Govt bid to recover SMC shares junked anew

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The Supreme Court (SC), upholding its earlier rulings, has denied with finality the government’s plea to include 25.45 million treasury shares of San Miguel Corp. (SMC) as part of coco levy assets to be returned to the state.

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In a recently released November 29, 2016 resolution, the SC found that the Office of the Solicitor General (OSG) was not able to present “substantial arguments” that warranted the reversal of the High Court’s denial of the government’s motion for reconsideration in its November 8, 2016 directive.

The motion for reconsideration sought to challenge the SC’s resolution dated October 5, 2016, which excluded the subject SMC treasury shares from sequestration.

The SC, in effect, ruled that the said treasury shares were legitimately acquired by SMC unless proven otherwise by the government in a separate case.

“SMC presently has a legitimate claim over the 25.45 million shares in its treasury by a commercial transaction not otherwise alleged to be conducted under any illicit or anomalous conditions,” the High Court pronounced.

The case was an offshoot of a case for reconveyance in favor of government of SMC shares registered in the name of the Coconut Industry Investment Fund Holding Companies (CIIF). The suit, instituted by the Presidential Commission on Good Government, sought to recover the shares, which were acquired using coco levy funds.

Majority of SMC used to be owned by businessman Eduardo Cojuangco, Jr., tagged as a crony of the late strongman Ferdinand Marcos and charged as complicit in the latter’s acquisition of ill-gotten wealth through shareholdings in the corporation.

The coco levy funds are composed of the taxes paid by small-scale coconut farmers during the Marcos administration.

The SC explained: “SMC and the CIIF Companies (through the UCPB) entered into the contract of sale in March 1986 and SMC paid P500 million on April 1, 1986 or several days prior to the actual sequestration… As the manner of SMC’s acquisition of these shares was arms-length and not made through public funds, the present issue does not fall within the ambit of our pronouncements in Republic v. Sandiganbayan [that the shares were acquired using ill-gotten wealth].”

The High Court also explained that SMC was not able to participate in the proceedings with respect to the sequestration case lodged against the shares of CIIF as it was not impleaded by the government.

“SMC was not given the proper chance to be heard and furnish proof on its claim of ownership over the treasury shares. That was a denial of its right to due process,” the High Court said.

The SC suggested that the government pursue its claim on the treasury shares in a separate suit impleading SMC.

“Clearly, issues regarding SMC’s right over the 25.45 million treasury shares or the entitlement to the alleged dividends on said shares or to the interests and increase in value of the P500 million remain unresolved. These issues are better ventilated and threshed out in a proper proceeding before the right forum where SMC will be accorded due process,” it pronounced.

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