Supreme Court upholds ruling affirming 24% government shares in SMC

MANILA, Philippines - The Supreme Court (SC) has upheld a ruling it handed down in January affirming government’s re-conveyance of the 24-percent shares in San Miguel Corp. (SMC) acquired through the coconut levy and registered under the names of the Coconut Industry Investment Fund (CIIF) and its holding companies.

The high court denied the consolidated appeals of the Philippine Coconut Producers Federation Inc. (COCOFED) and its former officer Danilo Ursua questioning the ruling that affirmed the 2004 decision of the Sandiganbayan.

The Sandiganbayan had declared the 753.8 million shares as public funds illegally acquired during the time of the former president Ferdinand Marcos.

The SC decision, penned by Associate Justice Presbitero Velasco Jr., said that the motions for reconsideration filed by petitioners COCOFED and Ursua lacked merit to warrant the reversal of the earlier ruling.

The decision, however, was not immediately made available to media yesterday as the office of Chief Justice Ma. Lourdes Sereno refused to release it, even three weeks after its promulgation last Sept. 6.

In the ruling, SC reiterated that “since the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy funds – funds which have been established to be public in character – it goes without saying that these acquired corporations and assets ought to be regarded and treated as government assets.”

The high tribunal emphasized that the government should use the funds for the benefit of the coconut farmers.

The 24-percent share was part of the 47 percent of the SMC shares that the government had sequestered in 1986 on suspicion that it was illegally acquired through the coco levy fund imposed on the farmers by the late dictator.

The shares were bought using the coconut levy funds collected by the Philippine Coconut Authority (PCA) from 1973 to 1982. It was originally 27 percent but was diluted to 24 percent with the entry into the SMC of Japanese brewer Kirin.

Last year, the SC ruled with finality that the other 20 percent of the contested shares was legally acquired by business tycoon and presidential uncle Eduardo “Danding” Cojuangco Jr.

It also dismissed an appeal filed by the Presidential Commission on Good Government (PCGG) which sought to re-convey these shares in favor of the government.

The SC said the government failed to prove its allegations that Cojuangco’s shares in the SMC are part of the ill-gotten wealth of the Marcoses.

Just like in earlier deliberations, Senior Justice Antonio Carpio inhibited himself because he was one of the petitioners – before he joined the SC – in a case to declare the funds as public.

The SC had ruled that the coco levy fund is imbued with public interest.

Justices Teresita Leonardo-de Castro and Diosdado Peralta also inhibited because they were the members of the Sandiganbayan panel that earlier decided the case.

The said SMC shares had been ordered by the SC converted from common shares into preferred shares through a ruling on Sept. 17, 2009.

The SC noted that the PCGG has held on to the sequestered shares for more than 20 years and maybe now is the right time to relinquish its role in the corporation in the light of the claim that the sequestration of the CIIF SMC shares “has frightened away investors and stunted growth of the company.”

The conversion, the SC added, is necessary to preserve the value of the 753,848,312 sequestered CIIF SMC common shares in light of the worldwide economic crisis that started last year.

In 1986, the government seized 24 percent of SMC shares on suspicion that these were acquired illegally through Marcos’ dummies.

These shares were part of the 47 percent share bloc of San Miguel shares sequestered by the PCGG in 1986.

President Aquino earlier ordered the creation of a task force on coco levy to come up with proposals on how to deal with the issue and a system that will accurately identify beneficiaries of the coco levy fund and come up with possible options on how to use the proceeds of the farmers’ 24 percent shares from the SMC.