. Pascual vs.

Secretary of Public Works, 110 Phil 331

Facts: A

law

was

enacted

in

1953

containing

provision

for

the

construction,reconstruction, repair, extension and improvement of Pasig feeder road terminalswithin Antonio Subdivision owned by Senator Jose C. Zulueta. Zulueta donated saidparcels of land to the Government 5 months after the enactment of the law, on thecondition that if the Government violates such condition the lands would revert toZulueta. The provincial governor of Rizal, Wenceslao Pascual, questioned the validity of the donation and the Constitutionality of the particular provision, it being anappropriation not for a public purpose.

Issue: Is the appropriation valid?

RULING:

No. The appropriation of amount for the construction on a land owned byprivate individual is invalid imposition since it results in the promotion of privateenterprise, it benefits the property of a particular individual. The provision that theland thereafter be donated to the government does not cure this defect. The rule isthat if the public advantage or benefit is merely incidental in the promotion of aparticular enterprise, such defect shall render the law invalid. On the other hand, if what is incidental is the promotion of a private enterprise, the tax law shall bedeemed for public purpose.

9. COCOFED vs. Republic, GR Nos. 177857-58, January 24, 2012

FACTS: In 1971, Republic Act No. 6260 was enacted creating the Coconut Investment Fund (CIF). The source of the CIF was a P0.55 levy on the sale of every 100 kg. of copra. The Philippine Coconut Administration was tasked to collect and administer the Fund. Out of the 0.55 levy, P0.02 was placed at the disposition of the COCOFED, the recognized national association of coconut producers declared by the PCA. Cocofund receipts were ought to be issued to every copra seller. During the Martial Law regime, then President Ferdinand Marcos issued several Presidential Decrees purportedly for the improvement of the coconut industry. The most relevant among these is P.D. No. 755 which permitted the use of the Fund for the acquisition of a commercial bank for the benefit of coconut farmers and the distribution of the shares of the stock of the bank it [PCA] acquired free to the coconut farmers (Sec.2). Thus, the PCA acquired the First United Bank, later renamed the United Coconut Planters Bank (UCPB). The PCA bought the 72.2% of PUBs outstanding capital stock or 137,866 shares at P200 per share (P27, 573,200.00) from Pedro Cojuangco in behalf of the coconut farmers. The rest of the Fund was deposited to the UCPB interest free. Farmers who had paid the CIF and registered their receipts with PCA were given their corresponding UCPB stock certificates. Only 16 million worth of COCOFUND receipts were registered and a large number of the coconut farmers opted to sell all/part of their UCPB shares to private individuals. Simply put, parts of the coconut levy funds went directly or indirectly to various projects and/or was converted into different assets or investments through the years. After the EDSA Revolution, President Corazon Aquino issued Executive Order 1 which created the Presidential Commission on Good Government (PCGG). The PCGG aimed to assist the President in the recovery of ill-gotten wealth accumulated by the Marcoses and their cronies. PCGG was empowered to file cases for sequestration in the Sandiganbayan.

Among the sequestered properties were the shares of stock in the UCPB registered in the name of over a million coconut farmers held in trust by the PCA. The Sandiganbayan allowed the sequestration by ruling in a Partial Summary Judgment that the Coconut Levy Funds are prima facie public funds and that Section 1 and 2 of PD No. 755 (and some other PDs) were unconstitutional. The COCOFED representing the over a million coconut farmers via Petition for review under Rule 45 sought the reversal of the ruling contending among others that the sequestration amounted to taking of private property without just compensatio n and impairment of vested right of ownership.

ISSUE: What is the NATURE of the Coconut Levy Fund?

RULING: The SC ruled in favor of the REPUBLIC. To begin with, the Coconut Levy was imposed in the exercise of the States inherent power of taxation. Indeed, the Coconut Levy Funds partake the nature of TAXES. The Funds were generated by virtue of statutory enactments by the proper legislative authorities and for public purpose. The Funds were collected to advance the government avowed policy of protecting the coconut industry. The SC took judicial notice of the fact that the coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts occupy a leading position among the countries export products. 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.