SC strikes down EOs on coco levy trust funds

Posted at 04/20/12 1:35 PM

MANILA, Philippines - The Supreme Court (SC) has declared as unconstitutional two presidential issuances that created trust funds for farmers involving the controversial coconut levy funds.

In a 23-page en banc Decision penned by Associate Justice Roberto Abad, the high court ruled as illegal Executive Order (EO) No. 312 which sought to establish funds from assets acquired using coco levy funds, and EO No. 313 which created an irrevocable trust fund known as the Coconut Trust Fund.

Both issuances were issued by former President Joseph Estrada.

EO No. 312 sought to put up a maximum fund of P1 billion through the sale of assets acquired through the coco levy funds or by entities financed by the coco levy funds.

EO No. 313, meantime, sought to create at least P40 billion trust fund out of a 27% stake in San Miguel Corp (SMC) acquired using proceeds from the coco levy.

The levy was a tax imposed on coconut farmers during the administration of Pres. Marcos, aimed at establishing development projects for the farmers and the industry.

In a unanimous vote of 11 Justices, the high court granted the petition of farmer groups led by Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa sa Niyugan in declaring the issuances void.

The high court held that EO 312 was intended for the disbursement of coco levy funds that Presidential Decree (PD) 232 of former President Ferdinand Marcos vested in the Philippine Coconut Authority (PCA).

"[A]n executive order cannot repeal a presidential decree which has the same standing as a statute enacted by Congress," the Decision read.

As for EO No. 313, the high court ruled that it is in contravention with Section 84(2) of PD 1445 (Ordaining and Instituting A Government Auditing Code of the Philippines) and the 1987 Constitution.

"[G]iven that the provisions of EO 312 and 313, which was 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 the Chairman of the Coconut Trust Fund and left to his discretion the appointment of the members and the other committee," the Decision read.

The high court also ruled that the coco levy funds are "special funds"deposited in the Philippine National Bank (PNB) and not in the Philippine Treasury.

The ruling also stated that the coco levy funds are taxes and should be subject to audit by the Commission on Audit (COA).

"[T]here 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," the Decision read.

Associate Justices Antonio Carpio, Teresita Leonardo-De Castro and Diosdado Peralta inhibited from the case.