G.R. No. 148154 - Republic vs. Sandiganbayan

On April 25, 1977, respondents Teodoro D. Regala, Victor P. Lazatin, Eleazar B. Reyes, Eduardo U. Escueta, and Leo J. Palma incorporated the United Coconut Oil Mills, Inc. (UNICOM) with an authorized capital stock of P100 million divided into one million shares at a par value of P100 per share.
The incorporators initially subscribed to 200,000 shares amounting to P20 million and made a partial payment of P5 million.

Increasing its authorized capital stock to three million shares without par value;
Converting the original 200,000 subscribed shares into one million shares without par value, deemed fully paid-for and non-assessable using the P5 million already paid; and
Waiving and abandoning the subscription receivables amounting to P15 million.

On September 4, 1979, UNICOM further increased its authorized capital stock to 10 million shares without par value, with a Certificate indicating the incorporators held one million shares and UCPB had subscribed to four million shares valued at P495 million.
On September 18, 1979, a new set of directors approved a third amendment, increasing the authorized capital stock to one billion shares divided into three classes (500 million Class aAa voting, 400 million Class aBa voting, and 100 million Class aCa non-voting shares, all at P1 par value). The previous paid-up subscriptions were converted into 500 million Class aAa voting common shares using a ratio of 100 to 1.

On August 29, 1979, the Board of Directors of the United Coconut Planters Bank (UCPB) approved Resolution 247-79, authorizing the bank, through its administrator for the Coconut Industry Investment Fund (CII Fund), to invest up to P500 million into UNICOM for the benefit of coconut farmers.
UCPB’s investment was reflected in the filings with the Securities and Exchange Commission (SEC) when UNICOM adjusted its capitalization.

On March 1, 1990, the Office of the Solicitor General (OSG) filed a complaint before the Presidential Commission on Good Government (PCGG) alleging that UCPB’s investment in UNICOM was manifestly disadvantageous to the government.
The OSG charged the respondents with violating Section 3(e) of Republic Act (R.A.) 3019 (the Anti-Graft and Corrupt Practices Act), asserting that during the conversion of share capital, the government’s investment of P495 million was reduced by P95 million, which was diverted as undue benefit to UNICOM’s incorporators.

UNICOM filed the Certificate of Filing of its Amended Articles of Incorporation with the SEC on February 8, 1980, thereby publicly disclosing changes involving the investment and conversion of shares.
According to the law, the period of prescription began from February 8, 1980, and ended on that same date ten years later, i.e. on February 8, 1990.
The OSG’s complaint, filed on March 1, 1990, was thus submitted after the expiration of the 10-year prescriptive period applicable to the offense, rendering the charge time-barred.

The PCGG, after redirecting the case to the Office of the Ombudsman in light of a previous related ruling, referred the complaint to the latter.
A Memorandum dated May 14, 1999, issued by the Office of the Ombudsman, approved the dismissal of the complaint on the ground of prescription.
The petition filed later by the Republic of the Philippines challenged the action, asserting that Section 15, Article XI of the 1987 Constitution (regarding recovery of ill-gotten wealth) should bar prescription; however, the Court clarified that such constitutional provision applies only to civil cases and not to criminal prosecutions under R.A. 3019.

The transaction involving UCPB’s investment in UNICOM was documented and recorded in public instruments and filings with the SEC, providing constructive notice to the public.
The alleged dilution of shares and reduction of the government’s investment benefits was not a concealed or covert act, but one that was recorded in publicly-accessible corporate records, including the General Information Sheets submitted to the SEC.

Justice Bersamin concurred with the Majority Opinion regarding the calculation of the prescriptive period from the filing of the Amended Articles of Incorporation on February 8, 1980.
Justice Brion, writing a concurring and dissenting opinion, discussed issues relating to the effect of the absence of respondent Eduardo M. Cojuangco, Jr. from the country on the running of the prescriptive period and the proper starting point of the period, offering an alternative view on the matter.

Whether the alleged violation of Section 3(e) of R.A. 3019 by respondents has already prescribed and, consequently, whether the criminal prosecution is barred by the statute of limitations.
When the prescriptive period should commence – from the date of commission of the offense (as evidenced by the SEC filing of the Amended Articles) or from the date of discovery.
Whether the absence of one respondent (specifically, Eduardo M. Cojuangco, Jr.) from the Philippine jurisdiction during part of the period affects the running of the statutory prescriptive period.
Whether the public nature of the corporate transactions (through SEC filings and other public documents) precludes the application of a discovery rule for prescription despite claims of hidden or undisclosed injury to the government.