SC junks claim

of UCPB,
Cocolife over
sequestered
coco levy
funds
By: Tetch Torres-Tupas - Reporter / @T2TupasINQ
INQUIRER.net / 06:18 PM September 15, 2015

The Supreme Court has dismissed the bid of

United Coconut Planters Bank (UCPB) and
United Coconut Planters Life Assurance Corp.
(Cocolife) to claim portion of the 753.8 million
shares of stocks of San Miguel Corp. worth P60
billion which are earlier reconveyed to the
government for the use of coconut farmers and
development of the coconut industry.

A 30-page decision penned by Associate Justice

Martin Villarama Jr. reversed the decision issued
by Makati City Regional Trial Court Judge
Winlove Dumayas and granted the petition filed
by the Presidential Commission on Good
Government, saying the Makati court had no
jurisdiction over the case.
On Jan. 24, 2012, the high court upheld the
Sandiganbayans decision in two civil cases
related to the coconut levy funds.
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The Supreme Court agreed with the

Sandiganbayan that the coco levy funds
belonged to the government and affirmed the
PCGGs right to vote the sequestered shares.
The same ruling stated that portion of SMC
shares of stocks belonged to the government
because it was acquired using the funds.
Denying a motion for reconsideration on Sept.
4, 2012, the high court said the 753.8-million
SMC Series 1 preferred shares as well as its
dividend earnings and increments belonged to
the government.
Because of the ruling, UCPB and Cocolife filed
separate petitions for declaratory relief before
the Makati court.

UCPB is claiming 11.03 percent or P7.84-billion

worth of SMC shares while Cocolife is claiming
11.01 percent.
After the Makati court ruled in favor of the two,
PCGG moved for a reconsideration which was
subsequently denied by the lower court,
prompting it to take the case to the high court.
In its petition, PCGG said the lower court
abused its discretion when it acted on the
petitions filed by Cocolife and UCPB, arguing
that the court had no jurisdiction over acts
performed by PCGG specifically in relation to
writs of sequestrations.
The Supreme Court agreed with PCGG, saying
under Section 4 (c) of Presidential Decree 1606
(the law that created the Sandiganbayan) as
amended by Republic Act No. 7975 and
Republic Act No. 8249, the jurisdiction of the
Sandiganbayan included suits for recovery of illgotten wealth and related cases.
Respondents assertion that the subject matter
of their petitions for declaratory relief is
different due to private funds used in buying
shares in UCPB and [Coconut Industry
Investment Fund] oil mills is but a feeble
attempt to create an exception to the
Sandiganbayans exclusive jurisdiction, the
Supreme Court said.

As underscored in Cuenca v PCGG, the

benchmark is whether such shares of UCPB and
CIIF oil mills are alleged to be ill-gotten wealth
of the Marcoses and their perceived cronies,
which is sufficient to bring the case within the
exclusive jurisdiction of the Sandiganbayan
pursuant to existing laws and decrees, it
added.
Likewise, the high court ruled that that the
petition should also be dismissed under the
doctrine of res judicata.
The doctrine of res judicata, according to the
Court, provides that a final judgment on the
merits rendered by a court of competent
jurisdiction is conclusive as to the rights of the
parties and their privies and constitutes an
absolute bar to subsequent actions involving
the claim, demand or cause of action.
The Supreme Court pointed out that the
Sandiganbayan resolved in 2004 and the high
court itself affirmed in 2012 the issue of
ownership of the sequestered CIIF companies
and CIIF SMC block of shares.
In the same ruling, the high court upheld that
the levy funds took on the nature of taxes and
could only be used for public purposes,
specifically for the development, rehabilitation,
and stabilization of the coconut industry.

Thus, the Supreme Court ordered the UCPB

shares of stock representing the 7.22-percent
fully paid shares subject of the said petition,
with all the dividends, reconveyed to the
government.
Having resolved that subject matter
jurisdiction pertains to the Sandiganbayan and
not the RTC, and that the petitions for
declaratory relief are barred by our Jan. 24,
2012 decision which settled with finality the
issue of ownership of the CIIF oil mills, the 14
holding companies and CIIF SMC block of
shares, we deem it unnecessary to address the
other issues presented, the high court
said. Tetch Torres-Tupas/RC

Sandigan
orders
turnover of

UCPB shares
in coco levy
case
By: Marc Jayson Cayabyab Reporter / @MJcayabyabINQ
INQUIRER.net / 07:06 PM October 28, 2015

The Sandiganbayan has ordered the turnover of

businessman Eduardo Danding Cojuangco
Jr.s 72.2-percent shares of the United Coconut
Planters Bank (UCPB) which the Supreme Court
ruled belonged to the government.
The Philippine Coconut Authority (PCA) and
defendant Cojuangco Jr. are hereby ordered to
surrender to the court the necessary
documents to effect the transfer of the subject
shares of stock in favor of plaintiff Republic of
the Philippines, the court said in a decision
penned by second division chair Associate
Justice Teresita Diaz-Baldos.

The UCPB is directed to cancel the subject

shares of stock and to issue the equivalent
number of shares in the name of the Republic
of the Philippines, the court added.
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The antigraft court ordered the full turnover of

the shares after it granted the governments
motion for execution of the Supreme Court
decision which ruled that the shares should be
used for the benefit of coconut farmers.
The UCPB shares referred to what critics called
the commission, or shares of stock, that
Cojuangco, an uncle of President Benigno
Aquino III, received after negotiating the
acquisition by the PCA of First United Bank
(FUB), which was later renamed UCPB and
became the depository of coconut levy funds.
The dictator Ferdinand Marcos imposed a levy
on coconut farmers with a promise to pool
these funds to be used for the benefit of
farmers. But Marcos allegedly used the funds to
benefit his cronies.
The court order finally serves to remove the
obstacle for the sale of the governments
majority stake in the UCPB to push through.

Cojuangco secured a majority stake in UCPB

when in 1975, Marcos issued a decree which
authorized the PCA to use the levy funds to buy
72.2 percent of then FUB or UCPB. Cojuangco
became UCPBs president and chief executive
officer. Cojuangco also used to be a board
member of the PCA. Marc Jayson
Cayabyab/JE/RC

Govt now owns

72% of UCPB
By: Marlon Ramos - Reporter / @MRamosINQ
Philippine Daily Inquirer / 03:30 AM October 29, 2015

Finally, the government has secured ownership

of 72.2 percent of the United Coconut Planters
Bank (UCPB) shares from business tycoon
Eduardo Danding Cojuangco Jr. which were
purchased in the 1970s using the controversial
coco levy funds.
This, after the Sandiganbayan granted the
motion of the Office of the Solicitor General
(OSG) which sought the transfer to the

government of 14,400 in UCPB shares following

the Supreme Court ruling in 2012 which
declared the state as the rightful owner of the
UCPB stocks.
The antigraft courts Second Division
promulgated its 17-page ruling on Oct. 23,
which was made available to the media on
Wednesday.
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The court finds that the proper procedure is for

defendant Cojuangco to transfer the subject
shares to the Republic of the Philippines and for
UCPB to record such transfer in its corporate
books, the court ruled.
The resolution was penned by Associate Justice
Teresita Diaz-Baldos, chair of the Second
Division, and was concurred in by Associate
Justices Napoleon Inoturan and Maria Cristina
Cornejo.
In granting the OSGs motion for execution, the
court dismissed Cojuangcos claims that the
subject of the government lawyers request was
vague as it ruled that the contested
properties involved are well-identified.

It ordered UCPB to cancel the subject shares of

stock and to issue the equivalent number of
shares in the name of the Republic of the
Philippines.
Rules are clear
The rules are clear. Once a judgment becomes
final and executory, the prevailing party can
have it executed as a matter of right by mere
motion within five years from the date of entry
of judgment, the court said.
The contentions of defendant Cojuangco about
the alleged ambiguity of the instant motion and
its violation lack basis, it added.
In fact, the court said its factual finding that
the shares of stocks in UCPB and it predecessor,
First United Bank, were purchased by the
Philippine Coconut Authority (PCA) using public
funds had been upheld by the Supreme Court
with finality.
It said the shares of stocks in UCPB must
therefore be reconveyed to the government
being the true and beneficial owner.

The PCA and defendant Cojuangco are hereby

ordered to surrender to the court the necessary
documents to effect the transfer of the subject
shares of stocks in favor of plaintiff Republic of
the Philippines, the court said.
What went before
In July 2003, the Sandiganbayan ruled that
businessman Eduardo Danding Cojuangco Jr.
had illegally acquired the United Coconut
Planters Bank (UCPB) with coconut levy funds
and forfeited his shareholdings there in favor of
the government.
The coconut levy was a tax imposed by then
President Ferdinand Marcos on the produce of
coconut farmers between 1973 and 1982,
supposedly to develop the coconut industry.
In 1975, Marcos issued Presidential Decree No.
755, which authorized the Philippine Coconut
Authority (PCA), whose board included
Cojuangco, to use the levy funds to buy 72.2
percent of First United Bank (FUB), which was
later renamed UCPB. Cojuangco became its
president and chief executive officer.

With the PCA and UCPB in their control,

Cojuangco and his associates were able to buy
firms and mills placed under the Coconut
Industry Investment Fund (CIIF), a group of 14
holding companies whose assets included 47
percent of San Miguel Corp. (SMC). These
assets were held by UCPB, the CIIF
administrator.
In 1986, shortly after the Edsa People Power
Revolution, all coco levy-acquired assets were
sequestered by the Philippine Commission on
Good Government (PCGG), but control of UCPB
went to Cojuangco when Joseph Estrada
became the President in 1998.
In December 2001, the Supreme Court ruled
that the coco levy funds were public in
character, but left it to the Sandiganbayan to
decide who owned the assets acquired with the
funds.
In its 2003 ruling, the Sandiganbayan declared
unconstitutional PD 755, and declared null and
void the transfer of the shares of stock of
FUB/UCPB by the PCA to Cojuangco, which cost
the PCA more than P10 million in 1975.

The antigraft court forfeited 72.2 percent of

UCPBs outstanding stocks in favor of the
government.
The high court affirmed this ruling in November
2012, stressing that Cojuangco was not entitled
to the UCPB shares that were bought with
public funds and, as such, were considered
public property.
In July 2013, the Supreme Court ruled with
finality that the government owned the shares
of Cojuangco in UCPB and that these should be
used for the benefit of the coconut farmers.
The high tribunal declared as unconstitutional
provisions in the agreement between
Cojuangco and the PCA in May 25, 1975, which
allowed the businessman, known to be a crony
of Marcos, to personally and exclusively own
public funds or property.
The agreement provided for the transfer to
Cojuangco by way of compensation, of 10
percent of the 72.2 percent shares of stock that
PCA purchased using the coconut levy funds.
No more pleadings

The court said that it would no longer entertain

any further pleadings on the case.
In March, President Aquino signed two
executive orders (EOs) that would pave the way
for the privatization of the coco levy funds,
specifically shares in UCPB, SMC and CIIF.
PCGG Chair Andres Bautista said the signing of
the EOs would allow the long-awaited sale of
UCPB, which has drawn the interest of potential
bidders such as Philippine National Bank, East
West Banking Corp., BDO Unionbank Inc., Union
Bank of the Philippines and China Banking Corp.
The President signed EO 179, which laid down
the guidelines for the inventory and
privatization of coco levy assets, and EO 180,
which provides for administrative guidelines for
the reconveyance and utilization of the coco
levy assets for the benefit of the coconut
farmers, the development of the coconut
industry, and for other purposes.
EO 179 mandates the PCGG, with the help of
the Office of the Solicitor General, to identify
and account for all known coco levy assets,
whether surrendered or sequestered.

The PCGG will map out the ownership structure

of corporations that were formed using the coco
levy and the investments they made, and bare
the money, assets and investments of the CIIF
companies and their holding firms.
3 coco levy assets
The order specified three main coco levy assets
for dispositionUCPB shares to be determined
by the government; shares in the CIIF and its
holding firms; and 5.5 million shares held by the
PCGG since March 1999.
The President also ordered the dissolution of
the CIIF companies.
On the other hand, EO 180 mandates the
Governance Commission for GOCCs, in
consultation with the Finance Secretary, the
Presidential Assistant for Food Security and
Agricultural Modernization, and Philippine
Coconut Authority, to find ways to dispose of
the noncash assets of the coco levy fund. The
Privatization and Management Office has been
designated the main disposition body.
In June, a coalition of coconut farmer groups
asked the Supreme Court to stop President

Aquino from implementing two EOs, warning

that the twin EOs would cause new plunder of
the coco levy funds.