Republic of the Philippines

SUPREME COURT
Baguio
EN BANC
G.R. Nos. 147036-37

April 10, 2012

Petitioner-Organizations, namely: PAMBANSANG KOALISYON NG MGA SAMAHANG

MAGSASAKA AT MANGGAGAWA SA NIYUGAN (PKSMMN), COCONUT
INDUSTRY REFORM MOVEMENT (COIR), BUKLOD NG MALAYANG
MAGBUBUKID, PAMBANSANG KILUSAN NG MGA SAMAHANG MAGSASAKA
(PAKISAMA), CENTER FOR AGRARIAN REFORM, EMPOWERMENT AND
TRANSFORMATION (CARET), PAMBANSANG KATIPUNAN NG MGA SAMAHAN
SA KANAYUNAN (PKSK); Petitioner-Legislator: REPRESENTATIVE LORETA ANN
ROSALES; and Petitioner-Individuals, namely: VIRGILIO V. DAVID, JOSE MARIE
FAUSTINO, JOSE CONCEPCION, ROMEO ROYANDOYAN, JOSE V. ROMERO, JR.,
ATTY. CAMILO L. SABIO, and ATTY. ANTONIO T. CARPIO, Petitioners,
vs.
EXECUTIVE SECRETARY, SECRETARY OF AGRICULTURE, SECRETARY OF
AGRARIAN REFORM, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
THE SOLICITOR GENERAL, PHILIPPINE COCONUT PRODUCERS FEDERATION,
INC. (COCOFED), and UNITED COCONUT PLANTERS BANK (UCPB), Respondents.
x-----------------------x
G.R. No. 147811
TEODORO J. AMOR, representing the Peasant Alliance of Samar and Leyte (PASALEY),
DOMINGO C. ENCALLADO, representing Aniban ng Magsasaka at Manggagawa sa
Niyugan (AMMANI), and VIDAL M. PILIIN, representing the Laguna Coalition,
Petitioners,
vs.
EXECUTIVE SECRETARY, SECRETARY OF AGRICULTURE, SECRETARY OF
AGRARIAN REFORM, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT,
THE SOLICITOR GENERAL, PHILIPPINE COCONUT PRODUCERS FEDERATION,
UNITED COCONUT PLANTERS BANK, Respondents.
DECISION
ABAD, J.:
These are consolidated petitions to declare unconstitutional certain presidential decrees and
executive orders of the martial law era relating to the raising and use of coco-levy funds.
The Facts and the Case

On June 19, 1971 Congress enacted Republic Act (R.A.) 62601 that established a Coconut
Investment Fund (CI Fund) for the development of the coconut industry through capital
financing.2 Coconut farmers were to capitalize and administer the Fund through the Coconut
Investment Company (CIC)3 whose objective was, among others, to advance the coconut
farmers interests. For this purpose, the law imposed a levy of P0.55 on the coconut farmers first
domestic sale of every 100 kilograms of copra, or its equivalent, for which levy he was to get a
receipt convertible into CIC shares of stock.4
About a year following his proclamation of martial law in the country or on August 20, 1973
President Ferdinand E. Marcos issued Presidential Decree (P.D.) 276, 5 which established a
Coconut Consumers Stabilization Fund (CCS Fund), to address the crisis at that time in the
domestic market for coconut-based consumer goods. The CCS Fund was to be built up through
the imposition of a P15.00-levy for every first sale of 100 kilograms of copra resecada. 6 The levy
was to cease after a year or earlier provided the crisis was over. Any remaining balance of the
Fund was to revert to the CI Fund established under R.A. 6260.7
A year later or on November 14, 1974 President Marcos issued P.D. 582, 8 creating a permanent
fund called the Coconut Industry Development Fund (CID Fund) to channel for the ultimate
direct benefit of coconut farmers part of the levies that they were already paying. The Philippine
Coconut Authority (PCA) was to provide P100 million as initial capital of the CID Fund and,
thereafter, give the Fund at least P0.20 per kilogram of copra resecada out of the PCAs
collection of coconut consumers stabilization levy. In case of the lifting of this levy, the PCA
was then to impose a permanent levy of P0.20 on the first sale of every kilogram of copra to
form part of the CID Fund.9 Also, under P.D. 582, the Philippine National Bank (PNB), then
owned by the Government, was to receive on deposit, administer, and use the CID Fund. 10 P.D.
582 authorized the PNB to invest the unused portion of the CID Fund in easily convertible
investments, the earnings of which were to form part of the Fund. 11
In 1975 President Marcos enacted P.D. 75512 which approved the acquisition of a commercial
bank for the benefit of the coconut farmers to enable such bank to promptly and efficiently
realize the industrys credit policy. 13 Thus, the PCA bought 72.2% of the shares of stock of First
United Bank, headed by Pedro Cojuangco.14 Due to changes in its corporate identity and
purpose, the banks articles of incorporation were amended in July 1975, resulting in a change in
the banks name from First United Bank to United Coconut Planters Bank (UCPB). 15
On July 14, 1976 President Marcos enacted P.D. 961, 16 the Coconut Industry Code, which
consolidated and codified existing laws relating to the coconut industry. The Code provided that
surpluses from the CCS Fund and the CID Fund collections, not used for replanting and other
authorized purposes, were to be invested by acquiring shares of stock of corporations, including
the San Miguel Corporation (SMC), engaged in undertakings related to the coconut and palm oil
industries.17 UCPB was to make such investments and equitably distribute these for free to
coconut farmers.18 These investments constituted the Coconut Industry Investment Fund (CIIF).
P.D. 961 also provided that the coconut levy funds (coco-levy funds) shall be owned by the
coconut farmers in their private capacities. 19 This was reiterated in the PD 146820 amendment of
June 11, 1978.

In 1980, President Marcos issued P.D. 1699,21 suspending the collections of the CCS Fund and
the CID Fund. But in 1981 he issued P.D. 184122 which revived the collection of coconut levies.
P.D. 1841 renamed the CCS Fund into the Coconut Industry Stabilization Fund (CIS Fund). 23
This Fund was to be earmarked proportionately among several development programs, such as
coconut hybrid replanting program, insurance coverage for the coconut farmers, and scholarship
program for their children.24
In November 2000 then President Joseph Estrada issued Executive Order (E.O.) 312, 25
establishing a Sagip Niyugan Program which sought to provide immediate income supplement to
coconut farmers and encourage the creation of a sustainable local market demand for coconut oil
and other coconut products.26 The Executive Order sought to establish a P1-billion fund by
disposing of assets acquired using coco-levy funds or assets of entities supported by those
funds.27 A committee was created to manage the fund under this program. 28 A majority vote of
its members could engage the services of a reputable auditing firm to conduct periodic audits. 29
At about the same time, President Estrada issued E.O. 313,30 which created an irrevocable trust
fund known as the Coconut Trust Fund (the Trust Fund). This aimed to provide financial
assistance to coconut farmers, to the coconut industry, and to other agri-related programs.31 The
shares of stock of SMC were to serve as the Trust Funds initial capital. 32 These shares were
acquired with CII Funds and constituted approximately 27% of the outstanding capital stock of
SMC. E.O. 313 designated UCPB, through its Trust Department, as the Trust Funds trustee
bank. The Trust Fund Committee would administer, manage, and supervise the operations of the
Trust Fund.33 The Committee would designate an external auditor to do an annual audit or as
often as needed but it may also request the Commission on Audit (COA) to intervene. 34
To implement its mandate, E.O. 313 directed the Presidential Commission on Good Government,
the Office of the Solicitor General, and other government agencies to exclude the 27% CIIF
SMC shares from Civil Case 0033, entitled Republic of the Philippines v. Eduardo Cojuangco,
Jr., et al., which was then pending before the Sandiganbayan and to lift the sequestration over
those shares.35
On January 26, 2001, however, former President Gloria Macapagal-Arroyo ordered the
suspension of E.O.s 312 and 313.36 This notwithstanding, on March 1, 2001 petitioner
organizations and individuals brought the present action in G.R. 147036-37 to declare E.O.s 312
and 313 as well as Article III, Section 5 of P.D. 1468 unconstitutional. On April 24, 2001 the
other sets of petitioner organizations and individuals instituted G.R. 147811 to nullify Section 2
of P.D. 755 and Article III, Section 5 of P.D.s 961 and 1468 also for being unconstitutional.
The Issues Presented
The parties submit the following issues for adjudication:
Procedurally
1. Whether or not petitioners special civil actions of certiorari under Rule 65 constituted
the proper remedy for their actions; and

2. Whether or not petitioners have legal standing to bring the same to court.
On the substance
3. Whether or not the coco-levy funds are public funds; and
4. Whether or not (a) Section 2 of P.D. 755, (b) Article III, Section 5 of P.D.s 961 and
1468, (c) E.O. 312, and (d) E.O. 313 are unconstitutional.
The Rulings of the Court
First. UCPB questions the propriety of the present petitions for certiorari and mandamus under
Rule 65 on the ground that there are no ongoing proceedings in any tribunal or board or before a
government official exercising judicial, quasi-judicial, or ministerial functions. 37 UCPB insists
that the Court exercises appellate jurisdiction with respect to issues of constitutionality or
validity of laws and presidential orders. 38
But, as the Court previously held, where there are serious allegations that a law has infringed the
Constitution, it becomes not only the right but the duty of the Court to look into such allegations
and, when warranted, uphold the supremacy of the Constitution.39 Moreover, where the issues
raised are of paramount importance to the public, as in this case, the Court has the discretion to
brush aside technicalities of procedure.40
Second. The Court has to uphold petitioners right to institute these petitions. The petitioner
organizations in these cases represent coconut farmers on whom the burden of the coco-levies
attaches. It is also primarily for their benefit that the levies were imposed.
The individual petitioners, on the other hand, join the petitions as taxpayers. The Court
recognizes their right to restrain officials from wasting public funds through the enforcement of
an unconstitutional statute.41 This so-called taxpayers suit is based on the theory that
expenditure of public funds for the purpose of executing an unconstitutional act is a
misapplication of such funds.42
Besides, the 1987 Constitution accords to the citizens a greater participation in the affairs of
government. Indeed, it provides for people's initiative, the right to information on matters of
public concern (including the right to know the state of health of their President), as well as the
right to file cases questioning the factual bases for the suspension of the privilege of writ of
habeas corpus or declaration of martial law. These provisions enlarge the peoples right in the
political as well as the judicial field. It grants them the right to interfere in the affairs of
government and challenge any act tending to prejudice their interest.
Third. For some time, different and conflicting notions had been formed as to the nature and
ownership of the coco-levy funds. The Court, however, finally put an end to the dispute when it
categorically ruled in Republic of the Philippines v. COCOFED 43 that these funds are not only
affected with public interest; they are, in fact, prima facie public funds. Prima facie means a fact
presumed to be true unless disproved by some evidence to the contrary. 44

The Court was satisfied that the coco-levy funds were raised pursuant to law to support a proper
governmental purpose. They were raised with the use of the police and taxing powers of the
State for the benefit of the coconut industry and its farmers in general. The COA reviewed the
use of the funds. The Bureau of Internal Revenue (BIR) treated them as public funds and the
very laws governing coconut levies recognize their public character. 45
The Court has also recently declared that the coco-levy funds are in the nature of taxes and can
only be used for public purpose.46 Taxes are enforced proportional contributions from persons
and property, levied by the State by virtue of its sovereignty for the support of the government
and for all its public needs.47 Here, the coco-levy funds were imposed pursuant to law, namely,
R.A. 6260 and P.D. 276. The funds were collected and managed by the PCA, an independent
government corporation directly under the President. 48 And, as the respondent public officials
pointed out, the pertinent laws used the term levy, 49 which means to tax,50 in describing the
exaction.
Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276 did not raise money to boost
the governments general funds but to provide means for the rehabilitation and stabilization of a
threatened industry, the coconut industry, which is so affected with public interest as to be within
the police power of the State.51 The funds sought to support the coconut industry, one of the
main economic backbones of the country, and to secure economic benefits for the coconut
farmers and farm workers. The subject laws are akin to the sugar liens imposed by Sec. 7(b) of
P.D. 388,52 and the oil price stabilization funds under P.D. 1956, 53 as amended by E.O. 137.54
Respondent UCPB suggests that the coco-levy funds are closely similar to the Social Security
System (SSS) funds, which have been declared to be not public funds but properties of the SSS
members and held merely in trust by the government. 55 But the SSS Law56 collects premium
contributions. It does not collect taxes from members for a specific public purpose. They pay
contributions in exchange for insurance protection and benefits like loans, medical or health
services, and retirement packages. The benefits accrue to every SSS member, not to the public,
in general.57
Furthermore, SSS members do not lose ownership of their contributions. The government merely
holds these in trust, together with his employers contribution, to answer for his future benefits. 58
The coco-levy funds, on the other hand, belong to the government and are subject to its
administration and disposition. Thus, these funds, including its incomes, interests, proceeds, or
profits, as well as all its assets, properties, and shares of stocks procured with such funds must be
treated, used, administered, and managed as public funds. 59
Lastly, the coco-levy funds are evidently special funds. In Gaston v. Republic Planters Bank,60
the Court held that the State collected stabilization fees from sugar millers, planters, and
producers for a special purpose: to finance the growth and development of the sugar industry and
all its components. The fees were levied for a special purpose and, therefore, constituted special
fund when collected. Its character as such fund was made clear by the fact that they were
deposited in the PNB (then a wholly owned government bank) and not in the Philippine
Treasury. In Osmea v. Orbos,61 the Court held that the oil price stabilization fund was a special
fund mainly because this was segregated from the general fund and placed in what the law

referred to as a trust account. Yet it remained subject to COA scrutiny and review. The Court
finds no substantial distinction between these funds and the coco-levy funds, except as to the
industry they each support.
Fourth. Petitioners in G.R. 147811 assert that Section 2 of P.D. 755 above is void and
unconstitutional for disregarding the public character of coco-levy funds. The subject section
provides:
Section 2. Financial Assistance. x x x and since the operations, and activities of the Philippine
Coconut Authority are all in accord with the present social economic plans and programs of the
Government, all collections and levies which the Philippine Coconut Authority is authorized to
levy and collect such as but not limited to the Coconut Consumers Stabilization Levy, and the
Coconut Industry Development Fund as prescribed by Presidential Decree No. 582 shall not be
considered or construed, under any law or regulation, special and/or fiduciary funds and do not
form part of the general funds of the national government within the contemplation of
Presidential Decree No. 711. (Emphasis ours)
The Court has, however, already passed upon this question in Philippine Coconut Producers
Federation, Inc. (COCOFED) v. Republic of the Philippines. 62 It held as unconstitutional Section
2 of P.D. 755 for "effectively authorizing the PCA to utilize portions of the CCS Fund to pay the
financial commitment of the farmers to acquire UCPB and to deposit portions of the CCS Fund
levies with UCPB interest free. And as there also provided, the CCS Fund, CID Fund and like
levies that PCA is authorized to collect shall be considered as non-special or fiduciary funds to
be transferred to the general fund of the Government, meaning they shall be deemed private
funds."
Identical provisions of subsequent presidential decrees likewise declared coco-levy funds private
properties of coconut farmers. Article III, Section 5 of P.D. 961 reads:
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 and/or fiduciary funds, or as part of the general funds of the national government within
the contemplation of P.D. No. 711; 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. (Emphasis ours)
Section 5 of P.D. 1468 basically reproduces the above provision, thus
Section 5. Exemption. The Coconut Consumers Stabilization Fund and the Coconut Industry
Development Fund, as well as all disbursements as herein authorized, shall not be construed or
interpreted, under any law or regulation, as special and/or fiduciary funds, or as part of the
general funds of the national government within the contemplation of P.D. 711; nor as
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 private capacities: Provided, however, That the President may at any time authorize the
Commission on Audit or any other officer of the government to audit the business affairs,
administration, and condition of persons and entities who receive subsidy for coconut-based
consumer products x x x. (Emphasis ours)
Notably, the raising of money by levy on coconut farm production, a form of taxation as already
stated, began in 1971 for the purpose of developing the coconut industry and promoting the
interest of coconut farmers. The use of the fund was expanded in 1973 to include the
stabilization of the domestic market for coconut-based consumer goods and in 1974 to divert part
of the funds for obtaining direct benefit to coconut farmers. After five years or in 1976, however,
P.D. 961 declared the coco-levy funds private property of the farmers. P.D. 1468 reiterated this
declaration in 1978. But neither presidential decree actually turned over possession or control of
the funds to the farmers in their private capacity. The government continued to wield
undiminished authority over the management and disposition of those funds.
In any event, such declaration is void. There is ownership when a thing pertaining to a person is
completely subjected to his will in everything that is not prohibited by law or the concurrence
with the rights of another.63 An owner is free to exercise all attributes of ownership: the right,
among others, to possess, use and enjoy, abuse or consume, and dispose or alienate the thing
owned.64 The owner is of course free to waive all or some of these rights in favor of others. But
in the case of the coconut farmers, they could not, individually or collectively, waive what have
not been and could not be legally imparted to them.
Section 2 of P.D. 755, Article III, Section 5 of P.D. 961, and Article III, Section 5 of P.D. 1468
completely ignore the fact that coco-levy funds are public funds raised through taxation. And
since taxes could be exacted only for a public purpose, they cannot be declared private properties
of individuals although such individuals fall within a distinct group of persons. 65
The Court of course grants that there is no hard-and-fast rule for determining what constitutes
public purpose. It is an elastic concept that could be made to fit into modern standards. Public
purpose, for instance, is no longer restricted to traditional government functions like building
roads and school houses or safeguarding public health and safety. Public purpose has been
construed as including the promotion of social justice. Thus, public funds may be used for
relocating illegal settlers, building low-cost housing for them, and financing both urban and
agrarian reforms that benefit certain poor individuals. Still, these uses relieve volatile iniquities
in society and, therefore, impact on public order and welfare as a whole.
But the assailed provisions, which removed the coco-levy funds from the general funds of the
government and declared them private properties of coconut farmers, do not appear to have a
color of social justice for their purpose. The levy on copra that farmers produce appears, in the
first place, to be a business tax judging by its tax base. The concept of farmers-businessmen is
incompatible with the idea that coconut farmers are victims of social injustice and so should be
beneficiaries of the taxes raised from their earnings.

It would altogether be different of course if the laws mentioned set apart a portion of the cocolevy fund for improving the lives of destitute coconut farm owners or workers for their social
amelioration to establish a proper government purpose. The support for the poor is generally
recognized as a public duty and has long been an accepted exercise of police power in the
promotion of the common good. 66 But the declarations do not distinguish between wealthy
coconut farmers and the impoverished ones. And even if they did, the Government cannot just
embark on a philanthropic orgy of inordinate dole-outs for motives political or otherwise. 67
Consequently, such declarations are void since they appropriate public funds for private purpose
and, therefore, violate the citizens right to substantive due process. 68
On another point, in stating that the coco-levy fund "shall not be construed or interpreted, under
any law or regulation, as special and/or fiduciary funds, or as part of the general funds of the
national government," P.D.s 961 and 1468 seek to remove such fund from COA scrutiny.
This is also the fault of President Estradas E.O. 312 which deals with P1 billion to be generated
out of the sale of coco-fund acquired assets. Thus
Section 5. Audit of Fund and Submission of Report. The Committee, by a majority vote, shall
engage the services of a reputable auditing firm to conduct periodic audits of the fund. It shall
render a quarterly report on all pertinent transactions and availments of the fund to the Office of
the President within the first three (3) working days of the succeeding quarter. (Emphasis ours)
E.O. 313 has a substantially identical provision governing the management and disposition of the
Coconut Trust Fund capitalized with the substantial SMC shares of stock that the coco-fund
acquired. Thus
Section 13. Accounting. x x x
The Fund shall be audited annually or as often as necessary by an external auditor
designated by the Committee. The Committee may also request the Commission on Audit to
conduct an audit of the Fund. (Emphasis ours)
But, since coco-levy funds are taxes, the provisions of P.D.s 755, 961 and 1468 as well as those
of E.O.s 312 and 313 that remove such funds and the assets acquired through them from the
jurisdiction of the COA violate Article IX-D, Section 2(1)69 of the 1987 Constitution. Section
2(1) vests in the COA the power and authority to examine uses of government money and
property. The cited P.D.s and E.O.s also contravene Section 2 70 of P.D. 898 (Providing for the
Restructuring of the Commission on Audit), which has the force of a statute.
And there is no legitimate reason why such funds should be shielded from COA review and
audit. The PCA, which implements the coco-levy laws and collects the coco-levy funds, is a
government-owned and controlled corporation subject to COA review and audit.
E.O. 313 suffers from an additional infirmity. Its title, "Rationalizing the Use of the Coconut
Levy Funds by Constituting a Fund for Assistance to Coconut Farmers as an Irrevocable Trust
Fund and Creating a Coconut Trust Fund Committee for the Management thereof" tends to

mislead. Apparently, it intends to create a trust fund out of the coco-levy funds to provide
economic assistance to the coconut farmers and, ultimately, benefit the coconut industry. 71 But
on closer look, E.O. 313 strays from the special purpose for which the law raises coco-levy funds
in that it permits the use of coco-levy funds for improving productivity in other food areas. Thus:
Section 2. Purpose of the Fund. The Fund shall be established for the purpose of financing
programs of assistance for the benefit of the coconut farmers, the coconut industry, and other
agri-related programs intended to maximize food productivity, develop business
opportunities in the countryside, provide livelihood alternatives, and promote anti-poverty
programs. (Emphasis ours)
xxxx
Section 9. Use and Disposition of the Trust Income. The Coconut Trust Fund Committee, on
an annual basis, shall determine and establish the amount comprising the Trust Income. After
such determination, the Committee shall earmark, allocate and disburse the Trust Income for the
following purposes, namely:
xxxx
(d) Thirty percent (30%) of the Trust Income shall be used to assist and fund
agriculturally-related programs for the Government, as reasonably determined by the Trust
Fund Committee, implemented for the purpose of: (i) maximizing food productivity in the
agriculture areas of the country, (ii) enhancing the upliftment and well-being of the living
conditions of farmers and agricultural workers, (iii) developing viable industries and business
opportunities in the countryside, (iv) providing alternative means of livelihood to the direct
dependents of agriculture businesses and enterprises, and (v) providing financial assistance and
support to coconut farmers in times of economic hardship due to extremely low prices of copra
and other coconut products, natural calamities, world market dislocation and similar occurrences,
including financial support to the ERAPs Sagip Niyugan Program established under Executive
Order No. 312 dated November 3, 2000; x x x. (Emphasis ours)
Clearly, E.O. 313 above runs counter to the constitutional provision which directs that all money
collected on any tax levied for a special purpose shall be treated as a special fund and paid out
for such purpose only.72 Assisting other agriculturally-related programs is way off the cocofunds objective of promoting the general interests of the coconut industry and its farmers.
A final point, the E.O.s also transgress P.D. 1445, 73 Section 84(2),74 the first part by the
previously mentioned sections of E.O. 313 and the second part by Section 4 of E.O. 312 and
Sections 6 and 7 of E.O. 313. E.O. 313 vests the power to administer, manage, and supervise the
operations and disbursements of the Trust Fund it established (capitalized with SMC shares
bought out of coco-levy funds) in a Coconut Trust Fund Committee. Thus
Section 6. Creation of the Coconut Trust Fund Committee. A Committee is hereby created
to administer, manage and supervise the operations of the Trust Fund, chaired by the
President with ten (10) members, as follows:

(a) four (4) representatives from the government sector, two of whom shall be the
Secretary of Agriculture and the Secretary of Agrarian Reform who shall act as Vice
Chairmen;
(b) four (4) representatives from coconut farmers organizations, one of whom shall come
from a list of nominees from the Philippine Coconut Producers Federation Inc.
("COCOFED");
(c) a representative from the CIIF; and
(d) a representative from a non-government organization (NGO) involved in agricultural
and rural development.
All decisions of the Coconut Trust Fund Committee shall be determined by a majority vote of all
the members.
The Coconut Trust Fund Committee shall perform the functions and duties set forth in Section 7
hereof, with the skill, care, prudence and diligence necessary under the circumstances then
prevailing that a prudent man acting in like capacity would exercise.
The members of the Coconut Trust Fund Committee shall be appointed by the President and
shall hold office at his pleasure.
The Coconut Trust Fund Committee is authorized to hire administrative, technical and/or support
staff as may be required to enable it to effectively perform its functions and responsibilities.
(Emphasis ours)
Section 7. Functions and Responsibilities of the Committee. The Coconut Trust Fund
Committee shall have the following functions and responsibilities:
(a) set the investment policy of the Trust Fund;
(b) establish priorities for assistance giving preference to small coconut farmers and
farmworkers which shall be reviewed periodically and revised as necessary in accordance
with changing conditions;
(c) receive, process and approve project proposals for financing by the Trust Fund;
(d) decide on the use of the Trust Funds income or net earnings including final
action on applications for assistance, grants and/or loans;
(e) avail of professional counsel and services by retaining an investment and financial
manager, if desired;
(f) formulate the rules and regulations governing the allocation, utilization and
disbursement of the Fund; and

(g) perform such other acts and things as may be necessary proper or conducive to attain
the purposes of the Fund. (Emphasis ours)
Section 4 of E.O. 312 does essentially the same thing. It vests the management and disposition of
the assistance fund generated from the sale of coco-levy fund-acquired assets into a Committee
of five members. Thus, Section 4 of E.O. 312 provides
Section 4. Funding. Assets acquired through the coconut levy funds or by entities financed by
the coconut levy funds identified by the President for appropriate disposal or sale, shall be sold
or disposed to generate a maximum fund of ONE BILLION PESOS (P1,000,000,000.00) which
shall be managed by a Committee composed of a Chairman and four (4) members to be
appointed by the President whose term shall be co-terminus with the Program. x x x (Emphasis
ours)
In effect, the above transfers the power to allocate, use, and disburse coco-levy funds that P.D.
232 vested in the PCA and transferred the same, without legislative authorization and in
violation of P.D. 232, to the Committees mentioned above. An executive order cannot repeal a
presidential decree which has the same standing as a statute enacted by Congress.
UCPB invokes the principle of separability to save the assailed laws from being struck down.
The general rule is that where part of a statute is void as repugnant to the Constitution, while
another part is valid, the valid portion, if susceptible to being separated from the invalid, may
stand and be enforced. When the parts of a statute, however, are so mutually dependent and
connected, as conditions, considerations, or compensations for each other, as to warrant a belief
that the legislature intended them as a whole, the nullity of one part will vitiate the rest. In which
case, if some parts are unconstitutional, all the other provisions which are thus dependent,
conditional, or connected must consequently fall with them. 75
But, given that the provisions of E.O.s 312 and 313, which as already stated invalidly transferred
powers over the funds to two committees that President Estrada created, the rest of their
provisions became non-operational. It is evident that President Estrada would not have created
the new funding programs if they were to be managed by some other entity. Indeed, he made
himself Chairman of the Coconut Trust Fund and left to his discretion the appointment of the
members of the other committee.
WHEREFORE, the Court GRANTS the petition in G.R. 147036-37, PARTLY GRANTS the
petition in G.R. 147811, and declares the following VOID:
a) E.O. 312, for being repugnant to Section 84(2) of P.D. 1445, and Article IX-D, Section
2(1) of the Constitution; and
b) E.O. 313, for being in contravention of Section 84(2) of P.D. 1445, and Article IX-D,
Section 2(1) and Article VI, Section 29(3) of the Constitution.
The Court has previously declared Section 2 of P.D. 755 and Article III, Section 5 of P.D.s 961
and 1468 unconstitutional.

SO ORDERED.
ROBERTO A. ABAD
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
ANTONIO T. CARPIO
Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE
CASTRO
Associate Justice

ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

BIENVENIDO L. REYES
Associate Justice

(On Official Leave)

ESTELA M. PERLAS-BERNABE
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions
in the above Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Court.
RENATO C. CORONA
Chief Justice