DOJ OPINION NO. 061, s. 2007
October 5, 2007
Secretary Nasser C. Pangandaman
Department of Agrarian Reform
DAR Bldg., Elliptical Road
Diliman, Quezon City
This refers to your request for opinion on whether the Department of Agrarian Reform (DAR), for the particular use, object, purpose or purposes of Comprehensive Agrarian Reform Program (CARP) implementation, can draw from or access the Coconut Levy Funds, in the light of the Supreme Court pronouncement in the cases of COCOFED, et al. vs. PCGG 1 and Republic vs. Sandiganbayan 2 that the Coconut Levy Funds (CLF) are clearly affected with public interest.
Your query, it appears, is raised in connection with the provision of Section 63 of Republic Act No. 6657, 3 as amended by R.A. No. 8532, which provides for the funding sources of the Agrarian Reform Fund (ARF), the special fund created under Proclamation 131, 4 s. 1987, and implemented under Executive Order No. 229, 5 dated July 22, 1987.
It is your position that the Coconut Consumer Stabilization Fund, otherwise known as the coconut levy funds (CLF), "should accrue to, and be remitted or credited under, the Agrarian Reform Fund (ARF)."
The legal provision adverted to, insofar as pertinent, reads:
SEC. 63. Funding Source. — The amount needed to implement this Act until year 2008 shall be funded from the Agrarian Reform Fund.
Additional amounts necessary for this purpose are hereby authorized to be appropriated in excess of the initial funds, amounting to FIFTY BILLION PESOS (P50,000,000,000.00) provided under Sections 20 6 and 21 7 of Executive Order No. 229.
The additional amount hereby authorized to be appropriated shall in no case exceed FIFTY BILLION PESOS (P50,000,000,000.00).
Sources of funding or appropriations shall include the following:
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b) All receipts from assets recovered and from sales of ill-gotten wealth recovered through the Presidential Commission on Good Government;
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Subject to the discussions provided hereunder, we resolve the issue in the negative.
At the outset, it may stated that in the more recent case of Republic vs. COCOFED, 8 the Supreme Court, en banc, stressed that "the coconut levy funds are not only affected with public interest; they are, in fact, prima facie public funds."
Explaining, the Court not only said that its more categorical and positive pronouncement on the nature of the funds is aimed "to avoid misunderstanding and confusion." It added:
Public funds are those moneys belonging to the State or to any political subdivision of the State; more specifically, taxes, customs duties and moneys raised by operation of law for the support of the government or for the discharge of its obligations. Undeniably, coconut levy funds satisfy this general definition of public funds, because of the following reasons:
1. Coconut levy funds are raised with the use of the police and taxing powers of the State.
2. They are levies imposed by the State for the benefit of the coconut industry and its farmers.
3. Respondents have judicially admitted that the sequestered shares were purchased with public funds.
4. The Commission on Audit (COA) reviews the use of coconut levy funds.
5. The Bureau of Internal Revenue (BIR), with the acquiescence of private respondents, has treated them as public funds.
6. The very laws governing coconut levies recognize their public character. 9
Since the coconut levy funds, like the sugar levy funds, are stabilization fees collected "in the nature of a tax which is within the power of the State to impose for the promotion of the coconut industry," hence, a special fund, the following constitutional provision applies: THcaDA
SEC. 29. . . . .
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(3) All money collected on any tax levied for a special purpose shall be treated as a special fund and paid out for such special purpose only. If the purpose for which the special fund was created has been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the Government. 10
As the Court said:
. . . Having been levied for a special purpose, the revenue collected are to be treated as a special fund, to be, in the language of the statute, "administered in trust" for the purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds of the Government. That is the essence of the trust intended. 11
As such special fund, it cannot likewise be used or spent for any other public purpose without specific legislative authorization. 12 EAaHTI
Moreover, we have had occasions to pass upon the extent of the application of Section 63 (b), earlier quoted, thus:
. . . (W)hile Section 63 of R.A. No. 6657 mandates that all receipts from assets recovered and sales of ill-gotten wealth recovered through the PCGG, shall fund the Agrarian Reform Fund, Section 2 13 of R.A. No. 7202 requires that if such recovered assets or ill-gotten wealth are determined to have been taken or acquired from the sugar industry, then the proceeds thereof should be used to compensate sugar producers. . . . .
It is believed, therefore, that the two discordant provisions in issue should be read together in that as a rule, funds related to assets or ill-gotten wealth recovered by the PCGG should be appropriated for CARP purposes, except when such assets or wealth were illegally acquired from the sugar industry, in which case, such funds shall go to the compensation fund for sugar producers. 14
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. . . Section 2 of R.A. No. 7202, however, prescribes a condition precedent, and that, the assets must have been first determined to be illegally taken from the sugar industry. Such determination, . . . is not the function of the PCGG or of any administrative agency because there is no law providing to that effect. Such prior determination, however, as held by the Supreme Court in several cases 15 (infra), is lodged within the exclusive and original jurisdiction of the Sandiganbayan. ISTECA
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Thus, even assuming argumentatively, that the coconut levy funds, per se, are not special funds, by express mandate of the law, before the same can be classified as funding sources for the ARF, the Sandiganbayan must make a prior determination that the said funds are "ill-gotten". Absent such determination, the funds cannot be included as funding source of the ARF. HCDaAS
Please be guided accordingly.
Very truly yours,
(SGD.) AGNES VST DEVANADERA
1. 178 SCRA 236.
2. 226 SCRA 314.
3. The Comprehensive Agrarian Reform Law of 1988.
4. Instituting a Comprehensive Agrarian Reform Program. Section 2 thereof states:
Sec. 2. Agrarian Reform Fund. — There is hereby created a special fund, to be known as The Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS (P50,000,000,000.00) to cover the estimated cost of the Comprehensive Agrarian Reform Program from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset Privatization Trust and receipts of sale of ill-gotten wealth received through the Presidential Commission on Good Government and such other sources as the government may deem appropriate. The amounts collected and accruing to this special fund shall be considered automatically appropriated for the purpose authorized in this Proclamation.
5. Providing the Mechanism for the Implementation of the Comprehensive Agrarian Reform Program.
6. Section 20. Agrarian Reform Fund: As provided in Proclamation No. 131 dated July 22, 1987, a special fund is created, known as The Agrarian Reform Fund, an initial amount of FIFTY BILLION PESOS (P50 billion) to cover the estimated cost of the CARP from 1987 to 1992 which shall be sourced from the receipts of the sale of the assets of the Asset Privatization Trust (APT) and receipts of sale of ill-gotten wealth received through the Presidential Commission on Good Government and such other sources as the government may deem appropriate. The amount collected and accruing to this special fund shall be considered automatically appropriated for the purpose authorized in this Order.
7. Section 21. Supplemental Appropriations. — The amount of TWO BILLION SEVEN HUNDRED MILLION PESOS (P2.7 billion) is hereby appropriated to cover the supplemental requirements of the CARP for 1987, to be sourced from the receipts of sale of ill-gotten wealth recovered through the Presidential Commission on Good Government and the proceeds from the sale of assets by the APT. The amount collected from these sources shall accrue to the Agrarian Reform Fund and shall likewise be considered automatically appropriated for the purpose authorized in this Order.
8. G.R. Nos. 147062-64, December 14, 2001, 372 SCRA 462.
9. Ibid., pp. 9-10, Decision, quoting Gaston vs. Republic Planters Bank, 158 SCRA 626.
10. Article VI, 1987 Constitution; emphasis added.
11. Gaston vs. Republic Planters Bank, 158 SCRA 626, 634; stress ours.
12. De Leon, Philippine Constitutional Law, Principles and Cases, Vol. 2, 1991 ed., p. 154.
13. SEC. 2. Whatever amount recovered by the Government through the Presidential Commission on Good Government or any other agency or from any other source and whatever assets or funds that may be recovered, or already recovered which have been determined to have been stolen or illegally acquired from the sugar industry shall be used to compensate all sugar producers . . . . (R.A. No. 7202) (emphasis supplied)
14. Secretary of Justice Op. No. 70, s. 1993.
15. PCGG vs. Peña, 159 SCRA 556, Republic vs. Sandiganbayan, 184 SCRA 382; Republic vs. Sandiganbayan, 226 SCRA 314.
16. Op. Cit., No. 21, s. 1995.