Cojuangco Jr. v. Republic

G.R. No. 180705 (November 27, 2012)

Facts:

The case revolves around the coconut levy funds, which were established through various laws and decrees during the Marcos administration, particularly aimed at supporting the coconut industry in the Philippines. The funds were collected from coconut farmers through a levy on copra sales, with the intention of providing credit facilities and other benefits to the farmers.

In 1971, Republic Act No. 6260 created the Coconut Investment Company (CIC) to manage the Coconut Investment Fund (CIF), sourced from a levy of PhP 0.55 on every 100 kg of copra sold. A portion of this levy was allocated to the Philippine Coconut Authority (PCA) and the national association of coconut producers, COCOFED.

Following the declaration of martial law in 1972, several presidential decrees were issued to manage and utilize the coconut levy funds. Among these was Presidential Decree No. 755, which authorized the PCA to acquire a commercial bank for the benefit of coconut farmers. The PCA was tasked with using the coconut levy funds to purchase shares in the First United Bank (FUB), which was later renamed the United Coconut Planters Bank (UCPB).

Eduardo M. Cojuangco, Jr. was involved in the acquisition of shares in FUB through a series of agreements with the PCA. The first agreement, dated May 1975, granted Cojuangco an option to purchase shares from Pedro Cojuangco, while the second agreement allowed the PCA to buy these shares for the benefit of coconut farmers. Cojuangco was to receive a commission in the form of shares for facilitating this transaction.

After the 1986 EDSA Revolution, the government sought to recover what it termed "ill-gotten wealth" associated with the Marcos regime, leading to the filing of Civil Case No. 0033 by the Presidential Commission on Good Government (PCGG) against Cojuangco and others. The case was subdivided into several complaints, including CC No. 0033-A, which specifically addressed the ownership of the UCPB shares.

The Sandiganbayan, in its July 11, 2003 Partial Summary Judgment (PSJ-A), ruled that the agreements between Cojuangco and the PCA were null and void due to lack of valuable consideration. It declared that the shares in question were conclusively owned by the Republic of the Philippines, as they were acquired using public funds.

Cojuangco subsequently filed a petition for review, challenging the Sandiganbayan's ruling and asserting his claim to the shares based on the agreements.

Legal Issues:

1. Was the acquisition of the UCPB shares by Cojuangco supported by valuable consideration, or was it null and void?
2. Did the Sandiganbayan have jurisdiction to declare the agreements null and void?
3. Can the Sandiganbayan nullify the PCA-Cojuangco Agreement when the parties concede its validity?
4. Are the UCPB shares, acquired with public funds, considered public property?

Arguments:

• Petitioner (Cojuangco):

  • Cojuangco argued that the agreements were valid and supported by consideration, as they facilitated the acquisition of shares for the benefit of coconut farmers.
  • He contended that the Sandiganbayan lacked jurisdiction to declare the agreements null and void, as the parties had not contested their validity.
  • He maintained that the PCA-Cojuangco Agreement should be treated as a valid contract, and the shares should revert to him if the agreement was deemed void.

• Respondent (Republic of the Philippines):

  • The Republic argued that the agreements were null and void due to lack of valuable consideration, as Cojuangco's claimed option to purchase the shares was not exclusive or personal.
  • It asserted that the Sandiganbayan had jurisdiction over the case as it involved the recovery of ill-gotten wealth.
  • The Republic emphasized that the UCPB shares were public property, as they were acquired using public funds, and thus should benefit the coconut farmers.

Court's Decision and Legal Reasoning:

The Supreme Court upheld the Sandiganbayan's ruling, affirming that the PCA-Cojuangco Agreement was not valid due to lack of publication, which is a requirement for a law to be effective. The Court reiterated that laws must be published to be binding, and since the PCA-Cojuangco Agreement was not published, it could not be accorded the status of law.

The Court also found that the agreements lacked sufficient consideration, as Cojuangco's claimed personal and exclusive option to purchase the shares was deemed fictitious. The Sandiganbayan's conclusion that the shares were conclusively owned by the Republic was upheld, as the coconut levy funds were determined to be public funds, and any acquisition using these funds should benefit the public, specifically the coconut farmers.

The Court emphasized that the coconut levy funds were collected for a special public purpose, and any transfer of these funds that benefits private individuals is invalid. Therefore, the UCPB shares acquired through the coconut levy funds were declared public property.

Significant Legal Principles Established:

1. Public Funds: The coconut levy funds are classified as public funds, and any acquisition using these funds must benefit the public.
2. Publication Requirement: For any law or agreement to be valid, it must be published as part of the legal requirements for effectivity.
3. Consideration in Contracts: A contract must have a lawful cause or consideration; otherwise, it is deemed void.
4. Jurisdiction of the Sandiganbayan: The Sandiganbayan has jurisdiction over cases involving the recovery of ill-gotten wealth, particularly those related to the Marcos regime.