G.R. Nos. 104637-38.

September 14, 2000

SAN MlGUEL CORPORATlON, NEPTUNlA CORPORATlON
LlMlTED, ANDRES SORlANO lll AND ANSCOR-HAGEDORN
SECURlTlES, lNC., petitioners, vs.SANDlGANBAYAN (FlRST
DlVlSlON), PHlLlPPlNE COCONUT PRODUCERS FEDERATlON,
lNC. (COCOFED), MARlA CLARA L. LOBREGAT, BlENVENlDO
MARUEZ, ]OSE R. ELEAZAR, ]R., DOMlNGO ESPlNA, ]OSE
GOMEZ, CELESTlNO SABATE, MANUEL DEL ROSARlO, ]OSE
MARTlNEZ, ]R., ]OSE REYNALDO MORENTE AND ELADlO
CHATTO, respondents.
G.R. No. 109797. September 14, 2000
SAN MlGUEL CORPORATlON, NEPTUNlA CORPORATlON
LlMlTED, ANDRES SORlANO lll AND ANSCOR-HAGEDORN
SECURlTlES, lNC., petitioners, vs.SANDlGANBAYAN (FlRST
DlVlSlON), PHlLlPPlNE COCONUT PRODUCERS FEDERATlON,
lNC. (COCOFED), MARlA CLARA L. LOBREGAT, BlENVENlDO
MARUEZ, ]OSE R. ELEAZAR, ]R., DOMlNGO ESPlNA, ]OSE
GOMEZ, CELESTlNO SABATE, MANUEL DEL ROSARlO, ]OSE
MARTlNEZ, ]R., ]OSE REYNALDO MORENTE AND ELADlO
CHATTO, respondents.
D E C l S l O N
PUNO, J.:
It appears that on March 26, 1986, the Coconut Industry
Investment Fund Holding Companies
[1
!"CIIF" #or $revity% sold
&&,1&&,266 shares o# the outstanding capital stoc' o# (an Miguel
Corporation to )ndres (oriano III o# the (MC *roup paya$le in #our
!+% installments,
[2
-n )pril 1, 1986, )ndres (oriano III paid the initial ./00 million to
the 1C.2 as administrator o# the CIIF,3he sale 4as transacted
through the stoc' e5change and the shares 4ere registered in the
name o# )nscor6Hagedorn (ecurities, Inc, !)H(I%,
-n )pril 7, 1986, the .residential Commission on *ood *overnment
!.C**% then led $y the #ormer .resident o# the (enate, the
Honora$le 8ovito 9, (alonga, se:uestered the shares o# stoc'
su$;ect o# the sale,
[&
<ue to the se:uestration, the (MC *roup
!hereina#ter re#erred to as the petitioners% suspended payment o#
the $alance o# the purchase price o# the su$;ect stoc's, In
retaliation, the 1C.2 *roup rescinded the sale,
-n 8une 2, 1986, 1C.2 and CIIF Holding Companies 4ent to
court, 3hey #iled a complaint 4ith the 9egional 3rial Court o# Ma'ati
against the petitioners #or con#irmation o# rescission o# sale 4ith
damages,
[+
-n 8une /, 1986, the petitioners assailed in this
Court the ;urisdiction o# the Ma'ati 93C on the ground that primary
;urisdiction 4as vested 4ith the .C** since the (MC shares 4ere
se:uestered shares,
[/
-n )ugust 10, 1988, 4e upheld the
petitioners, =e ordered, among others, the dismissal o# the
rescission case #iled in the Ma'ati 93C 4ithout pre;udice to the
ventilation o# the parties> claims $e#ore the (andigan$ayan,
[6
3he record sho4s that the petitioners and the 1C.2 *roup 4ere
a$le to thresh out their dispute e5tra6;udicially, In March 1990, they
signed a Compromise )greement and )mica$le (ettlement,
[7
Its
pertinent provisions state?
"&,1, 3he sale o# the shares covered $y and corresponding to
the first installment o# the 1986 (toc' .urchase )greement
consisting o# Five Million (MC (hares is here$y recognized $y the
parties as valid and e##ective as o# 1 )pril 1986,)ccordingly, said
shares and all stoc' and cash dividends declared thereon a#ter 1
)pril 1986 shall pertain, and are here$y assigned, to (MC, 5 5 5
&,2, 3he First Installment (hares shall revert to the
(MC treasury #or dispersal pursuant to the (MC (toc' <ispersal
.lan attached as )nne5 ")61" hereo#, 3he parties are a4are that
these First Installment (hares shall $e sold to raise #unds at the
soonest possi$le time #or the e5pansion program o# (MC, 5 5 5
&,&, 3he sale o# the shares covered $y and corresponding to
the second, third and fourth installments o# the 1986 (toc'
.urchase )greement is here$y rescinded e##ective 1 )pril 1986
and deemed null and void, and o# no #orce and e##ect, )ccordingly,
all stoc' and cash dividends declared a#ter 1 )pril 1986
corresponding to the second, third and #ourth installments shall
pertain to CllF Holding Corporations. 555"
[8
!emphasis supplied%
3hey li'e4ise agreed to pay an "arbitration fee" o# /,/00,000
(MC shares composed o# &,8/8,8&1 @)A shares and 1,6+1,169 @2A
shares to the PCGG to $e held in trust #or the Comprehensive
)grarian 9e#orm .rogram,
[9
-n March 2&, 1990, the petitioners and the 1C.2 *roup #iled 4ith
the (andigan$ayan a ]oint Petition for Approval of the
Compromise Agreement and Amicable Settlement. 3he
petition 4as doc'eted as Civil Case Bo, 0102,
[10
-n March 29, 1990, the (andigan$ayan motu proprio directed that
copies o# the 8oint .etition $e #urnished to E. Cojuangco, ]r., M.
Lobregat and others 4ho are de#endants in Civil Case Bo,
00&&, 3he same (MC shares are the su$;ect o# Civil Case Bo, 00&&
and alleged as part o# the alleged ill6gotten 4ealth o# #ormer
.resident Marcos and his "cronies,"
[11
-n )pril 2/, 1990, the Republic o# the .hilippines, through the
-##ice o# the (olicitor *eneral !-(*%,opposed
]12|
the Compromise
)greement and )mica$le (ettlement, It contended that the
involved coco6levy #unds, 4hether in the #orm o# earnings or
dividends there#rom, or in the #orm o# the value o# li:uidated
corporate assets represented $y all se:uestered shares !li'e the
value o# assets soldCmortgaged to #inance the ./00M #irst
installment%, or in the #orm o# cash, or, as in the case o# su$;ect
"(ettlement," in the #orm o# "proceeds" o# sale or o# "payments" o#
certain alleged o$ligations are pu$lic #unds, )s pu$lic #unds, the
coco6levy #unds, in any #orm or trans#ormation, are $eyond or
"outside the commerce," and per#orce not 4ithin the private
disposition o# private individuals,
[1&
3he relie#s prayed #or $y the (olicitor *eneral state?
"1, 3hat the "(ettlement" $e stric'en o## the record or at most
re#erred $ac' to the .C** #or serious study and
consideration,=hile the .C** under its legal mandate !as
sustained in *,9, Bo, 8+89/, "9epu$lic v, Campos"% in principle
encourages settlement agreements on ill6gotten 4ealth to e5pedite
recovery thereo# #or the $ene#it o# the *overnment, the herein
privately proposed "Settlement" subject of the petition
contains private proposals of "utilization and management
of" public funds that are prejudicial to the Government,
4ithout "#ull disclosures" as normally re:uired $y .C** and over
4hich in respect o# declarant immunity may even $e granted,
2, 3hat this .etition $e consolidated 4ith, or treated as a premature
motion or incident in Civil Case Bo, 00&&, and $rought $y improper
parties, 3o repeat, the plainti## 9epu$lic through .C** is not a
party to 4hat in e##ect 4ill $e a ;udicial compromise in Civil Case
Bo, 00&&, Bo4here does the "(ettlement" mention that its terms
are su$;ect to the ;udicial outcome o# this Civil Case Bo, 00&&, It is
to $e emphasiDed that even in the ".epsi6Cola (ettlement" cited $y
the petitioners, the alleged loan payments therein to li:uidate
alleged o$ligations are su$;ect in no uncertain terms to the #inal
outcome o# the main Civil Case Bo, 00&& pending $e#ore this
Honora$le Court,
>3he concern o# the Court in matters such as this has al4ays $een
to see to it that the properties in se:uestration 4ould $e 4ell !and
pro#ita$ly, i# possi$le% preserved either #or the government, i# the
plainti## proves the >crony> and >ill6gotten> character o# the property,
or #or the de#endants i# not,>
considering that one o# the relie#s prayed #or or one o# causes o#
action in the 9epu$lic>s Complaint in Civil Case Bo, 00&& is
precisely #or )ccounting andCor <amages, In the instant
"(ettlement," the "crony" and "ill6gotten character o# the property"
involved is a matter o# pu$lic record i# not pu$lic notoriety, .lainti##
9epu$lic need not prove the pu$lic character o# the coco6levy
#unds, 3his is a matter o# settled la4 and ;urisprudence, a "given"
#act, to :uote the Honora$le (upreme Court,"
[1+
!emphasis supplied%
-n )pril 18, 1990, Mr, Eduardo M, Co;uangco, 8r, moved to
intervene alleging legal interest in the approval or disapproval o#
the Compromise )greement and )mica$le (ettlement,
[1/
-n May 2+, 1990, the .hilippine Coconut .roducers> Federation, Inc,
!C-C-FE<%, et al,
[16
#iled an "-mni$us Class )ction Motion for
Leave to lntervene and to )dmit? !1% Opposition6in6Intervention,
and !2%Compulsory Counter-Petition and Counterclaim for
Damages."
[17
3hey alleged that they are the ultimatebeneficial
owners o# the (MC shares su$;ect o# the Compromise )greement,
-n 8une 18, 1990, the .C** #iled its Mani#estation
[18
attaching a
copy o# the 9esolution
[19
o# the Commission en banc dated 8une 1/,
1990, .C** ;oined the (olicitor *eneral in praying that the 8oint
.etition #or )pproval o# Compromise )greement should $e treated
as an incident o# Case Bo, 00&&,
[20
.C**, ho4ever, interposed no
o$;ection to the implementation o# the Compromise )greement
su$;ect to the incorporation o# the #ollo4ing provisions?
"1, )s stated in the C-M.9-MI(E, the / million (MC shares !no4
26,+/0,000% paid #or $y the ./00 million #irst installment shall $e
delivered to (MC, 'ept in treasury, and sold as soon as #easi$le in
accordance 4ith a plan to $e agreed upon $y the Commission and
(MCF provided, that (MC shall not unreasona$ly 4ithhold its
consent to a sales plan approved $y .C**,
3he ./00 million paid $y (MC as #irst installment shall $e
accounted #or $y 1C.2 and the CIIF companies to the e5tent
respectively received $y them, and any portion thereo# in e5cess o#
the usual $usiness needs o# the possessor shall $e delivered $y it
to the Commission, to $e held in escro4 #or the ultimate o4ner,
2, -n <elivery <ate, the stoc' certi#icates #or the $alance o# the
(H)9E( in the name o# the 1+ holding companies shall $e delivered
to .C** and deposited 4ith the Central 2an' #or sa#e'eeping to
a4ait their sale in accordance 4ith the plan o# dispersal that .C**
and 1C.2 shall agree to esta$lish #or them, )s soon as practica$le,
$ut 4ith proper account o# mar'et conditions, all those shares shall
$e sold, and the proceeds thereo# disposed as provided
$elo4, 1C.2 shall not unreasona$ly 4ithhold its consent to a sales
plan approved $y .C** in accordance 4ith this paragraph,
&, (o much o# the proceeds o# the sale as may $e necessary shall
$e used a% to #inance the o$ligations o# the CIIF Companies under
the C-M.9-MI(E, and $% to li:uidate the o$ligations o# the CIIF
Companies to 1C.2 #or the purchase price o# the (H)9E(, 3he
$alance shall $e 'ept $y the .C** in escro4 to a4ait #inal ;udicial
determination o# the o4nership o# the various coconut6related
companies and o# all the other assets involved here, 3he cash
dividends that have $een declared on the (H)9E( may $e applied
#or the a$ove purposes $e#ore proceeds #rom the sale o# shares are
realiDed, 3he $alance o# such cash dividends shall $e held in escro4
in the same manner as the sales proceeds,
+, )ll (H)9E( shall continue to $e se:uestered even $eyond
<elivery <ate, (e:uestration on them shall $e li#ted as they are
sold conse:uent to approval o# the sale $y the (andigan$ayan, and
in accordance 4ith the dispersal plan approved $y the
Commission, )ll o# the (H)9E( that are unsold 4ill continue to $e
voted $y .C** 4hile still unsold,
/, 3he consent o# .C** to the trans#er o# the se:uestered shares o#
stoc' in accordance 4ith the C-M.9-MI(E, and to the li#ting o# the
se:uestration thereon to permit such trans#er, shall $e e##ective
only 4hen approved $y the (andigan$ayan, 3he Commission
ma'es no determination o# the legal rights o# the parties as against
each other, 3he consent it gives here con#orms to its duty to care
#or the se:uestered assets, and to its purpose to prevent the
repetition o# the national plunder, It is not to $e construed as
indicating any recognition o# the legality or su##iciency o# any act o#
any o# the parties,"
[21
3he petitioners and the 1C.2 *roup #iled their 8oint
Mani#estation
[22
accepting the conditions imposed $y .C**, 3hey
also opposed the intervention o# C-C-FE<, et al,
-n -cto$er 12, 1990, the petitioners moved #or early resolution o#
the 8oint .etition #or )pproval o# the Compromise )greement and
)mica$le (ettlement together 4ith its pending incidents,
[2&
-n -cto$er 16, 1990, the (andigan$ayan issued an
-rder
[2+
integrating Case Bo, 0102 as an incident o# Civil Case Bo,
00&&, thus?
"Considering the interest e5pressed $y the di##erent parties in Civil
Case Bo, 00&&, and considering #urther that the su$;ect matter o#
the amica$le settlement 4hich is presented $e#ore this Court #or
approval, the Court has deemed it $est that Civil Case Bo, 0102 $e
integrated 4ith, and $e made an incident to, Civil Case Bo, 00&&,
555"
[2/
3he petitioners did not challenge the -rder,
In its Mani#estation
[26
dated Bovem$er 19, 1990, the (olicitor
*eneral maintained his -pposition to the Compromise )greement
and )mica$le (ettlement,
-n Bovem$er 2&, 1990, (andigan$ayan de#erred consideration o#
the Compromise )greement "until the parties thereto ta'e the
initiative to restore the same in the Court>s calendar,"
[27
-n
Fe$ruary /, 1991, it also de#erred resolution o# Co;uangco>s Motion
to Intervene,
-n Fe$ruary 21, 1991, the 1C.2 *roup #iled a Motion to set the
8oint .etition #or hearing,
[28
In its -rder dated Fe$ruary 27, 1991,
the (andigan$ayan re:uired the parties to comment on the
propriety o# the said court>s continuing to entertain the
Compromise )greement,
[29
In compliance 4ith the said -rder, the
petitioners #iled its Mani#estation dated March 1/, 1991 e5pressly
recogniDing the ;urisdiction o# the (andigan$ayan to rule on the
petition #or the approval o# the compromise agreement,
&1
-n 8une &, 1991, the (andigan$ayan issued the #ollo4ing
9esolution?
&1
"It appearing that the se:uestered character o# the shares o# stoc'
su$;ect o# the instant petition #or the approval o# the compromise
agreement, 4hich are shares o# stoc' in the (an Miguel Corporation
in the name o# the CIIF Corporations, is independent o# the
transaction involving the contracting parties in the Compromise
)greement $et4een 4hat may $e la$eled as the "(MC *roup" and
the "1C.2 *roup," and it appearing #urther that the said
se:uestered (MC shares o# stoc' have not $een physically seiDed
nor ta'en over $y the .C**, so much so that the reversions
contemplated in said Compromise )greement are 4ithout pre;udice
to the perpetuation o# the se:uestration thereon, until such time as
a ;udgment might $e rendered on said se:uestration !4hich issue is
not $e#ore this Court as !sic% this time%, and it appearing #inally that
the .C** has not interposed any o$;ection to the contractual
resolution o# the pro$lems con#ronting the "(MC *roup" and the
"1C.2 *roup" to the e5tent that the se:uestered character o# the
shares in :uestion is not a##ected, this Court will await the
pleasure of the Presidential Commission on Good
Government before consideration of the Compromise
Agreement is reinstated in the Court's calendar.
While this is, in effect, a denial of the "UCPB Group's"
Motion to set consideration of the Compromise Agreement
herein, this denial is without prejudice to a reiteration of
the motion or any other action by the parties should
developments hereafter justify the same."
-n 8uly +, 1991, the petitioners and the 1C.2 *roup #iled a 8oint
Mani#estation that they haveimplemented the Compromise
)greement and )mica$le (ettlement 4ith the conditions set $y the
.C** andaccordingly, withdrew their ]oint Petition.
32
3hey
in#ormed that they have e5ecuted the #ollo4ing corporate acts?
"a, -n instructions o# the (MC *roup, the certi#icates o# stoc'
registered in the name o# )nscor6Hagedorn (ecurities, Inc, !)H(I%
representing 17/,27+,960 (MC shares 4ere surrendered to the
(MC corporate secretary,
$, 3he said (MC shares 4ere reissued and registered in the record
$oo's o# (MC in the #ollo4ing manner?
i% Certi#icates #or 2/,+/0,000 (MC shares 4ere registered in the
name o# (MC, as treasuryF
ii% Certi#icates #or 1++,&2+,960 (MC shares 4ere registered in the
name o# the CIIF Holding CompaniesF
iii% Certi#icates #or /,/00,000 (MC shares 4ere registered in the
name o# the .C**,
c, 3he 1C.2 *roup has delivered to the (MC *roup the amount o#
./00,000,000,00 in #ull payment o# the 1C.2 pre#erred shares,
d, 3he (MC *roup delivered to the 1C.2 *roup the amount o#
.+81,628,0//,99 representing accumulated dividends !#rom )pril 1,
1986% on the shares reverted to the CIIF Holding Companies,"
&&
3he .C** mani#ested that it has no o$;ection to the action ta'en
$y the petitioners and the 1C.2 *roup,
&+
COCOFED, et al. and
Cojuangco, ]r. filed their respective motions,
35
both dated
]uly 4, 1991 to nullify the implementation of the
compromise agreement.
)cting on the 8oint Mani#estation o# Implementation o# Compromise
)greement and o# =ithdra4al o# .etition, the (andigan$ayan on
8uly /, 1991 noted the same "4ith the observation that the
.C**, the 1C.2 *roup and the (MC *roup shall al4ays act
4ith due regard to the sequestered character o# the shares o#
stoc' involved herein as 4ell as the #ruits thereo#, more particularly
to prevent the loss or dissipation o# their value" and "without
prejudice to 4hatever might $e the resolution o# this Court on the
Motion to Bulli#y the Compromise )greement #iled $y Eduardo
Co;uangco, 8r,"
&6
-n 8uly 8, 1991, the (andigan$ayan issued t4o !2% -rders, 3he #irst
4as to hear the de#endants in Civil Case Bo, 00&& on the matter o#
the Compromise )greement 4hether under Civil Case Bo, 0102 or
as an incident to Civil Case Bo, 00&&,
&7
3he second re:uired the
petitioners and the 1C.2 *roup as 4ell as .C** to #ormally state in
4riting the di##erent holders o# the (MC shares su$;ect o# the
compromise agreement, 3he (andigan$ayan #urther ordered .C**
to indicate on the #ace o# the su$;ect shares their se:uestered
character,
&8
-n 8uly 16, 1991, petitioners #iled their Mani#estation 4here they
declared that (toc' Certi#icate Bos, ) 000+129 and ) 001///6
representing 2/,+/0,000 shares 4ere issued in the name o# (MC as
treasury stocks,
&9
-n 8uly 2&, 1991, the (andigan$ayan noted the Mani#estations o#
the .C**, the petitioners and the 1C.2 group that the certi#icates
o# stoc' #or the su$;ect (MC shares 4hich are intended to #orm part
o# the corporation>s treasury shares have $een mar'ed
"se:uestered" $y (MC and are in the custody o# the .C**,
+0
-n )ugust /, 1991, the (andigan$ayan issued an order re:uiring
(MC to deliver the certi#icates o# stoc' representing the su$;ect
matter o# the Compromise )greement to the .C** in vie4 o# the
oral mani#estations o# Commissioner Maceren see'ing clari#ication
o# portions o# (andigan$ayan>s 8uly 2&, 1991 9esolution,
+1
-n )ugust 9, 1991, the 1C.2 *roup #iled a Motion to )llo4 it to
1tiliDe <ividends on (MC shares #or the payment o# the loans o# CIIF
Companies to 1C.2,
+2
3he motion 4as granted on (eptem$er 2,
1991,
+&
-n )ugust 1/, 1991, C-C-FE<, et al. #iled their 1rgent Motion to
Compel (urrender o# the Cash <ividends pertaining to !a% the +,/
million (MC shares allegedly delivered to .C** in trust #or the
Comprehensive )grarian 9e#orm .rogram and !$% the (MC shares
allegedly delivered to (MC as treasury shares,
++
-n )ugust 22, 1991, petitioners #iled a Mani#estation and Motion
stating that the (MC shares have reverted to the (MC treasury as
treasury shares and are not entitled to dividends,
+/
-n -cto$er 1, 1991, the (andigan$ayan issued a 9esolution
allo4ing C-C-FE<, et al. to intervene,
+6
-n March &0, 1992, it
denied the separate motions #or reconsideration #iled $y the
petitioners and the 1C.2 *roup,
+7
-n -cto$er 2/, 1991, the (andigan$ayan issued another
9esolution re:uiring (MC to deliver the 2/,+/ million (MC treasury
shares to the .C**,
+8
-n March 18, 1992, it denied petitioners>
Motion #or 9econsideration and #urther ordered (MC to pay
dividends on the said treasury shares and to deliver them to the
.C**,
+9
-n )pril 1&, 1992, petitioners #iled a Motion to <ismiss Intervention
andCor Motion #or Clari#ication 4ith )d Cautelam Motion to (uspend
3ime,
/0
3he motion 4as denied in the (andigan$ayan>s 9esolution
dated March 17, 199&,
/1
2e#ore this Court no4 are t4o !2% consolidated petitions
#or certiorari under 9ule 6/ o# the 9ules o# Court #iled $y petitioners
(an Miguel Corporation, Beptunia Corporation Gimited, )ndres
(oriano III and )nscor6Hagedorn (ecurities, Inc, 3hey see' to annul
the #ollo4ing resolutions o# the (andigan$ayan?
ln G.R. No. 104637-38:
1, 3he 9esolution dated -cto$er 2/, 1991 reiterating
/2
that all
Certi#icates o# (toc' representing se:uestered shares in the (MC
$e physically deposited with the PCGG and re:uiring (MC
to pay the cash dividends due or actually earned $y the said
shares and deliver them to .C**F
/&
2, 3he 9esolution dated March 18, 1992
/+
re:uiring (MC to deliver
to the .C** the 2/,+/ million shares as 4ell as the cash andCor
stoc' dividends 4hich have accrued thereto #rom March 26, 1986
to date and 4hich might have #urther accrued thereto had not said
shares o# stoc' $een declared treasury shares.
55
ln G.R. No. 109797:
1, 3he 9esolution dated (eptem$er &0,
1991 allowing COCOFED and other private respondents to
intervene in Case Bo, 0102 and admitting their Counter6.etitionF
/6
2, 3he 9esolution dated March 27, 1992 denying the motions o#
petitioners and the 1C.2 *roup #or reconsideration o# the
9esolution dated (eptem$er &0, 1991F and
/7
&, 3he 9esolution dated March 17, 199& denying petitioners>
motion to dismiss the Counter-Petition #iled $y C-C-FE<, et al,
/8
.etitioners contend?
ln G.R. No. 104637-38:
"GROUNDS FOR CERTlORARl
3he :uestioned orders o# the (andigan$ayan 4ere issued 4ithout
or in e5cess o# its ;urisdiction, and 4ith grave a$use o# discretion
amounting to lac' o# ;urisdiction, 3hey should $e set aside as null
and void,
A
3he :uestioned orders 4ould deprive (MC o# property already paid
#or, 3hey unduly protect the claimants o# se:uestered companies,
at the e5pense o# (MC,
B
3he (andigan$ayan over6reached its ;urisdiction in issuing the
:uestioned orders,
1, 3he #act o# se:uestration, $y itsel#, does not mean that the
possessor o# the se:uestered assets must $e dispossessed thereo#
at all costs, In the present case, there are 4eighty reasons 4hy the
treasury shares and any "dividends" thereon should remain 4ith
(MC,
2, 3he purported issue o# o4nership does not ;usti#y the
dispossession o# (MC o# these shares,
C
3he .C** is the entity primarily charged 4ith the duty and
responsi$ility o# preserving se:uestered assets, )$sent any
sho4ing that the .C** $etrayed this duty 4hen it allo4ed (MC to
'eep the shares already paid #or in treasury, the (andigan$ayan
has no ;urisdiction to over6rule the .C**>s ;udgment,
D
3he :uestioned orders 4ill #oment litigation, in violation o# the clear
policy o# the la4 that compromise is encouraged,
E
3he se:uestered !sic% assets threaten and put the se:uestered
assets at ris',
F
3he (andigan$ayan gravely a$used its discretion 4hen it treated
the contracting parties to the compromise agreement di##erently,"
/9
ln G. R. No. 109797:
"GROUNDS TO GRANT PETlTlON
3he (andigan$ayan acted 4ithout or in e5cess o# ;urisdiction or
4ith grave a$use o# discretion in issuing the :uestioned 9esolutions
in that?
l
Civil Case Bo, 0102 has $een 4ithdra4n, C-C-FE<, et al, cannot
intervene in a 4ithdra4n case,
ll
3he (andigan$ayan>s motu proprio consolidation o# Case 102 4ith
Case && did not ma'e the (MC *roup parties to Case &&,It did not
result in a merger o# the t4o cases 4hich preserved their separate
identity,
lll
2y their o4n allegations, C-C-FE<, et al, have no cause o# action,
1, C-C-FE<, et al, are not real parties in interest, 3hey deny the
(andigan$ayan>s $asis #or #inding that they are real parties in
interest, i,e,, that the (MC shares 4ere ac:uired 4ith coco6levy
#unds,
2, C-C-FE<, et al, are estopped #rom claiming to act #or the 1C.2
*roup,
lV
C-C-FE<, et al, are $ound $y the $usiness ;udgment o# the 1C.2
*roup that the compromise is to the $est interest o# the 1C.2
*roup,
V
In violation o# the pu$lic policy that #ro4ns on litigation and
encourages #air compromise, the :uestioned resolutions #oment
litigation on issues settled $y the compromise,
Vl
C-C-FE<, et al, paid no doc'et #ees #or the counter6petition, 3he
(andigan$ayan ac:uired no ;urisdiction over the counter6
petition,"
60
His6I6vis these arguments, private respondents C-C-FE<, et al,
contend?
ln G.R. No. 104637-38?
I, 3hat the (andigan$ayan has not yet resolved the matter o# the
compromise agreement, 2y insisting that it has implemented the
compromise agreement and thus need not turn over the (MC
shares corresponding to the ./00 million #irst installment and the
dividends thereon to the .C**, the (MC *roup is preempting the
(andigan$ayan,
II, 3he -rder o# the (andigan$ayan to turn over the (MC shares
corresponding to the ./00 million #irst installment and the
dividends thereon is proper $ecause the (MC *roup is not entitled
thereto, having #or#eited the #irst installment as li:uidated damages
#or its re#usal and #ailure to ma'e su$se:uent installment
payments,
III, )t any rate, the trans#ormation o# the (MC shares into treasury
shares is $ut part and parcel o# the compromise agreement 4hich
has not yet $een approved, 3hus, it is premature #or the (MC *roup
to treat these shares as such and to re#use to turn over the same
as 4ell as the accrued dividends thereon to the .C**, as ordered
$y the (andigan$ayan, Moreover, the trans#ormation is e5tremely
disadvantageous to the CIIF Companies,
IH, 3he .C** appointed directors o# 1C.2, the CIIF Companies, and
(MC cannot enter into a compromise agreement 4hich is
tantamount to a disposition or dissipation o# se:uestered
assets, Moreover, the .C** is not entitled to any ar$itration #ee,
H, =hile the la4 encourages amica$le settlements, the la4 li'e4ise
provides that any compromise should not only $e legal $ut must
also $e #air, In this case, the proposed compromise is contrary to
la4 and grossly disadvantageous to the CIIF Companies, 1C.2 and
the coconut #armersCproducers,
HI, 3he perceived danger o# ris' on the se:uestered assets is purely
speculative and is not supported $y ade:uate proo#,Moreover, the
(MC shares are su##icient to cover the losses 4hich may $e
sustained in pursuing the recovery o# the (MC shares,
HII, 3he CIIF Companies, $eing the disputed o4ners o# the (MC
shares, are entitled to have the dividends on the (MC shares
applied to its inde$tedness to 1C.2, -n the other hand, until the
:uestion o# 4hich entity is entitled thereto is settled, the (MC
shares corresponding to the ./00 million #irst installment and the
dividends thereon should $e turned over to the .C**,
61
and in G.R. No. 109797?
I, Civil Case Bo, 0102 may not $e 4ithdra4n sans the approval o#
the (andigan$ayan, Further, the #iling $y C-CFE<, et al, o# the
Intervention 4as in accordance 4ith the ruling in Soriano lll
case 4hich vests on C-C-FE<, et al, the right to ventilate its
claims over the (MC shares,
II, 3he C-C-FE< case settled 4ith #inality that C-C-FE<, et al, are
real parties in interest to the coconut levy #unds as 4ell as the
corporations organiDed and investments ac:uired or #unded #rom
out o# the coconut levy #unds,
III, =here the $usiness ;udgment is unsound and violative o# la4 or
pu$lic policy, a##ected persons may :uestion such decision,
IH, 3he admission o# the intervention is consistent 4ith the ruling
laid do4n in the (oriano III case,
H, 3he intervention is in the nature o# an )ns4er 4ith Compulsory
Counterclaim, )s such, the (andigan$ayan ac:uired ;urisdiction
despite non6payment o# doc'et #ees,
62
=e stress at the outset that the instant petitions 4ere $rought to
us through a special civil action o# certiorariunder 9ule 6/ o# the
9ules o# Court to annul and set aside the a$ove mentioned
(andigan$ayan resolutions #or having $een allegedly issued
4ithout or in e5cess o# ;urisdiction and 4ith grave a$use o#
discretion, 3o ;usti#y the issuance o# the 4rit o# certiorari, the a$use
o# discretion must $e grave, as 4hen the po4er is e5ercised in an
ar$itrary or despotic manner $y reason o# passion or personal
hostility, and it must $e so patent as to amount to an evasion o#
positive duty or to a virtual re#usal to per#orm the duty en;oined, or
to act at all, in contemplation o# la4, as to $e e:uivalent to having
acted 4ithout ;urisdiction,
6&
=e shall no4 use this unyielding
yardstic',
RE: lSSUE OF DELlVERY OF CERTlFlCATES OF STOCK OF SMC SHARES AND THE DlVlDENDS THEREON TO
THE PCGG lN G.R. NO. 104637-38
=e #ind no grave a$use o# discretion on the part o# (andigan$ayan
4hen it ordered the petitioners to deliver the treasury shares to
.C** and pay their corresponding dividends #or the #ollo4ing
reasons?
First. 3he cases at $ar do not merely involve a compromise
agreement dealing with private interest,3he Compromise
)greement here involves sequestered shares o# stoc' no4
4orth more than nine (9) billions of pesos, per estimate given
$y C-C-FE<,
6+
3heir o4nership is still under litigation, It is not yet
'no4n 4hether the shares are part o# the alleged ill6gotten 4ealth
o# #ormer .resident Marcos and his "cronies," )ny Compromise
)greement concerning these se:uestered shares #alls 4ithin the
un:uestiona$le ;urisdiction o# and has to $e approved $y the
(andigan$ayan, 3he parties themselves recogniDed this
;urisdiction, In the Compromise )greement itsel#, the petitioners
and the UCPB Group expressly acknowledged the need to
o$tain the approval $y the (andigan$ayan o# its terms and
conditions, thus?
@/, 1nless e5tended $y mutual agreement o# the parties, the
><elivery <ate> shall $e on the 10th <ay #rom and a#ter receipt $y
any party o# the notice o# approval of this Compromise
Agreement and Amicable Settlement by the
Sandiganbayan,1pon receipt o# such notice, all other parties shall
$e immediately in#ormed,A
6/
!emphasis supplied%
3he PCGG Resolution of ]une 15, 1990 also imposed the
approval o# the (andigan$ayan as a conditionsine qua non #or the
trans#er o# these se:uestered shares o# stoc', viz?
"+, )ll (H)9E( shall continue to $e se:uestered even $eyond
<elivery <ate, (e:uestration on them shall $e li#ted as they are
sold consequent to approval of the sale by the
Sandiganbayan, and in accordance 4ith the dispersal plan
approved $y the Commission, )ll o# the (H)9E( that are unsold 4ill
continue to $e voted $y .C** 4hile still unsold,
/, 3he consent o# .C** to the trans#er o# the se:uestered shares o#
stoc' in accordance 4ith the C-M.9-MI(E, and to the li#ting o# the
se:uestration thereon to permit such trans#er, shall be effective
only when approved by the Sandiganbayan,3he Commission
ma'es no determination o# the legal rights o# the parties as against
each other, 3he consent it gives here con#orms to its duty to care
#or the se:uestered assets, and to its purpose to prevent the
repetition o# the national plunder, It is not to $e construed as
indicating any recognition o# the legality or su##iciency o# any act o#
any o# the parties,"
66
!emphasis supplied%
3hus, the petitioners voluntarily submitted to the ;urisdiction o#
the (andigan$ayan $y as'ing #or the approval o# the said
Compromise )greement, 3hey stated in their Mani#estation dated
March 1/, 1991
67
that?
"1, 3he Compromise )greement su$;ect matter o# this petition
categorically states that J!a%ll the terms o# th!e% )greement are
su$;ect to approval $y the .residential Commission on *ood
*overnment !.C**% as may $e re:uired $y E5ecutive -rders
num$ered 1, 2, 1+ and 1+6), (T)he Agreement and the PCGG
approval thereof shall be submitted to the Sandiganbayan,K
5 5 5
PCGG has consented to the Compromise Agreement. But its
consent is 'effective only when approved by the
Sandiganbayan' (PCGG Resolution dated 15 ]une 1990, In 9e?
Compromise )greement $et4een (an Miguel Corporation, et al,
and 1nited Coconut .lanters 2an', et al,%, Petitioners accepted
this condition, and incorporated by reference such
condition as an integral part of the Compromise
Agreement,"
68
!emphasis supplied%
In #ine, the jurisdiction o# the (andigan$ayan to pass upon the
partiesK Compromise )greement is beyond dispute.
Second. *iven its undisputed ;urisdiction, the (andigan$ayan
ordered that the treasury shares should $e delivered to .C** and
that their dividends should $e paid pending determination of
their real ownership4hich is the 'ey to the :uestion 4hether
they are part o# the alleged ill6gotten 4ealth o# #ormer .resident
Marcos and his "cronies,"
=e cannot condemn and annul this order as capricious, In the
e5ercise o# its discretion, the (andigan$ayan can re:uire a party6
litigant to deliver a se:uestered property to the .C**, =e held
in Baseco vs. PCGG
69
that "the po4er o# the .C** to sequester
property claimed to $e >ill6gotten> means to place or cause to $e
placed under its possession or control said property, or any $uilding
or o##ice 4herein any such property and any records pertaining
thereto may $e #ound, including >$usiness enterprises and entities,>
6 6 6 for the purpose of preventing the destruction,
concealment or dissipation of, and otherwise conserving
and preserving the same 6 6 6 until it can $e determined,
through appropriate ;udicial proceedings, 4hether the property 4as
in truth >ill6gotten,> i,e, ac:uired through or as a result o# improper
or illegal use or the conversion o# #unds $elonging to the
government or any o# its $ranches, instrumentalities, enterprises,
$an's or #inancial institutions, or $y ta'ing undue advantage o#
o##icial position, authority, relationship, connection or in#luence,
resulting in un;ust enrichment o# the ostensi$le o4ner and grave
damage and pre;udice to the (tate,"
70
3he order o# the (andigan$ayan regarding the su$;ect treasury
shares is merely preservative in nature,=hen the petitioners
and 1C.2 *roup #iled their 8oint Mani#estation o# Implementation o#
the Compromise )greement and o# =ithdra4al o# .etition, the
(andigan$ayan cautioned that "the .C**, the 1C.2 and the (MC
*roup shall al4ays act 4ith due regard to the se:uestered
character o# the shares o# stoc' involved as 4ell as the #ruits
thereo#, more particularly to prevent the loss or dissipation
of their value,"
71
3he caution 4as 4isely given in vie4 o# the
many contested provisions o# the Compromise )greement, For one,
the (andigan$ayan o$served that the conversion o# the (MC shares
to treasury shares 4ill result in a change in the status o# the
se:uestered shares in that?
1, =hen the (MC converts these common shares to treasury stoc',
it is converting those outstanding shares into the corporation>s
property #or 4hich reason treasury shares do not earn
dividends.
2, 3he retained dividends 4hich 4ould have accrued to those
shares i# converted to treasury would go into the
corporationand enhance the corporation as a 4hole, 3he
enhancement to the speci#ic se:uestered shares, ho4ever, 4ould
$e only to the e5tent ali:uot in relation to all the other outstanding
(MC shares,
&, 2y converting the 26,+/ million shares o# stoc' into treasury
shares, the SMC has altered not only the voting power o# those
shares o# stoc' since treasury shares do not vote, $ut the (MC 4ill
have actually enhanced the voting strength o# the other
outstanding shares o# stoc' to the e5tent that these 26,+/ million
shares no longer vote,
72
3hese signi#icant changes in the character o# the (MC shares
cannot $e denied, In Commissioner of lnternal Revenue vs.
Manning,
73
4e e5plained the limited nature o# treasury shares,
thus?
")lthough authorities may di##er on the e5act legal and accounting
status o# the so6called >treasury shares,> they are more or less in
agreement that treasury shares are stoc's issued and #ully paid #or
and re6ac:uired $y the corporation either $y purchase, donation,
#or#eiture or other means, 3reasury shares are there#ore issued
shares, $ut $eing in the treasury they do not have the status o#
outstanding shares, Conse:uently, although a treasury share, not
having $een retired $y the corporation re6ac:uiring it, may $e re6
issued or sold again, such share, as long as it is held by the
corporation as a treasury share, participates neither in
dividends, because dividends cannot be declared by the
corporation to itself, nor in the meetings of the corporation
as voting stock, #or other4ise e:ual distri$ution o# voting po4ers
among stoc'holders 4ill $e e##ectively lost and the directors 4ill $e
a$le to perpetuate their control o# the corporation, though it still
represents a paid6#or interest in the property o# the corporation,
3he #oregoing essential #eatures o# a treasury stoc' are lac'ing in
the :uestioned shares,,,"
7+
!emphasis supplied%
For another, the payment to the .C** o# an arbitration fee in the
#orm o# /,/00,000 o# (MC shares
7/
is denounced as illegal, shoc'ing
and unconsciona$le,
76
C-C-FE<, et al, have assailed the legal right
o# .C** to act as ar$iter as 4ell as the #airness o# its acts as
ar$iter, C-C-FE<, et al, estimate that the value o# the (MC shares
given to .C** as ar$itration #ee 4hich allegedly is not deserved,
can run to P1,966,635,000.00,
77
3his is a serious allegation and
the (andigan$ayan cannot $e charged 4ith grave a$use o#
discretion 4hen it ordered that (MC should
$e temporarily dispossessed o# the subject treasury shares
and that SMC should pay their dividends while the
Compromise Agreement involving them is still under
question.
.etitioners cannot rely on the case o# First Phil. Holdings Corp.
vs. Sandiganbayan
78
to ;usti#y their insistence that the ./00
million payment made $y (oriano III should $e validated, 3hey
contend that the rules encouraging amica$le settlement in civil
cases should apply to cases involving se:uestered
properties,
79
InFirst Phil. Holdings, this Court gave due course to
the petition and ordered the (andigan$ayan to approve the .C**
9esolution li#ting the se:uestration o# ME9)GC- shares, =e noted
that the 9epu$lic o# the .hilippines has agreed to settle the
controversy and the agreement 4ill not in any 4ay pre;udice the
rights o# third persons,
In the cases at $ar, the record is clear that the Republic o# the
.hilippines, through the -##ice o# the (olicitor *eneral,
vigorously opposed the Compromise )greement on legal and
moral grounds, C-C-FE<, et al, also opposed and contend that the
conversion o# the (MC shares into treasury shares is highly
pre;udicial to the interests o# the coconut #armers, It cannot $e
gainsaid that i# it is later proved that (MC is not the la4#ul o4ner o#
the shares in :uestion, 4hat the ad;udged la4#ul o4ner 4ill receive
are treasury shares 4ith diminished value,3he impugned order o#
the (andigan$ayan 4as issued to avoid this mischie#,
.etitioners also argue that the (andigan$ayan gravely a$used its
discretion 4hen it treated the contracting parties to the
Compromise )greement di##erently,
80
3hey argue that it should not
have allo4ed the dividend income o# the se:uestered shares in the
name o# the CIIF Holding Companies to $e applied to their
inde$tedness to the 1C.2, )gain, 4e do not agree #or the order o#
the (andigan$ayan is consistent 4ith the need to preserve and
enhance the value o# the se:uestered assets, =e :uote its
e5planation?
"3he application o# the dividend income o# the CIIF6o4ned (MC
shares !4hich remain se:uestered% to the de$ts o# these CIIF
companies in #avor o# the 1C.2 4as meritorious on its o4n
account,
3he CIIF companies remain se:uestered companiesF the shares o#
stoc' in these companies and in the 1C.2 remain se:uestered, I#
the 1C.2 shares and the CIIF companies !and, there#ore, their
assets and properties% are ad;udged to have $een >ill6gotten> and
>crony6o4ned,> then all the se:uestered properties, including the
(MC shares and the resulting dividends 4ill go to the governmentF
other4ise, the CIIF companies 4ill go to their registered
stoc'holders, i,e,, allegedly the coconut #armers, and the de$ts o#
the CIIF companies to the 1C.2 4ill have $een duly paid or
diminished, 3he period o# se:uestration 4ill not have $een unduly
pre;udicial to these corporations or to the coconut #armers,
Furthermore, i# the de$ts o# the CIIF companies to the 1C.2 had
remained unpaid or unserviced at all, the $an' itsel# !4hich is also
heavily se:uestered% 4ould also su##er since it 4ould, according to
the 1C.2, $e violating the instructions o# the Monetary 2oard !M2%
thereon !p, /+6, 9ecord III%, Compliance 4ith the M2>s instructions
4ould save the 1C.2 #rom punitive action #rom the Central 2an',
3he release o# the dividends in this case 4ould, there#ore, protect
the contingent rights o# the coconut #armers as 4ell as o# the
9epu$lic in the 1C.2 itsel#, )#ter all, no$ody else is in contention
#or the $ene#its resulting #rom the payment o# the de$ts o# the CIIF
companies e5cept #or the *overnment $y reason o# the
se:uestrations imposed and the registered stoc'holders
thereo#,Bo$ody else 4ould su##er the conse:uences i# the (MC
shares o4ned $y the CIIF companies 4ere seiDed $y the 1C.2
andCor the 1C.2 $ecame impaired should the heavy de$ts o# the
CIIF companies not $e serviced or partially paid,
2, -n the other hand, the (MC *roup has not ;usti#ied its desire to
retain the custody o# the 2/,+/ million se:uestered shares o# stoc',
4hich it had converted to 3reasury (hares despite se:uestration,
and to retain the dividends due thereon, on its o4n merits,
3he (MC *roup>s primary ;usti#ication #or non6compliance 4ith the
9esolution o# this Court re:uiring it to turn over the certi#icates o#
stoc' #or the 2/,+/ million se:uestered shares as 4ell as the cash
dividends already accrued thereon is the #act that the shares o#
stoc' have allegedly no4 $ecome 3reasury (hares,
3he (MC *roup, ho4ever, #orgets t4o things?
>!a% 1nder the Corporation Code >3reasury shares are shares o#
stoc' 4hich have $een issued and #ully paid #or, $ut su$se:uently
reac:uired $y, the issuing corporation $y purchase, redemption,
donation or through some la4#ul means , , ,> !(ec, 9, 2,., 2lg, 68,
Corporation Code%, 3hese 26,+/ million shares o# stoc' or any
portion thereo# can, there#ore, $ecome 3reasury (hares, i,e,,
property o# the (an Miguel Corporation, only i# the sale $et4een the
1C.2 *roup and the (MC *roup is allo4edF other4ise these shares
cannot even $egin to $e deemed to have $een >re6ac:uired $y the
issuing corporation,> i,e,, the (an Miguel CorporationF
!$% Even then, under the )*9EEMEB3 $et4een the 1C.2 *roup and
the (MC *roup on March 26, 1986 #or the sale o# &&,1 million
shares o# (MC, the $uyers 4ere not only the (an Miguel
Corporation $ut also )ndres (oriano, III, the Beptunia Corporation
Gimited o# Hong'ong and the )nscor6Hagedorn (ecurities,
Inc, 1nder the letter o# the .C** Commissioner 9amon <iaD dated
May 19, 1986 !item Bo, 6, supra%, the Corporate (ecretary o# the
(an Miguel Corporation 4as #or$idden #rom recording the trans#er,
conveyance, and encum$rance o# these shares 4ithout the .C**>s
approval, 3his 4as $y virtue o# the .C**>s po4ers under (ec, 2 o#
E,-, Bo, 2,>
1nless, there#ore, the right o# Beptunia, )ndres (oriano, III and the
)nscor6Hagedorn (ecurities, Inc, to these 26,+/ million shares shall
have $een trans#erred to the (MC, the (MC cannot $e deemed to
have >reac:uired> these shares, 3hey 4ould remain co6o4ned $y all
#our !+% entities,
3he (MC *roup>s claim, there#ore, that these 26,+/ million shares
are no4 3reasury (hares is un#ounded,
2ut even i#, indeed, these shares are treasury shares, they remain
se:uestered so that any movement o# these shares cannot $e o#
any permanent character that 4ill alter their $eing se:uestered
shares and, there#ore, in >custodia legis,> that is to say, under the
control and disposition o# this Court,
It must #inally $e said that the conversion o# the 26,+/ !or 2/,+/%
million shares $y the (MC *roup into 3reasury (hares is o# the (MC
*roup>s o4n ma'ing and the (MC *roup cannot per#orm acts that
4ill, $y its o4n say6so, ta'e property a4ay #rom >custodia legis,>
3he position ta'en $y the (MC *roup here is sel#6serving and
unaccepta$le, It is also contrary to ;urisprudence,"
81
3he claim o# petitioners to #airness hardly impresses, It is planted
on the assumption that their purchase o# the su$;ect shares is
a$ove $oard, 3he assumption $egs the :uestion #or the
(andigan$ayan has yet to decide the real o4nership o# the su$;ect
shares, i,e,, 4hether or not they are part o# the alleged illegal
4ealth o# #ormer .resident Marcos and his "cronies," Bor have
petitioners sho4n that they 4ill su##er a legal pre;udice i# they
deliver the shares and the dividends thereon to the .C**, It need
not $e stressed that in the event the petitioners are #ound to $e the
la4#ul o4ners o# these shares, they 4ill $e a4arded the cash and
stoc' dividends 4hich have accrued thereon, =e agree 4ith the
conclusion o# the (andigan$ayan in its assailed 9esolution o# March
18, 1992 that "the (MC *roup has not ;usti#ied its desire to retain
the custody o# the 2/,+/ million se:uestered shares o# stoc', 4hich
it had converted to treasury shares despite se:uestration, and to
retain the dividends due thereon, on its o4n merits,"
82
More unimpressive is petitioners> su$mission that the "delivery o#
the shares to the .C** may create legal pro$lems and may give an
impression that these shares are outstanding and may $e sold and
trans#erred, 4hen under the la4, all that can $e done is #or (MC to
reissue the shares pursuant to procedures mandated $y the
applica$le la4s,"
8&
(uch #ear is clearly un#ounded and needs no
ela$orate re#utation,
RE: lSSUE Of lNTERVENTlON OF COCOFED, ET AL. lN CASE NO. 0102
=e also a##irm the resolution o# the (andigan$ayan allo4ing the
intervention o# C-C-FE<, et al, in Civil Case Bo, 0102, It is the
posture o# the petitioners that intervention is improper since Case
Bo, 0102 has already $een 4ithdra4n as o# 8uly +, 1991, 3hey
hinge the right to 4ithdra4 the 8oint .etition to approve their
Compromise )greement on section 1, 9ule 17 o# the 9ules o#
Court,
8+
=e do not agree,
First. 3he right o# C-C-FE<, et al, to intervene in cases involving
these (MC shares has long $een recogniDed $y this
Court, In Soriano lll v. Yuzon,
8/
4e ruled?
"5 5 5
3he .hilippine Coconut .roducers Federation !C-C-FE<% also came
into the picture, ) Mani#estation dated March 1/, 1988 4as #iled in
its $ehal# $y its .resident, Ma, Clara Go$regat, 3he Mani#estation
contained a discussion o# the la4s passed !and the o##icial action
ta'en pursuant thereto% esta$lishing the coconut levy and
providing #or the management and utiliDation o# the #unds there$y
generated, It advocated the thesis that the :uestion o# 4hether or
not the investments o# the coconut levy #und constitute pu$lic
property, essentially involves issues o# #act and la4 4hich should
$e resolved in the #irst instance $y a trial court o# competent
;urisdiction at a hearing on the merits, and the C-C-FE< should $e
conceded the right to demonstrate at such a hearing that the
coconut #armers, through the so6called CIIF companies, and not Mr,
Co;uangco, 8r, or any o# his companies, are the $ene#icial o4ners o#
the disputed $loc' o# (MC shares, )lternatively, the C-C-FE<
prayed that it $e given the opportunity to su$stantiate the points it
thus raises in *,9, Bo, 7+910, or in Civil Case Bo, 1&86/ o# the
9egional 3rial Court at Ma'ati, or in Civil Case Bo, 00&& o# the
(andigan$ayan entitled >9epu$lic v, Eduardo Co;uangco, 8r,, et al,,>
or in any other case 4hich may herea#ter $e #iled in litigation o# the
issues,"
86
In said case, 4e dismissed all the actions
87
$rought to us, directed
the dismissal o# cases pending $e#ore the 9egional 3rial Courts and
(ecurities and E5change Commission, and ruled that?
"3his dismissal is 4ithout pre;udice to the assertion and ventilation
$e#ore the (andigan$ayan $y the parties o# their respective claims
$y such appropriate modes as are prescri$ed $y la4, 5 5 5"
88
Second, =e again emphasiDe that petitioners and the 1C.2 *roup
voluntarily su$mitted to and invo'ed the ;urisdiction o# the
(andigan$ayan 4hen they #iled their 8oint .etition #or )pproval o#
the Compromise )greement and )mica$le (ettlement, 3he
(andigan$ayan then immediately exercised its jurisdiction as
can $e gleaned #rom the numerous hearings conducted and orders
it issued resolving various incidents o# the case, )mong others, it
ordered persons and entities 4ith 'no4n legal interest on the
su$;ect shares to #ile their comments on the 8oint .etition, 3his
order 4as not seasonably challenged by the
petitioners. .ursuant thereto, C-C-FE<, et al,, claiming $ene#icial
interests on the shares, intervened, Mr, Eduardo Co;uangco, 8r, also
mani#ested his intent to intervene, The right of these persons
and entities to have their claims heard and resolved cannot
be defeated by the petitioners by the simple act of
withdrawing their ]oint Petition for Approval of Compromise
Agreement and immediately implementing its provisions. 3o
allo4 the unilateral 4ithdra4al is to allo4 the petitioners to ma'e
a plaything o# the ;urisdiction o# the (andigan$ayan, su$mit to it
4hen it is in their #avor and repudiate it when it threatens to
turn against their interest, 8urisdiction is vested $y la4 and the
all too #amiliar rule is that once a court has assumed ;urisdiction
over a case, its ;urisdiction shall continue until the case is
terminated,
89
Third. .etitioners cannot invo'e section 1, 9ule 17 o# the 9ules o#
Court 4hich provides "that a complaint may $e dismissed $y the
plainti## $y #iling a notice o# dismissal at any time $e#ore service o#
the ans4er or o# a motion #or summary ;udgment," 3he provision
contemplates a complaint 4here there is a plainti## and a de#endant
4ith real conflicting interests, 3he cases at $ar, ho4ever, are
di##erent, 3hey started as a ]oint Petition #or )pproval o#
Compromise )greement and )mica$le (ettlement, Lno4n persons
and entities claiming adverse interests on the su$;ect shares 4ere
not impleaded, In other 4ords, no party that can assail the validity
o# the Compromise )greement that involves $illions o# pesos and
su$stantial state interests 4as impleaded in any capacity, Met,
petitioners are a4are that the su$;ect shares o# stoc' are
se:uestered and their o4nership is still under litigation in Case Bo,
00&&, 3he attempt to $ypass these persons and entities 4ith
interests in the su$;ect shares is hardly tena$le and the 4ithdra4al
o# the petition and its immediate implementation 4hen they
opposed it ma'es petitioners> posture dou$ly untena$le,
3here is another reason 4hy petitioners cannot rely on section 1,
9ule 17 o# the 9ules o# Court, 3his provision allo4s the plainti## to
4ithdra4 his complaint $e#ore de#endant has ans4ered it or #iled a
motion #or summary ;udgment, In #ine, $e#ore the de#endant has
pleaded to the complaint, )t that point, de#endant has hardly $een
e5posed to any 'ind o# damage or pre;udice, hence, the plainti## is
unilaterally allo4ed to 4ithdra4 his complaint, In the cases at
$ar, $e#ore the petitioners and the 1C.2 *roup can #ile their
Mani#estation o# =ithdra4al o# 8oint .etition #or )pproval o#
Compromise )greement and )mica$le (ettlement, C-C-FE<, et al,
have already #iled their -pposition in Intervention and Compulsory
Counter6.etition and Counterclaim #or <amages, In the same vein,
the 9epu$lic, thru the -(*, has already #iled its -pposition, 3hese
pleadings o# C-C-FE<, et al, and the 9epu$lic assail the legality o#
the Compromise )greement, 3hey can $e deemed as ans4ers to
the 8oint .etition, hence, petitioners can no longer unilaterally
4ithdra4 their 8oint .etition,
Fourth, .etitioners #urther contend that C-C-FE<, et al, cannot
intervene $ecause Case Bo, 0102 is not an action or a suit and they
did not implead any adverse party and set #orth no
claims, .etitioners> contention cannot merit the assent o# the
Court, 9egardless o# its nature as an action or suit, the #ault o# the
8oint .etition precisely lies in the attempt to $ypass parties 4ith
legitimate interests on the su$;ect shares, 3he e5istence o# these
parties is 'no4n to the petitioners yet they 4ere not
impleaded, 3heir #ailure to $e impleaded is $ad enough $ut 4orse
still is petitioners> su$mission that since they 4ere not impleaded,
ergo, they cannot intervene,It is no4 a musty principle o# ;ustice
that a right cannot arise #rom a 4rong, Moreover, the
(andigan$ayan did not treat the 8oint .etition as an "action or suit"
$ut as a mere incident o# Case Bo, 00&&, In any event, section 1,
9ule 19 o# the 9ules o# Court provides the rule on 4ho can
intervene, viD? ") person 4ho has a legal interest in the matter in
litigation, or in the success o# either o# the parties, or an interest
against $oth, or is so situated as to $e adversely a##ected $y a
distri$ution or other disposition o# property in the custody o# the
court or o# an o##icer thereo#, may, 4ith leave o# court, $e allo4ed
to intervene in the action," 3he legal interest o# C-C-FE<, et al,
4hich ;usti#ies their intervention is e5tensively discussed in the
impugned resolution o# the (andigan$ayan, viD?
"In all #airness, the motion to intervene #iled $y C-C-FE<, et al,
must $e granted #or the #ollo4ing reasons?
1, 3he coconut planters and producers represented $y C-C-FE< do
have a legal interest in the matter o# litigation and are so situated
as to $e adversely a##ected $y the disposition o# the se:uestered
shares o# stoc' su$;ect matter o# the compromise agreement,
3he rule on intervention !section 2, 9ule 12 o# the 9ules o# Court%
states?
>(ec, 2, Intervention 6 ) person may, $e#ore or during a trial $e
permitted $y the court, in its discretion, to intervene in an action, i#
he has legal interest in the matter o# litigation, or in the success o#
either o# the parties, or an interest against $oth, or 4hen he is so
situated as to $e adversely a##ected $y a distri$ution or other
disposition o# property in the custody o# the court or an o##icer
thereo#,>
5 5 5 5 5 5 5 5 5
It should $e $orne in mind that the real su$;ect matter o# this case
is the coconut levy #und o# 4hich the (MC shares in :uestion are
claimed to $e $ut a part, 555
3o start 4ith, the coconut levy #und came #rom levies imposed
upon the sale o# copra or e:uivalent coconut product that 4as
deducted #rom the price o# copra 4hich, as claimed $y movants6
#armers, 4ould have gone to them, 3hus, starting 1971, under the
Coconut Investment Fund !CIF%, a levy o# .0,// 4as imposed on the
#irst domestic sale o# every 100 'ilograms o# copra or e:uivalent
product, In 197&, under the Coconut Consumers (ta$iliDation Fund
!CC(F%, a levy o# .1/,00 on the #irst sale o# every 100 'ilograms o#
copra resecada or e:uivalent product 4as imposed, From the CC(F
4as esta$lished yet another #und, the Coconut Industry
<evelopment Fund !CI<F% 4hose initial capital o# .100 million and
regular allotment e:uivalent to .,20 per 'ilogram o# copra resecada
or its e:uivalent 4ere contri$uted $y the CC(F, !It is #rom this
Coconut Industry Investment Fund !CIIF% that the so6called CIIF
Companies 4ere later esta$lished%, From 1981, under the Coconut
Industry (ta$iliDation Fund 4hich replaced the CC(F and CI<F, a
levy o# ./0,00 #or every 100 'ilos o# copra resecada or e:uivalent
product delivered to e5porters and copra users 4as collected and
apportioned among the CI<F, C-C-FE<, .C) and the 1C.2,
3hrough the years, part o# the coconut levy #und 4as used and
applied to various pro;ects and invested or converted into di##erent
assets, properties and $usinesses, 555
555 [3he coconut #armers and producers do have a legal interest in
the (MC shares, 3hat legal interest consists o# their alleged
$ene#icial o4nership o# the (an Miguel shares, they $eing the
>registered o4ners andCor $ene#icial o4ners o# all, or at least not
less than #i#ty6one percent !/1N%, o# the capital stoc' o# the CIIF
Companies> some o# 4hich 4holly o4n the so6called CIIF Copra
3rading Companies and the CIIF Holding Companies 4hich are the
registered stoc'holders o# the (MC shares, !p, &, C-C-FE<>(
-mni$us Class )ction 555%, 3heir claim is $ased on the speci#ic
provisions o# (ection /, )rticle III, .< 1+68, the pertinent portion o#
4hich states? >(aid #und !Coconut Consumers (ta$iliDation Fund and
the Coconut Industry <evelopment Fund% and the dis$ursements
thereo# as herein authoriDed #or the $ene#it o# the coconut #armers
shall $e o4ned $y them in their private capacities 555,> 3his
.residential <ecree has $een assailed $y the .C** as a
>transgression o# the $asic limitation o# the licit e5ercise o# the
state>s ta5ing and police po4ers>, $ut this is a legal :uestion yet to
$e resolved,
It has $een argued that C-C-FE<, et al, should not $e allo4ed to
intervene $ecause they have no actual, material, direct or
immediate interest in the su$;ect matter, 3o $e $ound entirely $y
the #orm and nature o# these assets as shares o# stoc' su$;ect to
the special la4s, rules and $y6la4s o# corporations, is to adopt an
overly strict, narro4 and myopic approach, It has already $een
alleged that these shares constitute ill6gotten 4ealth derived #rom
the coconut levy #und, 3he #orm into 4hich part o# the coco6levy
#und has $een converted is not crucial or decisiveF other4ise, it
4ould $e so easy to de#eat the recovery o# ill6gotten 4ealth $y
simply converting those #unds, assets and properties #rom one #orm
to another and using legal technicalities to th4art all attempts to
reach them, 3he clear intention o# the la4 is to recover all assets
and properties illegally ac:uired $y #ormer .resident Marcos, et al,,
in 4hatever #orm they may $e, such as, to :uote the e5act 4ording
o# E5ecutive -rder Bo, 2, >in the #orm o# $an' accounts, deposits,
trust accounts, shares of stocks, $uildings, shopping centers,
condominium, mansions, residences, estates, and other 'inds o#
real and personal properties in the .hilippines and in various
countries o# the 4orld,> !2nd =hereas Clause, E5ecutive -rder Bo,
2%
Moreover, at this stage o# the proceedings, it has not yet $een
esta$lished 4ho the real o4ners o# the (MC shares are, $ut i# 4e
$ar movants #rom the start, and i# it should turn out in the end that
they are the $ene#icial o4ners and that the Compromise
)greement did in #act pre;udice their rights, then 4e shall have
done them an irrepara$le in;ustice, Fairness and prudence dictate
that 66 at the ris' o# the inconvenience o# having one more group to
$e heard on the matter 66 =e e5ercise our discretion in #avor o#
allo4ing them to intervene,"
90
1nder the rules on intervention, the allo4ance or disallo4ance o# a
motion to intervene is addressed to the sound discretion o# the
court,
91
Discretion is a faculty of a court or an official by
which he may decide a question either way, and still be
right.
92
3he permissive tenor o# the rules sho4s an intention to
give to the court the #ull measure o# discretion in permitting or
disallo4ing the intervention, 3he discretion o# the court, once
e5ercised, cannot $e revie4ed $y certiorari nor controlled
$y mandamus save in instances 4here such discretion has $een so
e5ercised in an ar$itrary or capricious manner,
9&
Bor are 4e impressed $y petitioners> su$mission that C-C-FE<, et
al, should pay a doc'et #ee #or their counter6petition and
counterclaim #or damages, =e note that it 4as the (andigan$ayan
itsel# that ordered C-C-FE< and the other de#endants in Civil Case
Bo, 00&& to give their comment to the 8oint .etition #or )pproval o#
Compromise )greement, etc, In response to this order, C-C-FE<,
et al, #iled their -pposition6in6Intervention and Compulsory
Counter6.etition and Counterclaim #or <amages, C-C-FE<, et al,
alleged that the Compromise )greement is illegal and its approval
4ould $ring damages to themselves, In e##ect, C-C-FE<, et al,
alleged a compulsory counterclaim #or 4hich they need not pay any
doc'et #ee,
Fifth, .etitioners cannot insist on their right to have their
Compromise )greement approved on the ground that it $ears the
imprimatur o# the .C**, 3o $e sure, the consent o# the .C** is a
#actor that should $e considered in the approval or disapproval o#
the su$;ect Compromise )greement $ut it is not the only #actor,
In Republic vs. Sandiganbayan,
94
this Court had the occasion to
categorically dra4 the distinctions $et4een !i% the (andigan$ayan>s
e5clusive ;urisdiction to determine the ;udicial :uestion o#
o4nership over se:uestered properties and !ii% the incidents o# the
e5ercise $y the .C** o# its purely administrative and e5ecutive
#unctions as conservator o# se:uestered properties, as #ollo4s?
"In other 4ords, neither in Pea nor in any other case did this Court
ever say that orders o# se:uestration, seiDure or ta'e6over o# the
.C** or other acts done in the exercise of its so-called
'primary administrative jurisdiction' are $eyond ;udicial revie4,
or $eyond the po4er o# the courts to reverse or nulli#y, It is true, o#
course, that those acts are entitled to much respect, the #indings
and conclusions motivating and ;usti#ying them should $e accorded
great 4eight, >li'e the #actual #indings o# the trial and appellate
courts,> and such #indings and conclusions o# the .C** may not $e
superseded and su$stituted $y the ;udgment o# the courts, 2ut
o$viously the principle does not and cannot sanction ar$itrary,
4himsical, capricious or oppressive e5ercise o# po4er and
discretion on the part o# the .C**, or its performance of
acts 4ithout or in e5cess o# its authority and competence under
the la4, )nd in accordance 4ith applica$le la4, revie4 o# those
acts, and correction or invalidation thereo#, 4hen called #or, can
only $e underta'en $y the (andigan$ayan, 4hich has e5clusive
original ;urisdiction over all cases regarding >the #unds, moneys,
assets and properties illegally ac:uired or misappropriated $y
#ormer .resident Ferdinand E, Marcos, Mrs, Imelda 9omualdeD
Marcos, their close relatives, su$ordinates, $usiness associates,
dummies, agents or nominees,>"
9/
!emphasis supplied%
3his ruling has stronger application in the cases at $ar considering
that C-C-FE<, et al, have challenged the legality o# the consent
given $y .C** to the Compromise )greement on various grounds
$ut especially in light o# the "ar$itration #ee" it received in the #orm
o# (MC shares o# su$stantial value, C-C-FE<, et al,>s position that
the Compromise )greement is a sell out o# its interest is also a
repudiation o# the so called "$usiness ;udgment" o# 1C.2 4hich
petitioners insist should $ind C-C-FE<, et al,
A final word, 3he cases at $ar involve shares o# stoc' estimated
to $e 4orth more than .9 $illion no4,3hese shares 4ere
se:uestered in 1986 and the government #iled Civil Case Bo, 00&&
in 1987 to determine 4hether they are part o# the alleged ill6gotten
4ealth o# #ormer .resident Marcos and his "cronies," =e did not set
aside the impugned resolutions o# the (andigan$ayan in the cases
at $ar #or they constitute cautious moves to preserve the character
o# the se:uestered shares pending determination o# their true
o4ners, 2e that as it may, 4e note that Civil Case Bo, 00&& has
remained unresolved $y the (andigan$ayan, 3he delay is no longer
tolera$le #or it loc's in $illions o# pesos 4hich could 4ell rev6up our
sputtering economy, =orse, it constitutes another em$arassing
evidence o# snail6paced ;ustice, so long lamented $ut mostly $y our
lips alone, 3he (andigan$ayan must not $e the $urial ground o#
cases o# #ar6reaching importance to our people, It is time #or it to
4rite finis to Civil Case Bo, 00&&,
lN VlEW WHEREOF, the petitions in *,9, Bos, 10+6&76&8 and in
*,9, Bo, 109797 are <I(MI((E<, Bo costs,
SO ORDERED.