SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

G.R. No. 180705. November 27, 2012.*

EDUARDO M. COJUANGCO, JR., petitioner, vs.

REPUBLIC OF THE PHILIPPINES, respondent.

Remedial Law; Civil Procedure; Jurisdiction; Subject matter

jurisdiction is conferred by law, not by the consent or acquiescence of
any or all of the parties.―The issue of jurisdiction over the subject
matter of the subdivided amended complaints has peremptorily
been put to rest by the Court in its January 24, 2012 Decision in
COCOFED v. Republic, 663 SCRA 514 (2012). There, the Court,
citing Regalado and settled jurisprudence, stressed the following
interlocking precepts: Subject matter jurisdiction is conferred by
law, not by the consent or acquiescence of any or all of the parties.
In turn, the issue on whether a suit comes within the penumbra of a
statutory conferment is determined by the allegations in the
complaint, regardless of whether or not the suitor will be entitled to
recover upon all or part of the claims asserted.
Statutes; Publication; It is well-settled that laws must be
published to be valid.―It bears to stress at this point that the PCA-
Cojuangco Agreement referred to above in Section 1 of P.D. 755 was
not reproduced or attached as an annex to the same law. And it is
well-settled that laws must be published to be valid. In fact,
publication is an indispensable condition for the effectivity of a law.
Tañada v. Tuvera, 146 SCRA 446 (1986), said as much: Publication
[of the law] is indispensable in every case x x x. x x x x We note at
this point the conclusive presumption that every person knows the
law, which of course presupposes that the law has been published if
the presumption is to have any legal justification at all. It is no less
important to remember that Section 6 of the Bill of Rights
recognizes „the right of the people to information on matters of
public concern,‰ and this certainly applies to, among others, and
indeed especially, the legislative enactments of the government.
x x x x We hold therefore that all statutes, including those of local

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application and private laws, shall be published as a condition for

their effectivity, which shall begin fifteen days after publication
unless a different effectivity

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* EN BANC.

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Cojuangco, Jr. vs. Republic

date is fixed by the legislature. Covered by this rule are presidential

decrees and executive orders promulgated by the President in the
exercise of legislative powers whenever the same are validly
delegated by the legislature, or, at present, directly conferred by the
Constitution. Administrative rules and regulations must also be
published if their purpose is to enforce or implement existing law
pursuant also to a valid delegation.
Same; Same; The publication must be of the full text of the law
since the purpose of publication is to inform the public of the
contents of the law.―The publication, as further held in Tañada,
must be of the full text of the law since the purpose of publication is
to inform the public of the contents of the law. Mere referencing the
number of the presidential decree, its title or whereabouts and its
supposed date of effectivity would not satisfy the publication
requirement. In this case, while it incorporated the PCA-Cojuangco
Agreement by reference, Section 1 of P.D. 755 did not in any way
reproduce the exact terms of the contract in the decree. Neither was
a copy thereof attached to the decree when published. We cannot,
therefore, extend to the said Agreement the status of a law.
Consequently, We join the Sandiganbayan in its holding that the
PCA-Cojuangco Agreement shall be treated as an ordinary
transaction between agreeing minds to be governed by contract law
under the Civil Code.
Civil Law; Contracts; Consideration; Under Article 1354 of the
Civil Code, it is presumed that consideration exists and is lawful
unless the debtor proves the contrary.―The assumption that ample
consideration is present in a contract is further elucidated in

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Pentacapital Investment Corporation v. Mahinay, 623 SCRA 284

(2010): Under Article 1354 of the Civil Code, it is presumed
that consideration exists and is lawful unless the debtor
proves the contrary. Moreover, under Section 3, Rule 131 of
the Rules of Court, the following are disputable
presumptions: (1) private transactions have been fair and regular;
(2) the ordinary course of business has been followed; and (3) there
was sufficient consideration for a contract. A presumption
may operate against an adversary who has not introduced proof to
rebut it. The effect of a legal presumption upon a burden of proof is
to create the necessity of presenting evidence to meet the legal
presumption or the prima facie case created thereby, and which, if
no proof to the contrary is presented and offered, will prevail. The
burden of proof remains where

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it is, but by the presumption, the one who has that burden is
relieved for the time being from introducing evidence in support of
the averment, because the presumption stands in the place of
evidence unless rebutted. (Emphasis supplied.)
Same; Same; Same; Inadequacy of consideration does not
vitiate a contract unless it is proven that there was fraud, mistake or
undue influence.―Inadequacy of the consideration, however, does
not render a contract void under Article 1355 of the Civil Code: Art.
1355. Except in cases specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless there has been
fraud, mistake or undue influence. (Emphasis supplied.) Alsua-
Betts v. Court of Appeals, 92 SCRA 332 (1979), is instructive that
lack of ample consideration does not nullify the contract:
Inadequacy of consideration does not vitiate a contract
unless it is proven which in the case at bar was not, that
there was fraud, mistake or undue influence. (Article 1355,
New Civil Code). We do not find the stipulated price as so
inadequate to shock the courtÊs conscience, considering that the
price paid was much higher than the assessed value of the subject
properties and considering that the sales were effected by a father

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to her daughter in which case filial love must be taken into account.
(Emphasis supplied.)
Same; Same; A government agency, like the Philippine Coconut
Authority (PCA), stoops down to level of an ordinary citizen when it
enters into a private transaction with private individuals.―A
government agency, like the PCA, stoops down to level of an
ordinary citizen when it enters into a private transaction with
private individuals. In this setting, PCA is bound by the law on
contracts and is bound to comply with the terms of the PCA-
Cojuangco Agreement which is the law between the parties. With
the silence of PCA not to challenge the validity of the PCA-
Cojuangco Agreement and the inability of government to
demonstrate the lack of ample consideration in the transaction, the
Court is left with no other choice but to uphold the validity of said
agreements.
Coconut Levy Funds; Any property acquired by means of the
coconut levy funds, such as the subject United Coconut Planters
Bank (UCPB) shares, should be treated as public funds or public
property, subject to the burdens and restrictions attached by law to
such property.―Any property acquired by means of the coconut levy
funds,

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Cojuangco, Jr. vs. Republic

such as the subject UCPB shares, should be treated as public funds

or public property, subject to the burdens and restrictions attached
by law to such property. COCOFED v. Republic, 663 SCRA 514
(2012), delved into such limitations, thusly: We have ruled time
and again that taxes are imposed only for a public purpose.
„They cannot be used for purely private purposes or for the
exclusive benefit of private persons.‰ When a law imposes
taxes or levies from the public, with the intent to give undue
benefit or advantage to private persons, or the promotion of
private enterprises, that law cannot be said to satisfy the
requirement of public purpose.
Same; Taxation; As the coconut levy funds partake of the nature
of taxes and can only be used for public purpose, and importantly,

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for the purpose for which it was exacted, i.e., the development,
rehabilitation and stabilization of the coconut industry, they cannot
be used to benefit―whether directly or indirectly―private
individuals, be it by way of a commission, or as the subject
Agreement interestingly words it, compensation.―As the coconut
levy funds partake of the nature of taxes and can only be used for
public purpose, and importantly, for the purpose for which it was
exacted, i.e., the development, rehabilitation and stabilization of the
coconut industry, they cannot be used to benefit―whether directly
or indirectly―private individuals, be it by way of a commission, or
as the subject Agreement interestingly words it, compensation.
Consequently, Cojuangco cannot stand to benefit by receiving, in his
private capacity, 7.22% of the FUB shares without violating the
constitutional caveat that public funds can only be used for public
purpose. Accordingly, the 7.22% FUB (UCPB) shares that were
given to Cojuangco shall be returned to the Government, to be used
„only for the benefit of all coconut farmers and for the development
of the coconut industry.‰

PETITION for review on certiorari of the partial summary

decision and resolution of the Sandiganbayan.
The facts are stated in the opinion of the Court.
Estelito P. Mendoza and Hyacinth E. Rafael for
petitioner Eduardo M. Cojuangco, Jr. in G.R. No. 180705.

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Cojuangco, Jr. vs. Republic

Angara, Abello, Concepcion, Regala and Cruz for

COCOFED, et al.
The Solicitor General for respondent.
Cesar G. David and Francisco B.A. Saavedra for
UCPB.
Sycip, Salazar, Hernandez & Gatmaitan for San Miguel
Corporation.

VELASCO, JR., J.:

The Case

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Of the several coconut levy appealed cases that stemmed

from certain issuances of the Sandiganbayan in its Civil
Case No. 0033, the present recourse proves to be one of the
most difficult.
In particular, the instant petition for review under Rule
45 of the Rules of Court assails and seeks to annul a
portion of the Partial Summary Judgment dated July 11,
2003, as affirmed in a Resolution of December 28, 2004,
both rendered by the Sandiganbayan in its Civil Case
(„CC‰) No. 0033-A (the judgment shall hereinafter be
referred to as „PSJ-A‰), entitled „Republic of the
Philippines, Plaintiff, v. Eduardo M. Cojuangco, Jr., et al.,
Defendants, COCOFED, et al., BALLARES, et al., Class
Action Movants.‰ CC No. 0033-A is the result of the
splitting into eight (8) amended complaints of CC No. 0033
entitled, „Republic of the Philippines v. Eduardo
Cojuangco, Jr., et al.,‰ a suit for recovery of ill-gotten
wealth commenced by the Presidential Commission on
Good Government („PCGG‰), for the Republic of the
Philippines („Republic‰), against Eduardo M. Cojuangco, Jr.
(„Cojuangco‰) and several individuals, among them,
Ferdinand E. Marcos, Maria Clara Lobregat („Lobregat‰),
and Danilo S. Ursua („Ursua‰). Each of the eight (8)
subdivided complaints, CC No. 0033-A to CC No. 0033-H,
correspondingly impleaded as defendants

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only the alleged participants in the transaction/s subject of

the suit, or who are averred as owner/s of the assets
involved.
Apart from this recourse, We clarify right off that PSJ-A
was challenged in two other separate but consolidated
petitions for review, one commenced by COCOFED et al.,
docketed as G.R. Nos. 177857-58, and the other, interposed
by Danilo S. Ursua, and docketed as G.R. No. 178193.
By Decision dated January 24, 2012, in the aforesaid
G.R. Nos. 177857-58 (COCOFED et al. v. Republic) and
G.R. No. 178193 (Ursua v. Republic) consolidated cases1

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(hereinafter collectively referred to as „COCOFED v.

Republic‰), the Court addressed and resolved all key
matters elevated to it in relation to PSJ-A, except for the
issues raised in the instant petition which have not yet
been resolved therein. In the same decision, We made clear
that: (1) PSJ-A is subject of another petition for review
interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705,
entitled Eduardo M. Cojuangco, Jr. v. Republic of the
Philippines, which shall be decided separately by the
Court,2 and (2) the issues raised in the instant petition
should not be affected by the earlier decision „save for
determinatively legal issues directly addressed [t]herein.‰3
For a better perspective, the instant recourse seeks to
reverse the Partial Summary Judgment4 of the anti-graft
court dated July 11, 2003, as reiterated in a Resolution5 of
December 28, 2004, denying COCOFEDÊs motion for
reconsideration, and the May 11, 2007 Resolution6 denying
COCOFEDÊs mo-

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1 G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA 514.
2 Id.
3 Id.
4 Penned by Associate Justice Teresita Leonardo-De Castro (now a
member of this Court), concurred in by Associate Justices Diosdado M.
Peralta (now also a member of this Court) and Francisco H. Villaruz, Jr.;
Rollo, pp. 179-261.
5 Rollo, pp. 361-400.
6 Id., at pp. 1043-53.

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Cojuangco, Jr. vs. Republic

tion to set case for trial and declaring the partial summary
judgment final and appealable, all issued in PSJ-A. In our
adverted January 24, 2012 Decision in COCOFED v.
Republic, we affirmed with modification PSJ-A of the
Sandiganbayan, and its Partial Summary Judgment in
Civil Case No. 0033-F, dated May 7, 2004 (hereinafter

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referred to as „PSJ-FÊ).7

_______________
7 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.
The dispositive portion of the Our modificatory decision reads:
WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are
hereby DENIED. The Partial Summary Judgment dated July 11, 2003
in Civil Case No. 0033-A as reiterated with modification in Resolution
dated June 5, 2007, as well as the Partial Summary Judgment dated
May 7, 2004 in Civil Case No. 0033-F, which was effectively amended in
Resolution dated May 11, 2007, are AFFIRMED with
MODIFICATION, only with respect to those issues subject of the
petitions in G.R. Nos. 177857-58 and 178193. However, the issues raised
in G.R. No. 180705 in relation to Partial Summary Judgment dated July
11, 2003 and Resolution dated June 5, 2007 in Civil Case No. 0033-A,
shall be decided by this Court in a separate decision.
The Partial Summary Judgment in Civil Case No. 0033-A dated July
11, 2003, is hereby MODIFIED, and shall read as follows:
WHEREFORE, in view of the foregoing, We rule as follows:
SUMMARY OF THE COURTÊS RULING.
A. Re: CLASS ACTION MOTION FOR A SEPARATE
SUMMARY JUDGMENT dated April 11, 2001 filed by Defendant
Maria Clara L. Lobregat, COCOFED, et al., and Ballares, et al.
The Class Action Motion for Separate Summary Judgment
dated April 11, 2001 filed by defendant Maria Clara L. Lobregat,
COCOFED, et al. and Ballares, et al., is hereby DENIED for lack
of merit.

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More specifically, We upheld the SandiganbayanÊs ruling

thatA the coconut levy funds are special public funds of the

_______________
B. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
COCOFED, ET AL. AND BALLARES, ET AL.) dated April 22, 2002 filed
by Plaintiff.

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1. a. The portion of Section 1 of P.D. No. 755, which

reads:
⁄and that the Philippine Coconut Authority is hereby
authorized to distribute, for free, the shares of stock of the
bank it acquired to the coconut farmers under such rules
and regulations it may promulgate.
taken in relation to Section 2 of the same P.D., is
unconstitutional: (i) for having allowed the use of the CCSF
to benefit directly private interest by the outright and
unconditional grant of absolute ownership of the
FUB/UCPB shares paid for by PCA entirely with the CCSF
to the undefined „coconut farmers‰, which negated or
circumvented the national policy or public purpose declared
by P.D. No. 755 to accelerate the growth and development of
the coconut industry and achieve its vertical integration;
and (ii) for having unduly delegated legislative power to the
PCA.
b. The implementing regulations issued by PCA, namely,
Administrative Order No. 1, Series of 1975 and Resolution
No. 074-78 are likewise invalid for their failure to see to it
that the distribution of shares serve exclusively or at least
primarily or directly the aforementioned public purpose or
national policy declared by P.D. No. 755.
2.  Section 2 of P.D. No. 755 which mandated that the coconut
levy funds shall not be considered special and/or fiduciary funds
nor part of the general funds of the national government and
similar provisions of Sec. 5, Art. III, P.D. No. 961 and Sec. 5, Art.
III, P.D. No. 1468 contravene the provisions of the Constitution,
particularly, Art. IX (D), Sec. 2; and Article VI, Sec. 29 (3).
3. Lobregat, COCOFED, et al. and Ballares, et al. have not
legally and validly obtained title of ownership over the subject
UCPB shares by virtue of P.D. No. 755, the Agreement dated May
25, 1975 between the PCA and de-

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Cojuangco, Jr. vs. Republic

Government. Consequently, We affirmed the

SandiganbayanÊs declaration that Sections 1 and 2 of
Presidential Decree

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fendant Cojuangco, and PCA implementing rules, namely, Adm.
Order No. 1, s. 1975 and Resolution No. 074-78.
4. The so-called „FarmersÊ UCPB shares‰ covered by 64.98% of
the UCPB shares of stock, which formed part of the 72.2% of the
shares of stock of the former FUB and now of the UCPB, the
entire consideration of which was charged by PCA to the CCSF,
are hereby declared conclusively owned by, the Plaintiff Republic
of the Philippines.
⁄    ⁄    ⁄
SO ORDERED.
The Partial Summary Judgment in Civil Case No. 0033-F dated May
7, 2004, is hereby MODIFIED, and shall read as follows:
WHEREFORE, the MOTION FOR EXECUTION OF
PARTIAL SUMMARY JUDGMENT (RE: CIIF BLOCK OF
SMC SHARES OF STOCK) dated August 8, 2005 of the plaintiff
is hereby denied for lack of merit. However, this Court orders the
severance of this particular claim of Plaintiff. The Partial
Summary Judgment dated May 7, 2004 is now considered a
separate final and appealable judgment with respect to the said
CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7, 2004 is
modified by deleting the last paragraph of the dispositive portion,
which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants
CIIF Companies, 14 Holding Companies and Cocofed, et al.) filed
by Plaintiff is hereby GRANTED. ACCORDINGLY, THE CIIF
COMPANIES, NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL),

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(„P.D.‰) 755, Section 3, Article III of P.D. 961 and Section 3,

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AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors; Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION
(SMC) SHARES OF STOCK TOTALING 33,133,266 SHARES AS OF
1983 TOGETHER WITH ALL DIVIDENDS DECLARED, PAID AND
ISSUED THEREON AS WELL AS ANY INCREMENTS THERETO
ARISING FROM, BUT NOT LIMITED TO, EXERCISE OF PRE-
EMPTIVE RIGHTS ARE DECLARED OWNED BY THE
GOVERNMENT TO BE USED ONLY FOR THE BENEFIT OF ALL
COCONUT FARMERS AND FOR THE DEVELOPMENT OF THE
COCONUT INDUSTRY, AND ORDERED RECONVEYED TO THE
GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE
SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-A
AND ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT THERE
IS NO MORE NECESSITY OF FURTHER TRIAL WITH RESPECT
TO THE ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED
UCPB SHARES, (2) THE CIIF BLOCK OF SMC SHARES, AND (3)
THE CIIF COMPANIES. AS THEY HAVE FINALLY BEEN
ADJUDICATED IN THE AFOREMENTIONED PARTIAL
SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY 7, 2004.
SO ORDERED.
⁄. (Emphasis and underlining in the original)

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482 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

Article III of P.D. 1468, as well as the pertinent

implementing regulations of the Philippine Coconut
Authority („PCA‰), are unconstitutional for allowing the
use and/or the distribution of properties acquired through
the coconut levy funds to private individuals for their own
direct benefit and absolute ownership. The Decision also
affirmed the GovernmentÊs ownership of the six CIIF
companies, the fourteen holding companies, and the CIIF
block of San Miguel Corporation shares of stock, for having
likewise been acquired using the coconut levy funds.
Accordingly, the properties subject of the January 24, 2012
Decision were declared owned by and ordered reconveyed
to the Government, to be used only for the benefit of all
coconut farmers and for the development of the coconut
industry.
By Resolution of September 4, 2012,8 the Court affirmed
the abovestated Decision promulgated on January 24,
2012.
It bears to stress at this juncture that the only portion of
the appealed Partial Summary Judgment dated July 11,
2003 („PSJ-A‰) which remains at issue revolves around the
following decretal holdings of that court relating to the
„compensation‰ paid to petitioner for exercising his
personal and exclusive option to acquire the FUB/UCPB
shares.9 It will be recalled that the Sandiganbayan
declared the Agreement between the PCA and Cojuangco
containing the assailed „compensation‰ null and void for
not having the required valuable consideration.
Consequently, the UCPB shares of stocks that are subject
of the Agreement were declared conclusively owned by the
Government. It also held that the Agreement did not have
the effect of law as it was not published as part of P.D. 755,
even if Section 1 thereof made reference to the same.

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8 Resolution, COCOFED v. Republic, G.R. Nos. 177857-58 & 178193,
September 4, 2012, 679 SCRA 604.
9 Rollo, pp. 259-260.

483

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Facts
We reproduce, below, portions of the statement of facts
in COCOFED v. Republic relevant to the present case:10

In 1971, Republic Act No. („R.A.‰) 6260 was enacted creating

the Coconut Investment Company („CIC‰) to administer the
Coconut Investment Fund („CIF‰), which, under Section 8
thereof, was to be sourced from a PhP 0.55 levy on the sale of every
100 kg. of copra. Of the PhP 0.55 levy of which the copra seller
was―or ought to be―issued COCOFUND receipts, PhP 0.02 was
placed at the disposition of COCOFED, the national association of
coconut producers declared by the Philippine Coconut
Administration („PHILCOA‰ now „PCA‰) as having the largest
membership.
The declaration of martial law in September 1972 saw the
issuance of several presidential decrees („P.D.‰) purportedly
designed to improve the coconut industry through the collection and
use of the coconut levy fund. While coming generally from
impositions on the first sale of copra, the coconut levy fund came
under various names x x x. Charged with the duty of collecting and
administering the Fund was PCA. Like COCOFED with which it
had a legal linkage, the PCA, by statutory provisions scattered in
different coco levy decrees, had its share of the coco levy.
The following were some of the issuances on the coco levy, its
collection and utilization, how the proceeds of the levy will be
managed and by whom and the purpose it was supposed to serve:
1. P.D. No. 276 established the Coconut Consumers Stabilization
Fund („CCSF‰) and declared the proceeds of the CCSF levy as trust
fund, to be utilized to subsidize the sale of coconut-based products,
thus stabilizing the price of edible oil.
2. P.D. No. 582 created the Coconut Industry Development Fund
(„CIDF‰) to finance the operation of a hybrid coconut seed farm.
3. Then came P.D. No. 755 providing under its Section 1 the
following:

_______________
10 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514.

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484

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Cojuangco, Jr. vs. Republic

It is hereby declared that the policy of the State is to provide

readily available credit facilities to the coconut farmers at
preferential rates; that this policy can be expeditiously and
efficiently realized by the implementation of the „Agreement for the
Acquisition of a Commercial Bank for the benefit of Coconut
Farmers‰ executed by the [PCA]⁄; and that the [PCA] is hereby
authorized to distribute, for free, the shares of stock of the bank it
acquired to the coconut farmers⁄.
Towards achieving the policy thus declared, P.D. No. 755, under
its Section 2, authorized PCA to utilize the CCSF and the CIDF
collections to acquire a commercial bank and deposit the CCSF
levy collections in said bank interest free, the deposit
withdrawable only when the bank has attained a certain level of
sufficiency in its equity capital. The same section also decreed that
all levies PCA is authorized to collect shall not be considered as
special and/or fiduciary funds or form part of the general funds of
the government within the contemplation of P.D. No. 711.
4. P.D. No. 961 codified the various laws relating to the
development of coconut/palm oil industries.
5. The relevant provisions of P.D. No. 961, as later amended by
P.D. No. 1468 (Revised Coconut Industry Code), read:
ARTICLE III
Levies
Section  1. Coconut Consumers Stabilization Fund
Levy.―The [PCA] is hereby empowered to impose and collect
⁄ the Coconut Consumers Stabilization Fund Levy, ⁄.
⁄.
Section  5. Exemption.―The [CCSF] and the [CIDF] as
well as all disbursements as herein authorized, shall not be
construed ⁄ as special and/or fiduciary funds, or as part
of the general funds of the national government within the
contemplation of PD 711; ⁄ the intention being that said
Fund and the disbursements thereof as herein
authorized for the benefit of the coconut farmers shall
be owned by them in their private capacities: ⁄.
(Emphasis supplied)
6. Letter of Instructions No. („LOI‰) 926, s. of 1979, made

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reference to the creation, out of other coco levy funds, of the

Coconut

485

VOL. 686, NOVEMBER 27, 2012 485

Cojuangco, Jr. vs. Republic

Industry Investment Fund („CIIF‰) in P.D. No. 1468 and entrusted

a portion of the CIIF levy to UCPB for investment, on behalf of
coconut farmers, in oil mills and other private corporations, with
the following equity ownership structure:
Section 2. Organization of the Cooperative Endeavor.―The
[UCPB], in its capacity as the investment arm of the coconut
farmers thru the [CIIF] ⁄ is hereby directed to invest, on
behalf of the coconut farmers, such portion of the CIIF ⁄ in
private corporations ⁄ under the following guidelines:
a) The coconut farmers shall own or control at least ⁄
(50%) of the outstanding voting capital stock of the private
corporation [acquired] thru the CIIF and/or corporation
owned or controlled by the farmers thru the CIIF ⁄. (Words
in bracket added.)
Through the years, a part of the coconut levy funds went directly
or indirectly to [finance] various projects and/or was converted into
various assets or investments.11 Relevant to the present petition is
the acquisition of the First United Bank („FUB‰), which was
subsequently renamed as United Coconut Planters Bank
(„UCPB‰).12
Apropos the intended acquisition of a commercial bank for the
purpose stated earlier, it would appear that FUB was the bank of
choice which Pedro CojuangcoÊs group (collectively, „Pedro
Cojuangco‰) had control of. The plan, then, was for PCA to buy all of
Pedro CojuangcoÊs shares in FUB. However, as later events
unfolded, a simple direct sale from the seller (Pedro) to PCA did not
ensue as it was made to appear that Cojuangco had the exclusive
option to acquire the formerÊs FUB controlling interests. Emerging
from this elaborate, circuitous arrangement were two deeds. The
first one was simply denominated as Agreement, dated May 1975,
entered into by and between Cojuangco for and in his behalf and in
behalf of „certain other buyers‰, and Pedro Cojuangco in which the
former was purportedly accorded the option to buy 72.2% of FUBÊs
outstanding capital stock, or 137,866 shares (the „option shares,‰ for

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brevity), at PhP 200 per share. On its face, this agreement does not
mention the word „option.‰

_______________
11 Id.; citing Republic v. Sandiganbayan, G.R. No. 118661, January 22,
2007, 512 SCRA 25.
12 Id.

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486 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

The second but related contract, dated May 25, 1975, was
denominated as Agreement for the Acquisition of a Commercial
Bank for the Benefit of the Coconut Farmers of the Philippines. It
had PCA, for itself and for the benefit of the coconut farmers,
purchase from Cojuangco the shares of stock subject of the First
Agreement for PhP200.00 per share. As additional consideration for
PCAÊs buy-out of what Cojuangco would later claim to be his
exclusive and personal option, it was stipulated that, from PCA,
Cojuangco shall receive equity in FUB amounting to 10%, or 7.22%,
of the 72.2%, or fully paid shares. And so as not to dilute
CojuangcoÊs equity position in FUB, later UCPB, the PCA agreed
under paragraph 6 (b) of the second agreement to cede over to the
former a number of fully paid FUB shares out of the shares it (PCA)
undertakes to eventually subscribe. It was further stipulated that
Cojuangco would act as bank president for an extendible period of 5
years.
Apart from the aforementioned 72.2%, PCA purchased from
other FUB shareholders 6,534 shares [of which Cojuangco, as may
be gathered from the records, got 10%.].
While the 64.98% portion of the option shares (72.2% – 7.22% =
64.98%) ostensibly pertained to the farmers, the corresponding
stock certificates supposedly representing the farmersÊ equity were
in the name of and delivered to PCA. There were, however, shares
forming part of the aforesaid 64.98% portion, which ended up in the
hands of non-farmers. The remaining 27.8% of the FUB capital
stock were not covered by any of the agreements.
Under paragraph #8 of the second agreement, PCA agreed to
expeditiously distribute the FUB shares purchased to such „coconut
farmers holding registered COCOFUND receipts‰ on equitable basis.

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

As found by the Sandiganbayan, the PCA appropriated, out of its

own fund, an amount for the purchase of the said 72.2% equity,
albeit it would later reimburse itself from the coconut levy
fund.

And per CojuangcoÊs own admission, PCA paid, out of

the CCSF, the entire acquisition price for the 72.2% option
shares.13

_______________
13 Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001,
372 SCRA 462, 477.

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Cojuangco, Jr. vs. Republic

As of June 30, 1975, the list of FUB stockholders

included Cojuangco with 14,440 shares and PCA with
129,955 shares.14 It would appear later that, pursuant to
the stipulation on maintaining CojuangcoÊs equity position
in the bank, PCA would cede to him 10% of its
subscriptions to (a) the authorized but unissued shares of
FUB and (b) the increase in FUBÊs capital stock (the
equivalent of 158,840 and 649,800 shares, respectively). In
all, from the „mother‰ PCA shares, Cojuangco would
receive a total of 95,304 FUB (UCPB) shares broken down
as follows: 14,440 shares + 10% (158,840 shares) + 10%
(649,800 shares) = 95,304.15
We further quote, from COCOFED v. Republic, facts
relevant to the instant case:16

Shortly after the execution of the PCA―Cojuangco Agreement,

President Marcos issued, on July 29, 1975, P.D. No. 755 directing x x x as
narrated, PCA to use the CCSF and CIDF to acquire a commercial bank
to provide coco farmers with „readily available credit facilities at
preferential rate‰ x x x.
Then came the 1986 EDSA event. One of the priorities of then
President Corazon C. AquinoÊs revolutionary government was the
recovery of ill-gotten wealth reportedly amassed by the Marcos family
and close relatives, their nominees and associates. Apropos thereto, she

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

issued Executive Order Nos. (EO) 1, 2 and 14, as amended by E.O. 14-A,
all series of 1986. E.O. 1 created the PCGG and provided it with the tools
and processes it may avail of in the recovery efforts;17 E.O. No. 2
asserted that the ill-gotten assets and properties come in the form of
shares of stocks, etc., while E.O. No. 14 conferred on the Sandiganbayan
exclusive and original jurisdic-

_______________
14 Republic v. Sandiganbayan, G.R. No. 118661, January 22, 2007,
512 SCRA 25.
15 Rollo, p. 263.
16 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.
17 The validity and propriety of these processes were sustained by the
Court in BASECO v. PCGG, No. L-75885, May 27, 1987, 150 SCRA 181.

488

488 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

tion over ill-gotten wealth cases, with the proviso that „technical rules of
procedure and evidence shall not be applied strictly‰ to the civil cases
filed under the EO. Pursuant to these issuances, the PCGG issued
numerous orders of sequestration, among which were those handed out
x x x against shares of stock in UCPB purportedly owned by or registered
in the names of (a) the more than a million coconut farmers, (b) the CIIF
companies and (c) Cojuangco, Jr., including the SMC shares held by the
CIIF companies. On July 31, 1987, the PCGG instituted before the
Sandiganbayan a recovery suit docketed thereat as CC No. 0033.
xxxx
3. Civil Case 0033 x x x would be subdivided into eight complaints,
docketed as CC 0033-A to CC 0033-H.
xxxx
5. By Decision of December 14, 2001, in G.R. Nos. 147062-64
(Republic v. COCOFED),18 the Court declared the coco levy funds as
prima facie public funds. And purchased as the sequestered UCPB
shares were by such funds, beneficial ownership thereon and the
corollary voting rights prima facie pertain, according to the Court, to the
government.
xxxx

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

Correlatively, the Republic, on the strength of the December 14, 2001

ruling in Republic v. COCOFED and on the argument, among others,
that the claim of COCOFED and Ballares et al., over the subject UCPB
shares is based solely on the supposed COCOFUND receipts issued for
payment of the RA 6260 CIF levy, filed a Motion for Partial Summary
Judgment [RE: COCOFED, et al. and Ballares, et al.] dated April 22,
2002, praying that a summary judgment be rendered declaring:
a. That Section 2 of [PD] 755, Section 5, Article III of P.D. 961 and
Section 5, Article III of P.D. No. 1468 are unconstitutional;
b. That x x x (CIF) payments under x x x (R.A.) No. 6260 are not valid
and legal bases for ownership claims over UCPB shares; and

_______________
18 Reported in 372 SCRA 462 (2001).

489

VOL. 686, NOVEMBER 27, 2012 489

Cojuangco, Jr. vs. Republic

c. That COCOFED, et al., and Ballares, et al. have not legally and
validly obtained title over the subject UCPB shares.

Right after it filed the Motion for Partial Summary

Judgment [RE: COCOFED, et al. and Ballares, et al., the
Republic interposed a Motion for Partial Summary
Judgment [Re: Eduardo M. Cojuangco, Jr.], praying that a
summary judgment be rendered:
a. Declaring that Section 1 of P.D. No. 755 is unconstitutional insofar as
it validates the provisions in the „[PCA-Cojuangco] Agreement
x x x‰ dated May 25, 1975 providing payment of ten percent (10%)
commission to defendant Cojuangco with respect to the [FUB], now
[UCPB] shares subject matter thereof;
b. Declaring that x x x Cojuangco, Jr. and his fronts, nominees and
dummies, including x x x and Danilo S. Ursua, have not legally and
validly obtained title over the subject UCPB shares; and
c. Declaring that the government is the lawful and true owner of the
subject UCPB shares registered in the names of ⁄ Cojuangco, Jr.
and the entities and persons above-enumerated, for the benefit of
all coconut farmers. x x x

Following an exchange of pleadings, the Republic filed

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

its surrejoinder praying that it be conclusively declared the

true and absolute owner of the coconut levy funds and the
UCPB shares acquired therefrom.19 We quote from
COCOFED v. Republic:20

A joint hearing on the separate motions for summary judgment

to determine what material facts exist with or without controversy

_______________
19 Rollo (G.R. Nos. 177857-58), pp. 830-871.
20 G.R. Nos. 177857-58 & 178193, January 24, 2012, 663 SCRA 514.

490

490 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

then ensued. By Order of March 11, 2003, the Sandiganbayan

detailed, based on this CourtÊs ruling in related ill-gotten cases, the
partiesÊ manifestations made in open court and the pleadings and
evidence on record, the facts it found to be without substantial
controversy, together with the admissions and/or extent of the
admission made by the parties respecting relevant facts, as follows:
As culled from the exhaustive discussions and manifestations
of the parties in open court of their respective pleadings and
evidence on record, the facts which exist without any
substantial controversy are set forth hereunder, together with
the admissions and/or the extent or scope of the admissions
made by the parties relating to the relevant facts:
1.  The late President Ferdinand E. Marcos was President
x x x for two terms under the 1935 Constitution and, during
the second term, he declared Martial Law through
Proclamation No. 1081 dated September 21, 1972.
2. On January 17, 1973, [he] issued Proclamation No. 1102
announcing the ratification of the 1973 Constitution.
3.  From January 17, 1973 to April 7, 1981, [he] x x x
exercised the powers and prerogative of President under the
1935 Constitution and the powers and prerogative of
President x x x the 1973 Constitution.
[He] x x x promulgated various [P.D.s], among which were
P.D. No. 232, P.D. No. 276, P.D. No. 414, P.D. No. 755, P.D.
No. 961 and P.D. No. 1468.

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

4.  On April 17, 1981, amendments to the 1973 Constitution

were effected and, on June 30, 1981, [he], after being elected
President, „reassumed the title and exercised the powers of
the President until 25 February 1986.‰
5. Defendants Maria Clara Lobregat and Jose R. Eleazar, Jr.
were [PCA] Directors x x x during the period 1970 to 1986
x x x.
6.  Plaintiff admits the existence of the following agreements
which are attached as Annexes „A‰ and „B‰ to the Opposition
dated October 10, 2002 of defendant Eduardo M. Cojuangco,
Jr. to the above-cited Motion for Partial Summary Judgment:

491

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Cojuangco, Jr. vs. Republic

a) „This Agreement made and entered into this ______ day of

May, 1975 at Makati, Rizal, Philippines, by and between:
PEDRO COJUANGCO, Filipino, of legal age and with
residence at 1575 Princeton St., Mandaluyong, Rizal, for and
in his own behalf and in behalf of certain other stockholders
of First United Bank listed in Annex „A‰ attached hereto
(hereinafter collectively called the SELLERS);
– and –
EDUARDO COJUANGCO, JR., Filipino, of legal age and
with residence at 136 9th Street corner Balete Drive, Quezon
City, represented in this act by his duly authorized attorney-
in-fact, EDGARDO J. ANGARA, for and in his own behalf
and in behalf of certain other buyers, (hereinafter collectively
called the BUYERS)‰;
WITNESSETH: That
WHEREAS, the SELLERS own of record and beneficially a
total of 137,866 shares of stock, with a par value of P100.00
each, of the common stock of the First United Bank (the
„Bank‰), a commercial banking corporation existing under the
laws of the Philippines;
WHEREAS, the BUYERS desire to purchase, and the
SELLERS are willing to sell, the aforementioned shares of
stock totaling 137,866 shares (hereinafter called the
„Contract Shares‰) owned by the SELLERS due to their
special relationship to EDUARDO COJUANGCO, JR.;

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

NOW, THEREFORE, for and in consideration of the

premises and the mutual covenants herein contained, the
parties agree as follows:
1. Sale and Purchase of Contract Shares
Subject to the terms and conditions of this Agreement, the
SELLERS hereby sell, assign, transfer and convey unto the
BUYERS, and the BUYERS hereby purchase and acquire, the
Contract Shares free and clear of all liens and encumbrances
thereon.
2. Contract Price
The purchase price per share of the Contract Shares
payable by the BUYERS is P200.00 or an aggregate price of
P27,573,200.00 (the „Contract Price‰).

492

492 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

3. Delivery of, and payment for, stock certificates

Upon the execution of this Agreement, (i) the
SELLERS shall deliver to the BUYERS the stock
certificates representing the Contract Shares, free and
clear of all liens, encumbrances, obligations, liabilities
and other burdens in favor of the Bank or third
parties, duly endorsed in blank or with stock powers
sufficient to transfer the shares to bearer; and (ii)
BUYERS shall deliver to the SELLERS P27,511,295.50
representing the Contract Price less the amount of
stock transfer taxes payable by the SELLERS, which
the BUYERS undertake to remit to the appropriate
authorities. (Emphasis added.)
4. Representation and Warranties of Sellers
The SELLERS respectively and independently of each
other represent and warrant that:
(a)  The SELLERS are the lawful owners of, with good
marketable title to, the Contract Shares and that (i) the
certificates to be delivered pursuant thereto have been validly
issued and are fully paid and non-assessable; (ii) the Contract
Shares are free and clear of all liens, encumbrances,
obligations, liabilities and other burdens in favor of the Bank
or third parties x x x.

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

This representation shall survive the execution and

delivery of this Agreement and the consummation or transfer
hereby contemplated.
(b)  The execution, delivery and performance of this
Agreement by the SELLERS does not conflict with or
constitute any breach of any provision in any agreement to
which they are a party or by which they may be bound.
(c) They have complied with the condition set forth in
Article X of the Amended Articles of Incorporation of the
Bank.
5. Representation of BUYERS
xxxx
6. Implementation
The parties hereto hereby agree to execute or cause to be
executed such documents and instruments as may be
required in order to carry out the intent and purpose of this
Agreement.
7. Notices
xxxx

493

VOL. 686, NOVEMBER 27, 2012 493

Cojuangco, Jr. vs. Republic

IN WITNESS WHEREOF, the parties hereto have hereunto

set their hands at the place and on the date first above
written.

PEDRO COJUANGCO EDUARDO

COJUANGCO, JR.
(on his own behalf and in behalf of the (on his own behalf and in
other Sellers listed in Annex „A‰ behalf of the other
hereof) Buyers)
(SELLERS) (BUYERS)

By:

EDGARDO J. ANGARA
Attorney-in-Fact

xxxx
b) ‰Agreement for the Acquisition of a Commercial Bank for
the Benefit of the Coconut Farmers of the Philippines, made

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

and entered into this 25th day of May 1975 at Makati, Rizal,
Philippines, by and between:
EDUARDO M. COJUANGCO, JR., Filipino, of legal age,
with business address at 10th Floor, Sikatuna Building, Ayala
Avenue, Makati, Rizal, hereinafter referred to as the
SELLER;
– and –
PHILIPPINE COCONUT AUTHORITY, a public
corporation created by Presidential Decree No. 232, as
amended, for itself and for the benefit of the coconut farmers
of the Philippines, (hereinafter called the BUYER)‰
WITNESSETH: That
WHEREAS, on May 17, 1975, the Philippine Coconut
Producers Federation („PCPF‰), through its Board of
Directors, expressed the desire of the coconut farmers to own
a commercial bank which will be an effective instrument to
solve the perennial credit problems and, for that purpose,
passed a resolution requesting the PCA to negotiate with the
SELLER for the transfer to the coconut farmers of the
SELLERÊs option to buy the First United Bank (the „Bank‰)
under such terms and conditions as BUYER may deem to be
in the best interest of the coconut farmers and instructed
Mrs. Maria Clara Lobregat to convey such request to the
BUYER;
WHEREAS, the PCPF further instructed Mrs. Maria
Clara Lobregat to make representations with the BUYER to
utilize its funds to finance the purchase of the Bank;

494

494 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

WHEREAS, the SELLER has the exclusive and personal

option to buy 144,400 shares (the „Option Shares‰) of the
Bank, constituting 72.2% of the present outstanding shares of
stock of the Bank, at the price of P200.00 per share, which
option only the SELLER can validly exercise;
WHEREAS, in response to the representations made by
the coconut farmers, the BUYER has requested the SELLER
to exercise his personal option for the benefit of the coconut
farmers;

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

WHEREAS, the SELLER is willing to transfer the Option

Shares to the BUYER at a price equal to his option price of
P200 per share;
WHEREAS, recognizing that ownership by the coconut
farmers of a commercial bank is a permanent solution to their
perennial credit problems, that it will accelerate the growth
and development of the coconut industry and that the policy
of the state which the BUYER is required to implement is to
achieve vertical integration thereof so that coconut farmers
will become participants in, and beneficiaries of the
development and growth of the coconut industry, the BUYER
approved the request of PCPF that it acquire a commercial
bank to be owned by the coconut farmers and, appropriated,
for that purpose, the sum of P150 Million to enable the
farmers to buy the Bank and capitalize the Bank to such an
extension as to be in a position to adopt a credit policy for the
coconut farmers at preferential rates;
WHEREAS, x x x the BUYER is willing to subscribe to
additional shares („Subscribed Shares‰) and place the Bank
in a more favorable financial position to extend loans and
credit facilities to coconut farmers at preferential rates;
NOW, THEREFORE, for and in consideration of the
foregoing premises and the other terms and conditions
hereinafter contained, the parties hereby declare and affirm
that their principal contractual intent is (1) to ensure that the
coconut farmers own at least 60% of the outstanding capital
stock of the Bank; and (2) that the SELLER shall receive
compensation for exercising his personal and exclusive option
to acquire the Option Shares, for transferring such shares to
the coconut farmers at the option price of P200 per share, and
for performing the management services required of him
hereunder.
1. To ensure that the transfer to the coconut farmers of the
Option Shares is effected with the least possible delay and to
provide for the faithful performance of the obligations of the
par-

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ties hereunder, the parties hereby appoint the Philippine

National Bank as their escrow agent (the „Escrow Agent‰).
Upon execution of this Agreement, the BUYER shall
deposit with the Escrow Agent such amount as may be
necessary to implement the terms of this Agreement x x x.
2. As promptly as practicable after execution of this
Agreement, the SELLER shall exercise his option to acquire
the Option Share and SELLER shall immediately thereafter
deliver and turn over to the Escrow Agent such stock
certificates as are herein provided to be received from the
existing stockholders of the Bank by virtue of the exercise on
the aforementioned option x x x.
3. To ensure the stability of the Bank and continuity of
management and credit policies to be adopted for the benefit
of the coconut farmers, the parties undertake to cause the
stockholders and the Board of Directors of the Bank to
authorize and approve a management contract between the
Bank and the SELLER under the following terms:
(a) The management contract shall be for a period of
five (5) years, renewable for another five (5) years by
mutual agreement of the SELLER and the Bank;
(b) The SELLER shall be elected President and shall
hold office at the pleasure of the Board of Directors.
While serving in such capacity, he shall be entitled to
such salaries and emoluments as the Board of Directors
may determine;
(c) The SELLER shall recruit and develop a
professional management team to manage and operate
the Bank under the control and supervision of the
Board of Directors of the Bank;
(d) The BUYER undertakes to cause three (3) persons
designated by the SELLER to be elected to the Board of
Directors of the Bank;
(e) The SELLER shall receive no compensation for
managing the Bank, other than such salaries or
emoluments to which he may be entitled by virtue of
the discharge of his function and duties as President,
provided x x x and
(f) The management contract may be assigned to a
management company owned and controlled by the
SELLER.
4. As compensation for exercising his personal and

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exclusive option to acquire the Option Shares and for

transferring

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496 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

such shares to the coconut farmers, as well as for performing

the management services required of him, SELLER shall
receive equity in the Bank amounting, in the aggregate, to
95,304 fully paid shares in accordance with the procedure set
forth in paragraph 6 below;
5. In order to comply with the Central Bank program for
increased capitalization of banks and to ensure that the Bank
will be in a more favorable financial position to attain its
objective to extend to the coconut farmers loans and credit
facilities, the BUYER undertakes to subscribe to shares with
an aggregate par value of P80,864,000 (the „Subscribed
Shares‰). The obligation of the BUYER with respect to the
Subscribed Shares shall be as follows:
(a) The BUYER undertakes to subscribe, for the benefit
of the coconut farmers, to shares with an aggregate par
value of P15,884,000 from the present authorized but
unissued shares of the Bank; and
(b) The BUYER undertakes to subscribe, for the benefit
of the coconut farmers, to shares with an aggregate par
value of P64,980,000 from the increased capital stock of
the Bank, which subscriptions shall be deemed made
upon the approval by the stockholders of the increase of
the authorized capital stock of the Bank from P50
Million to P140 Million.
The parties undertake to declare stock dividends of P8
Million out of the present authorized but unissued capital
stock of P30 Million.
6. To carry into effect the agreement of the parties that the
SELLER shall receive as his compensation 95,304 shares:
(a) The Escrow Agent shall, upon receipt from the
SELLER of the stock certificates representing the
Option Shares, duly endorsed in blank or with stock
powers sufficient to transfer the same to bearer,
present such stock certificates to the Transfer Agent of

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the Bank and shall cause such Transfer Agent to issue

stock certificates of the Bank in the following ratio: one
share in the name of the SELLER for every nine shares
in the name of the BUYER.
(b) With respect to the Subscribed Shares, the BUYER
undertakes, in order to prevent the dilution of
SELLERÊs equity position, that it shall cede over to the
SELLER 64,980 fully-paid shares out of the Subscribed
Shares. Such undertaking shall be complied with in the
following

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Cojuangco, Jr. vs. Republic

manner: upon receipt of advice that the BUYER has

subscribed to the Subscribed Shares upon approval by
the stockholders of the increase of the authorized
capital stock of the Bank, the Escrow Agent shall
thereupon issue a check in favor of the Bank covering
the total payment for the Subscribed Shares. The
Escrow Agent shall thereafter cause the Transfer Agent
to issue a stock certificates of the Bank in the following
ratio: one share in the name of the SELLER for every
nine shares in the name of the BUYER.
7. The parties further undertake that the Board of
Directors and management of the Bank shall establish and
implement a loan policy for the Bank of making available for
loans at preferential rates of interest to the coconut farmers
x x x.
8. The BUYER shall expeditiously distribute from time to
time the shares of the Bank, that shall be held by it for the
benefit of the coconut farmers of the Philippines under the
provisions of this Agreement, to such, coconut farmers
holding registered COCOFUND receipts on such equitable
basis as may be determine by the BUYER in its sound
discretion.
9. x x x x
10. To ensure that not only existing but future coconut
farmers shall be participants in and beneficiaries of the credit
policies, and shall be entitled to the benefit of loans and credit

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

facilities to be extended by the Bank to coconut farmers at

preferential rates, the shares held by the coconut farmers
shall not be entitled to pre-emptive rights with respect to the
unissued portion of the authorized capital stock or any
increase thereof.
11. After the parties shall have acquired two-thirds (2/3) of
the outstanding shares of the Bank, the parties shall call a
special stockholdersÊ meeting of the Bank:
(a) To classify the present authorized capital
stock of P50,000,000 divided into 500,000 shares,
with a par value of P100.00 per share into:
361,000 Class A shares, with an aggregate par
value of P36,100,000 and 139,000 Class B shares,
with an aggregate par value of P13,900,000. All
of the Option Shares constituting 72.2% of the
outstanding shares, shall be classified as Class A
shares and the balance of the outstanding shares,
constituting 27.8% of the outstanding shares, as
Class B shares;
(b) To amend the articles of incorporation of the
Bank to effect the following changes:

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198 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

(i) change of corporate name to First United

Coconut Bank;
(ii) replace the present provision restricting the
transferability of the shares with a limitation on
ownership by any individual or entity to not more
than 10% of the outstanding shares of the Bank;
(iii) provide that the holders of Class A shares
shall not be entitled to pre-emptive rights with
respect to the unissued portion of the authorized
capital stock or any increase thereof; and
(iv) provide that the holders of Class B shares
shall be absolutely entitled to pre-emptive rights,
with respect to the unissued portion of Class B
shares comprising part of the authorized capital
stock or any increase thereof, to subscribe to

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

Class B shares in proportion to the subscriptions

of Class A shares, and to pay for their
subscriptions to Class B shares within a period of
five (5) years from the call of the Board of
Directors.
(c) To increase the authorized capital stock of the Bank
from P50 Million to P140 Million, divided into
1,010,800 Class A shares and 389,200 Class B shares,
each with a par value of P100 per share;
(d) To declare a stock dividend of P8 Million payable to
the SELLER, the BUYER and other stockholders of the
Bank out of the present authorized but unissued capital
stock of P30 Million;
(e) To amend the by-laws of the Bank accordingly; and
(f) To authorize and approve the management contract
provided in paragraph 2 above.
The parties agree that they shall vote their shares and
take all the necessary corporate action in order to carry into
effect the foregoing provisions of this paragraph 11, including
such other amendments of the articles of incorporation and
by-laws of the Bank as are necessary in order to implement
the intention of the parties with respect thereto.
12. It is the contemplation of the parties that the Bank
shall achieve a financial and equity position to be able to lend
to the coconut farmers at preferential rates.
In order to achieve such objective, the parties shall cause the
Bank to adopt a policy of reinvestment, by way of stock divi-

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Cojuangco, Jr. vs. Republic

dends, of such percentage of the profits of the Bank as may be

necessary.
13. The parties agree to execute or cause to be executed
such documents and instruments as may be required in order
to carry out the intent and purpose of this Agreement.
IN WITNESS WHEREOF x x x

PHILIPPINE COCONUT
AUTHORITY
(BUYER)

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

By:
EDUARDO COJUANGCO, MARIA CLARA L. LOBREGAT
JR.
(SELLER)

xxxx
7. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the x x x (PCA) was the „other buyers‰ represented by
defendant Eduardo M. Cojuangco, Jr. in the May 1975 Agreement
entered into between Pedro Cojuangco (on his own behalf and in behalf of
other sellers listed in Annex „A‰of the agreement) and defendant
Eduardo M. Cojuangco, Jr. (on his own behalf and in behalf of the other
buyers). Defendant Cojuangco insists he was the „only buyer‰ under the
aforesaid Agreement.
8. Defendant Eduardo M. Cojuangco, Jr. did not own any share in the
x x x (FUB) prior to the execution of the two Agreements x x x.
9. Defendants Lobregat, et al., and COCOFED, et al., and Ballares, et al.
admit that in addition to the 137,866 FUB shares of Pedro Cojuangco, et
al. covered by the Agreement, other FUB stockholders sold their shares
to PCA such that the total number of FUB shares purchased by PCA ⁄
increased from 137,866 shares to 144,400 shares, the OPTION SHARES
referred to in the Agreement of May 25, 1975. Defendant Cojuangco did
not make said admission as to the said 6,534 shares in excess of the
137,866 shares covered by the Agreement with Pedro Cojuangco.
10. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the Agreement, described in Section 1 of Presidential Decree
(P.D.) No. 755 dated July 29, 1975 as the „Agreement for the Acquisition
of a Commercial Bank for the Benefit of Coconut Farmers‰ executed by
the Philippine

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500 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

Coconut Authority‰ and incorporated in Section 1 of P.D. No. 755 by

reference, refers to the „AGREEMENT FOR THE ACQUISITION OF A
COMMERCIAL BANK FOR THE BENEFIT OF THE COCONUT
FARMERS OF THE PHILIPPINES‰ dated May 25, 1975 between
defendant Eduardo M. Cojuangco, Jr. and the [PCA] (Annex „B‰ for
defendant CojuangcoÊs OPPOSITION TO PLAINTIFFÊS MOTION FOR
PARTIAL SUMMARY JUDGMENT [RE: EDUARDO M. COJUANGCO,

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

JR.] dated September 18, 2002).

Plaintiff refused to make the same admission.
11. As to whether P.D. No. 755 and the text of the agreement described
therein was published, the Court takes judicial notice that P.D. No. 755
was published [in] x x x volume 71 of the Official Gazette but the text of
the agreement x x x was not so published with P.D. No. 755.
12. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the PCA used public funds x x x in the total amount of P150
million, to purchase the FUB shares amounting to 72.2% of the
authorized capital stock of the FUB, although the PCA was later
reimbursed from the coconut levy funds and that the PCA
subscription in the increased capitalization of the FUB, which was later
renamed the x x x (UCPB), came from the said coconut levy funds x x x.
13. Pursuant to the May 25, 1975 Agreement, out of the 72.2% shares of
the authorized and the increased capital stock of the FUB (later UCPB),
entirely paid for by PCA, 64.98% of the shares were placed in the name of
the „PCA for the benefit of the coconut farmers‰ and 7.22% were given to
defendant Cojuangco. The remaining 27.8% shares of stock in the FUB
which later became the UCPB were not covered by the two (2)
agreements referred to in item no. 6, par. (a) and (b) above.
„There were shares forming part of the aforementioned 64.98% which
were later sold or transferred to non-coconut farmers.
14. Under the May 27, 1975 Agreement, defendant CojuangcoÊs equity in
the FUB (now UCPB) was ten percent (10%) of the shares of stock
acquired by the PCA for the benefit of the coconut farmers.

501

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15. That the fully paid 95.304 shares of the FUB, later the UCPB,
acquired by defendant x x x Cojuangco, Jr. pursuant to the May 25, 1975
Agreement were paid for by the PCA in accordance with the terms and
conditions provided in the said Agreement.
16. Defendants Lobregat, et al. and COCOFED, et al. and Ballares, et al.
admit that the affidavits of the coconut farmers (specifically, Exhibit „1-
Farmer‰ to „70-Farmer‰) uniformly state that:
a. they are coconut farmers who sold coconut products;
b. in the sale thereof, they received COCOFUND receipts pursuant to
R.A. No. 6260;
c. they registered the said COCOFUND receipts; and

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

d. by virtue thereof, and under R.A. No. 6260, P.D. Nos. 755, 961 and
1468, they are allegedly entitled to the subject UCPB shares.
but subject to the following qualifications:
a. there were other coconut farmers who received UCPB shares
although they did not present said COCOFUND receipt because
the PCA distributed the unclaimed UCPB shares not only to those
who already received their UCPB shares in exchange for their
COCOFUND receipts but also to the coconut farmers determined
by a national census conducted pursuant to PCA administrative
issuances;
b. [t]here were other affidavits executed by Lobregat, Eleazar,
Ballares and Aldeguer relative to the said distribution of the
unclaimed UCPB shares; and
c. the coconut farmers claim the UCPB shares by virtue of their
compliance not only with the laws mentioned in item (d) above but
also with the relevant issuances of the PCA such as, PCA
Administrative Order No. 1, dated August 20, 1975 (Exh. „298-
Farmer‰); PCA Resolution No. 033-78 dated February 16, 1978⁄.
The plaintiff did not make any admission as to the foregoing
qualifications.

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502 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

17. Defendants Lobregat, et al. and COCOFED, et al. and

Ballares, et al. claim that the UCPB shares in question have
legitimately become the private properties of the 1,405,366
coconut farmers solely on the basis of their having acquired said
shares in compliance with R.A. No. 6260, P.D. Nos. 755, 961 and
1468 and the administrative issuances of the PCA cited above.
18. On the other hand, defendant ⁄ Cojuangco, Jr. claims
ownership of the UCPB shares, which he holds, solely on the basis
of the two Agreements⁄. (Emphasis and words in brackets
added.)

On July 11, 2003, the Sandiganbayan issued the

assailed PSJ-A, ruling in favor of the Republic, disposing
insofar as pertinent as follows:21

WHEREFORE, in view of the foregoing, we rule as follows:

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

xxxx
C. Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
EDUARDO M. COJUANGCO, JR.) dated September 18, 2002 filed by
plaintiff.
1.  Sec. 1 of P.D. No. 755 did not validate the Agreement
between PCA and defendant Eduardo M. Cojuangco, Jr.
dated May 25, 1975 nor did it give the Agreement the
binding force of a law because of the non-publication of the
said Agreement.
2. Regarding the questioned transfer of the shares of stock of
FUB (later UCPB) by PCA to defendant Cojuangco or the
so-called „Cojuangco UCPB shares‰ which cost the PCA
more than Ten Million Pesos in CCSF in 1975, we declare,
that the transfer of the following FUB/UCPB shares to
defendant Eduardo M. Cojuangco, Jr. was not supported by
valuable consideration, and therefore null and void:
a. The 14,400 shares from the „Option Shares‰;

_______________
21 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-232, 257-60.

503

VOL. 686, NOVEMBER 27, 2012 503

Cojuangco, Jr. vs. Republic

b. Additional Bank Shares Subscribed and Paid by PCA,

consisting of:
1.  Fifteen Thousand Eight Hundred Eighty-Four
(15,884) shares out of the authorized but unissued
shares of the bank, subscribed and paid by PCA;
2. Sixty Four Thousand Nine Hundred Eighty
(64,980) shares of the increased capital stock
subscribed and paid by PCA; and
3. Stock dividends declared pursuant to paragraph 5
and paragraph 11 (iv) (d) of the Agreement.
3. The above-mentioned shares of stock of the
FUB/UCPB transferred to defendant Cojuangco are
hereby declared conclusively owned by the plaintiff
Republic of the Philippines.
4.  The UCPB shares of stock of the alleged fronts, nominees
and dummies of defendant Eduardo M. Cojuangco, Jr.

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

which form part of the 72.2% shares of the FUB/UCPB paid

for by the PCA with public funds later charged to the
coconut levy funds, particularly the CCSF, belong to the
plaintiff Republic of the Philippines as their true and
beneficial owner.
Let trial of this Civil Case proceed with respect to the issues which
have not been disposed of in this Partial Summary Judgment. For
this purpose, the plaintiff Ês Motion Ad Cautelam to Present
Additional
Evidence dated March 28, 2001 is hereby
22
GRANTED. (Emphasis and underlining added.)

As earlier explained, the core issue in this instant

petition is Part C of the dispositive portion in PSJ-A
declaring the 7.22% FUB (now UCPB) shares transferred
to Cojuangco, plus the other shares paid by the PCA as
„conclusively‰ owned by the Republic. Parts A and B of
the same dispositive portion have already been finally
resolved and adjudicated by this Court in COCOFED v.
Republic on January 24, 2012.23

_______________
22 PSJ-A, pp. 15, 54-55, 80-83; Rollo, pp. 193, 231-32, 257-60.
23 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.

504

504 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

From PSJ-A, Cojuangco moved for partial

reconsideration but the Sandiganbayan, by Resolution24 of
December 28, 2004, denied the motion.
Hence, the instant petition.

The Issues

CojuangcoÊs petition formulates the issues in question

form, as follows:25

a. Is the acquisition of the [so-called Cojuangco, Jr. UCPB

shares] by petitioner Cojuangco x x x „not supported by valuable

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

consideration and, therefore, null and void‰?

b. Did the Sandiganbayan have jurisdiction, in Civil Case No.
0033-A, an „ill-gotten wealth‰ case brought under [EO] Nos. 1 and
2, to declare the [Cojuangco UCPB shares] acquired by virtue of the
Pedro Cojuangco, et al. Agreement and/or the PCA Agreement null
and void because „not supported by valuable consideration‰?
c.  Was the claim that the acquisition by petitioner Cojuangco of
shares representing 7.2% of the outstanding capital stock of FUB
(later UCPB) „not supported by valuable consideration‰, a „claim‰
pleaded in the complaint and may therefore be the basis of a
„summary judgment‰ under Section 1, Rule 35 of the Rules of
Court?
d.  By declaring the [Cojuangco UCPB shares] as „not supported
by valuable consideration, and therefore, null and void‰, did the
Sandiganbayan effectively nullify the PCA Agreement? May the
Sandiganbayan nullify the PCA Agreement when the parties to the
Agreement, namely: x x x concede its validity? If the PCA
Agreement be deemed „null and void‰, should not the FUB (later
UCPB) shares revert to petitioner Cojuangco (under the PCA
Agreement) or to Pedro Cojuangco, et al. x x x? Would there be a
basis then, even assuming the absence of consideration x x x, to
declare 7.2% UCPB shares of petitioner Cojuangco as „conclusively
owned by the plaintiff Republic of the Philippines‰?26

_______________
24 Rollo, pp. 361-400.
25 Id., at pp. 42-43.
26 Id.

505

VOL. 686, NOVEMBER 27, 2012 505

Cojuangco, Jr. vs. Republic

The CourtÊs Ruling

I
THE SANDIGANBAYAN HAS JURISDICTION OVER
THE SUBJECT MATTER OF THE SUBDIVIDED
AMENDED COMPLAINTS,
INCLUDING THE SHARES ALLEGEDLY ACQUIRED

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

BY COJUANGCO BY VIRTUE OF THE PCA

AGREEMENTS.
The issue of jurisdiction over the subject matter of the
subdivided amended complaints has peremptorily been put
to rest by the Court in its January 24, 2012 Decision in
COCOFED v. Republic. There, the Court, citing Regalado27
and settled jurisprudence, stressed the following
interlocking precepts: Subject matter jurisdiction is
conferred by law, not by the consent or acquiescence of any
or all of the parties. In turn, the issue on whether a suit
comes within the penumbra of a statutory conferment is
determined by the allegations in the complaint, regardless
of whether or not the suitor will be entitled to recover upon
all or part of the claims asserted.
The RepublicÊs material averments in its complaint
subdivided in CC No. 0033-A included the following:

CC No. 0033-A

12. Defendant Eduardo M. Cojuangco, Jr. served as a public officer

during the Marcos administration. During the period of his incumbency
as a public officer, he acquired assets, funds and other property grossly
and manifestly disproportionate to his salaries, lawful income and
income from legitimately acquired property.
13. Defendant Eduardo M. Cojuangco, Jr., taking undue advantage of
his association, influence, connection, and acting in unlawful concert
with Defendants Ferdinand E. Marcos and Imelda

_______________
27 1 Regalado, REMEDIAL LAW COMPENDIUM 11 (6th revised ed., 1997).

506

506 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

R. Marcos, AND THE INDIVIDUAL DEFENDANTS,

embarked upon devices, schemes and stratagems, to
unjustly enrich themselves at the expense of Plaintiff and
the Filipino people, such as when he·
a)  manipulated, beginning the year 1975 with the active
collaboration of Defendants x x x Maria Clara Lobregat, Danilo Ursua

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

[etc.], the purchase by . . . (PCA) of 72.2% of the outstanding capital stock

of the x x x (FUB) which was subsequently converted into a universal
bank named x x x (UCPB) through the use of the Coconut Consumers
Stabilization Fund (CCSF) being initially in the amount of
P85,773,100.00 in a manner contrary to law and to the specific purposes
for which said coconut levy funds were imposed and collected under P.D.
276, and with sinister designs and under anomalous circumstances, to
wit:
(i)  Defendant Eduardo Cojuangco, Jr. coveted the coconut levy funds
as a cheap, lucrative and risk-free source of funds with which to
exercise his private option to buy the controlling interest in FUB;
thus, claiming that the 72.2% of the outstanding capital stock of
FUB could only be purchased and transferred through the exercise
of his „personal and exclusive action [option] to acquire the
144,000 shares‰ of the bank, Defendant Eduardo M. Cojuangco, Jr.
and PCA, x x x executed on May 26, 1975 a purchase agreement
which provides, among others, for the payment to him in fully paid
shares as compensation thereof 95,384 shares worth
P1,444,000.00 with the further condition that he shall manage and
control the bank as Director and President for a term of five (5)
years renewable for another five (5) years and to designate three
(3) persons of his choice who shall be elected as members of the
Board of Directors of the Bank;
(ii) to legitimize a posteriori his highly anomalous and irregular use
and diversion of government funds to advance his own private and
commercial interests, Defendant Eduardo Cojuangco, Jr. caused
the issuance by Defendant Ferdinand E. Marcos of PD 755 (a)
declaring that the coconut levy funds shall not be considered
special and fiduciary and trust funds and do not form part of the
general funds of the National Government, conveniently repealing
for that purpose a series of previous de-

507

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Cojuangco, Jr. vs. Republic

crees, PDs 276 and 414, establishing the character of the

coconut levy funds as special, fiduciary, trust and
governmental funds; (b) confirming the agreement between
Defendant Eduardo Cojuangco, Jr. and PCA on the
purchase of FUB by incorporating by reference said private

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commercial agreement in PD 755;

(iii)  To further consolidate his hold on UCPB, Defendant Eduardo
Cojuangco, Jr. imposed as consideration and conditions for the
purchase that (a) he gets one out of every nine shares given to
PCA, and (b) he gets to manage and control UCPB as president for
a term of five (5) years renewable for another five (5) years;
(iv)  To perpetuate his opportunity to deal with and make use of the
coconut levy funds x x x Cojuangco, Jr. caused the issuance by
Defendant Ferdinand E. Marcos of an unconstitutional decree (PD
1468) requiring the deposit of all coconut levy funds with UCPB,
interest free to the prejudice of the government.
(v) In gross violation of their fiduciary positions and in contravention
of the goal to create a bank for the coconut farmers of the country,
the capital stock of UCPB as of February 25, 1986 was actually
held by the defendants, their lawyers, factotum and business
associates, thereby finally gaining control of the UCPB by
misusing the names and identities of the so-called „more than one
million coconut farmers.‰
14. The acts of Defendants, singly or collectively, and/or in unlawful
concert with one another, constitute gross abuse of official position and
authority, flagrant breach of public trust and fiduciary obligations,
brazen abuse of right and power, and unjust enrichment, violation of the
constitution and laws of the Republic of the Philippines, to the grave and
irreparable damage of Plaintiff and the Filipino people.28

_______________
28 Rollo, pp. 488-493.

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Cojuangco, Jr. vs. Republic

In no uncertain terms, the Court has upheld the

SandiganbayanÊs assumption of jurisdiction over the
subject matter of Civil Case Nos. 0033-A and 0033-F.29 The
Court wrote:

Judging from the allegations of the defendantsÊ illegal acts thereat

made, it is fairly obvious that both CC Nos. 0033-A and CC 0033-F
partake, in the context of EO Nos. 1, 2 and 14, series of 1986, the nature
of ill-gotten wealth suits. Both deal with the recovery of sequestered

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shares, property or business enterprises claimed, as alleged in the

corresponding basic complaints, to be ill-gotten assets of President
Marcos, his cronies and nominees and acquired by taking undue
advantage of relationships or influence and/or through or as a result of
improper use, conversion or diversion of government funds or property.
Recovery of these assets―determined as shall hereinafter be discussed
as prima facie ill-gotten―falls within the unquestionable jurisdiction of
the Sandiganbayan.30
P.D. No. 1606, as amended by R.A. 7975 and E.O. No. 14, Series of
1986, vests the Sandiganbayan with, among others, original jurisdiction
over civil and criminal cases instituted pursuant to and in connection
with E.O. Nos. 1, 2, 14 and 14-A. Correlatively, the PCGG Rules and
Regulations defines the term „Ill-Gotten Wealth‰ as „any asset, property,
business enterprise or material possession of persons within the purview
of [E.O.] Nos. 1 and 2, acquired by them directly, or indirectly thru
dummies, nominees, agents, subordinates and/or business
associates by any of the following means or similar schemes‰:
(1) Through misappropriation, conversion, misuse or
malversation of public funds or raids on the public treasury;
(2) x x x x
(3) By the illegal or fraudulent conveyance or disposition of
assets belonging to the government or any of its subdivisions,
agencies or instrumentalities or government-owned or controlled
corporations;

_______________
29 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.
30 Id.; citing San Miguel Corporation v. Sandiganbayan, G.R. Nos.
104637-38, September 14, 2000, 340 SCRA 289.

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Cojuangco, Jr. vs. Republic

(4) By obtaining, receiving or accepting directly or indirectly

any shares of stock, equity or any other form of interest or
participation in any business enterprise or undertaking;
(5) Through the establishment of agricultural, industrial or
commercial monopolies or other combination and/or by the
issuance, promulgation and/or implementation of decrees and

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orders intended to benefit particular persons or special interests;

and
(6) By taking undue advantage of official position, authority,
relationship or influence for personal gain or benefit. (Emphasis
supplied)
Section 2(a) of E.O. No. 1 charged the PCGG with the task of
assisting the President in „[T]he recovery of all ill-gotten wealth
accumulated by former ⁄ [President] Marcos, his immediate family,
relatives, subordinates and close associates ⁄ including the takeover or
sequestration of all business enterprises and entities owned or controlled
by them, during his administration, directly or through nominees, by
taking undue advantage of their public office and/or using their powers,
authority, influence, connections or relationship.‰ Complementing the
aforesaid Section 2(a) is Section 1 of E.O. No. 2 decreeing the freezing of
all assets „in which the [Marcoses] their close relatives, subordinates,
business associates, dummies, agents or nominees have any interest or
participation.‰
The RepublicÊs averments in the amended complaints, particularly
those detailing the alleged wrongful acts of the defendants, sufficiently
reveal that the subject matter thereof comprises the recovery by the
Government of ill-gotten wealth acquired by then President Marcos, his
cronies or their associates and dummies through the unlawful, improper
utilization or diversion of coconut levy funds aided by P.D. No. 755 and
other sister decrees. President Marcos himself issued these decrees in a
brazen bid to legalize what amounts to private taking of the said public
funds.
xxxx
There was no actual need for Republic, as plaintiff a quo, to adduce
evidence to show that the Sandiganbayan has jurisdiction over the
subject matter of the complaints as it leaned on the averments in the
initiatory pleadings to make visible the jurisdiction of the
Sandiganbayan over the ill-gotten wealth complaints. As previ-

510

510 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

ously discussed, a perusal of the allegations easily reveals

the sufficiency of the statement of matters disclosing the
claim of the government against the coco levy funds and
the assets acquired directly or indirectly through said

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funds as ill-gotten wealth. Moreover, the Court finds no

rule that directs the plaintiff to first prove the subject
matter jurisdiction of the court before which the complaint
is filed. Rather, such burden falls on the shoulders of
defendant in the hearing of a motion to dismiss anchored
on said ground or a preliminary hearing thereon when such
ground is alleged in the answer.
xxxx
Lest it be overlooked, this Court has already decided that the
sequestered shares are prima facie ill-gotten wealth rendering the issue
of the validity of their sequestration and of the jurisdiction of the
Sandiganbayan over the case beyond doubt. In the case of COCOFED v.
PCGG, We stated that:
It is of course not for this Court to pass upon the factual issues
thus raised. That function pertains to the Sandiganbayan in the
first instance. For purposes of this proceeding, all that the Court
needs to determine is whether or not there is prima facie
justification for the sequestration ordered by the PCGG. The Court
is satisfied that there is. The cited incidents, given the public
character of the coconut levy funds, place petitioners
COCOFED and its leaders and officials, at least prima
facie, squarely within the purview of Executive Orders
Nos. 1, 2 and 14, as construed and applied in BASECO, to wit:
„1. that ill-gotten properties (were) amassed by the leaders and supporters of the

previous regime;

„a. more particularly, that Â(i) Ill-gotten wealth was accumulated by x x x Marcos,

his immediate family, relatives, subordinates and close associates, x x x (and) business

enterprises and entities (came to be) owned or controlled by them, during x x x (the

Marcos) administration, directly or through nominees, by taking undue advantage of

their public office and using their powers, authority, influence, connections or

relationshipsÊ;

„b. otherwise stated, that Âthere are assets and properties purportedly pertaining to

[the Marcoses], their close relatives, subordinates, business associates, dummies, agents

or nominees which had been or were acquired by them directly or indirectly, through or

as a result of the improper or illegal use of funds or properties owned by the

Government x x x or any of its branches, instrumentalities, enterprises, banks or

financial institutions, or by taking undue advantage of their office,

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authority, influence, connections or relationship, resulting in their unjust enrichment

x x x;

xxxx

2. The petitionersÊ claim that the assets acquired with the coconut levy funds are

privately owned by the coconut farmers is founded on certain provisions of law, to wit

[Sec. 7, RA 6260 and Sec. 5, Art. III, PD 1468]⁄ (Words in bracket added; italics in the

original).

xxxx

E.O. 1, 2, 14 and 14-A, it bears to stress, were issued precisely to

effect the recovery of ill-gotten assets amassed by the Marcoses, their
associates, subordinates and cronies, or through their nominees. Be that
as it may, it stands to reason that persons listed as associated with the
Marcoses refer to those in possession of such ill-gotten wealth but
holding the same in behalf of the actual, albeit undisclosed owner, to
prevent discovery and consequently recovery. Certainly, it is well-nigh
inconceivable that ill-gotten assets would be distributed to and left in the
hands of individuals or entities with obvious traceable connections to Mr.
Marcos and his cronies. The Court can take, as it has in fact taken,
judicial notice of schemes and machinations that have been put in place
to keep ill-gotten assets under wraps. These would include the setting up
of layers after layers of shell or dummy, but controlled, corporations31 or
manipulated instruments calculated to confuse if not altogether mislead
would-be investigators from recovering wealth deceitfully amassed at the
expense of the people or simply the fruits thereof. Transferring the illegal
assets to third parties not readily perceived as Marcos cronies would be
another. So it was that in PCGG v. Pena, the Court, describing the rule of
Marcos as a „well entrenched plundering regime of twenty years,‰ noted
the magnitude of the past regimeÊs organized pillage and the ingenuity of
the plunderers and pillagers with the assistance of experts and the best
legal minds in the market.32

Prescinding from the foregoing premises, there can no

longer be any serious challenge as to the SandiganbayanÊs

_______________
31 Id.; citing Yuchengco v. Sandiganbayan, G.R. No. 149802, January
20, 2006, 479 SCRA 1.
32 Id.

512

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Cojuangco, Jr. vs. Republic

subject matter jurisdiction. And in connection therewith,

the Court wrote in COCOFED v. Republic, that the instant
petition shall be decided separately and should not be
affected by the January 24, 2012 Decision, „save for
determinatively legal issues directly addressed‰ therein.33
Thus:

We clarify that PSJ-A is subject of another petition for review

interposed by Eduardo Cojuangco, Jr., in G.R. No. 180705 entitled,
Eduardo M. Cojuangco, Jr. v. Republic of the Philippines, which
shall be decided separately by this Court. Said petition should
accordingly not be affected by this Decision save for
determinatively legal issues directly addressed herein.34
(Emphasis Ours.)

We, therefore, reiterate our holding in COCOFED v.

Republic respecting the SandiganbayanÊs jurisdiction over
the subject matter of Civil Case No. 0033-A, including
those matters whose adjudication We shall resolve in the
present case.
II
PRELIMINARILY, THE AGREEMENT BETWEEN
THE PCAAND EDUARDO M. COJUANGCO, JR.
DATED MAY 25, 1975 CANNOT BE ACCORDED THE
STATUS OF A LAW FOR THE LACK OF THE
REQUISITE PUBLICATION.
It will be recalled that CojuangcoÊs claim of ownership
over the UCPB shares is hinged on two contract documents
the respective contents of which formed part of and
reproduced in their entirety in the aforecited Order35 of the
Sandiganbayan dated March 11, 2003. The first contract
refers to the agreement entered into by and between Pedro
Cojuangco and his group, on one hand, and Eduardo M.
Cojuangco, Jr., on the other, bearing date „May 1975‰36
(hereinafter referred to as

_______________
33 Id.
34 Id.

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35 Rollo, pp. 956-961.

36 The date of the agreement was left blank.

513

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Cojuangco, Jr. vs. Republic

„PC-ECJ Agreement‰), while the second relates to the

accord between the PCA and Eduardo M. Cojuangco, Jr.
dated May 25, 1975 (hereinafter referred to as „PCA-
Cojuangco Agreement‰). The PC-ECJ Agreement allegedly
contains, inter alia, CojuangcoÊs personal and exclusive
option to acquire the FUB („UCPB‰) shares from Pedro and
his group. The PCA-Cojuangco Agreement shows PCAÊs
acquisition of the said option from Eduardo M. Cojuangco,
Jr.
Section 1 of P.D. No. 755 incorporated, by reference, the
„Agreement for the Acquisition of a Commercial Bank for
the Benefit of the Coconut Farmers‰ executed by the PCA.
Particularly, Section 1 states:

Section  1. Declaration of National Policy.·It is hereby declared

that the policy of the State is to provide readily available credit
facilities to the coconut farmers at preferential rates; that this
policy can be expeditiously and efficiently realized by the
implementation of the „Agreement for the Acquisition of a
Commercial Bank for the benefit of the Coconut Farmers‰
executed by the Philippine Coconut Authority, the terms of
which „Agreement‰ are hereby incorporated by reference;
and that the Philippine Coconut Authority is hereby authorized to
distribute, for free, the shares of stock of the bank it acquired to the
coconut farmers under such rules and regulations it may
promulgate. (Emphasis Ours.)

It bears to stress at this point that the PCA-Cojuangco

Agreement referred to above in Section 1 of P.D. 755 was
not reproduced or attached as an annex to the same law.
And it is well-settled that laws must be published to be
valid. In fact, publication is an indispensable condition for
the effectivity of a law. Tañada v. Tuvera37 said as much:

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Publication [of the law] is indispensable in every case x x x.

xxxx

_______________
37 No. L-63915, December 29, 1986, 146 SCRA 446, 452-454.

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We note at this point the conclusive presumption that every

person knows the law, which of course presupposes that the law has
been published if the presumption is to have any legal justification
at all. It is no less important to remember that Section 6 of the Bill
of Rights recognizes „the right of the people to information on
matters of public concern,‰ and this certainly applies to, among
others, and indeed especially, the legislative enactments of the
government.
xxxx
We hold therefore that all statutes, including those of local
application and private laws, shall be published as a condition for
their effectivity, which shall begin fifteen days after publication
unless a different effectivity date is fixed by the legislature.
Covered by this rule are presidential decrees and executive
orders promulgated by the President in the exercise of legislative
powers whenever the same are validly delegated by the legislature,
or, at present, directly conferred by the Constitution.
Administrative rules and regulations must also be published if their
purpose is to enforce or implement existing law pursuant also to a
valid delegation.38

We even went further in Tañada to say that:

Laws must come out in the open in the clear light of the sun
instead of skulking in the shadows with their dark, deep secrets.
Mysterious pronouncements and rumored rules cannot be
recognized as binding unless their existence and contents are
confirmed by a valid publication intended to make full disclosure
and give proper notice to the people. The furtive law is like a
scabbarded saber that cannot feint, parry or cut unless the naked
blade is drawn.39

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The publication, as further held in Tañada, must be of

the full text of the law since the purpose of publication is to
inform the public of the contents of the law. Mere
referencing the number of the presidential decree, its title
or whereabouts

_______________
38 Id.
39 Id.

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VOL. 686, NOVEMBER 27, 2012 515

Cojuangco, Jr. vs. Republic

and its supposed date of effectivity would not satisfy the

publication requirement.40
In this case, while it incorporated the PCA-Cojuangco
Agreement by reference, Section 1 of P.D. 755 did not in
any way reproduce the exact terms of the contract in the
decree. Neither was a copy thereof attached to the decree
when published. We cannot, therefore, extend to the said
Agreement the status of a law. Consequently, We join the
Sandiganbayan in its holding that the PCA-Cojuangco
Agreement shall be treated as an ordinary transaction
between agreeing minds to be governed by contract law
under the Civil Code.

III
THE PCA-COJUANGCO AGREEMENT IS A VALID
CONTRACT FOR HAVING THE REQUISITE
CONSIDERATION.

In PSJ-A, the Sandiganbayan struck down the PCA-

Cojuangco Agreement as void for lack of
consideration/cause as required under Article 1318,
paragraph 3 in relation to Article 1409, paragraph 3 of the
Civil Code. The Sandiganbayan stated:

In sum, the evidence on record relied upon by defendant

Cojuangco negates the presence of: (1) his claimed personal and
exclusive option to buy the 137,866 FUB shares; and (2) any

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pecuniary advantage to the government of the said option, which

could compensate for generous payment to him by PCA of valuable
shares of stock, as stipulated in the May 25, 1975 Agreement
between him and the PCA.41

On the other hand, the aforementioned provisions of the

Civil Code state:

_______________
40 Id.
41 PSJ-A, p. 74; Rollo, p. 251.

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Art. 1318. There is no contract unless the following requisites

concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
(Emphasis supplied)42
Art 1409. The following contracts are inexistent and void from
the beginning:
xxxx
(3) Those whose cause or object did not exist at the time of the
transaction;43

The Sandiganbayan found and so tagged the alleged

cause for the agreement in question, i.e., CojuangcoÊs
„personal and exclusive option to acquire the Option
Shares,‰ as fictitious. A reading of the purchase agreement
between Cojuangco and PCA, so the Sandiganbayan ruled,
would show that Cojuangco was not the only seller; thus,
the option was, as to him, neither personal nor exclusive as
he claimed it to be. Moreover, as the Sandiganbayan
deduced, that option was inexistent on the day of execution
of the PCA-Cojuangco Agreement as the Special Power of
Attorney executed by Cojuangco in favor of now Senator
Edgardo J. Angara, for the latter to sign the PC-ECJ
Agreement, was dated May 25, 1975 while the PCA-

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Cojuangco Agreement was also signed on May 25, 1975.

Thus, the Sandiganbayan believed that when the parties
affixed their signatures on the second Agreement,
CojuangcoÊs option to purchase the FUB shares of stock did
not yet exist. The Sandiganbayan further ruled that there
was no justification in the second Agreement for the
compen-

_______________
42 An Act to Ordain and Institute the Civil Code of the Philippines
[CIVIL CODE], Republic Act No. 386, Art. 1318 (1950).
43 CIVIL CODE, Art. 1409; see also 4 Arturo M. Tolentino, COMMENTARIES
AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES 629 (2002).

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sation of Cojuangco of 14,400 shares, which it viewed as

exorbitant. Additionally, the Sandiganbayan ruled that
PCA could not validly enter, in behalf of FUB/UCPB, into a
veritable bank management contract with Cojuangco, PCA
having a personality separate and distinct from that of
FUB. As such, the Sandiganbayan concluded that the PCA-
Cojuangco Agreement was null and void. Correspondingly,
the Sandiganbayan also ruled that the sequestered FUB
(UCPB) shares of stock in the name of Cojuangco are
conclusively owned by the Republic.
After a circumspect study, the Court finds as
inconclusive the evidence relied upon by Sandiganbayan to
support its ruling that the PCA-Cojuangco Agreement is
devoid of sufficient consideration. We shall explain.
Rule 131, Section 3(r) of the Rules of Court states:

Sec. 3. Disputable presumptions.―The following presumptions

are satisfactory if uncontradicted, but may be contradicted and
overcome by other evidence:
xxxx
(r) That there was a sufficient consideration for a contract;

The Court had the occasion to explain the reach of the

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above provision in Surtida v. Rural Bank of Malinao

(Albay), Inc.,44 to wit:

Under Section 3, Rule 131 of the Rules of Court, the following

are disputable presumptions: (1) private transactions have been fair
and regular; (2) the ordinary course of business has been followed;
and (3) there was sufficient consideration for a contract. A
presumption may operate against an adversary who has not
introduced proof to rebut it. The effect of a legal presumption upon
a burden of proof is to create the necessity of presenting evidence to
meet the legal presumption or the prima facie case created thereby,
and which if no proof to the contrary is presented and offered, will
prevail. The bur-

_______________
44 G.R. No. 170563, December 20, 2006, 511 SCRA 507.

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Cojuangco, Jr. vs. Republic

den of proof remains where it is, but by the presumption, the one
who has that burden is relieved for the time being from introducing
evidence in support of the averment, because the presumption
stands in the place of evidence unless rebutted.
The presumption that a contract has sufficient
consideration cannot be overthrown by the bare
uncorroborated and self-serving assertion of petitioners that
it has no consideration. To overcome the presumption of
consideration, the alleged lack of consideration must be
shown by preponderance of evidence. Petitioners failed to
discharge this burden x x x. (Emphasis Ours.)

The assumption that ample consideration is present in a

contract is further elucidated in Pentacapital Investment
Corporation v. Mahinay:45

Under Article 1354 of the Civil Code, it is presumed that

consideration exists and is lawful unless the debtor proves
the contrary. Moreover, under Section 3, Rule 131 of the
Rules of Court, the following are disputable presumptions:
(1) private transactions have been fair and regular; (2) the ordinary

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course of business has been followed; and (3) there was sufficient
consideration for a contract. A presumption may operate
against an adversary who has not introduced proof to rebut it. The
effect of a legal presumption upon a burden of proof is to create the
necessity of presenting evidence to meet the legal presumption or
the prima facie case created thereby, and which, if no proof to the
contrary is presented and offered, will prevail. The burden of proof
remains where it is, but by the presumption, the one who has that
burden is relieved for the time being from introducing evidence in
support of the averment, because the presumption stands in the
place of evidence unless rebutted.46 (Emphasis supplied.)

_______________
45 G.R. Nos. 171736 & 181482, July 5, 2010, 623 SCRA 284, 303.
46 See also Union Bank of the Philippines v. Spouses Tiu, G.R. Nos.
173090-91, September 7, 2011, 657 SCRA 86; Great Asian Sales Center v.
Court of Appeals, 431 Phil. 293; 381 SCRA 557 (2002); Fernandez v.
Fernandez, 416 Phil. 322; 363 SCRA 811 (2001); Gevero

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The rule then is that the party who stands to profit from
a declaration of the nullity of a contract on the ground of
insufficiency of consideration―which would necessarily
refer to one who asserts such nullity―has the burden of
overthrowing the presumption offered by the aforequoted
Section 3(r). Obviously then, the presumption contextually
operates in favor of Cojuangco and against the Republic, as
plaintiff a quo, which then had the burden to prove that
indeed there was no sufficient consideration for the Second
Agreement. The SandiganbayanÊs stated observation,
therefore, that based on the wordings of the Second
Agreement, Cojuangco had no personal and exclusive
option to purchase the FUB shares from Pedro Cojuangco
had really little to commend itself for acceptance. This, as
opposed to the fact that such sale and purchase agreement
is memorialized in a notarized document whereby both
Eduardo Cojuangco, Jr. and Pedro Cojuangco attested to

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the correctness of the provisions thereof, among which was

that Eduardo had such option to purchase. A notarized
document, Lazaro v. Agustin47 teaches, „generally carries
the evidentiary weight conferred upon it with respect to its
due execution, and documents acknowledged before a
notary public have in their favor the disputable
presumption of regularity.‰
In Samanilla v. Cajucom,48 the Court clarified that the
presumption of a valid consideration cannot be discarded
on a simple claim of absence of consideration, especially
when the contract itself states that consideration was
given:

x x x This presumption appellants cannot overcome by a

simple assertion of lack of consideration. Especially may not
the presumption be so lightly set aside when the contract

_______________
v. Intermediate Appellate Court, G.R. No. 77029, August 30, 1990, 189 SCRA
201; Spouses Nuguid v. Court of Appeals, 253 Phil. 207; 171 SCRA 213 (1989).
47 G.R. No. 152364, April 15, 2010, 618 SCRA 298.
48 107 Phil. 432 (1960).

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520 SUPREME COURT REPORTS ANNOTATED

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itself states that consideration was given, and the same has
been reduced into a public instrument will all due
formalities and solemnities as in this case. (Emphasis ours.)

A perusal of the PCA-Cojuangco Agreement disclosed an

express statement of consideration for the transaction:

NOW, THEREFORE, for and in consideration of the foregoing

premises and the other terms and conditions hereinafter contained,
the parties hereby declare and affirm that their principal
contractual intent is (1) to ensure that the coconut farmers
own at least 60% of the outstanding capital stock of the
Bank, and (2) that the SELLER shall receive compensation
for exercising his personal and exclusive option to acquire
the Option Shares, for transferring such shares to the

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coconut farmers at the option price of P200 per share, and

for performing the management services required of him
hereunder.
xxxx
4. As compensation for exercising his personal and
exclusive option to acquire the Option Shares and for
transferring such shares to the coconut farmers, as well as
for performing the management services required of him,
SELLER shall receive equity in the Bank amounting, in the
aggregate, to 95,304 fully paid shares in accordance with the
procedure set forth in paragraph 6 below. (Emphasis supplied.)

Applying Samanilla to the case at bar, the express and

positive declaration by the parties of the presence of
adequate consideration in the contract makes conclusive
the presumption of sufficient consideration in the PCA
Agreement. Moreover, the option to purchase shares and
management services for UCPB was already availed of by
petitioner Cojuangco for the benefit of the PCA. The
exercise of such right resulted in the execution of the PC-
ECJ Agreement, which fact is not disputed. The document
itself is incontrovertible proof and hard evidence that
petitioner Cojuangco had the right to purchase the subject
FUB (now UCPB) shares. Res ipsa loquitur.

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The Sandiganbayan, however, pointed to the perceived

„lack of any pecuniary value or advantage to the
government of the said option, which could compensate for
the generous payment to him by PCA of valuable shares of
stock, as stipulated in the May 25, 1975 Agreement
between him and the PCA.‰49
Inadequacy of the consideration, however, does not
render a contract void under Article 1355 of the Civil Code:

Art. 1355. Except in cases specified by law, lesion or

inadequacy of cause shall not invalidate a contract, unless
there has been fraud, mistake or undue influence. (Emphasis

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supplied.)

Alsua-Betts v. Court of Appeals50 is instructive that lack

of ample consideration does not nullify the contract:

Inadequacy of consideration does not vitiate a contract

unless it is proven which in the case at bar was not, that
there was fraud, mistake or undue influence. (Article 1355,
New Civil Code). We do not find the stipulated price as so
inadequate to shock the courtÊs conscience, considering that the
price paid was much higher than the assessed value of the subject
properties and considering that the sales were effected by a father
to her daughter in which case filial love must be taken into account.
(Emphasis supplied.)

Vales v. Villa51 elucidates why a bad transaction cannot

serve as basis for voiding a contract:

x x x Courts cannot follow one every step of his life and extricate
him from bad bargains, protect him from unwise investments,
relieve him from one-sided contracts, or annul the effects of foolish

_______________
49 PSJ-A, pp. 73-74.
50 Nos. L-46430-31, July 30, 1979, 92 SCRA 332; Morales Development
Company, Inc. v. Court of Appeals, No. L-26572, March 28, 1969, 27 SCRA 484.
51 35 Phil. 769, 788 (1916).

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522 SUPREME COURT REPORTS ANNOTATED

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acts. x x x Men may do foolish things, make ridiculous

contracts, use miserable judgment, and lose money by
them― ―indeed, all they have in the world; but not for that
alone can the law intervene and restore. There must be, in
addition, a violation of law, the commission of what the law
knows as an actionable wrong, before the courts are
authorized to lay hold of the situation and remedy it.
(Emphasis ours.)

While one may posit that the PCA-Cojuangco Agreement

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puts PCA and the coconut farmers at a disadvantage, the

facts do not make out a clear case of violation of any law
that will necessitate the recall of said contract. Indeed, the
anti-graft court has not put forward any specific stipulation
therein that is at war with any law, or the Constitution, for
that matter. It is even clear as day that none of the parties
who entered into the two agreements with petitioner
Cojuangco contested nor sought the nullification of said
agreements, more particularly the PCA who is always
provided legal advice in said transactions by the
Government corporate counsel, and a battery of lawyers
and presumably the COA auditor assigned to said agency. A
government agency, like the PCA, stoops down to level of
an ordinary citizen when it enters into a private
transaction with private individuals. In this setting, PCA is
bound by the law on contracts and is bound to comply with
the terms of the PCA-Cojuangco Agreement which is the
law between the parties. With the silence of PCA not to
challenge the validity of the PCA-Cojuangco Agreement
and the inability of government to demonstrate the lack of
ample consideration in the transaction, the Court is left
with no other choice but to uphold the validity of said
agreements.
While consideration is usually in the form of money or
property, it need not be monetary. This is clear from Article
1350 which reads:

Art. 1350. In onerous contracts the cause is understood to be, for

each contracting party, the prestation or promise of a thing

523

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Cojuangco, Jr. vs. Republic

or service by the other; in remuneratory ones, the service or

benefit which is remunerated; and in contracts of pure
beneficence, the mere liability of the benefactor. (Emphasis
supplied.)

Gabriel v. Monte de Piedad y Caja de Ahorros52 tells us

of the meaning of consideration:

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x x x A consideration, in the legal sense of the word, is some

right, interest, benefit, or advantage conferred upon the
promisor, to which he is otherwise not lawfully entitled, or any
detriment, prejudice, loss, or disadvantage suffered or
undertaken by the promisee other than to such as he is at the time
of consent bound to suffer. (Emphasis Ours.)

The Court rules that the transfer of the subject UCPB

shares is clearly supported by valuable consideration.
To justify the nullification of the PCA-Cojuangco
Agreement, the Sandiganbayan centered on the alleged
imaginary option claimed by petitioner to buy the FUB
shares from the Pedro Cojuangco group. It relied on the
phrase „in behalf of certain other buyers‰ mentioned in the
PC-ECJ Agreement as basis for the finding that
petitionerÊs option is neither personal nor exclusive. The
pertinent portion of said agreement reads:

EDUARDO COJUANGCO, JR., Filipino, of legal age and with

residence at 136 9th Street corner Balete Drive, Quezon City,
represented in this act by his duly authorized attorney-in-fact,
EDGARDO J. ANGARA, for and in his own behalf and in
behalf of certain other buyers, (hereinafter collectively called
the „BUYERS‰); x x x.

A plain reading of the aforequoted description of

petitioner as a party to the PC-ECJ Agreement reveals that
petitioner is not only the buyer. He is the named buyer and
there are other buyers who were unnamed. This is clear
from the word

_______________
52 71 Phil. 497, 501 (1941).

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„BUYERS.‰ If petitioner is the only buyer, then his

description as a party to the sale would only be „BUYER.‰
It may be true that petitioner intended to include other

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

buyers. The fact remains, however, that the identities of

the unnamed buyers were not revealed up to the present
day. While one can conjure or speculate that PCA may be
one of the buyers, the fact that PCA entered into an
agreement to purchase the FUB shares with petitioner
militates against such conjecture since there would be no
need at all to enter into the second agreement if PCA was
already a buyer of the shares in the first contract. It is only
the parties to the PC-ECJ Agreement that can plausibly
shed light on the import of the phrase „certain other
buyers‰ but, unfortunately, petitioner was no longer
allowed to testify on the matter and was precluded from
explaining the transactions because of the motion for
partial summary judgment and the eventual promulgation
of the July 11, 2003 Partial Summary Judgment.
Even if conceding for the sake of argument that PCA is
one of the buyers of the FUB shares in the PC-ECJ
Agreement, still it does not necessarily follow that
petitioner had no option to buy said shares from the group
of Pedro Cojuangco. In fact, the very execution of the first
agreement undeniably shows that he had the rights or
option to buy said shares from the Pedro Cojuangco group.
Otherwise, the PC-ECJ Agreement could not have been
consummated and enforced. The conclusion is incontestable
that petitioner indeed had the right or option to buy the
FUB shares as buttressed by the execution and
enforcement of the very document itself.
We can opt to treat the PC-ECJ Agreement as a totally
separate agreement from the PCA-Cojuangco Agreement
but it will not detract from the fact that petitioner actually
acquired the rights to the ownership of the FUB shares
from the Pedro Cojuangco group. The consequence is he can
legally sell the shares to PCA. In this scenario, he would
resell the shares to PCA for a profit and PCA would still
end up paying a higher price for the FUB shares. The
„profit‰ that will accrue

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SUPREME COURT REPORTS ANNOTATED VOLUME 686 8/25/23, 7:25 PM

to petitioner may just be equal to the value of the shares

that were given to petitioner as commission. Still we can
only speculate as to the true intentions of the parties.
Without any evidence adduced on this issue, the Court will
not venture on any unproven conclusion or finding which
should be avoided in judicial adjudication.
The anti-graft court also inferred from the date of
execution of the special power of attorney in favor of now
Senator Edgardo J. Angara, which is May 25, 1975, that
the PC-ECJ Agreement appears to have been executed on
the same day as the PCA-Cojuangco Agreement (dated May
25, 1975). The coincidence on the dates casts „doubts as to
the existence of defendant CojuangcoÊs prior Âpersonal and
exclusiveÊ option to the FUB shares.‰
The fact that the execution of the SPA and the PCA-
Cojuangco Agreement occurred sequentially on the same
day cannot, without more, be the basis for the conclusion as
to the non-existence of the option of petitioner. Such
conjecture cannot prevail over the fact that without
petitioner Cojuangco, none of the two agreements in
question would have been executed and implemented and
the FUB shares could not have been successfully conveyed
to PCA.
Again, only the parties can explain the reasons behind
the execution of the two agreements and the SPA on the
same day. They were, however, precluded from elucidating
the reasons behind such occurrence. In the absence of such
illuminating proof, the proposition that the option does not
exist has no leg to stand on.
More importantly, the fact that the PC-ECJ Agreement
was executed not earlier than May 25, 1975 proves that
petitioner Cojuangco had an option to buy the FUB shares
prior to that date. Again, it must be emphasized that from
its terms, the first Agreement did not create the option. It,
however, proved the exercise of the option by petitioner.

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Cojuangco, Jr. vs. Republic

The execution of the PC-ECJ Agreement on the same

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day as the PCA-Cojuangco Agreement more than satisfies

paragraph 2 thereof which requires petitioner to exercise
his option to purchase the FUB shares as promptly as
practicable after, and not before, the execution of the
second agreement, thus:

2. As promptly as practicable after execution of this

Agreement, the SELLER shall exercise his option to acquire
the Option Shares and SELLER shall immediately thereafter
deliver and turn over to the Escrow Agent such stock certificates as
are herein provided to be received from the existing stockholders of
the bank by virtue of the exercise on the aforementioned option.
The Escrow Agent shall thereupon issue its check in favor of the
SELLER covering the purchase price for the shares delivered.
(Emphasis supplied.)

The Sandiganbayan viewed the compensation of

petitioner of 14,400 FUB shares as exorbitant. In the
absence of proof to the contrary and considering the
absence of any complaint of illegality or fraud from any of
the contracting parties, then the presumption that „private
transactions have been fair and regular‰53 must apply.
Lastly, respondent interjects the thesis that PCA could
not validly enter into a bank management agreement with
petitioner since PCA has a personality separate and
distinct from that of FUB. Evidently, it is PCA which has
the right to challenge the stipulations on the management
contract as unenforceable. However, PCA chose not to
assail said stipulations and instead even complied with and
implemented its prestations contained in said stipulations
by installing petitioner as Chairman of UCPB. Thus, PCA
has waived and forfeited its right to nullify said
stipulations and is now estopped from questioning the
same.

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53 RULES OF COURT, Rule 131(p).

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In view of the foregoing, the Court is left with no option

but to uphold the validity of the two agreements in
question.
IV
COJUANGCO IS NOT ENTITLED TO THE UCPB
SHARES WHICH WERE BOUGHT WITH PUBLIC
FUNDS AND HENCE, ARE PUBLIC PROPERTY.
The coconut levy funds were exacted
for a special public purpose. Conse-
quently, any use or transfer of the
funds that directly benefits private
individuals should be invalidated.
The issue of whether or not taxpayersÊ money, or funds
and property acquired through the imposition of taxes may
be used to benefit a private individual is once again posed.
Preliminarily, the instant case inquires whether the
coconut levy funds, and accordingly, the UCPB shares
acquired using the coconut levy funds are public funds.
Indeed, the very same issue took center stage, discussed
and was directly addressed in COCOFED v. Republic. And
there is hardly any question about the subject fundsÊ public
and special character. The following excerpts from
COCOFED v. Republic,54 citing Republic v. COCOFED and
related cases, settle once and for all this core,
determinative issue:

Indeed, We have hitherto discussed, the coconut levy was

imposed in the exercise of the StateÊs inherent power of taxation. As
We wrote in Republic v. COCOFED:
Indeed, coconut levy funds partake of the nature of
taxes, which, in general, are enforced proportional contribu-

_______________
54 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514; citing Republic v. COCOFED, G.R. Nos. 147062-64, December
14, 2001, 372 SCRA 462, 482-484.

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tions from persons and properties, exacted by the State by

virtue of its sovereignty for the support of government and for
all public needs.
Based on its definition, a tax has three elements, namely:
a) it is an enforced proportional contribution from persons
and properties; b) it is imposed by the State by virtue of its
sovereignty; and c) it is levied for the support of the
government. The coconut levy funds fall squarely into these
elements for the following reasons:
(a)  They were generated by virtue of statutory enactments
imposed on the coconut farmers requiring the payment of
prescribed amounts. Thus, PD No. 276, which created the ⁄
(CCSF), mandated the following:
„a.  A levy, initially, of P15.00 per 100 kilograms of
copra resecada or its equivalent in other coconut
products, shall be imposed on every first sale, in
accordance with the mechanics established under RA
6260, effective at the start of business hours on August
10, 1973.
„The proceeds from the levy shall be deposited with
the Philippine National Bank or any other government
bank to the account of the Coconut Consumers
Stabilization Fund, as a separate trust fund which
shall not form part of the general fund of the
government.‰
The coco levies were further clarified in amendatory laws,
specifically PD No. 961 and PD No. 1468―in this wise:
„The Authority (PCA) is hereby empowered to
impose and collect a levy, to be known as the Coconut
Consumers Stabilization Fund Levy, on every one
hundred kilos of copra resecada, or its equivalent ⁄
delivered to, and/or purchased by, copra exporters, oil
millers, desiccators and other end-users of copra or its
equivalent in other coconut products. The levy shall
be paid by such copra exporters, oil millers,
desiccators and other end-users of copra or its
equivalent in other coconut products under such
rules and regulations as the Authority may prescribe.
Until otherwise prescribed by the Authority, the
current levy being collected shall be continued.‰

529

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Like other tax measures, they were not voluntary

payments or donations by the people. They were enforced
contributions exacted on pain of penal sanctions, as provided
under PD No. 276:
„3. Any person or firm who violates any provision of
this Decree or the rules and regulations promulgated
thereunder, shall, in addition to penalties already
prescribed under existing administrative and special
law, pay a fine of not less than P2,500 or more than
P10,000, or suffer cancellation of licenses to operate, or
both, at the discretion of the Court.‰
Such penalties were later amended thus: ⁄.
(b)  The coconut levies were imposed pursuant to the laws
enacted by the proper legislative authorities of the State.
Indeed, the CCSF was collected under PD No. 276, ⁄.‰
(c) They were clearly imposed for a public purpose.
There is absolutely no question that they were
collected to advance the governmentÊs avowed policy
of protecting the coconut industry. This Court takes
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
countryÊs 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 as to be
within the police power of the State ⁄.
Even if the money is allocated for a special purpose and
raised by special means, it is still public in character⁄. In
Cocofed v. PCGG, the Court observed that certain agencies or
enterprises „were organized and financed with revenues
derived from coconut levies imposed under a succession of law
of the late dictatorship ⁄ with deposed Ferdinand Marcos
and his cronies as the suspected authors and chief
beneficiaries of the resulting coconut industry monopoly.‰ The
Court continued: „⁄. It cannot be denied that the
coconut industry is one of the major industries
supporting the national

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economy. It is, therefore, the StateÊs concern to make it a

strong and secure source not only of the livelihood of a
significant segment of the population, but also of export
earnings the sustained growth of which is one of the
imperatives of economic stability. (Emphasis Ours.)

The following parallel doctrinal lines from Pambansang

Koalisyon ng mga Samahang Magsasaka at Manggagawa
sa Niyugan (PKSMMN) v. Executive Secretary55 came next:

The Court was satisfied that the coco-levy funds were raised
pursuant to law to support a proper governmental purpose. They
were raised with the use of the police and taxing powers of the
State for the benefit of the coconut industry and its farmers in
general. The COA reviewed the use of the funds. The Bureau of
Internal Revenue (BIR) treated them as public funds and the very
laws governing coconut levies recognize their public character.
The Court has also recently declared that the coco-levy funds are
in the nature of taxes and can only be used for public purpose.
Taxes are enforced proportional contributions from persons and
property, levied by the State by virtue of its sovereignty for the
support of the government and for all its public needs. Here, the
coco-levy funds were imposed pursuant to law, namely, R.A. 6260
and P.D. 276. The funds were collected and managed by the PCA,
an independent government corporation directly under the
President. And, as the respondent public officials pointed out, the
pertinent laws used the term levy, which means to tax, in describing
the exaction.
Of course, unlike ordinary revenue laws, R.A. 6260 and P.D. 276
did not raise money to boost the governmentÊs general funds but to
provide means for the rehabilitation and stabilization of a
threatened industry, the coconut industry, which is so affected with
public interest as to be within the police power of the State. The
funds sought to support the coconut industry, one of the main
economic backbones of the country, and to secure economic benefits
for the coconut farmers and far workers. The subject laws are akin
to the

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55 G.R. Nos. 147036-37 & 147811, April 10, 2012, 669 SCRA 49.

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sugar liens imposed by Sec. 7(b) of P.D. 388, and the oil price
stabilization funds under P.D. 1956, as amended by E.O. 137.

From the foregoing, it is at once apparent that any

property acquired by means of the coconut levy funds, such
as the subject UCPB shares, should be treated as public
funds or public property, subject to the burdens and
restrictions attached by law to such property. COCOFED v.
Republic, delved into such limitations, thusly:

We have ruled time and again that taxes are imposed only
for a public purpose. „They cannot be used for purely
private purposes or for the exclusive benefit of private
persons.‰ When a law imposes taxes or levies from the
public, with the intent to give undue benefit or advantage to
private persons, or the promotion of private enterprises,
that law cannot be said to satisfy the requirement of public
purpose. In Gaston v. Republic Planters Bank, the petitioning
sugar producers, sugarcane planters and millers sought the
distribution of the shares of stock of the Republic Planters Bank
(RPB), alleging that they are the true beneficial owners thereof. In
that case, the investment, i.e., the purchase of RPB, was funded by
the deduction of PhP 1.00 per picul from the sugar proceeds of the
sugar producers pursuant to P.D. No. 388. In ruling against the
petitioners, the Court held that to rule in their favor would
contravene the general principle that revenues received from the
imposition of taxes or levies „cannot be used for purely private
purposes or for the exclusive benefit of private persons.‰ The Court
amply reasoned that the sugar stabilization fund is to „be utilized
for the benefit of the entire sugar industry, and all its
components, stabilization of the domestic market including
foreign market, the industry being of vital importance to the
countryÊs economy and to national interest.‰
Similarly in this case, the coconut levy funds were sourced from
forced exactions decreed under P.D. Nos. 232, 276 and 582, among

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others, with the end-goal of developing the entire coconut industry.

Clearly, to hold therefore, even by law, that the revenues
received from the imposition of the coconut levies be used
purely for private purposes to be owned by private
individuals in their private capacity and for their benefit,

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532 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

would contravene the rationale behind the imposition of

taxes or levies.
Needless to stress, courts do not, as they cannot, allow by
judicial fiat the conversion of special funds into a private
fund for the benefit of private individuals. In the same vein,
We cannot subscribe to the idea of what appears to be an
indirect― ―if not exactly direct― ―conversion of special funds
into private funds, i.e., by using special funds to purchase
shares of stocks, which in turn would be distributed for free
to private individuals. Even if these private individuals
belong to, or are a part of the coconut industry, the free
distribution of shares of stocks purchased with special
public funds to them, nevertheless cannot be justified. The
ratio in Gaston, as articulated below, applies mutatis mutandis to
this case:
The stabilization fees in question are levied by the State ⁄
for a special purpose―that of „financing the growth and
development of the sugar industry and all its components,
stabilization of the domestic market including the foreign
market.‰ The fact that the State has taken possession of
moneys pursuant to law is sufficient to constitute them
as state funds even though they are held for a special
purpose⁄.
That the fees were collected from sugar producers
[etc.], and that the funds were channeled to the
purchase of shares of stock in respondent Bank do not
convert the funds into a trust fund for their benefit nor
make them the beneficial owners of the shares so
purchased. It is but rational that the fees be collected
from them since it is also they who are benefited from
the expenditure of the funds derived from it. ⁄. 56

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In this case, the coconut levy funds were being exacted from
copra exporters, oil millers, desiccators and other end-users of copra

_______________
56 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24, 2012,
663 SCRA 514; citing Gaston v. Republic Planters Bank, No. L-77194, March
15, 1988, 158 SCRA 626, 633-34; see also Republic v. COCOFED, G.R. Nos.
147062-64, December 14, 2001, 372 SCRA 462, 485-486.

533

VOL. 686, NOVEMBER 27, 2012 533

Cojuangco, Jr. vs. Republic

or its equivalent in other coconut products.57 Likewise so, the funds

here were channeled to the purchase of the shares of stock in
UCPB. Drawing a clear parallelism between Gaston and this case,
the fact that the coconut levy funds were collected from the persons
or entities in the coconut industry, among others, does not and
cannot entitle them to be beneficial owners of the subject funds―or
more bluntly, owners thereof in their private capacity.
Parenthetically, the said private individuals cannot own the
UCPB shares of stocks so purchased using the said special
funds of the government.58 (Emphasis Ours.)

As the coconut levy funds partake of the nature of taxes

and can only be used for public purpose, and importantly,
for the purpose for which it was exacted, i.e., the
development, rehabilitation and stabilization of the coconut
industry, they cannot be used to benefit―whether directly
or indirectly―private individuals, be it by way of a
commission, or as the subject Agreement interestingly
words it, compensation. Consequently, Cojuangco cannot
stand to benefit by receiving, in his private capacity, 7.22%
of the FUB shares without violating the constitutional
caveat that public funds can only be used for public
purpose. Accordingly, the 7.22% FUB (UCPB) shares that
were given to Cojuangco shall be returned to the
Government, to be used „only for the benefit of all coconut
farmers and for the development of the coconut industry.‰59
The ensuing are the underlying rationale for declaring,
as unconstitutional, provisions that convert public property

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into private funds to be used ultimately for personal

benefit:

_______________
57 Republic v. COCOFED, G.R. Nos. 147062-64, December 14, 2001,
372 SCRA 462, 483; citing P.D. No. 961, 1976, Art. III, Sec. 1; P.D. No.
1468, 1978, Art. III, Sec. 1.
58 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.
59 Id.

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534 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

⁄ not only were the laws unconstitutional for decreeing the

distribution of the shares of stock for free to the coconut farmers
and therefore negating the public purposed declared by P.D. No.
276, i.e., to stabilize the price of edible oil and to protect the coconut
industry. They likewise reclassified the coconut levy fund as private
fund, to be owned by private individuals in their private capacities,
contrary to the original purpose for the creation of such fund. To
compound the situation, the offending provisions effectively
removed the coconut levy fund away from the cavil of public funds
which normally can be paid out only pursuant to an appropriation
made by law. The conversion of public funds into private assets was
illegally allowed, in fact mandated, by these provisions. Clearly
therefore, the pertinent provisions of P.D. Nos. 755, 961 and 1468
are unconstitutional for violating Article VI, Section 29 (3) of the
Constitution. In this context, the distribution by PCA of the UCPB
shares purchased by means of the coconut levy fund―a special fund
of the government―to the coconut farmers is, therefore, void.60

It is precisely for the foregoing that impels the Court to

strike down as unconstitutional the provisions of the PCA-
Cojuangco Agreement that allow petitioner Cojuangco to
personally and exclusively own public funds or property,
the disbursement of which We so greatly protect if only to
give light and meaning to the mandates of the
Constitution.
As heretofore amply discussed, taxes are imposed only

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for a public purpose.61 They must, therefore, be used for the

benefit of the public and not for the exclusive profit or gain
of private persons.62 Otherwise, grave injustice is inflicted
not only upon the Government but most especially upon
the citizenry―the taxpayers―to whom We owe a great deal
of accountability.
In this case, out of the 72.2% FUB (now UCPB) shares of
stocks PCA purchased using the coconut levy funds, the
May 25, 1975 Agreement between the PCA and Cojuangco
pro-

_______________
60 Id.
61 Id.; citing Republic v. Sandiganbayan, G.R. No. 118661, January
22, 2007, 512 SCRA 25.
62 Id.

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Cojuangco, Jr. vs. Republic

vided for the transfer to the latter, by way of compensation,

of 10% of the shares subject of the agreement, or a total of
7.22% fully paid shares. In sum, Cojuangco received public
assets―in the form of FUB (UCPB) shares with a value
then of ten million eight hundred eighty-six thousand pesos
(PhP 10,886,000) in 1975, paid by coconut levy funds. In
effect, Cojuangco received the aforementioned asset as a
result of the PCA-Cojuangco Agreement, and exclusively
benefited himself by owning property acquired using solely
public funds. Cojuangco, no less, admitted that the PCA
paid, out of the CCSF, the entire acquisition price for the
72.2% option shares.63 This is in clear violation of the
prohibition, which the Court seeks to uphold.

_______________
63 Republic v. COCOFED, G.R. Nos. 147062-64, Dec. 14, 2001, 372
SCRA 462, 477.
In the present case before the Court, it is not disputed that the money
used to purchase the sequestered UCPB shares came from the Coconut

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Consumer Stabilization Fund (CCSF), otherwise known, as the coconut

levy funds.
This fact was plainly admitted by private respondentÊs counsel, Atty.
Teresita J. Hebosa, during the Oral Arguments held on April 17, 2001 in
Baguio City, as follows:
„Justice Panganiban:
„In regard to the theory of the Solicitor General that the funds used to
purchase [both] the original 28 million and the subsequent 80 million
came from the CCSF, Coconut Consumers Stabilization Fund, do you
agree with that?
„Atty. Herbosa:
„Yes, Your Honor.
⁄   ⁄   ⁄
„Justice Panganiban:
„So it seems that the parties [have] agreed up to that point that the
funds used to purchase 72% of the former First United Bank came from
the Coconut Consumer Stabilization Fund?
„Atty. Herbosa:
„Yes, Your Honor.‰

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536 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

We, therefore, affirm, on this ground, the decision of the

Sandiganbayan nullifying the shares of stock transfer to
Cojuangco. Accordingly, the UCPB shares of stock
representing the 7.22% fully paid shares subject of the
instant petition, with all dividends declared, paid or issued
thereon, as well as any increments thereto arising from,
but not limited to, the exercise of pre-emptive rights, shall
be reconveyed to the Government of the Republic of the
Philippines, which as We previously clarified, shall „be
used only for the benefit of all coconut farmers and for the
development of the coconut industry.‰64
But apart from the stipulation in the PCA-Cojuangco
Agreement, more specifically paragraph 4 in relation to
paragraph 6 thereof, providing for the transfer to
Cojuangco for the UCPB shares adverted to immediately
above, other provisions are valid and shall be enforced, or
shall be respected, if the corresponding prestation had

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already been performed. Invalid stipulations that are

independent of, and divisible from, the rest of the
agreement and which can easily be separated therefrom
without doing violence to the manifest intention of the
contracting minds do not nullify the entire contract.65
WHEREFORE, Part C of the appealed Partial Summary
Judgment in Sandiganbayan Civil Case No. 0033-A is
AFFIRMED with modification. As MODIFIED, the
dispositive

_______________
FN40. Transcript of Oral Arguments, April 17, 2001, pp. 171, 173.
During the same Oral Argument, Private Respondent Cojuangco
similarly admitted that the „entire amount‰ paid for the shares had come
from the Philippine Coconut Authority. TSN,
p. 115.
64 COCOFED v. Republic, G.R. Nos. 177857-58 & 178193, January 24,
2012, 663 SCRA 514.
65 CIVIL CODE, Art. 1420 specifically provides, „[I]n case of a divisible
contract, if the illegal terms can be separated from the legal ones, the
latter may be enforced.‰

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Cojuangco, Jr. vs. Republic

portion in Part C of the SandiganbayanÊs Partial Summary

Judgment in Civil Case No. 0033-A, shall read as follows:
C.  Re: MOTION FOR PARTIAL SUMMARY JUDGMENT (RE:
EDUARDO M. COJUANGCO, JR.) dated September 18, 2002 filed
by Plaintiff.
1. Sec. 1 of P.D. No. 755 did not validate the Agreement between
PCA and defendant Eduardo M. Cojuangco, Jr. dated May
25, 1975 nor did it give the Agreement the binding force of a
law because of the non-publication of the said Agreement.
2.  The Agreement between PCA and defendant Eduardo M.
Cojuangco, Jr. dated May 25, 1975 is a valid contract for
having the requisite consideration under Article 1318 of the
Civil Code.
3. The transfer by PCA to defendant Eduardo M. Cojuangco, Jr.

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of 14,400 shares of stock of FUB (later UCPB) from the

„Option Shares‰ and the additional FUB shares subscribed
and paid by PCA, consisting of
a. Fifteen Thousand Eight Hundred Eighty-Four (15,884)
shares out of the authorized but unissued shares of
the bank, subscribed and paid by PCA;
b. Sixty Four Thousand Nine Hundred Eighty (64,980)
shares of the increased capital stock subscribed and
paid by PCA; and
c. Stock dividends declared pursuant to paragraph 5 and
paragraph 11 (iv) (d) of the PCA-Cojuangco
Agreement dated May 25, 1975 or the so-called
„Cojuangco-UCPB shares‰
is declared unconstitutional, hence null and void.
4. The above-mentioned shares of stock of the FUB/UCPB
transferred to defendant Cojuangco are hereby declared
conclusively owned by the Republic of the Philippines to be
used only for the benefit of all coconut farmers and for the
development of the

538

538 SUPREME COURT REPORTS ANNOTATED

Cojuangco, Jr. vs. Republic

coconut industry, and ordered reconveyed to the

Government.
5. The UCPB shares of stock of the alleged fronts, nominees and
dummies of defendant Eduardo M. Cojuangco, Jr. which
form part of the 72.2% shares of the FUB/UCPB paid for by
the PCA with public funds later charged to the coconut levy
funds, particularly the CCSF, belong to the plaintiff
Republic of the Philippines as their true and beneficial
owner.

Accordingly, the instant petition is hereby DENIED.

Costs against petitioner Cojuangco.
SO ORDERED.

Sereno (C.J.), Bersamin, Del Castillo, Abad, Villarama,

Jr., Perez, Mendoza and Leonen, JJ., concur.
Carpio, Leonardo-De Castro and Peralta, JJ., No part.
Brion, Reyes and Perlas-Bernabe, JJ., On leave.

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Petition denied.

Notes.―The Court cannot reverse the decision of the

Sandiganbayan on the basis alone of judicial
pronouncements to the effect that the coconut levy funds
were prima facie public funds, but without any competent
evidence linking the acquisition of the block of San Miguel
Corporation (SMC) shares by Cojuangco, et al. to the
coconut levy funds. (Republic vs. Sandiganbayan [First
Division], 648 SCRA 47 [2011])
The coconut levy funds were sourced from forced
exactions decreed under P.D. Nos. 232, 276 and 582, among
others, with the end-goal of developing the entire coconut
industry. (Philippine Coconut Producers Federation, Inc.
[COCOFED] vs. Republic, 663 SCRA 514 [2012])
――o0o――

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