DOJ Opinion No. 077, s. 1988

DOJ OPINION NO. 077 , s. 1988 April 6, 1988 Mr. Jose V. Romero, Jr. Chairman Philippine Coconut Authority Quezon City Sir : This has reference to your request for opinion on the nature and ownership of the desiccated Coconut Rationalization Fund and physical assets, collected and/or acquired by the Philippine Coconut Authority (PCA) pursuant to the Desiccated Coconut Industry Rationalization Program. cdlex You state that the Association of Philippine Coconut Desiccators (APCD) in a letter dated January 27, 1988, thru counsel, asserts beneficial ownership of the DCNRF and DCN assets and asks the transfer to it of all monies and assets after the payment of the loan obtained by PCA. On the other hand, the position of the PCA thru the comment submitted by your Legal Department is that E.O. 854 neither confers ownership to the remaining desiccators nor authorized the PCA Governing Board to confer such ownership by means of its rule-making power. In essence, the query refers to a dispute over the ownership of the DCNRF and DCN assets between the PCA and the APCD. We regret that this Department cannot, with propriety, render an opinion on your query. Pursuant to policy and established precedents, the Secretary of Justice does not pass upon questions which are justiciable in nature, especially if they concern substantial rights of private parties, his opinion being advisory in character and having no binding force on them (Ops. Nos. 92 and 112, s. 1971; No. 192; and No. 149, s. 1973). Besides private parties would in all probability, if the opinion happens to be adverse to their interest, take issue therewith and contest the same before the courts (Ops. No. 142, s. 1950; No. 232, 251 and 299, s. 1956; No. 40, s. 1975; No. 90, s. 1976; No. 128, s. 1977). However, for your information, may we invite your attention to the ruling of the Supreme Court in Caston, et al., vs. Republic Planters Bank, et al., (G.R. No. 77194, March 15, 1988), viz; "The stabilization fees collected are in the nature of a tax, which is within the power of the State to impose for the promotion of the sugar industry ( Lutz vs . Araneta, 98 Phil . 148 ). They constitute sugar liens (Sec. 7[b] P.D. No. 388). The collections made accrue to a Special Fund, a Development and Stabilization Fund almost identical to the Sugar Adjustment and Stabilization Fund created under Section 6 of Commonwealth Act 567. [1] The tax collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State (Lutz vs. Araneta, supra ). 'The protection of a large industry constitution one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. (Johnson vs. State ex. rel. Marey, 128 So. 857, cited in Lutz vs. Araneta, supra ). "The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special purposes that of financing the growth and development of the sugar industry and all its components, stabilization of the domestic market including the foreign market. The fact that the State has taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they are held for a special purpose (Lawrence vs. American Surety Co., 263 Mich 586, 249 ALR 535, cited in 42 Am. Jur. Sec. 2, p. 718). Having been levied for a special purpose, the revenues collected are to be treated as a special fund, to be, in the language of the statute, administered in trust for the purpose intended. Once the purpose has been fulfilled or abandoned, the balance, if any is to be transferred to the general funds of the Government. That is the essence of the trust intended (See 1987 Constitution, Article VI, Sec. 29(S), lifted from the 1935 Constitution, Article VI, Sec. 23 [1]). [2] prcd "The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in the Philippine Treasury, moneys from which may be paid out only in pursuance of an appropriation made by law (1987 Constitution, Article VI, Sec. 29 [1], 1973 Constitution, Article VIII, Sec. 18 [1]). "That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fund for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them since it is also they who are to be benefited from the expenditure of the funds derived form it. The investment in shares of respondent Bank is not alien to the purpose intended because of the Bank's character as a commodity bank for sugar conceived for the industry's growth and development. Furthermore, of note is the fact that one-half, (1/2) or P0.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the payment of salaries and wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM' thereby immediately negating the claim that the entire amount levied is in trust for sugar, producers, planters and millers. "To rule in petitioners' favor would contravene the general principle that revenue derived from taxes cannot be used for purely private persons. The Stabilization Fund is to be utilized for the benefit of the entire sugar industry, and all its components, stabilization of the domestic market including the foreign market, the industry being of vital importance to the country's economy and to national interest." cdll Very truly yours, (SGD.) SEDFREY A. ORDOEZ Secretary of Justice