COCOFED V.

REPUBLIC OF THE PHILIPPINES

G. R. Nos. 177857-58, September 17, 2009

FACTS:
For consideration is the Urgent Motion to Approve the conversion of the SMC Common Shares into SMC
Series 1 Preferred Shares interposed by petitioners Philippine Coconut Producers Federation, Inc.
(COCOFED).

Respondent Republic questioned COCOFED’s personality to seek the Court’s approval of the desired
conversion. Respondent also disputed COCOFED’s rights to impose and prescribe terms and conditions
on the proposed conversion, maintaining that the CIIF SMC common shares are sequestered assets and
are in custodia legis under Presidential Commission on Good Government’s (PCGG’s) administration.
Being in a sequestered status, only PCGG has the authority to approve the said conversion and seek the
necessary Court approval.

These shares of stocks were acquired through the coco levy funds which are prima facie public funds
having been raised through the use of the police and taxing power of the state for the benefit of the
coconut farmers. According to the intervenors, being in the nature of a public fund, the government
should have the right to vote and the conversion from common shares to preferred shares will cause the
loss of voting rights over certain corporate acts. The conversion, on the other hand, is financially
beneficial given that the dividend rate is fixed.

After an in-depth inquiry, thorough study, and judicious evaluation of the pros and cons of the proposed
conversion, the PCGG approved the same.

Intervenors suggest a deferment of any action on the conversion until the CIIF SMC shares ownership
issue is settled.

ISSUES:
Whether or not the court has authority to order the deferment of any action on the conversion.

RULING:

The decision on whether to proceed with the conversion or defer action thereon until final adjudication of
the issue of ownership over the sequestered shares properly pertains to the executive branch, represented
by the PCGG.

Just as it cannot look into the wisdom behind the enactment of a law, the Court cannot question the
wisdom and reasons behind the decision of the executive branch to ask for the conversion of the common
shares to preferred shares. Else, the Court would be trenching on the well-settled doctrine of separation of
powers. The cardinal postulate explains that the three branches must discharge their respective functions
within the limits of authority conferred by the Constitution. Under the principle of separation of powers,
neither Congress, the President, nor the Judiciary may encroach on fields allocated to the other branches
of government. The legislature is generally limited to the enactment of laws, the executive to the
enforcement of laws, and the judiciary to their interpretation and application to cases and controversies.