THE COCONUT LEVY FUNDS AS PUBLIC FUNDS: ESTABLISHING GUIDELINES FOR JUDICIAL RECOGNITION OFTHE SUI GENERIS NATURE OF ILLGOTIEN WEALTH SUITS

Maria Christina Capito Rabonza (JD'13)

ABSTRACT

In 1987, the Republic of the Philippines (the "Republic') filed a complaint at the Sandiganbayan against Eduardo M. Cojuangco, Jr. ("Cojuangco') and several corporations under his control, in order to recover the so-called Marcos ill-gotten wealth pursuant to Executive Order (EO) Nos. 1, 2, and 14. The complaint, entitled Civil Case No. 0033, sought to recover the controversial coconut levy funds and their proceeds, and was later subdivided into eight separate complaints. One of these subdivided complaints was Civil Case No. 0033F, which sought to recover 51 percent of shares of stocks of San Miguel Corporation (SMC) that were allegedly acquired using coconut levy funds. Civil Case No. 0033-F branched out into two cases, each involving distinct portions of the disputed SMC shares. In the first case decided on April 12, 2011, the Supreme Court awarded legal ownership of 20 percent of the shares to Cojuangco and his corporations (the "2011 Case"). This decision became final and executory on July 27, 2011. The second case was decided less than a year later on January 24, 2012 (the "2012 Case"). This time, the Court awarded 27 percent of the claimed shares to the Republic. While both cases originate from the same complaint in Civil Case No. 0033-F and therefore involve the same subject matter, cause of action, and parties, the decisions of the Court in these two cases are diametrically opposed to each other. The question is, why? In the 2011 Case, the Court determined the sufficiency of the Republic's allegations and evidence against the defendants by applying the definition of ill-gotten wealth. But such definition was merely created by the Court on the claimed belief that there is no existing legal - definition for it. However there is, in fact, an existing definition provided in Section 1(A) of the PCGG Rules, which was promulgated as early as April 11, 1986 and bears the force and effect of law. The Supreme Court even applied this definition in the 2005 case of Republic v. Estate of Hans Menzi, as well as in the 2012 Case. What is more disturbing is that the Court's definition of ill-gotten wealth in the 2011 Case deviated from the one found in the PCGG Rules, thereby creating a new cause of action for the recovery of ill-gotten wealth that could only be called an act of judicial legislation. 

The outcome of the 2011 Case represents more than just a financial loss to the Republic, one that is estimated to be approximately PhP56.2 billion as of June 2012. It represents the beginning of a dangerous trend. On June 11, 2012, the Sandiganbayan rendered a decision dismissing another ill-gotten wealth suit that impleaded business tycoon, Lucia Tan, as a defendant. The said decision adopted in Coto the erroneous definition of ill-, gotten wealth in the 2011 Case. This thesis therefore proposes to rectify the 2011 Case by establishing guidelines to invoke the reconsideration of a final and executory decision of the Supreme Court, on the claim that ill-gotten wealth suits are sui generis. This claim has two aspects. First, ill-gotten wealth suits are inherently peculiar since they are comprised of hundreds of cases with the same cause of action, and often involving the same subject matter and parties as well. This results in interlocking issues among the cases that can lead courts to decide based on a misappreciation of the facts or theory of the case, because an interlocking issue is still pending at another court or has yet to be presented to the court for resolution. Second, the ill-gotten wealth suits involve the recovery of public funds and assets. This imbues this class of suits with public interest that demand a treatment distinct from all others. No less than the Supreme Court has recognized the great public interest involved in recovering the Marcos ill-gotten wealth, that it has on more than a few occasions, relaxed the rules ofprocedure in order not to frustrate the Republic's efforts to recover ill-gotten wealth. The fact that the Supreme Court in the 2012 Case conclusively determined the nature of the coconut levy funds as public funds, makes it all the more imperative to reconsider the 2011 Case. This thesis does not ask for ill-gotten wealth suits to be made as an exception to the rule; it claims that they are, by nature, an exception. To reconsider a final and executory decision of the Supreme Court in order to correct a legally erroneous decision that in the words of former Chief Justice Teehankee, "involves the material and moral survival of the nation," is a far lesser evil than what we stand to lose, which is the rewriting of our history