Case Summary (A.M. No. P-21-026)
General Rule on Voting Sequestered Shares
Registered shareholders generally exercise voting rights, even when shares are sequestered. The PCGG, as conservator and not owner, may not vote sequestered corporate shares unless permitted by specific legal test.
Two-Tiered Test for PCGG Voting
For shares allegedly acquired with ill-gotten wealth and held in private names, PCGG must satisfy:
- Prima facie evidence that shares are ill-gotten and belong to the State; and
- Imminent danger of dissipation requiring PCGG to continue voting while ownership is litigated.
Public-Character Exception
When sequestered shares were acquired with funds that are prima facie public in character (or clearly affected with public interest), the above two-tiered test gives way to a “public character” test: such shares should be voted by PCGG pending final adjudication.
Acquisition of UCPB Shares with Coconut Levy Funds
It was undisputed that the contested UCPB shares were purchased with coconut levy funds (Coconut Consumers Stabilization Fund) raised by Presidential Decrees via State’s taxing and police powers for stabilization of edible oil prices—a fund plainly infused with public interest.
Coconut Levy Funds as Public Funds
Supreme Court held that coconut levy funds are:
- Raised by exercise of police and taxing powers for a public purpose;
- Subject to Commission on Audit review as government funds;
- Treated by Bureau of Internal Revenue and Executive orders as public funds;
- Encumbered by express decree provisions prescribing fund characterization and disposition.
Hence, the UCPB shares acquired with those funds are an exception to the two-tiered test and must be voted by PCGG.
Application to UCPB Shares: PCGG’s Voting Right
Because UCPB shares were acquired with prima facie public funds, PCGG is entitled to vote them pending final resolution of ownership in the Sandiganbayan. Private respondents, though registered shareholders, cannot exercise voting rights until they prove legitimate private ownership in the main cases.
Procedural and Discretionary Ruling
- Sandiganbayan gravely abused discretion by reversing established jurisprudence (Baseco, Cojuangco-Roxas) and permitting private respondents to vote public-fund shares.
- PCGG’s petition for certiorari under Rule 65 was meritorious, demonstrating Sandiganbayan’s patent contravention of Supreme Court precedents.
Relief and Mandates
- Assailed February 28, 2001 Sandiganbayan order is SET ASIDE.
- PCGG shall continue voting sequestered UCPB shares until Civil C
Case Syllabus (A.M. No. P-21-026)
Facts
- In 1986, PCGG sequestered alleged ill-gotten assets of former President Marcos and associates, including UCPB shares
- Sequestered UCPB shares were registered in the names of one million coconut farmers, CIIF companies, and Eduardo M. Cojuangco Jr.
- PCGG filed Civil Case No. 0033 in Sandiganbayan on July 31, 1987 for recovery of sequestered assets
Sandiganbayan Proceedings and Lifting of Sequestration
- November 15, 1990: Sandiganbayan Resolution lifted sequestration of UCPB shares held by private respondents for failure to implead within constitutional six-month period
- PCGG filed a certiorari petition (G.R. No. 96073) before the Supreme Court challenging the lifting Resolution
- Sandiganbayan ordered UCPB elections; PCGG obtained and later lost a Supreme Court restraining order against the elections
Supreme Court Interim Resolutions
- March 5, 1991: Supreme Court granted PCGG restraining order enjoining UCPB stockholders’ meeting
- March 3, 1992: Supreme Court lifted the restraining order; allowed private respondents to vote sequestered shares and hold elections
- February 16, 1993: Supreme Court recalled March 3, 1992 order; reinstated status quo ante; allowed PCGG to continue voting sequestered shares pending resolution on merits
Final Decision in G.R. No. 96073
- January 23, 1995: Supreme Court nullified November 1990 Sandiganbayan lifting of sequestration
- Held impleading private respondents unnecessary; judgments could divest ill-gotten shares directly
- Confirmed PCGG’s right to vote sequestered shares pending final outcome
Events Leading to the Present Petition
- February 13, 2001: UCPB Board announced stockholders’ meeting for March 6, 2001, upon demand by private respondents
- February 23, 2001: COCOFED et al. and Ballares et al. filed Class Action Omnibus Motion