FIRST DIVISION
|
REPUBLIC OF
THE Petitioner, - versus - SANDIGANBAYAN (First Division), EDUARDO
M. COJUANGCO, JR., PHILIPPINE COCONUT PRODUCERS FEDERATION, INC., MARIA CLARA
L. LOBREGAT, and THE CORPORATE SECRETARY OF THE SAN MIGUEL CORPORATION, Respondents. |
G.R. No. 118661
Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ,
AZCUNA,
GARCIA, JJ. Promulgated: January 22, 2007 |
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D E C I S I O N
GARCIA, J.:
This case revolves around the corporations
organized and the investments acquired or funded allegedly from the coconut levy
fund (the Fund, hereinafter). While it came from levies on the sale of copra or
equivalent coconut products exacted for the most part from coconut farmers, the
Fund went or was known under various names, such as Coconut Consumers
Development Fund, Coconut Industry Investment Fund and Coconut Industry
Stabilization Fund (CISF). The successive establishing legislations and the stated
purpose for the exaction accounted for
the differing denominations. Through the years, a part of the Fund went to
various projects, was converted into different assets or invested. Playing key
roles in the collection, administration and/or use of the Fund were the
Philippine Coconut Authority (PCA), formerly the Philippine Coconut
Administration (PHILCOA), United Coconut Producers Bank (UCPB), and Philippine
Coconut Producers Federation, Inc., or the COCOFED. By legal mandate, COCOFED once
received allocations from the coconut levy funds to finance its projects. Among
the assets allegedly acquired thru the direct or indirect use of the Fund was a
block of San Miguel Corporation (SMC) shares of stock.
Opinions had, for some time, been divided as to the nature
and ownership of a fund with public roots but with private fruits, so to speak.
The Court, however, veritably wrote finis
to both issues in at least seven (7) ill-gotten cases[1]
decided prior to the filing of the present petition in 1995, and in several more
subsequent cases,[2]
notably in Republic v. Cocofed[3]
where the Court declared the coconut levy fund as partaking the nature of
taxes, hence is not only affected with public interest, but “are in fact prima facie public funds.”
Consequent to the rulings in the supervening cases adverted
to, several sub-issues in the present petition have
been rendered moot and academic. Accordingly,
the present petition shall be resolved taking into stock and in the light of
the relevant findings and holdings in the supervening batch of cases.
In this petition for certiorari under Rule 65 of the Rules of
Court, the Republic of the Philippines (Republic, for short), represented by
the Presidential Commission on Good Government (PCGG), seeks to annul and set
aside a portion of the Order[4]
dated September 9, 1994 of the Sandiganbayan
(First Division) in its Civil Case No.
0102, a joint petition for approval of a compromise agreement and
settlement[5] interposed
by certain corporations involving sequestered SMC shares of stocks.
The factual background:
In 1971, Republic Act
(R.A.) No. 6260 was enacted creating the Coconut Investment Company to administer the Coconut Investment Fund (CIF), which was to be sourced from a levy of
P0.55 on the sale of every 100 kilograms of copra
or equivalent coconut product. In the
course of implementing R.A. No. 6260, PHILCOA declared COCOFED as the
recognized national association of coconut producers with the largest
membership.[6]
On
Then came P.D.
276 establishing the Coconut Consumers Stabilization Fund (CCSF) and declaring the proceeds of the CCSF levy as a trust fund.[8]
From the CCSF was established,
pursuant to P.D. 582,
another fund, the Coconut
Industry Development Fund (CIDF).
On December 26, 1974, P.D. 623 went into effect, reducing the
numerical composition, i.e., from 11
to 7 members, of the existing PCA's governing board, and thereby strengthening COCOFED
by reserving three (3) board seats to those “recommended by [COCOFED].” Also
included in the new board structure was one member to be recommended by the
owner/operator of the hybrid coconut seed nut farm.
It would appear that in the new 7-man PCA
Board initially sat herein respondent Maria Clara L. Lobregat (hereafter "Lobregat"), as COCOFED representative. Sitting as
representative of the Bugsuk Hybrid Coconut Seed Nut Farm was herein respondent
Eduardo M. Cojuangco, Jr. (hereafter “Cojuangco, Jr.").
At this juncture, it is relevant to
mention some incidents referred to or recurring allegations made in several
coco levy cases:
1.
On
2. On May 30, 1975, FUB
issued Stock Certificate Nos. 745
and 746, covering 124,080 and 5,880 shares, respectively, in the name of “[PCA] for the benefit of the
coconut farmers of the Philippines.”[13] As of the
end of the quarter,
Consequent to the changes in FUB’s corporate
identity and purpose, its Articles of Incorporation was amended in July 1975,
resulting in the change of name of the bank from FUB to UCPB.[15]
3. Soon after PCA acquired FUB, PD 755 was issued
therein directing PCA to use the CCSF and the CIDF to acquire a commercial bank
which shall provide intended beneficiaries with “readily available credit
facilities at preferential rates.” The Decree also authorized PCA to distribute
the Bank’s shares of stock, free, to the coconut farmers. [16]
In Cocofed vs. PCGG,[17]
we categorically stated that PCA acquired UCPB with the use of the CCSF.
4. To
codify the various laws relating to the coconut industry, President Marcos issued
PD 961, the Coconut Industry Code,
which took effect on
On September 3, 1979, then
President Marcos issued Letter of Instructions (LOI) No. 926[18] which, as couched, veritably directed the UCPB
to
invest, on behalf of coconut farmers,
such portion of the Coconut Industry Investment Fund - supposedly created by P.D. 1468 - in coconut oil mills and other private corporations, with
the following resulting ownership structure:
Section 2. Organization of the
Cooperative Endeavor. – The [UCPB], in its capacity as the
investment arm of the coconut farmers thru the Coconut Industry Investment Fund
(CIIF) …, is hereby directed to invest, on behalf of the coconut farmers, such
portion of the CIIF … in a private corporation which shall serve as the
instrument to pool and coordinate the resources of the coconut farmers and the
oil millers in the buying, milling and marketing of copra … under the following
guidelines:
a) The
coconut farmers shall own or control at least fifty percent (50%) of the
outstanding voting capital stock of the private corporation [acquired] thru the
CIIF and/or corporations owned or controlled by the coconut farmers thru the
CIIF…. (bracketed
words added).
On
Recapitulating, R.A. No. 6260 or the Coconut Investment
Act [20]
established the CIF. PD 276 [21]
established the CCSF. PD 582 [22]
established the CIDF. LOI No. 926 [23]
mentions about the creation of a Coconut Industry Investment Fund (hereafter "CIIF") in P.D. 582 and
directs the investment of a portion of the CIIF in private corporations. P.D. 1841 [24]
established the CISF.
The focus
of this case turns on 1) what the martial law issuances referred to as the bank
acquired for the benefit of the coconut farmers, i.e., UCPB; 2) the six
(6) corporations UCPB organized and/or invested in using CIIF, known as the “CIIF Corporations”;[25] and 3) the fourteen (14) corporations, known
as the “CIIF Holding Companies,”
which the CIIF Corporations acquired or organized.[26]
It appears that on December 15, 1983,
the CIIF Holding Companies each acquired,
in various lots, shares of the outstanding capital stock of SMC or a total of over
33.1 million shares (the “subject
shares,” hereinafter). On the
same day, the CIIF Holding Companies
signed an Agreement placing the subject shares under a Voting
Trust Agreement (VTA) in favor of Andres Soriano, Jr., who was later
substituted by Cojuangco, Jr., or, upon his written delegation, Andres Jr.’s
son, Andres III.[27]
Upon assuming office as President of the
Republic following the glorious 1986 EDSA Revolution, Corazon C. Aquino issued
Executive Order (EO) No. 1,
series of 1986, creating the PCGG to assist her in the recovery of ill-gotten wealth
of then President Marcos, his family, relatives, nominees and/or business associates.
Complementing EO No. 1 was EO No. 2,
series of 1986, asserting that ill-gotten assets are inter alia in the form of shares of stock acquired through or as
result of the improper or illegal use of funds owned by the Government or its
agencies/instrumentalities and accordingly may be frozen.
On March 26, 1986, the CIIF Holding Companies sold to Andres Soriano
III, “for himself and as agent of several
persons,” the subject 33.1 million SMC shares for the grand price
of P3.31 billion payable in
four (4) installments.[28]
On P500 million to UCPB, as administrator
of the CIIF Holding Companies (hereafter the “UCPB group”). The sale was transacted through the stock exchange with
the covered shares registered in the name of Anscor-Hagedorn
Securities, Inc.
On April 7, 1986, the PCGG sequestered
the subject 33.1 Million SMC shares, the PCGG noting in its letter to Soriano
III [29] that said
shares came “from the
shareholdings of Mr. Eduardo Cojuangco, Jr. which are listed [as owned by the
14 CIIF Holding Companies].”
The PCGG subsequently lifted the order
of sequestration
on SMC’s representation that 1.3 million farmers, as owners of the seller
corporations, owned the subject shares. However, the sequestration was soon reimposed at the instance of SMC which, in a complete
reversal of its earlier averment, alleged that the same shares were owned and
controlled by an “antagonistic block led by E. Cojuangco.”[30] PCGG would soon after require SMC officers
not to book share transfers without its prior written authority.
Due to the sequestration thus effected,
the SMC group suspended payment of the balance of the purchase price of the
subject shares. In retaliation, the UCPB
group rescinded the sale.
On
On
On
Sec. 26. The
authority to issue sequestration or freeze orders under Proclamation No. 3
dated
xxx [For sequestration
or freeze] orders issued before the ratification of this Constitution, the
corresponding judicial action or proceeding shall be filed within six months
from its ratification. For those issued after such ratification, the judicial
action or proceeding shall be commenced within six months from the issuance
thereof.
The
sequestration or freeze order is deemed automatically lifted if no judicial
action or proceeding is commenced as herein provided.
In an apparent rush to beat the deadline, the PCGG,
on
Early 1989 developments saw the SMC and UCPB groups successfully
threshing out their dispute over the aborted sale of over 33.1 million SMC shares which have meanwhile yielded dividends
and/or been subject to stock splits. But because any settlement required PCGG’s intervention, Soriano III,
for SMC, and Ramon Y. Sy, for UCPB, in a joint letter
of
This arbitral fee must, however, be used purely to
promote and support the government’s agrarian reform program and may be held
and controlled by the PCGG or the appropriate government agency, as trustee for
the agrarian reform beneficiaries.
In March 1990, the SMC group and the
UCPB group signed a “Compromise Agreement and Amicable Settlement” (hereafter
the “Compromise Agreement”).[35]
Its
pertinent provisions state in essence: [36]
1. The sale of the 5 Million SMC shares to the SMC Group
covered by and corresponding to the P500 Million first installment paid to the
sellers by the SMC Group is valid and effective as of
2. The First Installment Shares shall revert to the SMC
treasury for dispersal pursuant to the SMC Stock Dispersal Plan.
3. The sale of the shares covered by … the second, third
and fourth installments of the 1986 Stock Purchase Agreement
is hereby rescinded effective
4. An “arbitration fee” of 5,500,000
SMC shares (1 Million shares coming from SMC and 4.5 Million coming from the
UCPB Group) composed of 3,858,831 “A” shares and 1,641,169 “B” shares would be
given to the PCGG to be held in trust for the CARP.
On
The
Republic, through the Office of the Solicitor General (OSG), then opposed the
Compromise Agreement, contending, at bottom, that it involved coco levy funds
which, in any form or transformation, are public funds, hence not within the
private disposition of the contracting parties.[38]
Pressing on with its opposition, the Republic then stated:
2.
xxx the
Inasmuch as the shares subject of the
aforesaid compromise agreement where also the subject of Civil Case No. 0033
and alleged to be part of the alleged ill-gotten wealth of former President
Marcos and his cronies, the Sandiganbayan directed that
copies of the joint petition be furnished Cojuangco,
Jr., Lobregat and all the other defendants in Civil
Case No. 0033.
Thereafter,
Cojuangco, Jr. sought - and was subsequently granted - leave to intervene in Civil Case No. 0102, asserting in his
motion that, as owner/holder
of 54,117,421 shares in UCPB and 26,448 in SMC, he has legal interest in opposing
the approval of the Compromise Agreement. [39]
Pursuing
a similar move, COCOFED, in behalf of coconut farmers, with several other individuals,[40]
filed an OMNIBUS CLASS ACTION, [41]
with sub-captions, characterizing the action as a motion for leave to intervene
and to admit opposition-in-intervention and compulsory counter-petition and
counterclaim for damages, therein alleging that they are the ultimate
beneficial owners of the subject SMC shares.
On
3. So much of the proceeds of the sale as may be necessary
shall be used a) to finance the obligations of the CIIF Companies under the
COMPROMISE, and b) to liquidate the obligations of the CIIF Companies to UCPB
for the purchase price of the SHARES.
The balance shall be kept by the PCGG in escrow to await final judicial
determination of the ownership of the various coconut-related companies and of
all of the other assets involved here.
The cash dividends that have been declared on the SHARES may be applied
for the above purposes before proceeds from the sale of shares are
realized. The balance of such cash
dividends shall be held in escrow in the same manner as the sales proceeds.
4. All shares shall continue to be sequestered even beyond
Delivery Date. Sequestration on
them shall be lifted as they are sold consequent to the approval of the sale by
the Sandiganbayan, and in accordance with the dispersal plan approved by the
Commission. All of the SHARES that are
unsold will continue to be voted by the PCGG while still unsold.
5. The consent of the PCGG to the transfer of the
sequestered shares in accordance with the COMPROMISE, and to the lifting of the sequestration thereon to
permit such transfer, shall be effective only when
approved by the Sandiganbayan. xxx. The consent it gives here conforms to
its duty to care for the sequestered assets ….
It is not to be construed as indicating any recognition of the legality
or sufficiency of any act of any of the parties. (Underscoring and emphasis added.)
On
On October 16, 1990, the Sandiganbayan issued an Order integrating its Civil Case No. 0102 with, and made as an incident to, Civil Case No. 0033. [44]
In the
meantime, on
Subsequently,
the Sandiganbayan issued an order deferring consideration
of the SMC Group-UCPB Group Compromise Agreement “until the parties thereto take the initiative to restore the same in
the Court's calendar.”
In its
order of
On
It appearing that the sequestered character of the shares
of stock subject of the instant petition for the approval of the compromise
agreement, which are shares of stock in the [SMC] in the name of the CIIF
Corporations, is independent of the transaction involving the contracting
parties in the Compromise Agreement … and it appearing further that the said
sequestered SMC shares of stock have not been … taken over by the PCGG, so much
so that the reversions contemplated in said Compromise Agreement are without
prejudice to the perpetuation of the sequestration thereon, until such time as
a judgment might be rendered on said sequestration (which issue is not before
this Court as [sic] this time), and it appearing finally that the PCGG has not
interposed any objection to the contractual resolution of the problems
confronting the “SMC Group” and the “UCPB Group” to the extent that the
sequestered character of the shares in question is not affected, this Court
will await the pleasure of the [PCGG] before consideration of the Compromise
Agreement is reinstated in the Court's calendar.
While this is, in effect, a denial of the “UCPB Group's”
Motion to set consideration of the Compromise Agreement herein, this denial is
without prejudice to a reiteration of the motion or of any other action by the
parties should developments hereafter justify the same.
On
a. On
instructions of the SMC Group, the certificates of stock registered in the name
of … (AHSI) representing 175,274,960 SMC shares were surrendered to the SMC
corporate secretary.
b. The said SMC shares were reissued and
registered in the record books of SMC in the following manner:
i) Certificates for 25,450,000 SMC shares were registered in
the name of SMC, as treasury;
ii) Certificates
for 144,324,960 SMC shares were registered in the name of the CIIF Holding
Companies;
iii) Certificates for 5,500,000 SMC Shares were
registered in the name of the PCGG [in trust for the Comprehensive Agrarian Reform
Program, hereafter CARP shares].
For its part, the PCGG manifested that
it has no objection to the action taken by the two groups.
On July 5, 1991, the Sandiganbayan
issued a resolution noting the PCGG’s Manifestation as well as the Joint Manifestation
of Implementation of Compromise Agreement and Amicable Settlement and of Withdrawal
of Petition of the UCPB group and the SMC group, with the advice for the three to “always act with due regard to the
sequestered character of the shares of stock involved herein as well as the
fruits thereof … [and] without prejudice to whatever be the resolution of this
Court on the motion to Nullify Compromise Agreement filed by Eduardo Cojuangco, Jr.”[48]
On
xxx no apprehension nor accident will arise hereafter
where any person or entity outside of the parties present or represented in
this proceedings might claim any appearance of being a holder thereof in good faith
and for value.
On
On
On
On
To digress a bit.
It may be recalled that, in a Resolution
issued on
Assuming,
however, for purposes of argument merely, the lifting of sequestration to be
correct, may it also be assumed that the lifting of sequestration removed the
character of the coconut levy companies of being affected with public interest,
so that they and their stock and assets may now be considered to be of private
ownership? May it be assumed that the
lifting of sequestration operated to relieve the holders of stock in the
coconut levy companies … of the obligation of proving how that stock had been
legitimately transferred to private ownership, or that those stockholders who
had had some part in the collection, administration, or disposition of the
coconut levy funds are now deemed qualified to acquire said stock, and freed
from any doubt or suspicion that they had taken advantage of their special or
fiduciary relation with the agencies in charge of the coconut levies and the
funds thereby accumulated? The obvious
answer to each of the questions is a negative one. It seems plain that the lifting of
sequestration has no relevance to the nature of the coconut levy companies or
their stock or property, or to the legality of the
acquisition by private persons of their interest therein, or to the latter’s
capacity or disqualification to acquire stock in the companies or any property
acquired from coconut levy fund. [56]
Sometime in August 1994, the PCGG and
the Government Service Insurance System (GSIS) entered into a Stock Purchase Agreement [57]
in which the PCGG, thereat styled as “owner”
“with clear title” over a block of SMC
shares consisting of 14,519,996 shares of stock – the arbitration fee shares
and their stock dividends – sold the same to the GSIS for the total
consideration of P1.452 Billion. As indicated in the same agreement, the
block of shares thus sold shall be broken into smaller units to be resold to
GSIS members.
In the meantime, Cojuangco,
Jr. and the COCOFED-Lobregat group, having learned of
the conclusion of the aforesaid Stock
Purchase Agreement opposed the same and separately moved for the annulment
of the sale.
Acting on Cojuangco
Jr.’s, Lobregat’s and COCOFED’s motions aforementioned, the Sandiganbayan
issued, on
When the matter of the Omnibus Motion to annul the sale
of the [SMC] shares of stock covered by the instant matter was heard, the Court
… received the following assurances:
a) That the
records of [SMC] show that all of the shares of stock subject matter of the
instant proceedings had been indicated in the corporate records as being
sequestered;
b) That the
certificates for the stock dividends issued after the order of this Court dated
Apparently the motions pending before this Court … have been filed because of the … photographed transfer of
money from the [GSIS] to the [PCGG] and of the transfer of the shares of stock
of the [SMC] from the PCGG to the GSIS in exchange therefor. It would appear that there are no other
shares of stock that can be transferred by one to the other insofar as [SMC] is
concerned except the shares of stock subject matter of the instant proceedings.
In order to assuage the concern of all parties and in
order that, until further orders from the Supreme Court, this Court might rest
assured that whatever private transactions are made over the shares of stock
herein, the authority of this Court over the same will not be diminished, … the
PCGG is given fifteen (15) days from today within which to deliver the
certificates of stock representing all of the stock dividends of the shares of
stock already designated as "sequestered" by virtue of the Order of this
Court dated July 8, 1991, so that the Office of the Corporate Secretary of [SMC]
might inscribe thereon the word "Sequestered", clearly indicating thereby the
restricted character of those shares of stock. (Underscoring and words in
bracket added)
While it complied with the Sandiganbayan's Order of
On
The Manifestation and Motion of the
plaintiff [Republic, thru the PCGG] dated August 29, (should be Sept. 5) 1994 with
respect to the shares of stock of the [SMC] which have been transferred to the
PCGG, allegedly as arbitration fee in the compromise agreement between the UCPB
and SMC, is noted. The Court will await
the formal reply from the corporate secretary of the [SMC] to confirm the fact
that all the certificates of stock subject matter hereof have been inscribed
with the restriction of the sequestration herein. Further to the reliefs
prayed for in the Manifestation and Motion above, the Court cannot now or
hereafter either approve the stock purchase agreement, since the matter is
precisely pending with the Supreme Court, and at all events it is not for this
Court to approve or disapprove such transactions, much less may this Court lift
the sequestration at this time since this entire exercise provoked by the
reported sale of these SMC shares by the PCGG to the GSIS is precisely to
indicate in the shares of stock the sequestration of the PCGG recognized by
this Court over the same shares of stock.
Note the presence of Sol. Amparo M. Tang.
SO ORDERED.
On
It is the PCGG’s
stated position that the Compromise Agreement whence it sourced its right to
the 5.5 million SMC shares is a valid
contract between the original purported owners thereof, adding that the withdrawal
of their joint petition for approval of the compromise agreement has rendered
moot and academic any question respecting the validity of the transfer effected
therein. Pursuing the point, the PCGG suggests that the shares paid to it as “arbitration fee,”
inclusive of the dividends they earned, are not anymore sequestered.
In their separate, but largely overlapping
comments, respondents Cojuangco, Jr. and the COCOFED-Lobregat group urge the dismissal of the petition on a
mix of substantive and procedural grounds. On the procedural aspect, both
respondents are one in pointing to alleged violation of the forum-shopping rule
and the purported belated filing of this petition for
certiorari without, to boot, the participation of the OSG.
The petition is without merit, but not
necessarily on the procedural grounds set forth in the respondents’ comments.
Four (4) factual premises need at the outset to be
underscored:
First, the subject 33.1 million SMC shares
sold by the apparent owners thereof, the CIIF Holding Companies, to Soriano III “for himself and as agent of several persons,”
which later became the subject of the Compromise Agreement between the UCPB group
and the SMC group are sequestered shares. They appear to be still sequestered. Petitioner
PCGG, no less, admits the sequestered character of the subject shares.[61]
Second, part of the compromise agreement
package between the SMC group and the UCPB group entailed the transfer of a
portion of the sequestered shares (5.5 Million shares) to the PCGG as arbitration
fee to be held in trust for CARP purposes;
Third, The Stock Purchase Agreement entered into by and between the PCGG and
the GSIS involved the transferred sequestered shares which had since risen by
virtue of various stocks dividends and stock splits.
Fourth, The sequestered character of the
original 5.5 Million transferred shares necessarily attaches on the fruits or dividends
accruing thereon. These shares are alleged to be part of the alleged ill-gotten
wealth subject of Civil Case No. 0033.
We find no grave abuse of discretion on the part of the Sandiganbayan when it declined to approve the proposed
PCGG-GSIS Stock Purchase Agreement.
For, this purchase agreement involves sequestered SMC shares of stock the
ownership of which is still under litigation in Civil Case No. 0033.
Accordingly, any ownership movement of these shares cannot be of any permanent
character that will alter their being sequestered and, as correctly observed by
the Sandiganbayan in its Resolution[62] of March 18, 1992, as property in custodia legis.
It
cannot be overemphasized that the right of the PCGG to freely dispose of the
arbitration fee shares depends, in the ultimate analysis, on the right of the
SMC and the UCPB groups to freely cede to PCGG the same shares unencumbered by
a sequestration order. The right to effectively cede, in turn, hinges on the
question of enforceability of the Compromise Agreement. Now then, in San Miguel Corporation v. Sandiganbayan,[63]
we ruled that the Compromise Agreement entered into respecting the SMC shares,
significantly the subject of that and this case, falls within the unique
jurisdiction of the Sandiganbayan, the Court adding
the observation that the parties thereto themselves submitted to the
jurisdiction of the Sandiganbayan by asking for the
approval of the said Compromise Agreement. This agreement, to reiterate, is the
basis for the purported payment of an arbitral fee to PCGG. And as may be
recalled, no less than the PCGG, per its Resolution[64]
of
Lest it
be overlooked, the Court, in the same San Miguel
Corporation case, declared that it is
within the sound discretion of the Sandiganbayan to pass upon at the first instance and validate
or invalidate, as the case may be, such compromise agreement. Discretion is a
faculty of a court or an official by which it/he may decide a question either
way, and still be right,[65]
the power or liberty to decide according to the principles of justice and one’s
ideas of what is right and proper under the circumstances, without willfulness
or favor.[66] The
Sandiganbayan has not
approved the Compromise Agreement but not out of whim.
Given the foregoing perspective, the Sandiganbayan’s disinclination to approve the SMC
Group-UCPB Group Compromise Agreement and by extension the PCGG-GSIS Stock Purchase
Agreement can hardly be assailed as in grave abuse of discretion, a juridical
concept which conveys the notion of whimsical, despotic or unreasoning action.
With the view we take of the case, the graft court acted within the bounds of
its sound discretion and certainly within its jurisdiction when it virtually
disapproved the Compromise Agreement. For sure, the Sandiganbayan
had valid reasons for acting the way it did. The graft court specifically
mentioned one, i.e.,
the pendency
then before this Court of cases involving issues surrounding the SMC Group-UCPB Group Compromise
Agreement. The cases the Sandiganbayan doubtless had
in mind referred to G.R. Nos. 104637-38
entitled “San
Miguel Corporation, et al. v. Sandiganbayan (First
Division), et al,” and
G.R. No. 109797 entitled
“San Miguel Corporation, et al. v. Sandiganbayan (First Division), et al.” These cited and now-resolved consolidated
cases[67]
involved not only the validity of the Compromise Agreement or its
implementation, but touched on the need of the Sandiganbayan’s approval of
the Compromise Agreement and the propriety of the arbitration fee ceded therein
to the PCGG.
For another, the
judicial question of ownership over the sequestered shares – alleged to be
ill-gotten wealth - has yet to be resolved in Civil Case No.
0033. It will be recalled that since the institution of Civil Case No. 0033,
the PCGG has insisted that the SMC
shares sought to be recovered therein, which include or are the same shares subject of the Compromise Agreement,[68]
pertained in ownership to respondent Cojuangco, Jr.
And if only to stress the point, the PCGG ordered on April 7, 1986 the sequestration of said
block of shares on the theory that they belong to Cojuangco,
Jr.,[69]
allegedly a close associate of former President Marcos and that the sale
thereof by the CIIF Holding Companies was violative
of EO Nos. 1 and 2, both series of 1986. The attempt of the parties in the
Compromise Agreement and, by extension, in the Stock Purchase Agreement to pull
a fast one on persons or entities with ostensible interest on subject shares strikes
the Court as an instance of unfair play.
And for
a third, there is a challenge hurled by respondents Cojuangco,
Jr. and COCOFED against the legality, if not the propriety, of the consent
given by PCGG to the Compromise Agreement on several grounds, but particularly in
the light of the grant of the arbitral fee. While perhaps not decisively
determinative of the outcome of this case, respondent Cojuangco,
Jr. alleged, without so much of a comment from petitioner PCGG, that, at the
time that the Compromise Agreement in question was reached, all the members of
the Board of Directors of UCPB, as well as a majority of the members of the
Board of Directors of SMC, were PCGG representatives.[70]
There
can be no dispute, as petitioner PCGG submits, about the Compromise Agreement between the
SMC and the UCPB groups being a private agreement between the ostensible owners
of the subject SMC shares. We can also concede that the same agreement, notwithstanding
the maligned arbitration fee provision incorporated therein, does not contain
any stipulation or clause which, under Article 1306 of the Civil Code,[71]
would vitiate its validity. The
conclusion, however, that the petitioner would draw from the above premises
that the proposed sale of the “arbitration fee” shares to GSIS is effective and
enforceable, especially since the petition for approval of the Compromise
Agreement had been withdrawn and, in fact, implemented, does not commend itself
for concurrence. For, the petitioner’s posture presupposes that what the SMC
and the UCPB groups were dealing with and settling merely were their own
private interests. But as we articulated in San
Miguel, the “Compromise Agreement here involves sequestered shares of stock
now worth more than nine (9) billion pesos …. Their ownership is still under
litigation. It is not yet known whether the shares are part of the alleged
ill-gotten wealth of former President Marcos and his ‘cronies.’ Any Compromise
Agreement concerning these sequestered shares … has to be approved by the Sandiganbayan.”[72]
The fact that both the UCPB and the SMC groups, pursuant to
Section 1, Rule 17 of the Rules of Court, withdrew, or considered their
petition for approval of their Compromise Agreement withdrawn, is of no moment
insofar as the necessity of the Sandiganbayan’s
approval to lend enforceability to the agreement is concerned. For, in the context of this case, such
withdrawal is ineffectual, respondents Cojuangco, Jr.,
COCOFED and other persons with known legal interests on the subject shares
having previously filed their comment on the petition for approval of Compromise Agreement and eventually
intervened in the case. In San Miguel, the
Court expounded on one of the reasons for the ineffectivity,
thusly:
xxx The right of these persons and entities to have their claims heard and
resolved cannot be defeated by the petitioners by the simple act of withdrawing
their Joint Petition for Approval of Compromise Agreement and immediately
implementing its provisions. To allow the unilateral withdrawal is to allow the petitioners to make a
plaything of the jurisdiction of the Sandiganbayan,
submit to it when it is in their favor and repudiate it when it threatens to turn against their interest. xxx.
Petitioners cannot
invoke Section 1, Rule 17 of the Rules of Court which provides ‘that a
complaint may be dismissed by the plaintiff by filing a notice of dismissal at
any time before the service of the answer …..’ The provision contemplates a
complaint where there is a plaintiff and a defendant with real conflicting interests.
The cases at bar are different. They started as a Joint Petition for Approval of Compromise Agreement xxx. Known
persons and entities claiming adverse interests on the subject shares were not impleaded. In other words, no party can assail the validity
of the Compromise Agreement …. The attempt to bypass these persons … with
interests in the subject shares is hardly tenable and the withdrawal of the
petition and its immediate implementation when they opposed it makes
petitioners’ posture doubly untenable. (Italization
in the original)
In a bid to lend legitimacy to
the sale by the PCGG of the subject shares to the GSIS, the petitioner
maintains that such contract would not result in the diminution in value of the
sequestered assets but only in their transformation from shares of stock into
cash. Petitioner’s contention may be accorded cogency were it not for the fact
that the PCGG’s role as sequestrator
is to ensure the return of the sequestered property to its rightful owner/s as
far as possible in the same condition as it was at the time of sequestration[73]
with all the fruits and gains to which it is entitled, should allegations of its being
ill-gotten cannot be proven.
In Republic v.
COCOFED,[74] the Court observed that the lifting of
sequestration in coconut levy companies does not relieve the holders of stock
in such companies of the obligation of proving how that stock had been
legitimately transferred to private ownership. If the correct lesson of Republic v. COCOFED has to be pursued to
its logical conclusion, may it not be assumed that the lifting of sequestration
on the litigated shares of stock before the conclusion of the case for the recovery
thereof would not alter the ill-gotten
nature of such shares, if ultimately determined to be so? The answer to this
poser should be in the affirmative. And here lies the danger should the desired
premature lifting of the sequestration order on the arbitration fee shares be
granted and the same shares should eventually be successively sold to innocent
GSIS members and then to other innocent third parties.
As a final consideration, it
may not be amiss to state that the PCGG arbitration fee shares – also referred to
as the PCGG in-trust - for CARP shares - can trace their immediate roots to SMC shares of stocks held by UCPB’s CIIF group of companies which, in turn, owe their
existence to the coconut levy funds and the martial law issuances. Be that as
it may, no reasonable mind can plausibly escape the conclusion that the
arbitration fee shares are the fruits of funds that are prima facie public in character, if not part of the ill-gotten
wealth then to be recovered pursuant to EO No. 1 in relation to EO No. 14,[75]
series of 1986. It is up for the Sandiganbayan to
determine in Civil Case No. 0033 the nature of the subject shares on the basis
of the evidence presented thereat. Until then, it behooves the Sandiganbayan to issue such orders and take measures toward
preserving the character of the sequestered shares pending final determination
of their true owners. The herein assailed order is such issuance.
With the foregoing
disquisitions, the Court finds it unnecessary to delve on the procedural concerns
raised by respondents Cojuangco, Jr. and Lobregat, one of which, relating to the exclusion of the
Solicitor General from this petition, has been appropriately addressed in Republic v. Desierto.[76]
Notwithstanding the OSG's absence during PCGG's
commencement of this certiorari
proceedings, the underlying petition ought to be entertained. This
disposition is prompted partly by the OSG's timely participation in later
proceedings, a participation which is tantamount to a ratification of PCGG's act. As the
Court explained in the same Desierto case:
The preliminary issue to be resolved
in this case is whether or not the petition should be entertained even though
it was filed by the PCGG without the intervention of the … (OSG).
True, the OSG is mandated to
represent the Government in the Supreme Court and the Court of Appeals … in all
civil actions and special proceedings in which the Government or any officer
thereof in his official capacity is a party.
The OSG should have filed the instant petition in behalf of the Republic. However, the “ends of substantial justice”
affords an exception thereto. We have
ruled if the ends of substantial justice would be better served, and the issues
in the action could be determined in a more just, speedy and inexpensive
manner, then the petition should be entertained. Even assuming arguendo
that the PCGG has no authority to file the petition, its unauthorized filing
was ratified, and the defect was cured, when the OSG signed as co-counsel for
the Republic in its Consolidated Reply.[77]
There is more reason to apply the
above rule to the present case because, here, the OSG is not a mere co-signing
counsel but rather the principal signatory in petitioner's culminating pleading
– the “MEMORANDUM AND REPLY-MEMORANDUM FOR THE PETITIONER.”[78] We note that in the signature page thereof, [79]
two signatures appeared thereat: the first, being that of then Solicitor
General Silvestre Bello III himself, and the second,
that of Assistant Solicitor General Amparo Cabotaje-Tang.
We end this disposition with
the hope that all parties concerned would now allow the Sandiganbayan
uninterrupted opportunity to give repose to Civil Case No. 0033 and, in the
process, determine who, by law in the light of the facts of the case, own and is/are
entitled to some 33 Million shares of stock of SMC and the stock dividends they
have earned through the years starting 1986. In San Miguel Corporation v. Sandiganbayan,[80]
we stated that the shares of stock in question are estimated to be worth, as of
September 2000, more than P9 billion. It is high time their owner/s be
now established. Whoever it, or he/they shall be – be they one
of parties herein, the nameless coconut farmers or the UCPB or SMC groups should
only be a passing concern of the Court. The more important consideration is
that the issue of ownership is settled once and for all. And the Sandiganbayan is urged to resolve this issue with dispatch
and thus write finis to Civil Case No. 0033 which has been
pending for about 20 years now.
WHEREFORE,
the instant petition is DISMISSED.
No pronouncement as to costs.
SO ORDERED.
CANCIO C. GARCIA
Associate
Justice
WE CONCUR:
REYNATO
S. PUNO
Chief Justice
Chairperson
|
ANGELINA
SANDOVAL-GUTIERREZ Associate Justice |
RENATO
C. CORONA Associate Justice |
ADOLFO
S. AZCUNA
Associate Justice
C
E R T I F I C A T I O N
Pursuant to Article VIII, Section 13 of the
Constitution, it is hereby certified that the conclusions in the above decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court.
REYNATO
S. PUNO
Chief Justice
[1] Among
them Soriano, III v.
Yuzon, No. L-74910, August 10,
1988, 154 SCRA 226; COCOFED v. PCGG, G.R. No. 75713, October 2, 1989, 178 SCRA 236; Cojuangco
v. PCGG, G.R. Nos. 92319-20, October 2, 1990, 190 SCRA 226; Republic
v. Sandiganbayan, G.R. No. 96073,
January 23, 1995, 240 SCRA 376.
[2] Leyson, Jr. v. Ombudsman, G.R. No. 134990, April 27, 2000, 331 SCRA 227; San Miguel Corporation v. Sandiganbayan,
G.R. Nos. 10463-78 & G.R. No. 109797, September 14, 2000, 340 SCRA
289; Republic
(PCGG) v. Sandiganbayan, G.R. No. 96073, January 23, 1995, 240 SCRA 376.
[3] G.R.
Nos. 147062-64,
[4]
Annex “A,” Petition; Rollo,
p. 33.
[5]
[6] COCOFED
v. PCGG, supra.
[7] Vital Legal Documents, Volume 7, pp. 59-64.
[8]
[9] P.D. 755, 3rd Whereas.
[10] Republic
v. COCOFED, supra.
[11]
[12]
[13] Sandiganbayan Records, Volume 10, pp. 364-365.
[14]
[15] Sandiganbayan Records, Volume 10, pp. 374-375.
[16] Vital Legal Documents, Volume 26, pp. 41-43.
[17]
178 SCRA 236 (1989), supra.
[18] LOI-926-1979, 3rd Whereas; Vital Legal Documents, Volume 69, pp. 90-95.
[19] The
6th Whereas clause of P.D. 1841
partly reads: Whereas WHEREAS, the
Philippine Coconut Producers
Federation, the only recognized association of coconut farmers composed of
964,496 members throughout the
country,
[20] effective
[21] effective
[22] effective
[23] dated
[24] effective
[25] Granexport
Manufacturing Corp., San Pablo Mgft. Corp., Cagayan de Oro Oil Co., Inc.,
Legaspi Oil Co., Inc., Iligan Coconut Industries, Inc., and Southern Luzon Coconut Oil Mills, Inc.; listed in
Leyson v. Ombudsman, supra.
[26] Rollo, p. 73; Composed of Soriano Shares, Inc., ASC Investors, Inc., ARC Investors, Inc.; AP Holdings, Inc.; TODA Holdings, Inc.; Te Deum Resources, Inc.; Rock Steel Resources, Inc.; San Miguel Officers, Corps, Inc.; Roxas Shares, Inc.; Valhalla Properties Ltd., Inc.; Anglo Ventures Corp.; First Meridian Development, Inc., Randy Allied Ventures, Inc., and Fernandez Holdings, Inc.
[27] 2nd
Whereas clause of the
[28] Rollo,
pp. 35-49.
[29] Rollo,
pp. 50-51.
[30]
see Soriano, III v. Yuson, supra.
[31]
Docketed as Civil Case No. 13865.
[32]
Supra note 1.
[33] Republic
v. Sandiganbayan, supra.
[34] Rollo,
pp. 65-67.
[35] Rollo,
pp. 55-64.
[36] Compromise
Agreement, pp. 4-5; Rollo, pp. 58-59; quoted in SMC v. Sandiganbayan, G.R. Nos. 104637-38, September 14, 2000, 340
SCRA 289, 296-297.
[37] Annex
“F,” Petition; Rollo, pp. 55-64.
[38] SMC
v. Sandiganbayan, supra.
[39] Annex
“K,” Petition; Rollo, pp. 84-87.
[40] Maria
Clara L. Lobregat, Bienvenido Marquez, Jose R. Eleazar, Jr., Domingo Espina,
Jose Gomez, Celestino Sabate, Manuel Del Rosario, Jose Martinez Jr., Jose
Reynaldo Morente and Eladio Chatto.
[41] Annex
“L,” Petition; Rollo, pp. 88-150.
[42] Rollo,
pp. 72-83.
[43]
[44] SMC
v. Sandiganbayan, supra.
[45]
[46] Rollo,
p. 609.
[47] Rollo,
pp. 610-612.
[48] Rollo,
p. 291.
[49] Rollo,
pp. 292-293.
[50] Rollo,
pp. 175-178.
[51] Rollo,
pp. 294-297.
[52] Ibid.
[53]
Rollo, pp.
393 et seq.
[54]
See Decision in SMC v. Sandiganbayan, supra.
[55]
Supra note 33.
[56]
[57] Rollo,
pp. 182-186.
[58] Rollo,
pp. 227-228.
[59]
Annex “X,” Petition; Rollo, pp. 229 et
seq.
[60]
Rollo, p. 33.
[61]
Petitioner’s
Consolidated Reply, p. 8; Rollo, p. 491.
[62] Rollo, pp. 152 et seq.
[63]
See Note #2, supra.
[64]
See Note #42, supra.
[65]
Go Uan v. Galang, G.R. No. L-20413,
[66]
Lambs v. Phipps, 22 Phil. 489 (1912).
[67] Reported in 340 SCRA
289, supra.
[68]
Soriano, III v. Yuson, see Note No. 1, supra.
[69]
Supra note 29.
[70] Memorandum for respondent Cojuangco, Jr., p. 35; Rollo, p 684.
[71]
Article
1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
[72] Supra
note 2.
[73]
BASECO v. PCGG,
G.R. No. L-75885,
[74] Supra note 3.
[75] Vested the
Sandiganbayan exclusive and original jurisdiction over all cases of ill-gotten
wealth.
[76] Republic
v. Desierto, G.R. No. 131966,
[77]
[78] Rollo,
pp. 698-725.
[79] Rollo,
p. 723.