Cojuanco v Republic

7/30/2015 G.R.No.180705

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RepublicofthePhilippinesSUPREMECOURT

Manila

ENBANC

G.R.No.180705November27,2012

EDUARDOM.COJUANGCO,JR.,Petitioner,vs.REPUBLICOFTHEPHILIPPINES,Respondent.

DECISION

VELASCO,JR.,J.:

TheCase

OftheseveralcoconutlevyappealedcasesthatstemmedfromcertainissuancesoftheSandiganbayaninitsCivilCaseNo.0033,thepresentrecourseprovestobeoneofthemostdifficult.

In particular, the instant petition for review under Rule 45 of the Rules of Court assails and seeks to annul aportionofthePartialSummaryJudgmentdatedJuly11,2003,asaffirmedinaResolutionofDecember28,2004,both rendered by the Sandiganbayan in its Civil Case ("CC") No. 0033A (the judgment shall hereinafter bereferred to as "PSJA"), 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. 0033A is the result of thesplitting into eight (8) amended complaints of CC No. 0033 entitled, "Republic of the Philippines v. EduardoCojuangco,Jr.,etal.,"asuitforrecoveryofillgottenwealthcommencedbythePresidentialCommissiononGoodGovernment ("PCGG"), for the Republic of the Philippines ("Republic"), against Eduardo M. Cojuangco, Jr.("Cojuangco")andseveralindividuals,amongthem,FerdinandE.Marcos,MariaClaraLobregat("Lobregat"),andDanilo S. Ursua ("Ursua"). Each of the eight (8) subdivided complaints, CC No. 0033A to CC No. 0033H,correspondingly impleadedasdefendantsonlytheallegedparticipants inthetransaction/ssubjectof thesuit,orwhoareaverredasowner/softheassetsinvolved.

Apart from this recourse,Weclarify right off thatPSJAwaschallenged in twoother separatebut consolidatedpetitions for review, one commenced by COCOFED et al., docketed as G.R. Nos. 17785758, and the other,interposedbyDaniloS.Ursua,anddocketedasG.R.No.178193.

ByDecisiondatedJanuary24,2012, in theaforesaidG.R.Nos.17785758 (COCOFEDetal. v.Republic)andG.R.No.178193 (Ursuav.Republic) consolidatedcases1 (hereinafter collectively referred to as "COCOFEDv.Republic"), theCourt addressedand resolvedall keymatters elevated to it in relation toPSJA, except for theissues raised in the instant petitionwhich havenot yet been resolved therein. In the samedecision,Wemadeclear that: (1)PSJA issubjectofanotherpetition for review interposedbyEduardoCojuangco,Jr., inG.R.No.180705,entitledEduardoM.Cojuangco,Jr.v.Republicof thePhilippines,whichshallbedecidedseparatelybytheCourt,2and(2)theissuesraisedintheinstantpetitionshouldnotbeaffectedbytheearlierdecision"savefordeterminativelylegalissuesdirectlyaddressedtherein."3

Forabetterperspective, the instant recourseseeks toreverse thePartialSummaryJudgment4of theantigraftcourtdatedJuly11,2003,asreiteratedinaResolution5ofDecember28,2004,denyingCOCOFEDsmotionforreconsideration,andtheMay11,2007Resolution6denying

COCOFEDs motion to set case for trial and declaring the partial summary judgment final and appealable, allissued in PSJA. In our adverted January 24, 2012 Decision in COCOFED v. Republic, we affirmed withmodificationPSJAoftheSandiganbayan,anditsPartialSummaryJudgmentinCivilCaseNo.0033F,datedMay7,2004(hereinafterreferredtoas"PSJF).7

Morespecifically,WeupheldtheSandiganbayansrulingthatthecoconutlevyfundsarespecialpublicfundsoftheGovernment.Consequently,Weaffirmed theSandiganbayansdeclaration thatSections1and2ofPresidentialDecree("P.D.")755,Section3,ArticleIIIofP.D.961andSection3,ArticleIIIofP.D.1468,aswellasthepertinentimplementing regulations of the Philippine Coconut Authority ("PCA"), are unconstitutional for allowing the useand/or thedistributionof propertiesacquired through thecoconut levy funds toprivate individuals for their owndirect benefit and absolute ownership. TheDecision also affirmed theGovernments ownership of the sixCIIFcompanies, the fourteenholdingcompanies,and theCIIFblockofSanMiguelCorporation sharesof stock, forhavinglikewisebeenacquiredusingthecoconutlevyfunds.Accordingly,thepropertiessubjectoftheJanuary24,2012 Decision were declared owned by and ordered reconveyed to the Government, to be used only for thebenefitofallcoconutfarmersandforthedevelopmentofthecoconutindustry.

ByResolutionofSeptember4,2012,8theCourtaffirmedtheabovestatedDecisionpromulgatedonJanuary24,2012.

ItbearstostressatthisjuncturethattheonlyportionoftheappealedPartialSummaryJudgmentdatedJuly11,2003("PSJA")whichremainsatissuerevolvesaroundthefollowingdecretalholdingsofthatcourtrelatingtothe"compensation" paid to petitioner for exercising his personal and exclusive option to acquire the FUB/UCPBshares.9 It will be recalled that the Sandiganbayan declared the Agreement between the PCA and Cojuangcocontaining the assailed "compensation" null and void for not having the required valuable consideration.Consequently,theUCPBsharesofstocksthataresubjectoftheAgreementweredeclaredconclusivelyownedbytheGovernment.ItalsoheldthattheAgreementdidnothavetheeffectoflawasitwasnotpublishedaspartofP.D.755,evenifSection1thereofmadereferencetothesame.

Facts

Wereproduce,below,portionsofthestatementoffactsinCOCOFEDv.Republicrelevanttothepresentcase:10

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In 1971, Republic Act No. ("R.A.") 6260 was enacted creating the Coconut Investment Company("CIC")toadministertheCoconutInvestmentFund("CIF"),which,underSection8thereof,wastobesourcedfromaPhP0.55levyonthesaleofevery100kg.ofcopra.OfthePhP0.55levyofwhichthecopra seller was or ought to be issued COCOFUND receipts, PhP 0.02 was placed at thedispositionofCOCOFED,thenationalassociationofcoconutproducersdeclaredbythe

PhilippineCoconutAdministration("PHILCOA"now"PCA")ashavingthelargestmembership.

Thedeclarationofmartial law inSeptember1972saw the issuanceofseveralpresidentialdecrees("P.D.")purportedlydesigned to improve thecoconut industry through thecollectionanduseof thecoconutlevyfund.Whilecominggenerallyfromimpositionsonthefirstsaleofcopra,thecoconutlevyfundcameundervariousnamesxxx.ChargedwiththedutyofcollectingandadministeringtheFundwasPCA.LikeCOCOFEDwithwhichithadalegallinkage,thePCA,bystatutoryprovisionsscatteredindifferentcocolevydecrees,haditsshareofthecocolevy.

The following were some of the issuances on the coco levy, its collection and utilization, how theproceedsofthelevywillbemanagedandbywhomandthepurposeitwassupposedtoserve:

1.P.D.No.276establishedtheCoconutConsumersStabilizationFund("CCSF")anddeclaredtheproceedsof theCCSF levyas trust fund, to beutilized to subsidize the saleof coconutbasedproducts,thusstabilizingthepriceofedibleoil.

2. P.D. No. 582 created the Coconut Industry Development Fund ("CIDF") to finance theoperationofahybridcoconutseedfarm.

3.ThencameP.D.No.755providingunderitsSection1thefollowing:

It is hereby declared that the policy of the State is to provide readily available creditfacilitiestothecoconutfarmersatpreferentialratesthatthispolicycanbeexpeditiouslyandefficientlyrealizedbytheimplementationofthe"AgreementfortheAcquisitionofaCommercialBankforthebenefitofCoconutFarmers"executedbythePCAandthatthePCA is hereby authorized to distribute, for free, the shares of stock of the bank itacquiredtothecoconutfarmers.

Towardsachievingthepolicythusdeclared,P.D.No.755,underitsSection2,authorizedPCA to utilize the CCSF and the CIDF collections to acquire a commercial bank anddeposit the CCSF levy collections in said bank interest free, the deposit withdrawableonlywhen thebankhasattaineda certain level of sufficiency in its equity capital. Thesame section also decreed that all levies PCA is authorized to collect shall not beconsidered as special and/or fiduciary funds or form part of the general funds of thegovernmentwithinthecontemplationofP.D.No.711.

4. P.D. No. 961 codified the various laws relating to the development of coconut/palm oilindustries.

5. The relevant provisions of P.D. No. 961, as later amended by P.D. No. 1468 (RevisedCoconutIndustryCode),read:

ARTICLEIIILevies

Section 1. Coconut Consumers Stabilization Fund Levy. The PCA is herebyempowered to imposeand collect theCoconutConsumersStabilizationFundLevy,.

.

Section5.Exemption.TheCCSFandtheCIDFaswellasalldisbursementsashereinauthorized,shallnotbeconstruedasspecialand/or fiduciary funds,oraspartofthegeneralfundsofthenationalgovernmentwithinthecontemplationofPD711 the intentionbeing that saidFundand thedisbursements thereofashereinauthorizedforthebenefitofthecoconutfarmersshallbeownedbythemintheirprivatecapacities:.(Emphasissupplied)

6.LetterofInstructionsNo.("LOI")926,s.of1979,madereferencetothecreation,outofothercoco levy funds, of the Coconut Industry Investment Fund ("CIIF") in P.D. No. 1468 andentrustedaportionoftheCIIFlevytoUCPBforinvestment,onbehalfofcoconutfarmers,inoilmillsandotherprivatecorporations,withthefollowingequityownershipstructure:

Section2.OrganizationoftheCooperativeEndeavor.TheUCPB,initscapacityastheinvestmentarmofthecoconutfarmersthrutheCIIFisherebydirectedtoinvest, on behalf of the coconut farmers, such portion of the CIIF in privatecorporationsunderthefollowingguidelines:

a)Thecoconut farmersshallownorcontrolat least(50%)of theoutstandingvoting capital stock of the private corporation acquired thru the CIIF and/orcorporationownedorcontrolledbythefarmersthrutheCIIF.(Wordsinbracketadded.)

Throughtheyears,apartofthecoconutlevyfundswentdirectlyorindirectlytofinancevariousprojects and/orwas converted into various assets or investments.11 Relevant to the presentpetitionistheacquisitionoftheFirstUnitedBank("FUB"),whichwassubsequentlyrenamedasUnitedCoconutPlantersBank("UCPB").12

Apropostheintendedacquisitionofacommercialbankforthepurposestatedearlier,itwouldappear thatFUBwasthebankofchoicewhichPedroCojuangcosgroup(collectively, "PedroCojuangco")hadcontrolof.Theplan,then,wasforPCAtobuyallofPedroCojuangcossharesinFUB.However,aslatereventsunfolded,asimpledirectsalefromtheseller(Pedro)toPCAdidnotensueasitwasmadetoappearthatCojuangcohadtheexclusiveoptiontoacquiretheformersFUBcontrolling interests.Emergingfromthiselaborate,circuitousarrangementweretwodeeds.ThefirstonewassimplydenominatedasAgreement,datedMay1975,enteredintobyandbetweenCojuangco forand inhisbehalfand inbehalfof "certainotherbuyers",andPedroCojuangco in which the former was purportedly accorded the option to buy 72.2% of

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FUBs outstanding capital stock, or 137,866 shares (the "option shares," for brevity), at PhP200pershare.Onitsface,thisagreementdoesnotmentiontheword"option."

Thesecondbutrelatedcontract,datedMay25,1975,wasdenominatedasAgreementfortheAcquisitionofaCommercialBankfortheBenefitoftheCoconutFarmersofthePhilippines.IthadPCA, for itself and for thebenefit of the coconut farmers, purchase fromCojuangco theshares of stock subject of the First Agreement for PhP200.00 per share. As additionalconsideration forPCAsbuyoutofwhatCojuangcowould later claim tobehisexclusiveandpersonal option, it was stipulated that, from PCA, Cojuangco shall receive equity in FUBamounting to 10%, or 7.22%, of the 72.2%, or fully paid shares. And so as not to diluteCojuangcosequitypositioninFUB,laterUCPB,thePCAagreedunderparagraph6(b)ofthesecondagreement to cedeover to the former a number of fully paidFUBshares out of theshares it (PCA) undertakes to eventually subscribe. It was further stipulated that Cojuangcowouldactasbankpresidentforanextendibleperiodof5years.

Apart from the aforementioned 72.2%, PCA purchased from other FUB shareholders 6,534sharesofwhichCojuangco,asmaybegatheredfromtherecords,got10%..

Whilethe64.98%portionoftheoptionshares(72.2%7.22%=64.98%)ostensiblypertainedtothefarmers,thecorrespondingstockcertificatessupposedlyrepresentingthefarmersequitywere in thenameofanddelivered toPCA.Therewere,however,shares formingpartof theaforesaid64.98%portion,whichendedupinthehandsofnonfarmers.Theremaining27.8%oftheFUBcapitalstockwerenotcoveredbyanyoftheagreements.

Underparagraph#8ofthesecondagreement,PCAagreedtoexpeditiouslydistributetheFUBshares purchased to such "coconut farmers holding registered COCOFUND receipts" onequitablebasis.

AsfoundbytheSandiganbayan,thePCAappropriated,outofitsownfund,anamountforthepurchaseof thesaid72.2%equity,albeit itwould later reimburse itself from thecoconut levyfund.

AndperCojuangcosownadmission,PCApaid,outoftheCCSF,theentireacquisitionpriceforthe72.2%optionshares.13

AsofJune30,1975,thelistofFUBstockholdersincludedCojuangcowith14,440sharesandPCAwith129,955shares.14Itwouldappearlaterthat,pursuanttothestipulationonmaintainingCojuangcosequitypositioninthebank,PCAwouldcedetohim10%of itssubscriptionsto(a)theauthorizedbutunissuedsharesofFUBand(b)theincreaseinFUBscapitalstock(theequivalentof158,840and649,800shares,respectively). Inall, fromthe"mother"PCAshares,Cojuangcowould receivea total of 95,304FUB (UCPB) sharesbrokendownas follows:14,440shares+10%(158,840shares)+10%(649,800shares)=95,304.15

Wefurtherquote,fromCOCOFEDv.Republic,factsrelevanttotheinstantcase:16

ShortlyaftertheexecutionofthePCACojuangcoAgreement,PresidentMarcosissued,onJuly29,1975, P.D. No. 755 directing x x x as narrated, PCA to use the CCSF and CIDF to acquire acommercialbanktoprovidecocofarmerswith"readilyavailablecreditfacilitiesatpreferentialrate"xxx.

Then came the 1986 EDSA event. One of the priorities of then President Corazon C. Aquinosrevolutionary government was the recovery of illgotten wealth reportedly amassed by theMarcosfamily and close relatives, their nominees and associates. Apropos thereto, she issued ExecutiveOrderNos.(EO)1,2and14,asamendedbyE.O.14A,allseriesof1986.E.O.1createdthePCGGand provided it with the tools and processes it may avail of in the recovery efforts17 E.O. No. 2assertedthattheillgottenassetsandpropertiescomeintheformofsharesofstocks,etc.,whileE.O.No. 14 conferred on the Sandiganbayan exclusive and original jurisdiction over illgotten wealthcases,withtheprovisothat"technicalrulesofprocedureandevidenceshallnotbeappliedstrictly"tothecivilcasesfiledundertheEO.Pursuanttotheseissuances,thePCGGissuednumerousordersofsequestration,amongwhichwerethosehandedoutxxxagainstsharesofstockinUCPBpurportedlyowned by or registered in the names of (a) themore than amillion coconut farmers, (b) theCIIFcompaniesand(c)Cojuangco,Jr.,includingtheSMCsharesheldbytheCIIFcompanies.OnJuly31,1987, thePCGG instituted before theSandiganbayan a recovery suit docketed thereat asCCNo.0033.

xxxx

3.CivilCase0033xxxwouldbesubdivided intoeight complaints,docketedasCC0033A toCC0033H.

xxxx

5.ByDecisionofDecember14,2001,inG.R.Nos.14706264(Republicv.COCOFED),18theCourtdeclaredthecocolevyfundsasprimafaciepublic funds.AndpurchasedasthesequesteredUCPBshareswerebysuch funds,beneficialownership thereonand thecorollaryvotingrightsprima faciepertain,accordingtotheCourt,tothegovernment.

xxxx

Correlatively,theRepublic,onthestrengthoftheDecember14,2001rulinginRepublicv.COCOFEDandontheargument,amongothers,thattheclaimofCOCOFEDandBallaresetal.,overthesubjectUCPBshares isbasedsolelyon thesupposedCOCOFUND receipts issued forpaymentof theRA6260CIFlevy,filedaMotionforPartialSummaryJudgmentRE:COCOFED,etal.andBallares,etal.datedApril22,2002,prayingthatasummaryjudgmentberendereddeclaring:

a.ThatSection2of[PD]755,Section5,ArticleIIIofP.D.961andSection5,ArticleIIIofP.D.No.1468areunconstitutional

b. That x x x (CIF) payments under x x x (R.A.)No. 6260 are not valid and legal bases forownershipclaimsoverUCPBsharesand

c.ThatCOCOFED,etal.,andBallares,etal.havenotlegallyandvalidlyobtainedtitleoverthesubjectUCPBshares.

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RightafteritfiledtheMotionforPartialSummaryJudgmentRE:COCOFED,etal.andBallares,etal.,theRepublicinterposed a Motion for Partial Summary Judgment Re: Eduardo M. Cojuangco, Jr., praying that a summaryjudgmentberendered:

a.Declaring thatSection1ofP.D.No.755 isunconstitutional insofaras it validates theprovisions in the"PCACojuangcoAgreementxxx"datedMay25,1975providingpaymentoftenpercent(10%)commissiontodefendantCojuangcowithrespecttotheFUB,nowUCPBsharessubjectmatterthereof

b.DeclaringthatxxxCojuangco,Jr.andhisfronts,nomineesanddummies,includingxxxandDaniloS.Ursua,havenotlegallyandvalidlyobtainedtitleoverthesubjectUCPBsharesand

c.DeclaringthatthegovernmentisthelawfulandtrueownerofthesubjectUCPBsharesregisteredinthenamesofCojuangco,Jr.andtheentitiesandpersonsaboveenumerated,forthebenefitofallcoconutfarmers.xxx

Followinganexchangeofpleadings,theRepublicfileditssurrejoinderprayingthatitbeconclusivelydeclaredthetrueandabsoluteownerofthecoconutlevyfundsandtheUCPBsharesacquiredtherefrom.19

WequotefromCOCOFEDv.Republic:20

Ajointhearingontheseparatemotionsforsummaryjudgmenttodeterminewhatmaterialfactsexistwithorwithoutcontroversy thenensued.ByOrderofMarch11,2003, theSandiganbayandetailed,basedonthisCourtsrulinginrelatedillgottencases,thepartiesmanifestationsmadeinopencourtand thepleadingsandevidenceon record, the facts it found tobewithout substantial controversy,togetherwiththeadmissionsand/orextentoftheadmissionmadebythepartiesrespectingrelevantfacts,asfollows:

As culled from the exhaustive discussions andmanifestations of the parties in open court of theirrespective pleadings and evidence on record, the facts which exist without any substantialcontroversyareset forthhereunder, togetherwith theadmissionsand/or theextentorscopeof theadmissionsmadebythepartiesrelatingtotherelevantfacts:

1.The latePresidentFerdinandE.MarcoswasPresidentxxx for twotermsunder the1935Constitutionand,during thesecond term,hedeclaredMartialLaw throughProclamationNo.1081datedSeptember21,1972.

2.OnJanuary17, 1973, he issuedProclamationNo.1102announcing the ratificationof the1973Constitution.

3.FromJanuary17,1973toApril7,1981,hexxxexercisedthepowersandprerogativeofPresidentunder the1935Constitutionand thepowersandprerogativeofPresidentxxx the1973Constitution.

HexxxpromulgatedvariousP.D.s,amongwhichwereP.D.No.232,P.D.No.276,P.D.No.414,P.D.No.755,P.D.No.961andP.D.No.1468.

4.OnApril 17, 1981, amendments to the 1973Constitutionwere effected and, on June 30,1981,he,afterbeingelectedPresident,"reassumedthetitleandexercisedthepowersof thePresidentuntil25February1986."

5.DefendantsMariaClaraLobregatandJoseR.Eleazar,Jr.werePCADirectorsxxxduringtheperiod1970to1986xxx.

6.PlaintiffadmitstheexistenceofthefollowingagreementswhichareattachedasAnnexes"A"and"B"totheOppositiondatedOctober10,2002ofdefendantEduardoM.Cojuangco,Jr.totheabovecitedMotionforPartialSummaryJudgment:

a) "This Agreement made and entered into this ______ day of May, 1975 atMakati,Rizal,Philippines,byandbetween:

PEDROCOJUANGCO,Filipino,oflegalageandwithresidenceat1575PrincetonSt.,Mandaluyong,Rizal, for and inhisownbehalf and inbehalf of certainotherstockholdersofFirstUnitedBank listed inAnnex"A"attachedhereto(hereinaftercollectivelycalledtheSELLERS)

and

EDUARDOCOJUANGCO,JR.,Filipino,oflegalageandwithresidenceat1369thStreet corner Balete Drive, Quezon City, represented in this act by his dulyauthorizedattorneyinfact,EDGARDOJ.ANGARA,forandinhisownbehalfandinbehalfofcertainotherbuyers,(hereinaftercollectivelycalledtheBUYERS)"

WITNESSETH:That

WHEREAS,theSELLERSownofrecordandbeneficiallyatotalof137,866sharesofstock,withaparvalueofP100.00each,ofthecommonstockoftheFirstUnitedBank(the"Bank"),acommercialbankingcorporationexistingunderthelawsofthePhilippines

WHEREAS,theBUYERSdesiretopurchase,andtheSELLERSarewillingtosell,theaforementionedsharesofstocktotaling137,866shares(hereinaftercalledthe"Contract Shares") owned by the SELLERS due to their special relationship toEDUARDOCOJUANGCO,JR.

NOW, THEREFORE, for and in consideration of the premises and the mutualcovenantshereincontained,thepartiesagreeasfollows:

1.SaleandPurchaseofContractShares

SubjecttothetermsandconditionsofthisAgreement,theSELLERSherebysell,assign,transferandconveyuntotheBUYERS,andtheBUYERSherebypurchase and acquire, theContract Shares free and clear of all liens andencumbrancesthereon.

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2.ContractPrice

The purchase price per share of the Contract Shares payable by theBUYERSisP200.00oranaggregatepriceofP27,573,200.00(the"ContractPrice").

3.Deliveryof,andpaymentfor,stockcertificates

Upontheexecutionof thisAgreement,(i) theSELLERSshalldeliver to theBUYERS the stock certificates representing theContract Shares, free andclearofall liens,encumbrances,obligations, liabilitiesandotherburdensinfavor of the Bank or third parties, duly endorsed in blank or with stockpowers sufficient to transfer the shares to bearer and (ii) BUYERS shalldelivertotheSELLERSP27,511,295.50representingtheContractPricelessthe amount of stock transfer taxes payable by the SELLERS, which theBUYERS undertake to remit to the appropriate authorities. (Emphasisadded.)

4.RepresentationandWarrantiesofSellers

TheSELLERSrespectivelyand independentlyofeachother representandwarrantthat:

(a)TheSELLERSarethelawfulownersof,withgoodmarketabletitleto, the Contract Shares and that (i) the certificates to be deliveredpursuanttheretohavebeenvalidlyissuedandarefullypaidandnonassessable (ii) the Contract Shares are free and clear of all liens,encumbrances,obligations,liabilitiesandotherburdensinfavoroftheBankorthirdpartiesxxx.

This representation shall survive the execution and delivery of thisAgreementandtheconsummationortransferherebycontemplated.

(b)Theexecution,deliveryandperformanceofthisAgreementbytheSELLERS does not conflict with or constitute any breach of anyprovisioninanyagreementtowhichtheyareapartyorbywhichtheymaybebound.

(c)TheyhavecompliedwiththeconditionsetforthinArticleXoftheAmendedArticlesofIncorporationoftheBank.

5.RepresentationofBUYERS

xxxx

6.Implementation

Thepartiesheretoherebyagree toexecuteorcause tobeexecutedsuchdocuments and instruments asmay be required in order to carry out theintentandpurposeofthisAgreement.

7.Notices

xxxx

INWITNESSWHEREOF,thepartiesheretohavehereuntosettheirhandsat theplaceandonthedatefirstabovewritten.

PEDROCOJUANGCO(onhisownbehalfandin

behalfoftheotherlistedinAnnex"A"hereof)

(SELLERS)

EDUARDOCOJUANGCO,JR.(onhisownbehalfandinbehalf

SellersoftheotherBuyers)(BUYERS)

By:

EDGARDOJ.ANGARAAttorneyinFact

xxxx

b)"AgreementfortheAcquisitionofaCommercialBankfortheBenefitoftheCoconutFarmersof the Philippines, made and entered into this 25th day of May 1975 at Makati, Rizal,Philippines,byandbetween:

EDUARDOM.COJUANGCO,JR.,Filipino,of legalage,withbusinessaddressat10thFloor,SikatunaBuilding,AyalaAvenue,Makati,Rizal,hereinafterreferredtoastheSELLER

and

PHILIPPINECOCONUTAUTHORITY,apubliccorporationcreatedbyPresidentialDecreeNo.232,asamended,foritselfandforthebenefitofthecoconutfarmersofthePhilippines,(hereinaftercalledtheBUYER)"

WITNESSETH:That

WHEREAS, on May 17, 1975, the Philippine Coconut Producers Federation("PCPF"), through its Board of Directors, expressed the desire of the coconutfarmers toownacommercialbankwhichwillbeaneffective instrument tosolvethe perennial credit problems and, for that purpose, passed a resolutionrequesting thePCA tonegotiatewith theSELLER for the transfer to thecoconutfarmersof theSELLERs option to buy theFirstUnitedBank (the "Bank") under

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such termsandconditionsasBUYERmaydeemtobe in thebest interestof thecoconutfarmersandinstructedMrs.MariaClaraLobregattoconveysuchrequesttotheBUYER

WHEREAS, the PCPF further instructed Mrs. Maria Clara Lobregat to makerepresentationswiththeBUYERtoutilize itsfundstofinancethepurchaseoftheBank

WHEREAS, the SELLER has the exclusive and personal option to buy 144,400shares (the "Option Shares") of the Bank, constituting 72.2% of the presentoutstandingsharesofstockoftheBank,atthepriceofP200.00pershare,whichoptiononlytheSELLERcanvalidlyexercise

WHEREAS,inresponsetotherepresentationsmadebythecoconutfarmers,theBUYERhasrequestedtheSELLERtoexercisehispersonaloptionforthebenefitofthecoconutfarmers

WHEREAS,theSELLERiswillingtotransfertheOptionSharestotheBUYERatapriceequaltohisoptionpriceofP200pershare

WHEREAS, recognizing that ownership by the coconut farmers of a commercialbank is a permanent solution to their perennial credit problems, that it willacceleratethegrowthanddevelopmentofthecoconutindustryandthatthepolicyof the state which the BUYER is required to implement is to achieve verticalintegration thereof so that coconut farmers will become participants in, andbeneficiariesof thedevelopmentandgrowthof thecoconut industry, theBUYERapprovedtherequestofPCPFthat itacquireacommercialbanktobeownedbythecoconut farmersand,appropriated, for thatpurpose, thesumofP150Millionto enable the farmers to buy the Bank and capitalize the Bank to such anextensionastobeinapositiontoadoptacreditpolicyforthecoconutfarmersatpreferentialrates

WHEREAS, x x x the BUYER is willing to subscribe to additional shares("SubscribedShares")andplacetheBankinamorefavorablefinancialpositiontoextendloansandcreditfacilitiestococonutfarmersatpreferentialrates

NOW,THEREFORE, for and in consideration of the foregoing premises and theother termsandconditionshereinaftercontained, thepartiesherebydeclareandaffirm that their principal contractual intent is (1) to ensure that the coconutfarmersownatleast60%oftheoutstandingcapitalstockoftheBankand(2)thattheSELLERshallreceivecompensationforexercisinghispersonalandexclusiveoption to acquire theOptionShares, for transferring such shares to the coconutfarmersattheoptionpriceofP200pershare,andforperformingthemanagementservicesrequiredofhimhereunder.

1.ToensurethatthetransfertothecoconutfarmersoftheOptionSharesiseffected with the least possible delay and to provide for the faithfulperformanceoftheobligationsofthepartieshereunder,thepartiesherebyappoint the Philippine National Bank as their escrow agent (the "EscrowAgent").

UponexecutionofthisAgreement,theBUYERshalldepositwiththeEscrowAgent such amount as may be necessary to implement the terms of thisAgreementxxx.

2.AspromptlyaspracticableafterexecutionofthisAgreement,theSELLERshall exercise his option to acquire the Option Share and SELLER shallimmediatelythereafterdeliverandturnovertotheEscrowAgentsuchstockcertificates as are herein provided to be received from the existingstockholders of the Bank by virtue of the exercise on the aforementionedoptionxxx.

3. To ensure the stability of the Bank and continuity of management andcredit policies to be adopted for the benefit of the coconut farmers, thepartiesundertake to cause the stockholdersand theBoardofDirectorsofthe Bank to authorize and approve a management contract between theBankandtheSELLERunderthefollowingterms:

(a)Themanagementcontractshallbe foraperiodof five (5)years,renewable for another five (5) years by mutual agreement of theSELLERandtheBank

(b)TheSELLERshallbeelectedPresidentandshallholdofficeatthepleasureoftheBoardofDirectors.Whileservinginsuchcapacity,heshall be entitled to such salaries and emoluments as the Board ofDirectorsmaydetermine

(c)TheSELLERshallrecruitanddevelopaprofessionalmanagementteam to manage and operate the Bank under the control andsupervisionoftheBoardofDirectorsoftheBank

(d)TheBUYERundertakestocausethree(3)personsdesignatedbytheSELLERtobeelectedtotheBoardofDirectorsoftheBank

(e) The SELLER shall receive no compensation for managing theBank, other than such salaries or emoluments to which hemay beentitled by virtue of the discharge of his function and duties asPresident,providedxxxand

(f) The management contract may be assigned to a managementcompanyownedandcontrolledbytheSELLER.

4. As compensation for exercising his personal and exclusive option to

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acquire theOptionSharesand for transferringsuchshares to thecoconutfarmers, as well as for performing the management services required ofhim,SELLERshallreceiveequity intheBankamounting, intheaggregate,to 95,304 fully paid shares in accordance with the procedure set forth inparagraph6below

5. In order to comply with the Central Bank program for increasedcapitalization of banks and to ensure that the Bank will be in a morefavorable financial position to attain its objective to extend to the coconutfarmers loans and credit facilities, the BUYER undertakes to subscribe toshares with an aggregate par value of P80,864,000 (the "SubscribedShares"). The obligation of the BUYER with respect to the SubscribedSharesshallbeasfollows:

(a)TheBUYERundertakestosubscribe,forthebenefitofthecoconutfarmers, toshareswithanaggregateparvalueofP15,884,000fromthepresentauthorizedbutunissuedsharesoftheBankand

(b)TheBUYERundertakestosubscribe,forthebenefitofthecoconutfarmers, toshareswithanaggregateparvalueofP64,980,000fromthe increasedcapital stockof theBank,whichsubscriptionsshallbedeemedmadeupontheapprovalbythestockholdersoftheincreaseof theauthorizedcapital stockof theBank fromP50Million toP140Million.

The parties undertake to declare stock dividends of P8 Million out of thepresentauthorizedbutunissuedcapitalstockofP30Million.

6.To carry intoeffect theagreementof theparties that theSELLERshallreceiveashiscompensation95,304shares:

(a) The Escrow Agent shall, upon receipt from the SELLER of thestock certificates representing the Option Shares, duly endorsed inblankorwith stockpowerssufficient to transfer thesame tobearer,presentsuchstockcertificatestotheTransferAgentoftheBankandshallcausesuchTransferAgenttoissuestockcertificatesoftheBankinthefollowingratio:oneshareinthenameoftheSELLERforeveryninesharesinthenameoftheBUYER.

(b)WithrespecttotheSubscribedShares,theBUYERundertakes,inorder toprevent thedilutionofSELLERsequityposition, that itshallcede over to the SELLER 64,980 fullypaid shares out of theSubscribed Shares. Such undertaking shall be complied with in thefollowing manner: upon receipt of advice that the BUYER hassubscribed to the Subscribed Shares upon approval by thestockholders of the increase of the authorized capital stock of theBank,theEscrowAgentshallthereuponissueacheckinfavoroftheBank covering the total payment for the Subscribed Shares. TheEscrow Agent shall thereafter cause the Transfer Agent to issue astock certificatesof theBank in the following ratio: one share in thename of the SELLER for every nine shares in the name of theBUYER.

7.ThepartiesfurtherundertakethattheBoardofDirectorsandmanagementoftheBankshallestablishandimplementaloanpolicyfortheBankofmakingavailableforloansatpreferentialratesofinteresttothecoconutfarmersxxx.

8.TheBUYERshallexpeditiouslydistributefromtimetotimethesharesoftheBank,thatshallbeheldbyitforthebenefitofthecoconutfarmersofthePhilippinesundertheprovisionsofthisAgreement, to such, coconut farmers holding registered COCOFUND receipts on suchequitablebasisasmaybedeterminebytheBUYERinitssounddiscretion.

9.xxxx

10. To ensure that not only existing but future coconut farmers shall be participants in andbeneficiaries of the credit policies, and shall be entitled to the benefit of loans and creditfacilitiestobeextendedbytheBanktococonutfarmersatpreferentialrates,thesharesheldbythe coconut farmers shall not be entitled to preemptive rights with respect to the unissuedportionoftheauthorizedcapitalstockoranyincreasethereof.

11.Afterthepartiesshallhaveacquiredtwothirds(2/3)oftheoutstandingsharesoftheBank,thepartiesshallcallaspecialstockholdersmeetingoftheBank:

(a)ToclassifythepresentauthorizedcapitalstockofP50,000,000dividedinto500,000shares, with a par value of P100.00 per share into: 361,000 Class A shares, with anaggregateparvalueofP36,100,000and139,000ClassBshares,withanaggregateparvalue of P13,900,000. All of the Option Shares constituting 72.2% of the outstandingshares,shallbeclassifiedasClassAsharesandthebalanceoftheoutstandingshares,constituting27.8%oftheoutstandingshares,asClassBshares

(b)ToamendthearticlesofincorporationoftheBanktoeffectthefollowingchanges:

(i)changeofcorporatenametoFirstUnitedCoconutBank

(ii)replacethepresentprovisionrestrictingthetransferabilityoftheshareswithalimitation on ownership by any individual or entity to not more than 10% of theoutstandingsharesoftheBank

(iii)providethattheholdersofClassAsharesshallnotbeentitledtopreemptiverightswith respect to theunissuedportionof theauthorizedcapital stockoranyincreasethereofand

(iv)providethat theholdersofClassBsharesshallbeabsolutelyentitled topre

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emptiverights,withrespecttotheunissuedportionofClassBsharescomprisingpartoftheauthorizedcapitalstockoranyincreasethereof,tosubscribetoClassBshares in proportion t the subscriptions of Class A shares, and to pay for theirsubscriptionstoClassBshareswithinaperiodoffive(5)yearsfromthecalloftheBoardofDirectors.

(c)ToincreasetheauthorizedcapitalstockoftheBankfromP50MilliontoP140Million,divided into 1,010,800 Class A shares and 389,200 Class B shares, each with a parvalueofP100pershare

(d) To declare a stock dividend ofP8Million payable to theSELLER, theBUYERandotherstockholdersoftheBankoutofthepresentauthorizedbutunissuedcapitalstockofP30Million

(e)ToamendthebylawsoftheBankaccordinglyand

(f)Toauthorizeandapprovethemanagementcontractprovidedinparagraph2above.

Thepartiesagreethattheyshallvotetheirsharesandtakeallthenecessarycorporateactioninordertocarryintoeffecttheforegoingprovisionsofthisparagraph11,includingsuchotheramendmentsofthearticlesofincorporationandbylawsoftheBankasarenecessaryinordertoimplementtheintentionofthepartieswithrespectthereto.

12. It is the contemplation of the parties that the Bank shall achieve a financial and equitypositiontobeabletolendtothecoconutfarmersatpreferentialrates.

In order to achieve such objective, the parties shall cause the Bank to adopt a policy ofreinvestment,bywayofstockdividends,ofsuchpercentageoftheprofitsoftheBankasmaybenecessary.

13.ThepartiesagreetoexecuteorcausetobeexecutedsuchdocumentsandinstrumentsasmayberequiredinordertocarryouttheintentandpurposeofthisAgreement.

INWITNESSWHEREOFxxx

PHILIPPINECOCONUTAUTHORITY(BUYER)

By:

EDUARDOCOJUANGCO,JR.(SELLER)

MARIACLARAL.LOBREGAT

xxxx

7.DefendantsLobregat,etal.andCOCOFED,etal.andBallares,etal.admit that thexxx (PCA)was the "other buyers" represented by defendant Eduardo M. Cojuangco, Jr. in the May 1975Agreemententered intobetweenPedroCojuangco(onhisownbehalfand inbehalfofothersellerslisted inAnnex "A"of theagreement)anddefendantEduardoM.Cojuangco, Jr. (onhisownbehalfand inbehalfof theotherbuyers).DefendantCojuangco insistshewas the "onlybuyer"under theaforesaidAgreement.

8. Defendant Eduardo M. Cojuangco, Jr. did not own any share in the x x x (FUB) prior to theexecutionofthetwoAgreementsxxx.

9.DefendantsLobregat,etal.,andCOCOFED,etal.,andBallares,etal.admitthatinadditiontothe137,866FUBsharesofPedroCojuangco,etal.coveredbytheAgreement,otherFUBstockholderssoldtheirsharestoPCAsuchthat thetotalnumberofFUBsharespurchasedbyPCAincreasedfrom137,866sharesto144,400shares,theOPTIONSHARESreferredtointheAgreementofMay25,1975.DefendantCojuangcodidnotmakesaidadmissionastothesaid6,534sharesinexcessofthe137,866sharescoveredbytheAgreementwithPedroCojuangco.

10.DefendantsLobregat,etal.andCOCOFED,etal.andBallares,etal.admitthattheAgreement,describedinSection1ofPresidentialDecree(P.D.)No.755datedJuly29,1975asthe"Agreementfor the Acquisition of a Commercial Bank for the Benefit of Coconut Farmers" executed by thePhilippineCoconutAuthority"andincorporatedinSection1ofP.D.No.755byreference,referstothe"AGREEMENT FOR THE ACQUISITIONOF A COMMERCIAL BANK FOR THE BENEFITOF THECOCONUTFARMERSOFTHEPHILIPPINES"datedMay25,1975betweendefendantEduardoM.Cojuangco, Jr. and thePCA (Annex "B" for defendantCojuangcosOPPOSITIONTOPLAINTIFFSMOTION FOR PARTIAL SUMMARY JUDGMENT RE: EDUARDO M. COJUANGCO, JR. datedSeptember18,2002).

Plaintiffrefusedtomakethesameadmission.

11.AstowhetherP.D.No.755andthetextof theagreementdescribedthereinwaspublished,theCourttakesjudicialnoticethatP.D.No.755waspublishedinxxxvolume71oftheOfficialGazettebutthetextoftheagreementxxxwasnotsopublishedwithP.D.No.755.

12.DefendantsLobregat,etal.andCOCOFED,etal.andBallares,etal.admit that thePCAusedpublic funds x x x in the total amount of P150million, to purchase the FUB shares amounting to72.2%of theauthorizedcapital stockof theFUB,although thePCAwas later reimbursed from thecoconut levy fundsand that thePCAsubscription in the increasedcapitalizationof theFUB,whichwaslaterrenamedthexxx(UCPB),camefromthesaidcoconutlevyfundsxxx.

13. Pursuant to theMay 25, 1975Agreement, out of the 72.2% shares of the authorized and theincreasedcapitalstockoftheFUB(laterUCPB),entirelypaidforbyPCA,64.98%oftheshareswereplaced in the name of the "PCA for the benefit of the coconut farmers" and 7,22%were given todefendantCojuangco.Theremaining27.8%sharesofstockintheFUBwhichlaterbecametheUCPBwerenotcoveredbythetwo(2)agreementsreferredtoinitemno.6,par.(a)and(b)above."Thereweresharesformingpartoftheaforementioned64.98%whichwerelatersoldortransferredtononcoconutfarmers.

14.UndertheMay27,1975Agreement,defendantCojuangcosequityintheFUB(nowUCPB)was

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tenpercent(10%)ofthesharesofstockacquiredbythePCAforthebenefitofthecoconutfarmers.

15. That the fully paid 95.304 shares of the FUB, later the UCPB, acquired by defendant x x xCojuangco,Jr.pursuanttotheMay25,1975AgreementwerepaidforbythePCAinaccordancewiththe terms and conditions provided in the said Agreement. 16. Defendants Lobregat, et al. andCOCOFED, et al. and Ballares, et al. admit that the affidavits of the coconut farmers (specifically,Exhibit"1Farmer"to"70Farmer")uniformlystatethat:

a.theyarecoconutfarmerswhosoldcoconutproducts

b.inthesalethereof,theyreceivedCOCOFUNDreceiptspursuanttoR.A.No.6260

c.theyregisteredthesaidCOCOFUNDreceiptsand

d.byvirtuethereof,andunderR.A.No.6260,P.D.Nos.755,961and1468,theyareallegedlyentitledtothesubjectUCPBshares.

butsubjecttothefollowingqualifications:

a.therewereothercoconutfarmerswhoreceivedUCPBsharesalthoughtheydidnotpresentsaidCOCOFUNDreceiptbecausethePCAdistributedtheunclaimedUCPBsharesnotonlytothosewhoalreadyreceivedtheirUCPBsharesinexchangefortheirCOCOFUNDreceiptsbutalso to the coconut farmers determined by a national census conducted pursuant to PCAadministrativeissuances

b.therewereotheraffidavitsexecutedbyLobregat,Eleazar,BallaresandAldeguerrelativetothesaiddistributionoftheunclaimedUCPBsharesand

c. thecoconut farmersclaim theUCPBsharesbyvirtueof theircompliancenotonlywith thelawsmentionedinitem(d)abovebutalsowiththerelevantissuancesofthePCAsuchas,PCAAdministrativeOrderNo.1,datedAugust20,1975 (Exh. "298Farmer")PCAResolutionNo.03378datedFebruary16,1978.

Theplaintiffdidnotmakeanyadmissionastotheforegoingqualifications.

17.DefendantsLobregat,etal.andCOCOFED,etal.andBallares,etal.claimthattheUCPBsharesinquestionhave legitimatelybecometheprivatepropertiesof the1,405,366coconut farmerssolelyon thebasisof theirhavingacquiredsaidshares incompliancewithR.A.No.6260,P.D.Nos.755,961and1468andtheadministrativeissuancesofthePCAcitedabove.

18.Ontheotherhand,defendantCojuangco,Jr.claimsownershipoftheUCPBshares,whichheholds,solelyonthebasisofthetwoAgreements.(Emphasisandwordsinbracketsadded.)

OnJuly11,2003,theSandiganbayanissuedtheassailedPSJA,rulinginfavoroftheRepublic,disposinginsofaraspertinentasfollows:21

WHEREFORE,inviewoftheforegoing,weruleasfollows:

xxxx

C.Re:MOTIONFORPARTIALSUMMARYJUDGMENT(RE:EDUARDOM.COJUANGCO,JR.)datedSeptember18,2002filedbyplaintiff.

1. Sec. 1 of P.D. No. 755 did not validate the Agreement between PCA and defendant Eduardo M.Cojuangco,Jr.datedMay25,1975nordiditgivetheAgreementthebindingforceofalawbecauseofthenonpublicationofthesaidAgreement.

2. Regarding the questioned transfer of the shares of stock of FUB (later UCPB) by PCA to defendantCojuangcoorthesocalled"CojuangcoUCPBshares"whichcostthePCAmorethanTenMillionPesosinCCSF in1975,wedeclare, that the transferof the followingFUB/UCPBshares todefendantEduardoM.Cojuangco,Jr.wasnotsupportedbyvaluableconsideration,andthereforenullandvoid:

a.The14,400sharesfromthe"OptionShares"

b.AdditionalBankSharesSubscribedandPaidbyPCA,consistingof:

1. Fifteen Thousand Eight Hundred EightyFour (15,884) shares out of the authorized butunissuedsharesofthebank,subscribedandpaidbyPCA

2. Sixty Four ThousandNineHundred Eighty (64,980) shares of the increased capital stocksubscribedandpaidbyPCAand

3. Stock dividends declared pursuant to paragraph 5 and paragraph 11 (iv) (d) of theAgreement.

3.TheabovementionedsharesofstockoftheFUB/UCPBtransferredtodefendantCojuangcoareherebydeclaredconclusivelyownedbytheplaintiffRepublicofthePhilippines.

4. The UCPB shares of stock of the alleged fronts, nominees and dummies of defendant Eduardo M.Cojuangco,Jr.whichformpartofthe72.2%sharesoftheFUB/UCPBpaidforbythe

PCA with public funds later charged to the coconut levy funds, particularly the CCSF, belong to the plaintiffRepublicofthePhilippinesastheirtrueandbeneficialowner.

Let trial of this Civil Case proceed with respect to the issues which have not been disposed of in this PartialSummaryJudgment.Forthispurpose,theplaintiffsMotionAdCautelamtoPresent

AdditionalEvidencedatedMarch28,2001isherebyGRANTED.22(Emphasisandunderliningadded.)

Asearlierexplained,thecoreissueinthisinstantpetitionisPartCofthedispositiveportioninPSJAdeclaringthe7.22%FUB(nowUCPB)sharestransferredtoCojuangco,plustheothersharespaidbythePCAas"conclusively"owned by theRepublic. Parts A and B of the same dispositive portion have already been finally resolved andadjudicatedbythisCourtinCOCOFEDv.RepubliconJanuary24,2012.23

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FromPSJA,CojuangcomovedforpartialreconsiderationbuttheSandiganbayan,byResolution24ofDecember28,2004,deniedthemotion.

Hence,theinstantpetition.

TheIssues

Cojuangcospetitionformulatestheissuesinquestionform,asfollows:25

a. Is the acquisition of the socalled Cojuangco, Jr. UCPB shares by petitioner Cojuangco x x x "notsupportedbyvaluableconsiderationand,therefore,nullandvoid"?

b.Did theSandiganbayanhave jurisdiction, inCivilCaseNo. 0033A, an "illgottenwealth" casebroughtunderEONos.1and2,todeclaretheCojuangcoUCPBsharesacquiredbyvirtueofthePedroCojuangco,et al. Agreement and/or the PCA Agreement null and void because "not supported by valuableconsideration"?

c.WastheclaimthattheacquisitionbypetitionerCojuangcoofsharesrepresenting7.2%oftheoutstandingcapital stock of FUB (later UCPB) "not supported by valuable consideration", a "claim" pleaded in thecomplaintandmaythereforebethebasisofa"summaryjudgment"underSection1,Rule35oftheRulesofCourt?

d.BydeclaringtheCojuangcoUCPBsharesas"notsupportedbyvaluableconsideration,andtherefore,nullandvoid",didtheSandiganbayaneffectivelynullifythePCAAgreement?MaytheSandiganbayannullifythePCA Agreement when the parties to the Agreement, namely: x x x concede its validity? If the PCAAgreement be deemed "null and void", should not the FUB (later UCPB) shares revert to petitionerCojuangco(underthePCAAgreement)ortoPedroCojuangco,etal.xxx?Wouldtherebeabasisthen,evenassumingtheabsenceofconsiderationxxx,todeclare7.2%UCPBsharesofpetitionerCojuangcoas"conclusivelyownedbytheplaintiffRepublicofthePhilippines"?26

TheCourtsRuling

I

THESANDIGANBAYANHASJURISDICTIONOVERTHESUBJECTMATTEROFTHESUBDIVIDEDAMENDEDCOMPLAINTS,INCLUDINGTHESHARESALLEGEDLYACQUIREDBYCOJUANGCOBYVIRTUEOFTHEPCAAGREEMENTS.

TheissueofjurisdictionoverthesubjectmatterofthesubdividedamendedcomplaintshasperemptorilybeenputtorestbytheCourtinitsJanuary24,2012DecisioninCOCOFEDv.Republic.There,theCourt,citingRegalado27andsettledjurisprudence,stressedthefollowinginterlockingprecepts:Subjectmatter jurisdictionisconferredbylaw,notby theconsentoracquiescenceofanyorallof theparties. In turn, the issueonwhetherasuitcomeswithin the penumbra of a statutory conferment is determined by the allegations in the complaint, regardless ofwhetherornotthesuitorwillbeentitledtorecoveruponallorpartoftheclaimsasserted.

TheRepublicsmaterialavermentsinitscomplaintsubdividedinCCNo.0033Aincludedthefollowing:

CCNo.0033A

12.DefendantEduardoM.Cojuangco,Jr.servedasapublicofficerduringtheMarcosadministration.Duringtheperiodofhisincumbencyasapublicofficer,heacquiredassets,fundsandotherpropertygrosslyandmanifestlydisproportionatetohissalaries,lawfulincomeandincomefromlegitimatelyacquiredproperty.

13.DefendantEduardoM.Cojuangco,Jr.,takingundueadvantageofhisassociation,influence,connection,andacting inunlawful concertwithDefendantsFerdinandE.Marcosand ImeldaR.Marcos,ANDTHE INDIVIDUALDEFENDANTS,embarkedupondevices,schemesandstratagems,tounjustlyenrichthemselvesattheexpenseofPlaintiffandtheFilipinopeople,suchaswhenhe

a) manipulated, beginning the year 1975 with the active collaboration of Defendants x x x Maria ClaraLobregat,DaniloUrsuaetc.,thepurchaseby...(PCA)of72.2%oftheoutstandingcapitalstockofthexxx(FUB)whichwassubsequentlyconvertedintoauniversalbanknamedxxx(UCPB)throughtheuseoftheCoconutConsumersStabilizationFund(CCSF)beinginitiallyintheamountofP85,773,100.00inamannercontrarytolawandtothespecificpurposesforwhichsaidcoconutlevyfundswereimposedandcollectedunderP.D.276,andwithsinisterdesignsandunderanomalouscircumstances,towit:

(i)DefendantEduardoCojuangco,Jr.covetedthecoconutlevyfundsasacheap,lucrativeandriskfreesourceof fundswithwhich toexercisehisprivateoption tobuy thecontrolling interest inFUBthus,claiming that the72.2%of theoutstandingcapital stockofFUBcouldonlybepurchasedandtransferredthroughtheexerciseofhis"personalandexclusiveactionoptiontoacquirethe144,000shares"ofthebank,DefendantEduardoM.Cojuangco,Jr.andPCA,xxxexecutedonMay26,1975apurchaseagreementwhichprovides,amongothers,forthepaymenttohiminfullypaidsharesascompensation thereof 95,384 shares worth P1,444,000.00 with the further condition that he shallmanage and control the bank asDirector andPresident for a termof five (5) years renewable foranother five (5) years and to designate three (3) persons of his choice who shall be elected asmembersoftheBoardofDirectorsoftheBank

(ii)tolegitimizeaposteriorihishighlyanomalousandirregularuseanddiversionofgovernmentfundstoadvancehisownprivateandcommercialinterests,DefendantEduardoCojuangco,Jr.causedtheissuancebyDefendantFerdinandE.MarcosofPD755(a)declaringthatthecoconutlevyfundsshallnotbeconsideredspecialandfiduciaryandtrustfundsanddonotformpartofthegeneralfundsoftheNationalGovernment,convenientlyrepealingforthatpurposeaseriesofpreviousdecrees,PDs276 and 414, establishing the character of the coconut levy funds as special, fiduciary, trust andgovernmental funds (b)confirming theagreementbetweenDefendantEduardoCojuangco,Jr.andPCAonthepurchaseofFUBbyincorporatingbyreferencesaidprivatecommercialagreementinPD755

(iii)To further consolidate his hold on UCPB, Defendant Eduardo Cojuangco, Jr. imposed asconsiderationandconditionsforthepurchasethat(a)hegetsoneoutofeveryninesharesgiventoPCA,and(b)hegetstomanageandcontrolUCPBaspresidentforatermoffive(5)yearsrenewableforanotherfive(5)years

(iv) To perpetuate his opportunity to deal with and make use of the coconut levy funds x x x

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Cojuangco,Jr.causedtheissuancebyDefendantFerdinandE.Marcosofanunconstitutionaldecree(PD1468)requiringthedepositofallcoconutlevyfundswithUCPB,interestfreetotheprejudiceofthegovernment.

(v)Ingrossviolationoftheirfiduciarypositionsandincontraventionofthegoaltocreateabankforthecoconutfarmersof thecountry, thecapitalstockofUCPBasofFebruary25,1986wasactuallyheld by the defendants, their lawyers, factotum and business associates, thereby finally gainingcontrol of theUCPB bymisusing the names and identities of the socalled "more than onemillioncoconutfarmers."

14. The acts ofDefendants, singly or collectively, and/or in unlawful concertwith one another, constitutegrossabuseofofficialpositionandauthority,flagrantbreachofpublictrustandfiduciaryobligations,brazenabuseofrightandpower,andunjustenrichment,violationoftheconstitutionandlawsoftheRepublicofthePhilippines,tothegraveandirreparabledamageofPlaintiffandtheFilipinopeople.28

In no uncertain terms, the Court has upheld the Sandiganbayans assumption of jurisdiction over the subjectmatterofCivilCaseNos.0033Aand0033F.29TheCourtwrote:

Judging from the allegations of the defendants illegal acts thereatmade, it is fairly obvious that bothCCNos.0033AandCC0033Fpartake, in the context ofEONos.1, 2and14, seriesof 1986, thenatureof illgottenwealth suits. Both deal with the recovery of sequestered shares, property or business enterprises claimed, asalleged in the corresponding basic complaints, to be illgotten assets of President Marcos, his cronies andnomineesandacquiredbytakingundueadvantageofrelationshipsor influenceand/orthroughorasaresultofimproperuse,conversionordiversionofgovernmentfundsorproperty.Recoveryoftheseassetsdeterminedasshall hereinafter be discussed as prima facie illgottenfalls within the unquestionable jurisdiction of theSandiganbayan.30

P.D.No.1606,asamendedbyR.A.7975andE.O.No.14,Seriesof1986,veststheSandiganbayanwith,amongothers,originaljurisdictionovercivilandcriminalcasesinstitutedpursuanttoandinconnectionwithE.O.Nos.1,2,14and14A.Correlatively,thePCGGRulesandRegulationsdefinestheterm"IllGottenWealth"as"anyasset,property,businessenterpriseormaterialpossessionofpersonswithinthepurviewofE.O.Nos.1and2,acquiredbythemdirectly,orindirectlythrudummies,nominees,agents,subordinatesand/orbusinessassociatesbyanyofthefollowingmeansorsimilarschemes":

(1) Throughmisappropriation, conversion, misuse ormalversation of public funds or raids on the publictreasury

(2)xxxx

(3)Bytheillegalorfraudulentconveyanceordispositionofassetsbelongingtothegovernmentoranyofitssubdivisions,agenciesorinstrumentalitiesorgovernmentownedorcontrolledcorporations

(4)Byobtaining,receivingoracceptingdirectlyorindirectlyanysharesofstock,equityoranyotherformofinterestorparticipationinanybusinessenterpriseorundertaking

(5) Through the establishment of agricultural, industrial or commercial monopolies or other combinationand/or by the issuance, promulgation and/or implementation of decrees and orders intended to benefitparticularpersonsorspecialinterestsand

(6)By takingundueadvantageofofficial position,authority, relationshipor influence forpersonalgainorbenefit.(Emphasissupplied)

Section2(a)ofE.O.No.1charged thePCGGwith the taskofassisting thePresident in "Therecoveryofall illgottenwealthaccumulatedbyformerPresidentMarcos,hisimmediatefamily,relatives,subordinatesandcloseassociatesincludingthetakeoverorsequestrationofallbusinessenterprisesandentitiesownedorcontrolledbythem,duringhisadministration,directlyorthroughnominees,bytakingundueadvantageoftheirpublicofficeand/orusingtheirpowers,authority,influence,connectionsorrelationship."ComplementingtheaforesaidSection2(a) isSection1ofE.O.No.2decreeing the freezingofallassets "inwhich theMarcoses theirclose relatives,subordinates,businessassociates,dummies,agentsornomineeshaveanyinterestorparticipation."

TheRepublicsavermentsintheamendedcomplaints,particularlythosedetailingtheallegedwrongfulactsofthedefendants, sufficiently reveal that the subjectmatter thereof comprises the recovery by theGovernment of illgotten wealth acquired by then President Marcos, his cronies or their associates and dummies through theunlawful, improperutilizationordiversionofcoconut levy fundsaidedbyP.D.No.755andothersisterdecrees.PresidentMarcoshimself issuedthesedecreesinabrazenbidto legalizewhatamountstoprivatetakingof thesaidpublicfunds.

xxxx

TherewasnoactualneedforRepublic,asplaintiffaquo,toadduceevidencetoshowthattheSandiganbayanhasjurisdictionover thesubjectmatterof thecomplaintsas it leanedon theaverments in the initiatorypleadings tomakevisiblethejurisdictionoftheSandiganbayanovertheillgottenwealthcomplaints.Aspreviouslydiscussed,aperusal of the allegations easily reveals the sufficiency of the statement ofmatters disclosing the claim of thegovernment against the coco levy fundsand theassets acquireddirectly or indirectly through said fundsas illgottenwealth.Moreover,theCourtfindsnorulethatdirectstheplaintifftofirstprovethesubjectmatterjurisdictionof the court beforewhich the complaint is filed.Rather, suchburden falls on the shouldersof defendant in thehearingofamotion todismissanchoredonsaidgroundorapreliminaryhearing thereonwhensuchground isallegedintheanswer.

xxxx

Lestitbeoverlooked,thisCourthasalreadydecidedthatthesequesteredsharesareprimafacieillgottenwealthrenderingtheissueofthevalidityoftheirsequestrationandofthejurisdictionoftheSandiganbayanoverthecasebeyonddoubt.InthecaseofCOCOFEDv.PCGG,Westatedthat:

It is of course not for this Court to pass upon the factual issues thus raised. That function pertains to theSandiganbayan in the first instance. For purposes of this proceeding, all that the Court needs to determine iswhetherornotthereisprimafaciejustificationforthesequestrationorderedbythePCGG.TheCourtissatisfiedthatthereis.Thecitedincidents,giventhepubliccharacterofthecoconutlevyfunds,placepetitionersCOCOFEDanditsleadersandofficials,atleastprimafacie,squarelywithinthepurviewofExecutiveOrdersNos.1,2and14,asconstruedandappliedinBASECO,towit:

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"1.thatillgottenproperties(were)amassedbytheleadersandsupportersofthepreviousregime

"a.moreparticularly, that (i) IllgottenwealthwasaccumulatedbyxxxMarcos,his immediate family, relatives,subordinatesandcloseassociates,xxx(and)businessenterprisesandentities(cametobe)ownedorcontrolledby them,duringx x x (theMarcos)administration,directlyor throughnominees,by takingundueadvantageoftheirpublicofficeandusingtheirpowers,authority,influence,connectionsorrelationships

"b. otherwise stated, that there are assets and properties purportedly pertaining to the Marcoses, their closerelatives,subordinates,businessassociates,dummies,agentsornomineeswhichhadbeenorwereacquiredbythemdirectlyorindirectly,throughorasaresultoftheimproperorillegaluseoffundsorpropertiesownedbytheGovernmentxxxoranyofitsbranches,instrumentalities,enterprises,banksorfinancialinstitutions,orbytakingundue advantage of their office, authority, influence, connections or relationship, resulting in their unjustenrichmentxxx

xxxx

2.Thepetitionersclaimthattheassetsacquiredwiththecoconutlevyfundsareprivatelyownedbythecoconutfarmersisfoundedoncertainprovisionsoflaw,towitSec.7,RA6260andSec.5,Art.III,PD1468(Wordsinbracketaddeditalicsintheoriginal).

xxxx

E.O.1,2,14and14A,itbearstostress,wereissuedpreciselytoeffecttherecoveryofillgottenassetsamassedby the Marcoses, their associates, subordinates and cronies, or through their nominees. Be that as it may, itstandstoreasonthatpersonslistedasassociatedwiththeMarcosesrefertothoseinpossessionofsuchillgottenwealth but holding the same in behalf of the actual, albeit undisclosed owner, to prevent discovery andconsequentlyrecovery.Certainly,itiswellnighinconceivablethatillgottenassetswouldbedistributedtoandleftinthehandsofindividualsorentitieswithobvioustraceableconnectionstoMr.Marcosandhiscronies.TheCourtcantake,asithasinfacttaken,judicialnoticeofschemesandmachinationsthathavebeenputinplacetokeepillgotten assets underwraps. Thesewould include the setting up of layers after layers of shell or dummy, butcontrolled, corporations31 or manipulated instruments calculated to confuse if not altogethermislead wouldbeinvestigatorsfromrecoveringwealthdeceitfullyamassedattheexpenseofthepeopleorsimplythefruitsthereof.TransferringtheillegalassetstothirdpartiesnotreadilyperceivedasMarcoscronieswouldbeanother.SoitwasthatinPCGGv.Pena,theCourt,describingtheruleofMarcosasa"wellentrenchedplunderingregimeoftwentyyears," noted the magnitude of the past regimes organized pillage and the ingenuity of the plunderers andpillagerswiththeassistanceofexpertsandthebestlegalmindsinthemarket.32

Prescindingfromtheforegoingpremises,therecannolongerbeanyseriouschallengeastotheSandiganbayanssubjectmatterjurisdiction.Andinconnectiontherewith,theCourtwroteinCOCOFEDv.Republic,thattheinstantpetition shall be decided separately and should not be affected by the January 24, 2012 Decision, "save fordeterminativelylegalissuesdirectlyaddressed"therein.33Thus:

WeclarifythatPSJAissubjectofanotherpetitionforreviewinterposedbyEduardoCojuangco,Jr., inG.R.No.180705entitled,EduardoM.Cojuangco,Jr.v.Republicof thePhilippines,whichshallbedecidedseparatelybythisCourt.SaidpetitionshouldaccordinglynotbeaffectedbythisDecisionsavefordeterminatively legal issuesdirectlyaddressedherein.34(EmphasisOurs.)

We,therefore,reiterateourholdinginCOCOFEDv.RepublicrespectingtheSandiganbayansjurisdictionoverthesubject matter of Civil Case No. 0033A, including those matters whose adjudication We shall resolve in thepresentcase.

II

PRELIMINARILY,THEAGREEMENTBETWEENTHEPCAANDEDUARDOM.COJUANGCO,JR.DATEDMAY25, 1975 CANNOT BE ACCORDED THE STATUS OF A LAW FOR THE LACK OF THE REQUISITEPUBLICATION.

ItwillberecalledthatCojuangcosclaimofownershipovertheUCPBsharesishingedontwocontractdocumentstherespectivecontentsofwhichformedpartofandreproduced in theirentirety in theaforecitedOrder35of theSandiganbayandatedMarch11,2003.The first contract refers to theagreemententered intobyandbetweenPedroCojuangcoandhisgroup,ononehand,andEduardoM.Cojuangco,Jr.,ontheother,bearingdate"May1975"36(hereinafterreferredtoas"PCECJAgreement"),whilethesecondrelatestotheaccordbetweenthePCAandEduardoM.Cojuangco,Jr.datedMay25,1975(hereinafterreferredtoas"PCACojuangcoAgreement").ThePCECJAgreementallegedlycontains, interalia,Cojuangcospersonalandexclusiveoption toacquire theFUB("UCPB")sharesfromPedroandhisgroup.ThePCACojuangcoAgreementshowsPCAsacquisitionofthesaidoptionfromEduardoM.Cojuangco,Jr.

Section1ofP.D.No.755incorporated,byreference,the"AgreementfortheAcquisitionofaCommercialBankfortheBenefitoftheCoconutFarmers"executedbythePCA.Particularly,Section1states:

Section 1.Declaration ofNational Policy. It is hereby declared that the policy of theState is to provide readilyavailable credit facilities to the coconut farmers at preferential rates that this policy can be expeditiously andefficiently realized by the implementation of the "Agreement for the Acquisition of a Commercial Bank for thebenefitoftheCoconutFarmers"executedbythePhilippineCoconutAuthority,thetermsofwhich"Agreement"areherebyincorporatedbyreferenceandthatthePhilippineCoconutAuthorityisherebyauthorizedtodistribute,forfree, thesharesofstockof thebank itacquiredto thecoconut farmersundersuchrulesandregulations itmaypromulgate.(EmphasisOurs.)

ItbearstostressatthispointthatthePCACojuangcoAgreementreferredtoaboveinSection1ofP.D.755wasnotreproducedorattachedasanannextothesamelaw.Anditiswellsettledthatlawsmustbepublishedtobevalid. In fact, publication is an indispensable condition for the effectivity of a law. Taada v. Tuvera37 said asmuch:

Publicationofthelawisindispensableineverycasexxx.

xxxx

Wenoteatthispointtheconclusivepresumptionthateverypersonknowsthelaw,whichofcoursepresupposesthatthelawhasbeenpublishedifthepresumptionistohaveanylegaljustificationatall.ItisnolessimportanttorememberthatSection6oftheBillofRightsrecognizes"therightofthepeopletoinformationonmattersofpublicconcern," and this certainly applies to, among others, and indeed especially, the legislative enactments of thegovernment.

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Wehold therefore thatallstatutes, including thoseof localapplicationandprivate laws,shallbepublishedasacondition for their effectivity,which shall begin fifteen days after publication unless a different effectivity date isfixedbythelegislature.

CoveredbythisrulearepresidentialdecreesandexecutiveorderspromulgatedbythePresidentintheexerciseoflegislativepowerswheneverthesamearevalidlydelegatedbythelegislature,or,atpresent,directlyconferredbythe Constitution. Administrative rules and regulations must also be published if their purpose is to enforce orimplementexistinglawpursuantalsotoavaliddelegation.38

WeevenwentfurtherinTaadatosaythat:

Lawsmustcomeout in theopen in theclear lightof thesun insteadofskulking in theshadowswith theirdark,deep secrets. Mysterious pronouncements and rumored rules cannot be recognized as binding unless theirexistenceandcontentsareconfirmedbyavalidpublicationintendedtomakefulldisclosureandgivepropernoticetothepeople.Thefurtivelawislikeascabbardedsaberthatcannotfeint,parryorcutunlessthenakedbladeisdrawn.39

Thepublication,asfurtherheldinTaada,mustbeofthefulltextofthelawsincethepurposeofpublicationistoinform thepublicof thecontentsof the law.Mere referencing thenumberof thepresidentialdecree, its titleorwhereaboutsanditssupposeddateofeffectivitywouldnotsatisfythepublicationrequirement.40

In thiscase,while it incorporated thePCACojuangcoAgreementby reference,Section1ofP.D.755didnot inany way reproduce the exact terms of the contract in the decree. Neither was acopy thereof attached to thedecreewhenpublished.Wecannot,therefore,extendtothesaid

Agreementthestatusofa law.Consequently,WejointheSandiganbayanin itsholdingthatthePCACojuangcoAgreementshallbe treatedasanordinary transactionbetweenagreeingminds tobegovernedbycontract lawundertheCivilCode.

III

THE PCACOJUANGCO AGREEMENT IS A VALID CONTRACT FOR HAVING THE REQUISITECONSIDERATION.

InPSJA,theSandiganbayanstruckdownthePCACojuangcoAgreementasvoidforlackofconsideration/causeas required under Article 1318, paragraph 3 in relation to Article 1409, paragraph 3 of the Civil Code. TheSandiganbayanstated:

In sum, the evidence on record relied upon by defendantCojuangco negates the presence of: (1) his claimedpersonal and exclusive option to buy the 137,866 FUB shares and (2) any pecuniary advantage to thegovernmentofthesaidoption,whichcouldcompensateforgenerouspaymenttohimbyPCAofvaluablesharesofstock,asstipulatedintheMay25,1975AgreementbetweenhimandthePCA.41

Ontheotherhand,theaforementionedprovisionsoftheCivilCodestate:

Art.1318.Thereisnocontractunlessthefollowingrequisitesconcur:

(1)Consentofthecontractingparties

(2)Objectcertainwhichisthesubjectmatterofthecontract

(3)Causeoftheobligationwhichisestablished.(Emphasissupplied)42

Art.1409.Thefollowingcontractsareinexistentandvoidfromthebeginning:

xxxx

(3)Thosewhosecauseorobjectdidnotexistatthetimeofthetransaction43

The Sandiganbayan found and so tagged the alleged cause for the agreement in question, i.e., Cojuangcos"personalandexclusiveoptiontoacquiretheOptionShares,"asfictitious.AreadingofthepurchaseagreementbetweenCojuangcoandPCA,so theSandiganbayanruled,wouldshowthatCojuangcowasnot theonlysellerthus, the option was, as to him, neither personal nor exclusive as he claimed it to be. Moreover, as theSandiganbayandeduced,thatoptionwasinexistentonthedayofexecutionofthePCACojuangcoAgreementastheSpecialPowerofAttorneyexecutedbyCojuangcoinfavorofnowSenatorEdgardoJ.Angara,forthelattertosignthePCECJAgreement,wasdatedMay25,1975whilethePCACojuangcoAgreementwasalsosignedonMay25, 1975.Thus, theSandiganbayanbelieved thatwhen theparties affixed their signatures on the secondAgreement,CojuangcosoptiontopurchasetheFUBsharesofstockdidnotyetexist.TheSandiganbayanfurtherruledthattherewasnojustificationinthesecondAgreementforthecompensationofCojuangcoof14,400shares,whichitviewedasexorbitant.Additionally,theSandiganbayanruledthatPCAcouldnotvalidlyenter,inbehalfofFUB/UCPB, intoaveritablebankmanagementcontractwithCojuangco,PCAhavingapersonalityseparateanddistinct from that ofFUB.As such, theSandiganbayanconcluded that thePCACojuangcoAgreementwasnullandvoid.Correspondingly,theSandiganbayanalsoruledthatthesequesteredFUB(UCPB)sharesofstockinthenameofCojuangcoareconclusivelyownedbytheRepublic.

Afteracircumspectstudy,theCourtfindsasinconclusivetheevidencerelieduponbySandiganbayantosupportitsrulingthatthePCACojuangcoAgreementisdevoidofsufficientconsideration.Weshallexplain.

Rule131,Section3(r)oftheRulesofCourtstates:

Sec. 3. Disputable presumptions.The following presumptions are satisfactory if uncontradicted, but may becontradictedandovercomebyotherevidence:

xxxx

(r)Thattherewasasufficientconsiderationforacontract

The Court had the occasion to explain the reach of the above provision in Surtida v. Rural Bank of Malinao(Albay),Inc.,44towit:

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Under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) privatetransactionshavebeenfairandregular(2)theordinarycourseofbusinesshasbeenfollowedand(3)therewassufficientconsiderationforacontract.Apresumptionmayoperateagainstanadversarywhohasnot introducedprooftorebutit.Theeffectofalegalpresumptionuponaburdenofproofistocreatethenecessityofpresentingevidence tomeet the legal presumption or the prima facie case created thereby, andwhich if no proof to thecontraryispresentedandoffered,willprevail.Theburdenofproofremainswhereitis,butbythepresumption,theonewho has that burden is relieved for the time being from introducing evidence in support of the averment,becausethepresumptionstandsintheplaceofevidenceunlessrebutted.

Thepresumption that a contract has sufficient consideration cannot beoverthrownby thebareuncorroboratedand selfserving assertion of petitioners that it has no consideration. To overcome the presumption ofconsideration,theallegedlackofconsiderationmustbeshownbypreponderanceofevidence.Petitionersfailedtodischargethisburdenxxx.(EmphasisOurs.)

TheassumptionthatampleconsiderationispresentinacontractisfurtherelucidatedinPentacapitalInvestmentCorporationv.Mahinay:45

UnderArticle1354oftheCivilCode,itispresumedthatconsiderationexistsandislawfulunlessthedebtorprovesthe contrary. Moreover, under Section 3, Rule 131 of the Rules of Court, the following are disputablepresumptions:(1)privatetransactionshavebeenfairandregular (2) theordinarycourseofbusinesshasbeenfollowed and (3) there was sufficient consideration for a contract. A presumption may operate against anadversarywhohasnotintroducedprooftorebutit.Theeffectofalegalpresumptionuponaburdenofproofistocreate the necessity of presenting evidence to meet the legal presumption or the prima facie case createdthereby,andwhich,ifnoprooftothecontraryispresentedandoffered,willprevail.Theburdenofproofremainswhere it is,butby thepresumption, theonewhohasthatburden isrelievedfor the timebeingfromintroducingevidenceinsupportoftheaverment,becausethepresumptionstandsintheplaceofevidenceunlessrebutted.46(Emphasissupplied.)

Therulethenisthatthepartywhostandstoprofitfromadeclarationofthenullityofacontractonthegroundofinsufficiencyofconsiderationwhichwouldnecessarilyrefertoonewhoassertssuchnullityhastheburdenofoverthrowing the presumption offered by the aforequoted Section 3(r). Obviously then, the presumptioncontextuallyoperatesinfavorofCojuangcoandagainsttheRepublic,asplaintiffaquo,whichthenhadtheburdentoprovethatindeedtherewasnosufficientconsiderationfortheSecondAgreement.TheSandiganbayansstatedobservation, therefore, that basedon thewordingsof theSecondAgreement,Cojuangcohadnopersonal andexclusive option to purchase the FUB shares from Pedro Cojuangco had really little to commend itself foracceptance.This,asopposedtothefactthatsuchsaleandpurchaseagreementismemorializedinanotarizeddocument whereby both Eduardo Cojuangco, Jr. and Pedro Cojuangco attested to the correctness of theprovisionsthereof,amongwhichwasthatEduardohadsuchoptiontopurchase.Anotarizeddocument,Lazarov.Agustin47 teaches, "generally carries theevidentiaryweight conferredupon itwith respect to itsdueexecution,anddocumentsacknowledgedbeforeanotarypublichaveintheirfavorthedisputablepresumptionofregularity."

InSamanillav.Cajucom,48 theCourtclarifiedthat thepresumptionofavalidconsiderationcannotbediscardedonasimpleclaimofabsenceof consideration,especiallywhen thecontract itself states that considerationwasgiven:

xxxThispresumptionappellantscannotovercomebyasimpleassertionoflackofconsideration.Especiallymaynot thepresumptionbeso lightlysetasidewhen thecontract itselfstates thatconsiderationwasgiven,and thesamehasbeenreducedintoapublicinstrumentwillalldueformalitiesandsolemnitiesasinthiscase.(Emphasisours.)

AperusalofthePCACojuangcoAgreementdisclosedanexpressstatementofconsiderationforthetransaction:

NOW, THEREFORE, for and in consideration of the foregoing premises and the other terms and conditionshereinaftercontained,thepartiesherebydeclareandaffirmthattheirprincipalcontractual intent is(1)toensurethatthecoconutfarmersownatleast60%oftheoutstandingcapitalstockoftheBank,and(2)thattheSELLERshall receive compensation for exercising his personal and exclusive option to acquire the Option Shares, fortransferring such shares to the coconut farmers at the option price of P200 per share, and for performing themanagementservicesrequiredofhimhereunder.

xxxx

4. As compensation for exercising his personal and exclusive option to acquire the Option ShareApplyingSamanilla to the case at bar, the express and positive declaration by the parties of the presence of adequateconsiderationinthecontractmakesconclusivethepresumptionofsufficientconsiderationinthePCAAgreement.Moreover,theoptiontopurchasesharesandmanagementservicesforUCPBwasalreadyavailedofbypetitionerCojuangco for the benefit of the PCA. The exercise of such right resulted in the execution of the PCECJAgreement, which fact is not disputed. The document itself is incontrovertible proof and hard evidence thatpetitionerCojuangcohadtherighttopurchasethesubjectFUB(nowUCPB)shares.Resipsaloquitur.

The Sandiganbayan, however, pointed to the perceived "lack of any pecuniary value or advantage to thegovernment of the said option, which could compensate for the generous payment to him by PCA of valuablesharesofstock,asstipulatedintheMay25,1975AgreementbetweenhimandthePCA."49

Inadequacyoftheconsideration,however,doesnotrenderacontractvoidunderArticle1355oftheCivilCode:

Art.1355.Except incasesspecifiedby law, lesionor inadequacyofcauseshallnot invalidateacontract,unlesstherehasbeenfraud,mistakeorundueinfluence.(Emphasissupplied.)

AlsuaBettsv.CourtofAppeals50isinstructivethatlackofampleconsiderationdoesnotnullifythecontract:

Inadequacyofconsiderationdoesnotvitiateacontractunlessit isprovenwhichinthecaseatbarwasnot,thattherewasfraud,mistakeorundueinfluence.(Article1355,NewCivilCode).Wedonotfindthestipulatedpriceassoinadequatetoshockthecourtsconscience,consideringthatthepricepaidwasmuchhigherthantheassessedvalueofthesubjectpropertiesandconsideringthatthesaleswereeffectedbyafathertoherdaughterinwhichcasefiliallovemustbetakenintoaccount.(Emphasissupplied.)sandfortransferringsuchsharestothecoconutfarmers,aswellasforperformingthemanagementservicesrequiredofhim,SELLERshallreceiveequityintheBank amounting, in the aggregate, to 95,304 fully paid shares in accordance with the procedure set forth inparagraph6below.(Emphasissupplied.)

Valesv.Villa51elucidateswhyabadtransactioncannotserveasbasisforvoidingacontract:

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xxxCourtscannotfollowoneeverystepofhislifeandextricatehimfrombadbargains,protecthimfromunwiseinvestments,relievehimfromonesidedcontracts,orannul theeffectsof foolishacts.xxxMenmaydofoolishthings,makeridiculouscontracts,usemiserablejudgment,andlosemoneybythemindeed,alltheyhaveintheworldbutnotforthatalonecanthelawinterveneandrestore.Theremustbe,inaddition,aviolationoflaw,thecommissionofwhat the lawknowsasanactionablewrong, before the courtsareauthorized to layholdof thesituationandremedyit.(Emphasisours.)

Whileonemayposit that thePCACojuangcoAgreementputsPCAand thecoconut farmersatadisadvantage,the facts do notmake out a clear case of violation of any law that will necessitate the recall of said contract.Indeed,theantigraftcourthasnotputforwardanyspecificstipulationthereinthat isatwarwithanylaw,ortheConstitution,forthatmatter.ItisevenclearasdaythatnoneofthepartieswhoenteredintothetwoagreementswithpetitionerCojuangcocontestednorsoughtthenullificationofsaidagreements,moreparticularlythePCAwhois always provided legal advice in said transactions by the Government corporate counsel, and a battery oflawyersandpresumably theCOAauditorassigned tosaidagency.Agovernmentagency, like thePCA,stoopsdowntolevelofanordinarycitizenwhenitentersintoaprivatetransactionwithprivateindividuals.Inthissetting,PCAisboundby the lawoncontractsand isboundtocomplywith the termsof thePCACojuangcoAgreementwhichisthelawbetweentheparties.WiththesilenceofPCAnottochallengethevalidityofthePCACojuangcoAgreementandtheinabilityofgovernmenttodemonstratethelackofampleconsiderationinthetransaction,theCourtisleftwithnootherchoicebuttoupholdthevalidityofsaidagreements.

Whileconsiderationisusuallyintheformofmoneyorproperty,itneednotbemonetary.ThisisclearfromArticle1350whichreads:

Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the prestation orpromiseofathingorservicebytheotherinremuneratoryones,theserviceorbenefitwhichisremuneratedandincontractsofpurebeneficence,themereliabilityofthebenefactor.(Emphasissupplied.)

Gabrielv.MontedePiedadyCajadeAhorros52tellsusofthemeaningofconsideration:

xxxAconsideration,inthelegalsenseoftheword,issomeright,interest,benefit,oradvantageconferreduponthe promisor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantagesuffered or undertaken by the promisee other than to such as he is at the time of consent bound to suffer.(EmphasisOurs.)

TheCourtrulesthatthetransferofthesubjectUCPBsharesisclearlysupportedbyvaluableconsideration.

To justify the nullification of the PCACojuangco Agreement, the Sandiganbayan centered on the allegedimaginaryoptionclaimedbypetitioner tobuy theFUBshares from thePedroCojuangcogroup. It reliedon thephrase "in behalf of certain other buyers" mentioned in the PCECJ Agreement as basis for the finding thatpetitionersoptionisneitherpersonalnorexclusive.Thepertinentportionofsaidagreementreads:

EDUARDOCOJUANGCO, JR., Filipino, of legal age andwith residence at 136 9th Street corner Balete Drive,QuezonCity,representedinthisactbyhisdulyauthorizedattorneyinfact,EDGARDOJ.ANGARA,forandinhisownbehalfandinbehalfofcertainotherbuyers,(hereinaftercollectivelycalledthe"BUYERS")xxx.

A plain reading of the aforequoted description of petitioner as a party to the PCECJ Agreement reveals thatpetitioner isnotonly thebuyer.He is thenamedbuyerand thereareotherbuyerswhowereunnamed.This isclearfromtheword"BUYERS."Ifpetitioneristheonlybuyer,thenhisdescriptionasapartytothesalewouldonlybe"BUYER."Itmaybetruethatpetitionerintendedtoincludeotherbuyers.Thefactremains,however,thattheidentitiesoftheunnamedbuyerswerenotrevealeduptothepresentday.WhileonecanconjureorspeculatethatPCAmaybeoneof thebuyers, the fact thatPCAentered intoanagreement topurchase theFUBshareswithpetitionermilitatesagainstsuchconjecturesincetherewouldbenoneedatalltoenterintothesecondagreementifPCAwasalreadyabuyerofthesharesinthefirstcontract.ItisonlythepartiestothePCECJAgreementthatcanplausibly shed lighton the importof thephrase "certainotherbuyers"but, unfortunately,petitionerwasnolongerallowedtotestifyonthematterandwasprecludedfromexplainingthetransactionsbecauseofthemotionforpartialsummaryjudgmentandtheeventualpromulgationoftheJuly11,2003PartialSummaryJudgment.

Even if conceding for the sake of argument that PCA is one of the buyers of the FUB shares in the PCECJAgreement,still itdoesnotnecessarily followthatpetitionerhadnooption tobuysaidshares fromthegroupofPedroCojuangco. In fact, theveryexecutionof the firstagreementundeniablyshows thathehad the rightsoroption tobuysaid shares from thePedroCojuangcogroup.Otherwise, thePCECJAgreement couldnothavebeenconsummatedandenforced.TheconclusionisincontestablethatpetitionerindeedhadtherightoroptiontobuytheFUBsharesasbuttressedbytheexecutionandenforcementoftheverydocumentitself.

WecanopttotreatthePCECJAgreementasatotallyseparateagreementfromthePCACojuangcoAgreementbutitwillnotdetractfromthefactthatpetitioneractuallyacquiredtherightstotheownershipoftheFUBsharesfromthePedroCojuangcogroup.TheconsequenceishecanlegallysellthesharestoPCA.Inthisscenario,hewouldresellthesharestoPCAforaprofitandPCAwouldstillenduppayingahigherpricefortheFUBshares.The"profit"thatwillaccruetopetitionermayjustbeequaltothevalueofthesharesthatweregiventopetitionerascommission.Stillwecanonlyspeculateastothetrueintentionsoftheparties.Withoutanyevidenceadducedonthisissue,theCourtwillnotventureonanyunprovenconclusionorfindingwhichshouldbeavoidedinjudicialadjudication.

The antigraft court also inferred from the date of execution of the special power of attorney in favor of nowSenatorEdgardoJ.Angara,whichisMay25,1975,thatthePCECJAgreementappearstohavebeenexecutedon thesamedayas thePCACojuangcoAgreement (datedMay25,1975).Thecoincidenceon thedatescasts"doubtsastotheexistenceofdefendantCojuangcospriorpersonalandexclusiveoptiontotheFUBshares."

ThefactthattheexecutionoftheSPAandthePCACojuangcoAgreementoccurredsequentiallyonthesamedaycannot,withoutmore, be the basis for the conclusion as to the nonexistence of the option of petitioner. SuchconjecturecannotprevailoverthefactthatwithoutpetitionerCojuangco,noneofthetwoagreementsinquestionwouldhavebeenexecutedandimplementedandtheFUBsharescouldnothavebeensuccessfullyconveyedtoPCA.

Again,onlythepartiescanexplainthereasonsbehindtheexecutionofthetwoagreementsandtheSPAonthesameday.Theywere,however,precludedfromelucidatingthereasonsbehindsuchoccurrence.Intheabsenceofsuchilluminatingproof,thepropositionthattheoptiondoesnotexisthasnolegtostandon.

More importantly, the fact that thePCECJAgreementwasexecutednotearlier thanMay25,1975proves thatpetitionerCojuangcohadanoptiontobuytheFUBsharesprior to thatdate.Again, itmustbeemphasizedthatfrom its terms, the first Agreement did not create the option.It, however, proved the exercise of the option bypetitioner.

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TheexecutionofthePCECJAgreementonthesamedayasthePCACojuangcoAgreementmorethansatisfiesparagraph2thereofwhichrequirespetitioner toexercisehisoptiontopurchasetheFUBsharesaspromptlyaspracticableafter,andnotbefore,theexecutionofthesecondagreement,thus:

2.Aspromptlyaspracticableafterexecutionof thisAgreement, theSELLERshallexercisehisoptiontoacquiretheOptionSharesandSELLERshallimmediatelythereafterdeliverandturnovertotheEscrowAgentsuchstockcertificates as are herein provided to be received from the existing stockholders of the bank by virtue of theexerciseontheaforementionedoption.TheEscrowAgentshallthereuponissueitscheckinfavoroftheSELLERcoveringthepurchasepriceforthesharesdelivered.(Emphasissupplied.)

TheSandiganbayanviewedthecompensationofpetitionerof14,400FUBsharesasexorbitant.Intheabsenceofprooftothecontraryandconsideringtheabsenceofanycomplaintofillegalityorfraudfromanyofthecontractingparties,thenthepresumptionthat"privatetransactionshavebeenfairandregular"53mustapply.

Lastly,respondentinterjectsthethesisthatPCAcouldnotvalidlyenterintoabankmanagementagreementwithpetitionersincePCAhasapersonalityseparateanddistinct fromthatofFUB.Evidently, it isPCAwhichhastheright to challenge the stipulations on themanagement contract as unenforceable. However, PCA chose not toassail said stipulations and instead even complied with and implemented its prestations contained in saidstipulationsby installingpetitionerasChairmanofUCPB.Thus,PCAhaswaivedand forfeited its right tonullifysaidstipulationsandisnowestoppedfromquestioningthesame.

In view of the foregoing, the Court is left with no option but to uphold the validity of the two agreements inquestion.

IV

COJUANGCOISNOTENTITLEDTOTHEUCPBSHARESWHICHWEREBOUGHTWITHPUBLICFUNDSANDHENCE,AREPUBLICPROPERTY.

Thecoconutlevyfundswereexactedforaspecialpublicpurpose.Consequently,anyuseortransferofthefundsthatdirectlybenefitsprivateindividualsshouldbeinvalidated.

Theissueofwhetherornottaxpayersmoney,orfundsandpropertyacquiredthroughtheimpositionoftaxesmaybeused to benefit a private individual is onceagainposed.Preliminarily, the instant case inquireswhether thecoconut levy funds, andaccordingly, theUCPBsharesacquiredusing the coconut levy fundsarepublic funds.Indeed,theverysameissuetookcenterstage,discussedandwasdirectlyaddressedinCOCOFEDv.Republic.Andthereishardlyanyquestionaboutthesubjectfundspublicandspecialcharacter.ThefollowingexcerptsfromCOCOFED v. Republic,54 citing Republic v. COCOFED and related cases, settle once and for all this core,determinativeissue:

Indeed,Wehavehithertodiscussed,thecoconutlevywasimposedintheexerciseoftheStatesinherentpoweroftaxation.AsWewroteinRepublicv.COCOFED:

Indeed, coconut levy funds partake of the nature of taxes, which, in general, are enforced proportionalcontributions from persons and properties, exacted by the State by virtue of its sovereignty for the support ofgovernmentandforallpublicneeds.

Based on its definition, a tax has three elements, namely: a) it is an enforced proportional contribution frompersonsandpropertiesb)itisimposedbytheStatebyvirtueofitssovereigntyandc)itisleviedforthesupportofthegovernment.Thecoconutlevyfundsfallsquarelyintotheseelementsforthefollowingreasons:

(a)Theyweregeneratedbyvirtueofstatutoryenactmentsimposedonthecoconutfarmersrequiringthepaymentofprescribedamounts.Thus,PDNo.276,whichcreatedthe(CCSF),mandatedthefollowing:

"a.Alevy,initially,ofP15.00per100kilogramsofcopraresecadaoritsequivalentinothercoconutproducts,shallbeimposedoneveryfirstsale,inaccordancewiththemechanicsestablishedunderRA6260,effectiveatthestartofbusinesshoursonAugust10,1973.

"TheproceedsfromthelevyshallbedepositedwiththePhilippineNationalBankoranyothergovernmentbanktotheaccountoftheCoconutConsumersStabilizationFund,asaseparatetrustfundwhichshallnotformpartofthegeneralfundofthegovernment."

Thecocolevieswerefurtherclarifiedinamendatorylaws,specificallyPDNo.961andPDNo.1468inthiswise:

"TheAuthority(PCA)isherebyempoweredtoimposeandcollectalevy,tobeknownastheCoconutConsumersStabilizationFundLevy,oneveryonehundredkilosofcopra resecada,or itsequivalentdelivered to,and/orpurchased by, copra exporters, oil millers, desiccators and other endusers of copra or its equivalent in othercoconutproducts.Thelevyshallbepaidbysuchcopraexporters,oilmillers,desiccatorsandotherendusersofcopraoritsequivalentinothercoconutproductsundersuchrulesandregulationsastheAuthoritymayprescribe.UntilotherwiseprescribedbytheAuthority,thecurrentlevybeingcollectedshallbecontinued."

Like other tax measures, they were not voluntary payments or donations by the people. They were enforcedcontributionsexactedonpainofpenalsanctions,asprovidedunderPDNo.276:

"3. Any person or firm who violates any provision of this Decree or the rules and regulations promulgatedthereunder,shall, inadditiontopenaltiesalreadyprescribedunderexistingadministrativeandspecial law,payafineofnot less thanP2,500ormorethanP10,000,orsuffercancellationof licensestooperate,orboth,at thediscretionoftheCourt."

Suchpenaltieswerelateramendedthus:.

(b) The coconut levies were imposed pursuant to the laws enacted by the proper legislative authorities of theState.Indeed,theCCSFwascollectedunderPDNo.276,."

(c)Theywereclearly imposed forapublicpurpose.There isabsolutelynoquestion that theywerecollected toadvancethegovernmentsavowedpolicyofprotectingthecoconutindustry.

ThisCourt takes judicial notice of the fact that the coconut industry is oneof the great economic pillars of ournation,andcoconutsandtheirbyproductsoccupyaleadingpositionamongthecountrysexportproducts.

7/30/2015 G.R.No.180705


Taxation is done not merely to raise revenues to support the government, but also to provide means for therehabilitationandthestabilizationofathreatenedindustry,whichissoaffectedwithpublicinterestastobewithinthepolicepoweroftheState.

Evenifthemoneyisallocatedforaspecialpurposeandraisedbyspecialmeans,itisstillpublicincharacter.InCocofed v. PCGG, theCourt observed that certain agencies or enterprises "were organized and financedwithrevenuesderivedfromcoconutleviesimposedunderasuccessionoflawofthelatedictatorshipwithdeposedFerdinand Marcos and his cronies as the suspected authors and chief beneficiaries of the resulting coconutindustrymonopoly."TheCourtcontinued: ". Itcannotbedenied that thecoconut industry isoneof themajorindustriessupporting thenationaleconomy. It is, therefore, theStates concern tomake it a strongandsecuresource not only of the livelihood of a significant segment of the population, but also of export earnings thesustainedgrowthofwhichisoneoftheimperativesofeconomicstability.(EmphasisOurs.)

ThefollowingparalleldoctrinallinesfromPambansangKoalisyonngmgaSamahangMagsasakaatManggagawasaNiyugan(PKSMMN)v.ExecutiveSecretary55camenext:

TheCourtwassatisfied that thecocolevy fundswere raisedpursuant to law tosupportapropergovernmentalpurpose.TheywereraisedwiththeuseofthepoliceandtaxingpowersoftheStateforthebenefitofthecoconutindustryanditsfarmersingeneral.TheCOAreviewedtheuseofthefunds.TheBureauofInternalRevenue(BIR)treatedthemaspublicfundsandtheverylawsgoverningcoconutleviesrecognizetheirpubliccharacter.

TheCourthasalsorecentlydeclaredthatthecocolevyfundsareinthenatureoftaxesandcanonlybeusedforpublicpurpose.Taxesareenforcedproportionalcontributionsfrompersonsandproperty, leviedbytheStatebyvirtueof itssovereigntyforthesupportof thegovernmentandforall itspublicneeds.Here,thecocolevyfundswereimposedpursuantto law,namely,R.A.6260andP.D.276.ThefundswerecollectedandmanagedbythePCA,anindependentgovernmentcorporationdirectlyunderthePresident.And,astherespondentpublicofficialspointedout,thepertinentlawsusedthetermlevy,whichmeanstotax,indescribingtheexaction.

Ofcourse,unlikeordinaryrevenuelaws,R.A.6260andP.D.276didnotraisemoneytoboostthegovernmentsgeneral fundsbut toprovidemeans for the rehabilitationandstabilizationofa threatened industry, thecoconutindustry,whichissoaffectedwithpublicinterestastobewithinthepolicepoweroftheState.Thefundssoughttosupport the coconut industry, one of the main economic backbones of the country, and to secure economicbenefits for thecoconut farmersand farworkers.Thesubject lawsareakin to thesugar liens imposedbySec.7(b)ofP.D.388,andtheoilpricestabilizationfundsunderP.D.1956,asamendedbyE.O.137.

Fromtheforegoing,itisatonceapparentthatanypropertyacquiredbymeansofthecoconutlevyfunds,suchasthe subject UCPB shares, should be treated as public funds or public property, subject to the burdens andrestrictionsattachedbylawtosuchproperty.COCOFEDv.Republic,delvedintosuchlimitations,thusly:

Wehaveruledtimeandagainthattaxesareimposedonlyforapublicpurpose."Theycannotbeusedforpurelyprivatepurposesor for theexclusivebenefit of privatepersons."Whena law imposes taxesor levies from thepublic, with the intent to give undue benefit or advantage to private persons, or the promotion of privateenterprises, that lawcannotbesaidtosatisfy therequirementofpublicpurpose. InGastonv.RepublicPlantersBank,thepetitioningsugarproducers,sugarcaneplantersandmillerssoughtthedistributionofthesharesofstockof theRepublicPlantersBank (RPB),alleging that theyare the truebeneficialowners thereof. In thatcase, theinvestment,i.e.,thepurchaseofRPB,wasfundedbythedeductionofPhP1.00perpiculfromthesugarproceedsof thesugarproducerspursuant toP.D.No.388. In rulingagainst thepetitioners, theCourtheld that to rule intheir favorwouldcontravene thegeneralprinciple that re

Cojuanco v Republic

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