CONFEDERATION OF COCONUT FARMERS ORGANIZATIONS OF THE PHILIPPINES, INC.

(CCFOP), Petitioner, v. HIS EXCELLENCY PRESIDENT BENIGNO SIMEON C. AQUINO III, ACTING
COMMISSIONER RICHARD ROGER AMURAO OF THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT (PCGG), CHAIRMAN CESAR L. VILLANUEVA OF THE GOVERNANCE COMMISSION
FOR GOCCS (GCG), AND SECRETARY LEILA M. DE LIMA OF THE DEPARTMENT OF
JUSTICE, Respondents.

DECISION

MENDOZA, J.:

Through the subject Petition for Prohibition under Rule 65 of the Rules of Court (Petition), the controversy
surrounding the utilization of the contentious "coco levy funds" is once again put into the fore.

Before the Court proceeds, a brief restatement of the factual antecedents leading up to the present petition
is in order.

The collection of what is known as the coconut levy funds all began on June 19, 1971, following the passage
of Republic Act (R.A.) No. 6260,1 for the purpose of providing the necessary funds for the development of
the coconut industry. The imposition, which was pooled to what was called the Coconut Investment
Fund (CIF), consisted of a sum equivalent to fifty-five centavos (P0.55) on the first domestic sale by a
coconut farmer for every 100 kilograms of copra or other coconut products. In exchange for the levy, the
coconut farmer was to be issued a receipt which shall be converted into shares of stock of the Coconut
Investment Company (CIC).

Playing key roles in the collection, administration and/or use of the coconut levy funds were the Philippine
Coconut Authority (PCA), formerly the Philippine Coconut Administration (PHILCOA), United Coconut
Planters Bank (UCPB), and Philippine Coconut Producers Federation, Inc., or the COCOFED. By legal
mandate, COCOFED once received allocations from the coconut levy funds to finance its projects. Among the
assets allegedly acquired thru the direct or indirect use of the Fund was a block of San Miguel Corporation
(SMC) shares of stock.2

The declaration of martial law in September 1972 saw the issuance of several presidential decrees (P.Ds.),
purportedly designed to improve the coconut industry through the collection and use of the coconut
levy funds. Among those issued included: [1] P.D. No. 276 which established the Coconut Consumers
Stabilization Fund (CCSF) and declared the proceeds thereof as trust fund to be utilized to subsidize the sale
of coconut-based products, thus, stabilizing the price of edible oil; [2] P.D. No. 582 which created the
Coconut Industry Development Fund (CIDF) to finance the operation of a hybrid coconut seed farm; [3] P.D.
No. 755 which approved the acquisition of a commercial bank (UCPB) for the benefit of the coconut farmers
to enable such bank to promptly and efficiently realize the industry's credit policy; and [4] P.D. No. 961
(Coconut Industry Code), which codified and consolidated all existing laws and decrees relative to the
coconut industry.

Apropos to the current controversy are the provisions in P.D. No. 755 and P.D. No. 961, which decreed
that the coconut levy funds were not to be construed or interpreted as special and/or fiduciary funds, or as
part of the general funds of the national government, the intention being that said funds and the
disbursements thereof would be owned by the coconut farmers in their private capacities.

On November 8, 1977, P.D. No. 1234 was enacted. It decreed that all income and collections for special and
fiduciary funds authorized by law, including the CCSF and the CIDF, shall be remitted to the Treasury and be
treated as Special Accounts in the General Fund (SAGF).

Then, on June 11, 1978, P.D. No. 1468 (Revised Coconut Industry Code) was issued. It brought back the
declarations made in P.D. Nos. 755 and 961 that the CCSF and the CIDF shall not form part of the SAGF or
as part of the general funds of the national government, but shall be owned by the coconut farmers in their
private capacities.

Through the years, a part of the coconut levy funds went directly or indirectly to various projects and/or was
converted into different assets or investments.3 Among these projects was the Sagip Niyugan Program,
established sometime in November 2000 via Executive Order (E.O.) Nos. 312 and 313. It created a P1billion
trust fund by disposing of assets acquired using coconut levy funds or assets of entities supported by those
funds.

On January 24, 2012, in COCOFED v. Republic (COCOFED),4 the Court struck down the provisions of P.D.
Nos. 755, 961, and 1468 which declared the coconut levy funds as private assets. In doing so, the Court
explained:

In sum, not only were the challenged presidential issuances unconstitutional for decreeing the distribution of
the shares of stock for free to the coconut farmers and, therefore, negating the public purpose declared by
P.D. No. 276, i.e., to stabilize the price of edible oil and to protect the coconut industry. They likewise
reclassified, nay treated, the coconut levy fund as private fund to be disbursed and/or invested for the
benefit of private individuals in their private capacities, contrary to the original purpose for which the fund
was created. To compound the situation, the offending provisions effectively removed the coconut levy fund
away from the cavil of public funds which normally can be paid out only pursuant to an appropriation made
by law. The conversion of public funds into private assets was illegally allowed, in fact mandated,
by these provisions. Clearly therefore, the pertinent provisions of P.D. Nos. 755,
961 and 1468 are unconstitutional for violating Article VI, Section 29 (3) of the Constitution. In this
context, the distribution by PCA of the UCPB shares purchased by means of the coconut levy fund a special
fun of the government to the coconut farmers, is therefore void.5 [Emphasis supplied]
Reiterating the character of the coconut levy funds as public in character, the Court, in Pambansang
Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan v. Executive Secretary
(PKSMMN),6struck down E.O. Nos. 312 and 313, for being violative, among others, of, Section 29 (3), Article
VI of the Constitution.

On March 18, 2015, then President Benigno S. Aquino III (President Aquino) issued E.O. Nos. 1797 and
180.8 Essentially, E.O. No. 179 calls for the inventory and privatization of all coco levy assets. E.O. No. 180,
on the other hand, mandates the reconveyance and utilization of these assets for the benefit of coconut
farmers and the development of the coconut industry. Believing that the twin executive orders are
invalid, petitioner Confederation of Coconut Farmers Organizations of the Philippines, Inc. (CCFOP)
proceeded with the subject petition with this Court.

Hence, this petition raising the following issues: chanRob lesvi rtual Lawl ibra ry

ISSUES

WHETHER THE PRESIDENT, IN THE GUISE OF IMPLEMENTING THE LAWS RELATIVE TO COCONUT
LEVY FUNDS AND ASSETS, GRAVELY ABUSED HIS DISCRETION IN ISSUING THE ASSAILED
EXECUTIVE ORDERS WITHOUT PRIOR LEGISLATION;

II

WHETHER THE PRESIDENT GRAVELY ABUSED HIS DISCRETION WHEN HE ARROGATED UNTO
HIMSELF, WITHOUT LEGISLATIVE AUTHORITY, THE POWER TO ALLOCATE, USE AND ADMINISTER
THE SUBJECT COCONUT LEVY FUNDS AND ASSETS, WHICH POWERS IS EXCLUSIVELY LODGED
WITH THE PCA; AND

III

WHETHER THE PRESIDENT GRAVELY ABUSED HIS DISCRETION WHEN HE ARROGATED UNTO
HIMSELF THE EXCLUSIVE AUTHORITY OF THE JUDICIARY TO EXECUTE ITS FINAL AND
EXECUTORY DECISION, IN VIOLATION OF THE PRINCIPLE OF SEPARATION OF POWERS. 9
Arguments of the Petitioner

Violation of the Constitution

Similar to the controversy laid down in PKSMMN, petitioner assails the constitutionality of E.O. Nos. 179 and
180 on the argument that the presidential issuances violated Section 29(1) and (3), Article VI 10 of the
Constitution. In this iteration, petitioner explains that the assailed executive orders were made without
authority of law because they were based on P.D. No. 1234, a law that had ceased to exist when P.D.
No. 1468 re-enacted provisions of the earlier P.D. No. 755 and 961, retaining the character of the funds as
not part of the general funds of the government. According to petitioner, with the passage of P.D. No. 1468,
it became evident that it was the intention of the legislature to no longer retain the character of the coconut
levy funds as special public funds as mandated under P.D. No. 1234, but rather, treat the same as private
funds which are owned by the coconut farmers in their private capacities. To further its argument, petitioner
points out that P.D. No. 1234 expressly limits its application to "all other income accruing to the PCA under
existing laws." Thus, it argues that because the CCSF and CIDF were covered by P.D. No. 1468, a law
passed after P.D. No. 1234, the same cannot be considered as covered by P.D. 1234.

Although petitioner concedes that COCOFED11 and Republic v. COCOFED, et al. (Republic)12 [1] annulled
Section 5, Article 3 of P.D. No. 1468, Section 2 of P.D. No. 755, as well as Section 3, Article 5 of P.D. No.
961; and [2] declared that coco-levy funds are public funds for a special purpose, petitioner opines the
foregoing decisions of the Court: (a) did nothing more than invalidate the offending provisions of law; (b)
did not ipso facto direct the transfer of the CCSF and CIDF to the SAGF pursuant to P.D. No. 1234; and (c)
did not authorize the President to create a special account in the general fund. Petitioner, thus, posits that
the President assumed a legislative function when he issued the assailed executive orders
directing the transfer of the CCSF and CIDF to the special account in the general law. Citing several
bills pending in Congress, petitioner posits that Congress saw the need to pass a law in order to
properly place the coconut levy funds in SAGF.

Violation of the mandate of the PCA

Petitioner also contends that E.O. Nos. 179 and 180 violate the mandate of the PCA under P.D. No. 232 to
administer and utilize coconut levy funds, inasmuch as it directs the PCA, together with the Governance
Commission for Government-Owned and Controlled Corporations (GCG), the Department of Finance (DOF)
and the Presidential Assistant for Food Security and Agricultural Modernization (PAFSAM), to make
recommendations to the President for approval of all non-cash coconut levy assets that will be divested,
sold, alienated or disposed. Petitioner explains that, in effect, the questioned executive issuances would
diminish the powers of the PCA by relegating it to only one of the recommendatory bodies for the
privatization and utilization of coconut funds and assets.

On this point, petitioner, citing PKSMMN, averred that similar executive issuances empowering the President
to allocate, use and dispose of coconut levy assets were struck down by the Court for being without
legislative authorization and for being violative of P.D. No. 232.

Violation of the authority of the Judiciary

Finally, petitioner asserts that the questioned executive orders violate the Court's authority to execute its
final and executory decisions. It insists that with the finality of COCOFED, the release, transfer and deposit
of the government shares in UCPB to the Bureau of Treasury could only be done by
the Sandiganbayan which has the exclusive jurisdiction to execute the final judgment in the said case.

On June 30, 2015, the Court granted petitioner's prayer and issued a Temporary Restraining Order enjoining
the respondents from implementing the assailed E.O. Nos. 179 and 180 and from using, disbursing and
dispersing the subject coconut levy assets and funds.13

Arguments of the Respondents

Traversing the challenge mounted by petitioner, the respondents, through the Office of the Solicitor General
(OSG), first question the propriety of the filing of the subject suit on procedural grounds. First, on the
improper inclusion of the President as a respondent, they claimed that the President, who was then in power
at the time this case was initiated, enjoyed immunity pursuant to the principle of separation of
powers.14 The respondents likewise challenge petitioner's standing to bring the instant suit, not only because
it had failed to establish any direct injury, but also because the questioned orders do not involve tax
measures, negating any challenge via a taxpayer's suit.15 They also point out that despite petitioner's claim
that the twin executive orders had infringed on the powers of Congress, no member of Congress
had joined petitioner in the filing of the present suit. Finally, the respondents assert that because
members of Congress have "a more direct and specific interest in raising the questions being raised,"16 the
doctrine of transcendental importance cannot be used to justify petitioner's standing.17

As for the issues raised in the petition, the respondents counter that when the Court, in COCOFED, struck
down P.D. No. 1468, as well as P.D. Nos. 755 and 961, the result was as if the aforementioned laws did not
exist at all. Consequently, they argue that, as declared in COCOFED, P.D. No. 1234 should be considered the
operative law and that "coconut levies are special funds to be remitted to the Treasury in the General Fund
of the State but treated as Special Accounts."18

As for petitioner's claim that there are pending bills in Congress providing for the disposition of the coconut
levy funds, the respondents assert that until such bills become law, P.D. No. 1234 should be made to apply
in treating the coconut levy funds as part of SAGF.

The Court's Ruling

Before delving on the substantial issues of this case, a resolution of procedural matters is in order.

Petitioners legal standing

The Court upholds petitioner's assertion that it has legal standing to institute the present case. In PKSMMN,
the Court recognized petitioner organization as among those representing coconut farmers on whom the
burden of the coco levies attached. Considering that that the coconut levies were imposed primarily for the
benefit of petitioner's members,19 it behooves the Court to accord standing to petitioner to ensure that the
subject grievance is given its due.

With the procedural issues settled, the Court finds that the present petition is partially meritorious.

Nature of Coco Levy Funds

Petitioner believes that notwithstanding P.D. No. 1234 and the Court's pronouncements in COCOFED and
Republic, the CCSF and the CIDF remained to be private funds in nature. It insists that the legislative
intent to treat the CIDF and the CCSF as private funds is evident with the passage of P.D. No. 1468 because
it was a later law.

Section 1(a) of P.D. No. 1234 reads: chanRoble svirtual Lawli bra ry

SECTION 1. All income and collections for Special or Fiduciary Funds authorized by law shall be
remitted to the Treasury and treated as Special Accounts in the General Fund, including the
following:chanRob lesvi rtual Lawl ibra ry

a. Philippine Coconut Authority - Coconut Development Fund, including all income derived therefrom under
Sections 13 and 14 of Republic Act No. 1145; Coconut Investment Fund under Section 8 of Republic Act No.
6260, including earnings, profits, proceeds and interests derived therefrom; Coconut Consumers
Stabilization Fund under Section 3-A of PD No. 232, as inserted by Section 3 of P.D. No. 414 and
under paragraph 1(a) of P.D. No. 276; Coconut Industry Development Fund under Section 3-B of
P.D. No. 232, as inserted by Section 2 of P.D. No. 582; and all other fees accruing to the Philippine
Coconut Authority under the provisions of Section 19 of Republic Act No. 1365, in accordance with Section 2
of P.D. No. 755 and all other income accruing to the Philippine Coconut Authority under existing laws.
[Emphasis supplied]

The above-cited provision clearly characterizes the CCSF and the CIDF as public funds, which shall be
remitted to the Treasury as Special Accounts in the General Fund. Petitioner, however, insists that
pursuant to P.D. No. 1468, the CIDF and the CCSF were excluded from the provisions of P.D. No. 1234. It
noted Section 5 thereof which states that both the CIDF and the CCSF shall not be construed as special
funds or part of the general funds of the national government. As such, petitioner concluded that P.D. No.
1468 takes precedence over P.D. No. 1234, it being the later law.

Petitioner's continuous reliance on Section 5, Article III of P.D. No. 1468 is gravely erroneous.

In the landmark cases of COCOFED and Republic, the Court, in no uncertain terms, declared Section 5,
Article III of P.D. No. 1468 unconstitutional and categorized coconut levy funds to be public in nature.

In Republic, the Court expounded on why coconut levy funds are public in nature, viz: cha nRoblesv irt ual Lawlib rary

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. Undeniably, coconut levy funds satisfy this
general definition of public funds, because of the following reasons: chanRoblesv irtual Lawlib rary

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.
x x x x

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.

x x x x

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 and Osmeña v. Orbos.

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, 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. 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.

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.

x x x x

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.

x x x x

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.

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, was a categorical legislative intent to regard the CCSF as public, not private,
funds.20 [Emphasis supplied]

On the other hand, in COCOFED, the Court categorically struck down Section 5, Article III of P.D. No. 1468
for being unconstitutional because it converted the coconut levy funds into private funds, which may then be
appropriated even without an enabling law, to wit: chanRoble svirtual Lawli bra ry

In sum, not only were the challenged presidential issuances unconstitutional for decreeing the distribution of
the shares of stock for free to the coconut farmers and, therefore, negating the public purpose declared by
P.D. No. 276, i.e., to stabilize the price of edible oil and to protect the coconut industry. They likewise
reclassified, nay treated, the coconut levy fund as private fund to be disbursed and/or invested for
the benefit of private individuals in their private capacities, contrary to the original purpose for which the
fund was created. To compound the situation, the offending provisions effectively removed the coconut levy
fund away from the cavil of public funds which normally can be paid out only pursuant to an appropriation
made by law.

The conversion of public funds into private assets was illegally allowed, in fact mandated, by
these provisions. Clearly therefore, the pertinent provisions of P.D. Nos. 755, 961 and 1468 are
unconstitutional for violating Article VI, Section 29 (3) of the Constitution. In this context, the
distribution by PCA of the UCPB shares purchased by means of the coconut levy fund - a special fund of the
government - to the coconut farmers, is therefore void.21[Emphasis supplied]

Clearly, both cases had definitely settled the public nature of coconut levy funds, which included the CCSF
and the CIDF. The most compelling reasons to treat coconut levy funds as public funds are the fact that it
was raised through the State's taxing power and it was for the development of the coconut industry as a
whole and not merely to benefit individual farmers.

In addition, petitioner cannot use Article III, Section 5 of P.D. No. 1468 as basis to classify the CCSF and the
CIDF as private funds because it was struck down as unconstitutional. It must be remembered that as a
rule, an unconstitutional act is not a law to such an extent that it is inoperative as if it has not been passed
at all.22 Consequently, the perceived legislative intent espoused by Section 5, Article III of P.D. No. 1468 is
inoperative because it is unconstitutional. Hence, the characterization of P.D. No. 1234 of coconut levy
funds, including the CCSF and the CIDF, as public funds stands.

No usurpation of judicial power to execute its own decision

Petitioner also argues that the release of coconut levy assets held by the UCPB is in the nature of an
execution. Thus, it surmises that there must be a writ of execution from the Sandiganbayan before the
government may cause the release of the said assets.

Execution has been defined as a remedy afforded by law for the enforcement of a judgment, its
object being to obtain satisfaction of the judgment on which the writ is issued.23 Being a remedy, it is thus
optional on the winning litigant and may avail it in case the judgment cannot be enforced. In other words, a
party litigant may choose to have a judgment enforced and if for some reason he cannot do so, he may
decide to avail of the coercive measure of execution in order for the judgment to be realized. A writ of
execution was never meant to be a prerequisite before a judgment may be enforced.
With the finality of the decision in COCOFED, there is no question that the coconut levy assets are
public funds. Thus, the government may take the necessary steps to preserve them and to be able to
utilize them. It does not deprive the courts with its power to issue writs of execution because the
government may resort to it in case it encounters obstacles in the enforcement of the decision.

Existing appropriation law treating coconut levy funds as special funds

The power of the purse lies with Congress.24 This power is categorically and explicitly stated by the
fundamental law itself. Article VI, Section 29 of the Constitution reads: chanRob lesvi rtua lLawl ibra ry

SECTION 29. (1) No money shall be paid out of the Treasury except in pursuance of an appropriation made
by law.

(2) No public money or property shall be appropriated, applied, paid, or employed, directly or indirectly, for
the use, benefit, or support of any sect, church, denomination, sectarian institution, or system of religion, or
of any priest, preacher, minister, or other religious teacher, or dignitary as such, except when such priest,
preacher, minister, or dignitary is assigned to the armed forces, or to any penal institution, or government
orphanage or leprosarium.

(3) 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. If the purpose for which a special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred to the general funds of the Government.
The said provision provides for two classification of appropriation measures-general and special
appropriation. A general appropriation law is one passed annually to provide for the financial operations of
the entire government during one fiscal period, whereas a special appropriation is designed for a specific
purpose.25 The revenue collected for a special purpose shall be treated as a special fund to be used
exclusively for the stated purpose. This serves as a deterrent for abuse in the disposition of special
funds.26 The coconut levy funds are special funds allocated for a specific purpose and can never be used for
purposes other than for the benefit of the coconut farmers or the development of the coconut industry.

Any attempt to appropriate the said funds for another reason, no matter how noble or beneficial,
would be struck down as unconstitutional.

An appropriation measure may be defined as a statute the primary and specific purpose of which is
to authorize the release of public funds.27 The assailed issuances, however, did not create a new special
fund. They were issued pursuant to previous laws and jurisprudence which declared coconut levy funds such
as the CCSF and the CIDF as public funds for a special purpose. In fact, P.D. No. 1234 recognized that all
funds collected and accruing to the SAGF shall be considered automatically appropriated for purposes
authorized by law creating such fund.

Sections 1(a) and 2 of P.D. No. 1234 expressly provide: ch anRoblesvi rtua lLawl ibra ry

SECTION 1. All income and collections for Special or Fiduciary Funds authorized by law shall be remitted to
the Treasury and treated as Special Accounts in the General Fund, including the following:

a. Philippine Coconut Authority - Coconut Development Fund, including all income derived therefrom under
Sections 13 and 14 of Republic Act No. 1145; Coconut Investment Fund under Section 8 of Republic Act No.
6260, including earnings, profits, proceeds and interests derived therefrom; Coconut Consumers
Stabilization Fund under Section 3-A of PD No. 232, as inserted by Section 3 of P.D. No. 414 and under
paragraph 1(a) of P.D. No. 276; Coconut Industry Development Fund under Section 3-B of P.D. No. 232, as
inserted by Section 2 of P.D. No. 582; and all other fees accruing to the Philippine Coconut Authority under
the provisions of Section 19 of Republic Act No. 1365, in accordance with Section 2 of P.D. No. 755 and all
other income accruing to the Philippine Coconut Authority under existing laws.

x x x

SECTION 2. The amounts collected and accruing to Special or Fiduciary Funds shall be considered as being
automatically appropriated for the purposes authorized by law creating the said Funds, except as may be
otherwise provided in the General Appropriations Decree.
Accordingly, in COCOFED,28 the Court emphasized that the coconut levy funds were special funds which do
not form part of the general fund, to wit:chanRoblesvi rtua lLawl ib rary

If only to stress the point, P.D. No. 1234 expressly stated that coconut levies are special funds to be
remitted to the Treasury in the General Fund of the State, but treated as Special Accounts:
Section 1. All income and collections for Special or Fiduciary Funds authorized by law shall be remitted to
the Treasury and treated as Special Accounts in the General Fund,including the following:

(a) [PCA] Development Fund, including all income derived therefrom under Sections 13 and 14 of [RA] No.
1145; Coconut Investments Fund under Section 8 of [RA] No. 6260, including earnings, profits, proceeds
and interests derived therefrom; Coconut Consumers Stabilization Funds under Section 3-A of PD No. 232,
as inserted by Section 3 of P.D. No. 232, as inserted by Section 2 of P.D. No. 583; and all other fees
accruing to the [PCA] under the provisions of Section 19 of [RA] No. 1365, in accordance with Section 2 of
P.D. No.755 and all other income accruing to the [PCA] under existing laws.

Moreover, the Court, in Gaston, stated the observation that the character of a stabilization fund as a special
fund "is emphasized by the fact that the funds are deposited in the Philippine National Bank [PNB] and not in
the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by
law." Similarly in this case, Sec. 1(a) of P.D. No. 276 states that the proceeds from the coconut levy shall be
deposited with the PNB, then a government bank, or any other government bank under the account of the
CCSF, as a separate trust fund, which shall not form part of the government's general fund. And even
assuming arguendo that the coconut levy funds were transferred to the general fund pursuant to P.D. No.
1234, it was with the specific directive that the same be treated as special accounts in the general
fund.29 [Emphasis in the original]

Thus, E.O. No. 179 does not create a new special fund but merely reiterates that revenues arising
out of or in connection with the privatization of coconut levy funds shall be deposited in the
SAGF. An automatic appropriation law is not necessarily unconstitutional for as long as there are
clear legislative parameters on how the amounts appropriated are to be disbursed.30 The president
should not have unlimited discretion as to its disbursement31 since the funds are allocated for a specific
purpose. In Edu v. Ericta,32the Court explained when a valid delegation of legislative power may be
done, viz:chanRob lesvi rtua lLawl ibra ry

It is a fundamental principle flowing from the doctrine of separation of powers that Congress may not
delegate its legislative power to the two other branches of the government, subject to the exception that
local governments may over local affairs participate in its exercise. What cannot be delegated is the
authority under the Constitution to make laws and to alter and repeal them; the test is the
completeness of the statute in all its term and provisions when it leaves the hands of the legislature. To
determine whether or not there is an undue delegation of legislative power, the inquiry must be directed to
the scope and definiteness of the measure enacted. The legislature does not abdicate its functions
when it describes what job must be done, who is to do it, and what the scope of his authority is. For
a complex economy, that may indeed be the only way in which the legislative process can go forward. A
distinction has rightfully been made between delegation of power to make the laws which necessarily
involves a discretion as to what it shall be, which constitutionally may not be done, and delegation of
authority or discretion as to its execution to be exercised under and in pursuance of the law, to which no
valid objection can be made. The Constitution is thus not to be regarded as denying the legislature the
necessary resources of flexibility and practicability.33

COCOFED held that the CCSF and the CIDF are to be utilized for the benefit of coconut farmers
and for the development of the coconut industry. Pursuant to this, E.O. 180 provides: cha nRoblesv irt ual Lawlib rary

SECTION 1. Reiteration of Policy. - All Coco Levy Funds and Coco Levy Assets reconveyed to the
Government, whether voluntarily or through lawful order from a competent court, and all proceeds of any
privatization of the Coco Levy Assets, shall be used solely and exclusively for the benefit of all the coconut
farmers and for the development of the coconut industry.

Any disposition and utilization shall be guided by the following objectives:

a. Improving coconut farm productivity, developing coconut based enterprises, and increasing the income
of coconut farmers;

b. Strengthening coconut farmers' organizations; and

c. Attaining a balanced, equitable, integrated, and sustainable growth, rehabilitation and development of the
coconut industry.

On its own, E.O. Nos. 179 and 180 appears to have been executed within the legislative
parameters set by COCOFED. P.D. No. 1234, however, does not actually provide a mechanism for how
the SAGF is to be disbursed. Thus, the assailed issuances do not just implement P.D. No. 1234-it
implements P.D. No. 755 and P.D. No. 1468 as well.

Article III, Sections 2 and 3 of P.D. No. 1468, in particular, provides the specific purpose for how the CCSF
and the CIDF should be utilized, to wit: chanRob lesvi rtua lLawl ibra ry

SECTION 2. Utilization of Fund. - All collections of the Coconut Consumers Stabilization Fund Levy shall be
utilized by the Authority for the following purposes:

a) When the national interest so requires, to provide a subsidy for coconut-based products the amount of
which subsidy shall be determined on the basis of the base price of copra or its equivalent as fixed by the
Authority and the prices of coconut-based products as fixed by the Price Control Council; Provided, however,
that when the coconut farmers, who in effect shoulder the burden of the levies herein imposed, shall have
owned or controlled, under Section 9 and 10 hereof, oil mills and/or refineries which manufacture coconut-
based consumer products, only such oil mills and/or refineries shall be entitled to the subsidy herein
authorized;

b) To refund wholly or in part any premium duty collected on copra or its equivalent sold prior to February
17, 1974;

c) To finance the developmental and operating expenses of the Philippine Coconut Producers Federation
including projects such as scholarships for the benefit of deserving children of the coconut farmers; and

d) To finance the establishment and operation of industries and commercial enterprises relating to the
coconut and other palm oil industry as described in Section 9 hereof; and

e) To finance the Coconut Farmers Refund which is hereby constituted as the pooled savings of the coconut
farmers, to be utilized for their mutual assistance, protection and relief in the form of social benefits, such as
life and accident insurance coverage of the farmers.

SECTION 3. Coconut Industry Development Fund. - There is hereby created a permanent fund to be known
as the Coconut Industry Development Fund, which shall be administered and utilized by the bank acquired
for the benefit of the coconut farmers under PD 755 for the following purposes:

a) To finance the establishment, operation and maintenance of a hybrid coconut seednut farm under such
terms and conditions that may be negotiated by the National Investment and Development Corporation
(NIDC) with any private person, corporation, firm or entity as would insure that the country shall have, at
the earliest possible time, a proper, adequate and continuous supply of selected high yielding hybrid as well
as indigenous precocious seednuts and, for this purpose, the contract, including the amendments and
supplements thereto as provided for herein, entered into by NIDC as herein authorized is hereby confirmed
and ratified, and the bank acquired for the benefit of the coconut farmers under the PD 755 shall administer
the said contract, including its amendments and supplements, and perform all the rights and obligations of
NIDC thereunder, utilizing for that purpose the Coconut Industry Development Fund;

b) To purchase all of the seednuts produced by the hybrid coconut seednut farm which shall be distributed,
for free, by the Authority to coconut farmers on a voluntary basis as well as for new areas opened for
coconut planting in accordance with, and in the manner prescribed in, the nationwide coconut replanting
program, provided, that farmers who have been paying the levy herein authorized shall be given priority;

c) To defray the cost of implementing the nationwide replanting program which, including the activities
described in sub-paragraphs (b) and (d) of this Section, shall upon prior approval of the President of the
Philippines, be implemented by the Authority through a private non-profit foundation owned by the coconut
farmers in the manner prescribed by Sections 9 and 10 hereof;

d) To finance the establishment, operation and maintenance of extension services, model plantations and
other activities as would insure that the coconut farmers shall be informed of the proper methods of
replanting; and

e) The balance, if any, shall be utilized for investments for the benefit of the coconut farmers as
prescribed in Section 9 hereof. [Emphasis supplied]
While most of the provisions are aligned with the avowed purpose to benefit the coconut Industry, Section
3(e), Article III provides that any remaining balance may be used by UCPB to purchase shares and stocks in
corporations related to the coconut industry, viz:
chanRoblesv irtual Lawlib rary

SECTION 9. Investments For the Benefit of the Coconut Farmers. - Notwithstanding any law to the contrary,
the bank acquired for the benefit of the coconut farmers under PD 755 is hereby given full power and
authority to make investments in the form of shares of stock in corporations organized for the purpose of
engaging in the establishment and the operation of industries and commercial activities and other allied
business undertakings relating to the coconut and other palm oils industry in all its aspects and the
establishment of a research into the commercial and industrial uses of coconut and other oil industry. For
that purpose, the Authority shall, from time to time, ascertain how much of the collections of the Coconut
Consumers Stabilization Fund and/or the Coconut Industry Development Fund is not required to finance the
replanting program and other purposes herein authorized and such ascertained surplus shall be utilized by
the bank for the investments herein authorized.
The surplus created by this particular Section of P.D. No. 1468 eventually became known as the Coconut
Industry Investment Fund (CIIF). With the use of the CIIF, UCPB acquired coconut oil mills corporation, 14
holding companies, and San Miguel Corporation shares.34 In short, Section 9 of P.D. No. 1468 allowed
Marcos cronies to grow their wealth - to the detriment of the coconut industry.

A law which provides this kind of open-ended provision cannot be considered a law which provides clear
legislative parameters. Too much unbridled discretion is given for any surplus or balance that remains
unutilized from the CIDF.

The provision of P.D. No. 1468 are simply too broad to limit the amount of spending that may be done by
the implementing authority. Considering that no statute provides for specific parameters on how the
SAGF may be spent, Congress must first provide a law for the disbursements of the funds, in line
with its constitutional authority.35 The absence of the requisite legislative authority in the
disbursement of public funds cannot be remedied by executive fiat.

For this reason, Sections 6, 7, 8, and 936 of E.O. No. 180 are declared void because they are not in
conformity with the law. Through these sections, the President went beyond the authority delegated by
law in the disbursement of the coconut levy funds.

WHEREFORE, the Petition for Prohibition is PARTIALLY GRANTED. The Court finds, and declares, that
Section 6, Section 7, Section 8 and Section 9 of Executive Order No. 180, series of 2015, are not in
conformity with law.

In accordance with the foregoing, it is hereby reiterated that the coconut levy funds are to be deposited in
the Special Accounts in the General Fund and are to be appropriated only for the benefit of the coconut
farmers and for the development of the coconut industry.

The Temporary Restraining Order issued by the Court on June 30, 2015 is LIFTED effective immediately.

SO ORDERED.