CONFEDERATION OF COCONUT FARMERS ORGANIZATION OF

THE PHILIPPINES, INC. (CCFOP) VS. HIS EXCELLENCY

PRESIDENT BENIGNO SIMEON C. AQUINO, III, ET AL.
G.R. NO. 217965, 08 AUGUST 2017

FACTS: To support the coconut industry, R.A. No. 6260 was enacted in
1971. The said law aimed to impose a levy of PhP 0.55 per 100
kilograms of copra or coconut products sold by farmers. The
funds are pooled into the Coconut Investment Fund (CIF) which
in turn gave farmers shares of the Coconut Investment
Company (CIC). After the declaration of martial law in 1972,
P.D. Nos. 276, 582, 755, and 961 were issued to manage the
coconut levy funds, all aimed to support the coconut industry.
P.D. Nos. 755 and 961 declared that coconut levy funds were
not to be treated as special funds, asserting that they belong to
the farmers in their own private capacities.
P.D. No. 1234 was issued in 1977, directing that all income and
fiduciary funds be remitted to the national treasury and thereby
treated as Special Accounts in the General Fund. This included
the coconut levy funds.
A year later, P.D. No. 1468 was issued, effectively reinstating
the previous declarations, and that the coconut levy funds were
owned by the coconut farmers and not part of the General
Fund.
For a couple of years, coconut levy funds were used in
numerous projects. However, in 2012, the Court ruled that in a
case that coconut levy funds were public funds and not private
assets. It also struck down P.D. Nos. 755, 961, and 1468.
President Aquino later issued Executive Order Nos. 179 and 180
in 2025 to facilitate the inventory and privatization of the
coconut levy funds to reconvey the same to the coconut
farmers. CCFOP challenged the validity of the two (2) orders for
being unconstitutional and that it violated the authority of the
Philippine Coconut Authority and the Judiciary.
ISSUE: (1) Whether Executive Order Nos. 179 and 180 are
unconstitutional.
(2) Whether the coconut levy funds are public funds.
HELD: (1) The Court declared that Executive Order Nos. 179 and 180
were unconstitutional in certain respects but reaffirmed that
the coconut levy funds are public funds. It further stated that
the funds be treated as Special Accounts in the General Funds
for the sole benefit of the coconut farmers. The portion of the
orders which allowed for the allocation and disbursement of the
funds without legislative authority were declared void.
 (2) The Court ruled that the coconut levy funds are public in
nature. Citing the ruling in the landmark case of COCOFED v.
Republic, the Court held that:
xxx
“Public funds are those moneys belonging to the State or to
any political subdivision of the State; more specifically,
taxes, customs duties and monies 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.
xxx

WHY IT APPLIES IN THE PHILHEALTH CASE: The ruling in this case

applies in the PhilHealth case because it defines what public
funds are. It also reiterated a landmark ruling wherein a specific
criterion for a fund to be considered “public” is laid down.
Because of this ruling, PhilHealth funds are also public funds
because they are collected for a specific purpose. It cited
Bernas’ commentary in 1987:
“The revenue collected for a special purpose shall be
treated as a special fund to be used exclusively for the
stated purpose. This serves as a deterrent for abuse in
the disposition of special funds.”
JOHN H. OSMENA VS. OSCAR ORBOS, ET AL.
G.R. NO. 99886, 31 MARCH 1993

FACTS: On 10 October 1984, President Ferdinand Marcos issued

Presidential Decree No. 1956, which created the Oil Prize
Stabilization Fund (OPSF). The issuance aimed to reduce the
impact of the fluctuating oil prices felt by the consumer public
by reimbursing oil companies for the cost increases due to the
foreign exchange and world market prices. This fund came to
be known later as the “trust liability account.” President
Corazon Aquino later issued executive Order No. 137 to expand
the grounds of reimbursements.
Osmena challenged the decree, alleging that the trust account
status of the OPSF was invalid, that the delegated legislative
power to the Energy Regulation Board (ERB) was
unconstitutional, and that the various reimbursements made to
oil companies from the OPSF were illegal. Osmena argues that
the monies collected pursuant to P.D. No. 1956, as amended,
must be treated as a “special fund” and not as a “trust
account” or a “trust fund.”
ISSUE: Whether the OPSF is a special fund.
HELD: YES, the OPSF is a special fund.
The Court ruled that while the funds collected are taxes, they
are still exacted in the exercise of the police power of the State.
Moreover, it is plainly expressed in E.O. no. 137 that the OPSF is
a special fund. These funds must be segregated from the
general fund and placement into a trust liability account
nonetheless subjects it to scrutiny of the Commission on Audit.
The Court further held that the OPSF qualifies as a special fund
under Section 29(3) Article VI of the 1987 Constitution, to wit:
xxx
(3) All money collected on any tax levied for a special
purpose shall be treated as a special fund and paid out for
such purpose only. If the purpose for which a special fund
was created has been fulfilled or abandoned, the balance, if
any, shall be transferred to the general funds of the
Government.
xxx
WHY IT APPLIES IN THE PHILHEALTH CASE: The ruling in this case
applies in the PhilHealth case because it supports the
contention that PhilHealth funds are special funds, as defined in
Section 29(3) Article VI of the Constitution. PhilHealth funds are
sourced from taxes collected in the exercise of the
government’s taxing or police powers and they are levied for
 the special purpose of providing healthcare services to Filipino
citizens.
MANDANAS VS. EXECUTIVE SECRETARY
G.R. NO. 199802, 03 JULY 2018

FACTS: The General Appropriations Act (GAA) for FY 2012 was assailed
by Petitioners on the ground that the computation of the base
amounts for the Internal Revenue Allotment (IRA) for the local
government units (LGUs) did not include certain collections of
NIRTs by the Bureau of Customs, namely: excise taxes, value-
added taxes (VATs), and documentary stamp taxes (DSTs).
Petitioners further insist that such taxes should form part of the
base from which the IRA should be computed because they
constitute National Internal Revenue taxes (NIRTs), albeit being
collected by the BoC. The exclusion of the said taxes deprived
LGUs of about PhP 60,750,000.00 for FY 2012. Worse, the
erroneous computation began since 1992, hence, the National
Government has deprived LGUs of PhP 438,203,906,675.73 in
their IRAs.
The following have been excluded from the base for reckoning
the just share of the LGUs as required by Section 6, Article X of
the 1987 Constitution, namely:
1. The share of the affected LGUs in the proceeds of the sale
and conversion of former military bases in accordance
with R.A. No. 7227;

2. The share of the different LGUs in the excise taxes

imposed on locally manufactured Virginia tobacco
products as provided for in Section 3, R.A. No. 7171, and
as now provided in Section 289 of the NIRC;

3. The share of the different LGU s in incremental revenues

from Burley and native tobacco products under Section 8
of R.A. No. 8240, and as now provided for in Section 288
of the NIRC;

4. The share of the COA in the NIRTs as provided in Section

24(3) of P.D. No. 144567 in relation to Section 284 of the
NIRC;

5. The shares of the different LGUs in the excise taxes on

mineral products, as provided in Section 287 of the NIRC
in relation to Section 290 of the LGC;

6. The NIRTs collected by the cities and provinces and

divided exclusively among the LGUs of the ARMM, the
regional government and the central government,
 pursuant to Section 1568 in relation to Section 9,69
Article IX of R. A. No. 9054; and

7. The shares of the relevant LG Us in the franchise taxes

paid by Manila Jockey Club, Inc., and the Philippine Racing
Club, Inc.
Respondent argues that Article 284 of the Local Government
Code sis consistent with Section 6 Article X of the 1987
Constitution to the effect that LGUs shall have a “just share” in
the national taxes and that the determination of the just share
is well within the discretion of the Congress – including the
exclusion of the named taxes. Respondents also insist that
there is a difference between the VATs, excise taxes, and DSTs
collected by the BIR, and those collected by the BoC, which
warrant different treatments.
ISSUE: Whether the exclusion of the excise taxes, VATs, and DSTs from
the base amount for the computation of the just share of the
LGUs in the national taxes is constitutional.
HELD: NO, the Court held that exclusion was indeed unconstitutional.
The phrase “national internal revenue taxes” in Section284 of
the LGC is undoubtedly more restrictive that “national taxes” in
Section 6 Article X of the constitution. Verba legis non est
recedendum (from the words of a statute there should be no
departure).
Section 6, Article X of the 1987 Constitution provides that:
“Section 6. Local government units shall have a just
share, as determined by law, in the national taxes
which shall be automatically released to them.”
Section 248 of the LGC states:
“Section 284. Allotment of Internal Revenue Taxes. - Local
government units shall have a share in the national
internal revenue taxes based on the collection of the
third fiscal year preceding the current fiscal year as
follows:
xxx
Under Section 21 of the National Internal Revenue Code, as
amended, the phrase “national internal revenue taxes” include
income taxes, estate and donor’s taxes, value-added taxes,
other percentage taxes, excise taxes, documentary stamp
taxes, and such other taxes which may be imposed and
collected by the BIR hereafter. There is a clear exclusion of
other national taxes, like customs duties, from the computation
of the base amount.
 Assuming arguendo that Sectio 248 is valid, the
implementation is still erroneous because a cursory reading of
the provision provides no authorization to exclude or deduct
from collections of NIRTs.

WHY IT APPLIES IN THE PHILHEALTH CASE: The ruling in

Mandanas vs. Executive Secretary ruled that some national
taxes may, by law, be justifiably excluded from the
computation of the base amount for the just shares of LGUs. It
further held that Congress had the authority to exclude such
taxes by virtue of their being taxes imposed for special
purposes.
The Court ruled that excise taxes imposed on locally
manufactured Virginia tobacco products under R.A. 7171 (now
Section 289 NIRC) and the incremental revenues from Burley
and native tobacco products under Section 8 of R.A. 8240 (now
Section 288 NIRC), among many other excise taxes, are
justifiably excluded by Congress to be included in the
computation for the base amount for the just shares of LGUs
because they are taxes imposed for a special purpose.
This helps the PhilHealth case because there is jurisprudence
telling us that these excise taxes are ruled to be imposed for a
special purpose.
A reading of Section 288 and Section 289 of the NIRC and
Section 24(3) of P.D. No. 1445 in relation to Section 284 of the
NIRC reveals that all such taxes are levied and collected for a
special purpose:

Section 288 NIRC

(B) Incremental Revenues from Republic Act No.
8240. - Fifteen percent (15%) of the incremental revenue
collected from the excise tax on tobacco products under R.
A. No. 8240 shall be allocated and divided among the
provinces producing burley and native tobacco in
accordance with the volume of tobacco leaf production. The
fund shall be exclusively utilized for programs to promote
economically viable alternatives for tobacco farmers and
workers such as:
xxx

Section 289 NIRC

 Section 289. Special Financial Support to Beneficiary
Provinces Producing Virginia Tobacco. - The financial
support given by the National Government for the
beneficiary provinces shall be constituted and collected
from the proceeds of fifteen percent (15%) of the excise
taxes on locally manufactured Virginia-type of cigarettes.
The funds allotted shall be divided among the beneficiary
provinces pro-rata according to the volume of Virginia
tobacco production.
xxx
The Secretary of Budget and Management is hereby
directed to retain annually the said funds equivalent to
fifteen percent (15%) of excise taxes on locally
manufactured Virginia-type cigarettes to be remitted to the
beneficiary provinces qualified under R.A. No. 7171.
The provisions of existing laws to the contrary
notwithstanding, the fifteen percent (15%) share from
government revenues mentioned in R.A. No. 7171 and due
to the Virginia tobacco-producing provinces shall be directly
remitted to the provinces concerned.
xxx
The exclusion of these taxes from the computation conforms to
Section 29(3), Article VI of the 1987 Constitution, which states:
Section 29. x x x
xxx
(3) All money collected on any tax levied for a special
purpose shall be treated as a special fund and paid
out for such purpose only. If the purpose for which a
special fund was created has been fulfilled or abandoned,
the balance, if any, shall be transferred to the general funds
of the Government. [Bold emphasis supplied]
PAMBANSANG KOALISYON NG MGA SAMAHANG MAGSASAKA AT
MANGGAGAWA SA NIYUGAN VS. EXECUTIVE SECRETARY
G.R. NO. 147036-37 AND G.R. NO. 147811, 10 APRIL 2012

FACTS: The consolidated petitions assail the constitutionality of

Presidential Decrees and Executive Orders issued during the
Martial Law era and those under the administration of President
Joseph Estrada in relation to the raising and use of coconut levy
funds, particularly Section 2 of P.D. No. 755, Article III, Section 5
of P.D. Nos. 961 and 1468, E.O. No. 313.
In 1971, R.A. 6260 was enacted to establish a Coconut
Investment Fund aimed at developing the coconut industry
through a Coconut Investment Company (CIC) to advance
coconut farmers’ interests. The law imposed PhP 0.55 for every
100 kilograms of copra, or its equivalent, for which levy the
farmer gets a receipt convertible into CIC shares of stock.
Then in 1975, P.D. 755 was issued approving the acquisition of a
commercial bank for the benefit of the coconut farmers. This
bank later became known as the United Coconut Planters Bank
(UCPB).
President Estrada issued E.O. 312 in 2000, establishing a Sagip
Niyugan Program aimed at providing immediate income
supplement to coconut farmers as well as create a demand for
coconut oil and other coconut products. For that purpose, the
order established a PhP 1 billion fund by disposing the assets
from the coconut levy funds.
Later, the Coconut Trust Fund was established under E.O. 313,
which aimed to give financial assistance to the coconut farmers
and the industry through the operation of a trust fund. To realize
this objective, E.O. No. 313 directed the Presidential Commission
on Good Government, and the Office of the Solicitor General,
among others to exclude the 27% Coconut Industry Investment
Fund (CIIF) San Miguel Corporation (SMC) shares from a civil case
pending before the Sandiganbayan to lift the sequestration of the
shares.
In 2001, President Arroyo ordered the suspension of E.O. Nos. 312
and 313. Petitioners notwithstanding filed the instant action to
declare E.O. Nos. 312 and 313, as well as Section 5 of P.D. 1468
unconstitutional.
ISSUE: Whether the coconut levy funds are public funds.
HELD: YES, coconut levy funds are public funds. The Court emphasized
that:
 “Third. For some time, different and conflicting notions had
been formed as to the nature and ownership of the coco-
levy funds. The Court, however, finally put an end to the
dispute when it categorically ruled in Republic of the
Philippines v. COCOFED that these funds are not only
affected with public interest; they are, in fact, prima
facie public funds. Prima facie means a fact presumed to
be true unless disproved by some evidence to the contrary.
The Court was satisfied that the coco-levy funds were
raised pursuant to law to support a proper
governmental purpose. They were raised with the use of
the police and taxing powers of the State for the benefit of
the coconut industry and its farmers in general. The COA
reviewed the use of the funds. The Bureau of Internal
Revenue (BIR) treated them as public funds and the very
laws governing coconut levies recognize their public
character.
Coconut levy funds are in the nature of taxes and can only be
used for public purposes. The Court further explained that
coconut levy funds are evidently special funds. Citing Gaston vs.
Republic Planters Bank, it held that the State collected
stabilization fees from sugar millers, planters, and producers for a
special purpose: to finance the growth and development of the
sugar industry and all its components. The fees were levied for
a special purpose and, therefore, constituted a special
fund when collected.
In Osmeña v. Orbos, the Court held that the oil price stabilization
fund was a special fund mainly because this was
segregated from the general fund and placed in what the
law referred to as a trust account. Yet it remained subject to
COA scrutiny and review. The Court finds no substantial
distinction between these funds and the coco-levy funds, except
as to the industry they each support.
WHY IT APPLIES IN THE PHILHEALTH CASE: This ruling applies in
the PhilHealth case because it further strengthens our claim that a
portion of the PhilHealth funds raised by sin tax laws, which expressly
mandated that a share in the revenues from the excise taxes be
earmarked for the health – this is a special purpose. Thus, the funds
pooled from the excise taxes’ revenues are special funds intended to
be used solely for said special purpose.