G.R. No. 177857-58 - Philippine Coconut Producers Federation, Inc. vs. Republic

The petitioners sought the conversion of 753,848,312 sequestered San Miguel Corporation (SMC) Class “A” and “B” common shares into 753,848,312 SMC Series 1 Preferred Shares.
The shares, registered in the name of the Coconut Industry Investment Fund (CIIF) Holding Companies, were held as sequestered assets under the supervision of the Presidential Commission on Good Government (PCGG).
The conversion was approved by the Court in its Resolution dated September 17, 2009 upon the petition of the Philippine Coconut Producers Federation, Inc. (COCOFED).

Petitioners included COCOFED, several individual petitioners, and oppositors-intervenors such as Jovito R. Salonga, Wigberto E. TaAada, Oscar F. Santos, Ana Theresa Hontiveros, and Teofisto L. Guingona III.
Additional movants-intervenors included groups like the 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), among others.
The United Coconut Planters Bank (UCPB) also intervened later with a motion regarding the deposit of net dividend earnings and/or redemption proceeds.

Oppositors-intervenors challenged the conversion arguing that it was economically disadvantageous to the government and coconut farmers due to the redemption mechanism that would allow SMC to buy back the preferred shares at a fixed price potentially lower than their market value.
They contended that the Court’s resolution overlooked the economic disadvantages and the fact that the government, being the winning party in a related case, should have no incentive to convert.
Additionally, movants-intervenors questioned issues such as the loss of voting rights inherent in common shares and the applicability of COA Circular No. 89-296 on the conversion process.

The Court had previously considered the merits of the conversion, including arguments on the preservation and conservation of the shares’ value via fixed issue price and guaranteed dividends (PhP 6 per share for three years).
The conversion was justified as a sound business strategy to protect the government’s interest by ensuring a significant premium over the market price and avoiding speculative loss due to unfavorable market conditions.
The petitions, motions for reconsideration, and supplemental motions were filed under various procedural provisions, leading the Court to address issues on both the substance and procedural adherence (e.g., Omnibus Motion Rule).

Whether the conversion of sequestered SMC common shares into preferred shares is disadvantageous to the government and coconut farmers due to the redemption option, which might force a repurchase at a price lower than market value.
Whether the additional dividend earnings (guaranteed PhP 6 per share for three years) adequately compensate for any potential loss arising from the redemption price difference.

Whether the PCGG and the executive branch have the authority to convert the sequestered shares without requiring the consent of the CIIF companies, considering the separation of powers doctrine.
Whether the involvement of the current administration versus the government as such carries any legal significance in the conversion decision.

Whether the motions for reconsideration, including those filed as supplements or interventions, comply with the procedural requirements such as the Omnibus Motion Rule.
Whether guidelines like COA Circular No. 89-296, which govern the disposition of government property, apply to the conversion of sequestered assets that remain under court control.

Whether UCPB, as the statutory administrator of the CIIF, has a direct or exclusive right to determine the depository bank for the net dividend earnings or redemption proceeds from the Series 1 Preferred Shares.