Govt can’t have 25-M SMC shares – SC

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The Supreme Court (SC) has denied an omnibus motion of the government to include the 25.45-million San Miguel Corporation (SMC) shares that were subject of a 1990 compromise agreement as part of SMC assets to be reconveyed to the State.

In a 27-page en banc resolution penned by Justice Presbitero Velasco Jr. in the consolidated cases in GR Nos. 177857-88 (Philippine Coconut Producers Federation Inc., et al. v. Republic) and GR No. 178193 (Ursua v. Republic) promulgated on October 5, 2016, the High Court said the denial was without prejudice to the right of respondent to institute the appropriate action or proceeding where SMC’s alleged right over the 25.45 million SMC treasury shares will be determined and finally resolved.

The contested 25.45 million SMC shares were subject of the compromise agreement dated March 20 and 22, 1990 entered into by and between the SMC Group and the United Coconut Planters Bank (UCPB) Group that SMC subsequently converted to treasury shares.

The SC held that it has no jurisdiction over SMC since it is not a party to the case.


It noted that SMC was never made a party to CC No. 0033-F filed by the government to recover the SMC shares of stock registered in the name of the Coconut Industry Investment Fund Holding (CIIF) Companies nor was it “given a chance to justify, let alone ventilate, its claim over the 25.45 million shares it has in its possession even when it had volunteered to participate and moved to intervene in the said case.”

“Certainly, SMC cannot, under the premises, be considered as such judgment obligor in CC 0033-F as it was not impleaded by respondent Republic as a party despite the clear mandate of the Rules of Court that ‘parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants,’” the High Court said.

Civil Case (CC) No. 0033 was the case for recovery of ill-gotten wealth instituted by the Presidential Commission on Good Government (PCGG) with the Sandiganbayan against former President Ferdinand Marcos, Eduardo Cojuangco Jr., et al.in 1987.

The SC, however, also held that its “acknowledgment that the court has no jurisdiction over SMC in the present case is not ‘allow[ing]San Miguel Corporation to keep these treasury shares under the guise of technicalities.’”
The question of jurisdiction, the court has repeatedly explained, is not a mere question of technicality or a simple matter of procedure but an element of due process.

“Indeed, it is unsporting, nay the height of injustice a clear violation of the due process guarantee, to order SMC to comply with any decision rendered in CC 0033-F when it was never given the opportunity to present, explain and prove its claim over the presently contested shares,” the High Court said.

It added that that its pronouncements in Republic v. Sandiganbayan, Lobregat et al. (GR No. 96073), one of the cases that sprang forth from the sequestration made by PCGG of pieces of property suspected to have been ill-gotten by Marcos and his cronies, is not applicable in the present case because “[u]nlike in the foregoing cases, 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.’ SMC and the CIIF Companies (through 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 arm’s length and not made through public funds, the present issue does not fall within the ambit of our pronouncements in Republic v. Sandiganbayan.”

The SC said SMC should have been allowed to participate and present its evidence in CC 0033-F when it filed a “Motion to Intervene” but government lawyers opposed the intervention and found the same improper.

Undeniably, it added, 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 and it should be corrected, the SC said.

It clarified its January 24, 2012 resolution where it finally rendered judgment on the captioned consolidated petitions and affirmed with modification the partial summary judgments (PSJs) of the Sandiganbayan holding that the CIIF Companies and the CIIF block of SMC shares are public funds/assets.

The High Court underscored that the government participated in negotiation of the compromise agreement.
It also held that there was nothing on record that says the government offered to return the P500 million to the SMC Group.

That is to say that while the respondent Republic is asking for the delivery and reconveyance of the 25.45 million shares, the SC said, it has not intimated its intention to return the P500 million it received (through the CIIF Companies now declared as government-owned) for the same shares.

It further held that while the general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or agents, it is established that “[t]he rule on non-estoppel of the government is not designed to perpetrate an injustice” Thus, several exceptions to the Republic’s non-estoppel have been recognized.

Justice Velasco was joined by Justices Arturo Brion, Lucas Bersamin, Mariano del Castillo, Jose Portugal Perez, Jose Catral Mendoza and Bienvenido Reyes.

Senior Justice Antonio Carpio, Justices Teresita Leonardo-de Castro, Diosdado Peralta, Estela Perlas-Bernabe, Francis Jardeleza and Alfredo Benjamin Caguioa did not take part.

Chief Justice Maria Lourdes Sereno and Justice Marvic Leonen wrote separate dissenting opinions.
Sereno voted to grant the government’s motion.

“It was only because of the obstinate refusal of SMC to heed the Sandiganbayan’s directives to deliver the shares, and its stark circumvention of the sequestration proceedings that the compromise agreement was brazenly implemented despite the absence of the Sandiganbayan’s approval. This court cannot countenance these acts of SMC by holding it blameless and putting the Republic in estoppel through the delayed action of its agents she said .”

Leonen said that by denying the manifestation and omnibus motion filed by the government, “the ponencia [ruling]effectively reconsiders the long-settled cases of San Miguel Corporation et al. v. Sandiganbayan [First Division], Cocofed, et al. v. Republic and Republic v. Cocofed et al.”

He added, “It is the duty of this court to see through the elaborate legal machinations of parties who have substantial resources by using the light of principle and the true spirit of our fundamental laws in order to achieve social justice. It is simply unfair for a party to decline to follow a final and executory order of this court in one case and then cry due process in another. Social justice is not mere shibboleth It is a constitutional fiat.

Not only is it a juridical necessity; it is also the basis of a humane society… The majority’s position falls short of achieving this ideal It has made it more difficult for impoverished coconut farmers to gain what is truly [owed]them after suffering the exactions of the martial law years.”

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