SC: Danding shares at SMC not covered by coco levy fund

MANILA, Philippines -  The Supreme Court (SC) yesterday affirmed the Sandiganbayan’s 2007 decision that saved the 20 percent share of businessman Eduardo “Danding” Cojuangco Jr. in San Miguel Corp. (SMC) from government sequestration.

The SC ruled the shares of Cojuangco, chairman and chief executive officer of SMC, were not part of the coco levy funds seized by the government from cronies of the late strongman Ferdinand Marcos.

In a 73-page decision penned by Associate Justice Lucas Bersamin, the SC dismissed the petition of the Presidential Commission on Good Government (PCGG) seeking reversal of the Nov. 28, 2007 ruling of the anti-graft court favoring Cojuangco.

“The Court declares that the block of shares in San Miguel Corp. in the names of respondents Cojuangco et al is the exclusive property of Cojuangco et al as registered owners,” the SC ruled.

The SC ruling also affirmed the lifting of nine writs of sequestration issued by PCGG on Conjuangco’s block of shares.

The SC said the Sandiganbayan did not abuse its discretion in lifting the writs.

It also discussed the concept of ill-gotten wealth, saying the government “should furnish to the Sandiganbayan in proper judicial proceedings the competent evidence proving who were close associates of President Marcos who has amassed assets and properties that would be rightly considered as ill-gotten wealth.”

The high court also cited as basis the failure of PCGG to substantiate its claim that the shares of Cojuangco in SMC were ill-gotten.

Lastly, the SC ruled that Cojuangco, maternal uncle of President Aquino, did not violate fiduciary duties – contrary to allegations of the PCGG.

Chief Justice Renato Corona and Associate Justices Presbitero Velasco Jr., Teresita Leonardo-de Castro, Mariano del Castillo Jr., Roberto Abad, Martin Villarama Jr. and Jose Perez concurred with the ruling.

Justices Conchita Carpio-Morales, Arturo Brion, Jose Mendoza and Lourdes Sereno gave their dissenting opinions while Justices Antonio Carpio, Antonio Eduardo Nachura and Diosdado Peralta took no part in the deliberations since they had handled the case in the past.

The SC ruling on Cojuangco’s shares in SMC, which are being claimed by government and coconut producers, ended almost 20 years of litigation.

The government assailed the Sandiganbayan in its Nov. 28, 2007 ruling that Cojuangco, as chairman of SMC, is the rightful owner of the contested shares in the giant food conglomerate.

Cojuangco, in a motion filed by counsel Estelito Mendoza in May 2009, urged the SC to resolve the PCGG suit.

Cojuangco said the case has been pending in the SC when it has been deemed submitted for decision since July 28, 2008.

Since the PCGG sequestered the subject SMC shares in 1986 and 1987 and subsequently filed complaint for ill-gotten wealth against him and his corporations, Mendoza argued their rights as owners of the SMC shares of stock have been “curtailed and limited.”

“The owners of the shares could not freely sell, encumber or otherwise exercise rights of ownership over the shares. The resulting damage and injury needs no proof. And since the plaintiff is the Republic of the Philippines, it is futile to expect any possible compensation for the injury and damage sustained,” he said.

Cojuangco added the SC’s dismissal of the PCGG’s petition would mitigate the damage that they have sustained since their SMC shares of stock were confiscated by the government.

The assailed ruling of the Sandiganbayan dismissed the government’s complaint seeking to recover the 20 percent block of shares in SMC currently controlled by Cojuangco and his companies due to insufficiency of evidence.

The Sandiganbayan said the government had failed to substantiate its claim that the shares were bought by Cojuangco’s group using the coco levy funds.

At the time of the Sandiganbayan’s assailed ruling, the Cojuangco block was worth P18.8 billion at the closing of San Miguel shares at P47.

Cojuangco was director of the Philippine Coconut Authority (PCA) and chairman of the United Coconut Planters Bank (UCPB) at the time the SMC shares were acquired.

While Cojuangco was adjudged owner of the disputed shares, his counterclaims against the government for damages on alleged violation of his rights over his properties when the PCGG sequestered the shares in 1987 was also dismissed, with the court holding that there was also no evidence against the government.

Earlier, the SC granted the motion filed by former senators Jovito Salonga and Wigberto Tañada and former congressman Oscar Santos as well as coconut farmers belonging to Surigao del Sur Federation of Agricultural Cooperatives (SUFAC), Moro Farmers Association of Zamboanga del Sur (MOFAZS) and Pambansang Kilusan ng mga Samahan ng Magsasaka (Pakisama) to intervene in the case.

In their petition to intervene, Salonga’s group said the Sandiganbayan committed an error and decided the case in violation of law and contrary to the previous ruling of the SC that the subject SMC shares are not private property.

The intervenors insisted that the subject SMC shares, having been purchased from funds sourced from the UCPB and the Coconut Industry Investment Fund’s (CIIF) oil mills, are deemed to have been purchased using public funds.