Title
Cojuangco vs. Sandiganbayan
Case
G.R. No. 183278
Decision Date
Apr 24, 2009
The Republic of the Philippines successfully reclaimed 111,415 PTIC shares from Marcos associates, securing ownership and entitlement to dividends and interests accrued from 1986 to 2007, despite share transfer to Metro Pacific.
accounting
delivery
remittance

Case Summary (G.R. No. 143370)

Factual Background

The Republic of the Philippines filed a Complaint for Reconveyance, Reversion, Accounting, Restitution and Damages before the Sandiganbayan on July 16, 1987, seeking recovery of alleged ill-gotten wealth of the Marcoses and their associates, including some 2.4 million PLDT shares. The complaint alleged that certain PLDT shares were owned by Philippine Telecommunications Investment Corporation (PTIC) and that Prime Holdings, Inc. held PTIC shares amounting to 111,415 shares. The Sandiganbayan dismissed the PLDT-share aspects of the complaint, prompting the Republic to appeal to this Court in G.R. No. 153459 and consolidated cases.

Prior Decision and Post-judgment Moves

In Yuchengco v. Sandiganbayan, this Court adjudged the Republic to be the owner of 111,415 PTIC shares registered in the name of Prime Holdings and ordered reconveyance of those shares in the dispositive portion dated January 20, 2006. That Decision became final and executory on October 26, 2006. The Republic filed a Motion for the Issuance of a Writ of Execution on November 20, 2006, asking the Sandiganbayan to cancel the certificates registered in Prime Holdings’ name, annotate PTIC’s Stock and Transfer Book, and order PTIC to account for all cash and stock dividends declared or issued by PLDT in favor of PTIC from 1986 to the present, including compounded interests.

Sandiganbayan's Actions and the Present Challenge

By Resolution dated December 14, 2006, the Sandiganbayan granted reconveyance but denied the accounting for dividends. After the Republic moved for reconsideration, the Sandiganbayan issued the first challenged Resolution on November 7, 2007 directing PTIC to deliver the cash and stock dividends pertaining to the 111,415 shares, including compounded interests. The petitioners moved for reconsideration, and by the second challenged Resolution dated June 13, 2008 the Sandiganbayan modified relief by awarding legal interest but denying compound interest, and issued a Writ of Execution. The petitioners then filed the present petition for certiorari.

Issues Presented

The Court distilled the dispositive issues as whether the Sandiganbayan gravely abused its discretion in ordering accounting, delivery, and remittance of stock, cash, and property dividends and interests pertaining to the 111,415 PTIC shares when this Court's dispositive language did not expressly mention dividends; and whether the Republic, having sold the shares to a third party, retained entitlement to dividends, interests, and earnings.

Petitioners' Contentions

The petitioners advanced a literalist reading of this Court's January 20, 2006 dispositive portion, arguing that it did not include dividends, interests, and earnings and therefore the Sandiganbayan exceeded its authority in ordering their accounting and remittance. They further contended that the Republic had relinquished its right to the fruits of the shares by selling them to Metro Pacific Assets Holdings, Inc., and that any entitlement thereafter belonged to the transferee.

Respondent's Position and Relevant Legal Principles

The Republic relied on the proposition that dividends are an incident of ownership of shares and that an adjudication of ownership carries with it the right to the fruits produced by the property. The Court noted settled principles: a dividend is a portion of corporate profits ratably divided among stockholders; the right to dividends is an incident of ownership; and transfers of shares not recorded in the corporate books are valid only inter partes and do not affect the corporation's obligation to the recorded owner under Sec. 63 of the Corporation Code.

Ruling of the Court

The Court denied the petition for certiorari and affirmed the challenged Sandiganbayan Resolutions. It held that the January 20, 2006 Decision in G.R. No. 153459 adjudicated the Republic as owner of the 111,415 PTIC shares and, by necessary implication, adjudicated the dividends and interests accruing to those shares in favor of the Republic. The Court found no grave abuse of discretion by the Sandiganbayan in ordering accounting and remittance of dividends and interests.

Legal Basis and Reasoning

The Court reasoned that ownership carries the traditional attributes or juses, including the right to receive what a thing produces. The Court observed that although the general rule confines execution to the dispositive portion, exceptions permit reference to the body of the opinion where ambiguity exists or where the opinion contains extensive and explicit discussion settling the issue. Applying those exceptions, the Court found that the body of the January 20, 2006 Decision made clear that the adjudication encompassed the whole block of shares and their fruits, because those shares had been held to be part of ill-gotten wealth and therefore public money. The Court rejected the petitioners’ contention that the Republic lost entitlement to dividends upon sale to Metro Pacific because dividends are payable to holders of record on the date of declaration or on a designated record date, and because an unrecorded transfer is effective only between the parties and leaves the transferor liable as the owner of record for dividends vis-à-vis the corporation. The Court therefore concluded that the Republic was entitled to dividends from 1986 when the shares were sequestered until their transfer pursuant to the Sale and Purchase Agreement dated February 28, 2007. From that date forward, the Republic acted as trustee of subsequen

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