Case Summary (G.R. No. L-46158)
Key Individuals and Context
• Eduardo M. Cojuangco, Jr. – former government official under President Marcos; President and Director of United Coconut Planters Bank (UCPB); Director of the Philippine Coconut Authority (PCA).
• Cojuangco Companies – 44 corporations through which Cojuangco acquired San Miguel Corporation (SMC) shares.
• Coconut farmers – beneficiaries of coco levy funds.
• PCGG – Presidential Commission on Good Government, petitioner in original cases.
• Sandiganbayan – anti-graft court that heard Civil Case No. 0033-F.
Petitioner and Respondents
• Petitioner: Republic of the Philippines (through PCGG).
• Respondents: Eduardo M. Cojuangco, Jr. and 44 “nominee” corporations.
Key Dates
• July 31, 1987: Republic filed original Civil Case No. 0033.
• Mid-1983: Cojuangco acquired ~20% of SMC shares (16,276,545 at acquisition).
• 1991–1999: Complaint subdivided; parties impleaded; writs of sequestration issued and later challenged.
• May 7, 2004: Sandiganbayan granted partial summary judgment for CIIF block of 33,133,266 shares.
• July 11, 2003: Republic moved for partial summary judgment on Cojuangco block shares.
• December 10, 2004: Sandiganbayan denied Republic’s motion, citing genuine factual issues.
• August 2006: Trial set; Republic declined to present witnesses, offered documentary evidence only.
• November 28, 2007: Sandiganbayan dismissed Republic’s case on Cojuangco block, ruling insufficient proof.
Applicable Law
• 1987 Constitution – basis for government recovery of ill-gotten wealth.
• PCGG Rules (1986) Sec. 3 – sequestration orders require two-commissioner signature and prima facie basis.
• EO No. 1 (Feb 28, 1986) and EO No. 2 (Mar 12, 1986) – define “ill-gotten wealth” and authorize PCGG to recover it.
• RA 3019 (Anti-Graft Act) Sec. 3(i) – prohibits public officers from acquiring personal interests in matters they oversee.
• P.D. 755 (1975) – acquired UCPB with coco levy funds to serve coconut farmers; directed free distribution of UCPB shares to farmers.
• P.D. 961/1468 – created Coconut Industry Investment Fund (CIIF) from coco levy surpluses to invest in palm-oil corporations.
• Corporation Code Secs. 31, 34 – directors owe fiduciary duties; they must account for profits from corporate opportunities.
Proven Facts and Judicial Admissions
• Cojuangco admitted in his Answer: – He was a public officer under Marcos (PCA Director; UCPB President/Director). – In 1983, he acquired SMC shares worth US$49 million (~20% of capital stock). – He used proceeds of loans from UCPB and advances from CIIF Oil Mills to pay for those shares.
• Respondents’ joint Pre-Trial Brief specified planned evidence showing UCPB loans and CIIF advances funded the purchase. They did not contradict these admissions.
• Coconut levy funds, CIIF, UCPB, and assets acquired therefrom are prima facie public in character. Supreme Court rulings (COCOFED, Republic v. Sandiganbayan) so hold.
Errors in Sandiganbayan Proceedings
- Lifting nine writs of sequestration for technical defects was proper; but imposing onerous conditions on SMC’s corporate books (e.g., notice periods; escrow) exceeded Sandiganbayan’s authority.
- Denial of Republic’s partial summary judgment on Cojuangco block was correct then, given disputed facts.
- Dismissal of Republic’s case on November 28, 2007 overlooked respondents’ judicial admissions that UCPB loans and CIIF advances exclusively financed the stock purchase; respondents failed to present any contrary evidence at trial.
- Failure to hold Cojuangco to his fiduciary duties as UCPB officer/director: – The loan transactions aided his personal acquisition of SMC shares, depriving coconut farmers and UCPB/CIIF of corporate opportunities. – Violated Corporation Code Secs. 31, 34 (self-dealing) and anti-graft laws (RA 3019, RPC Art. 216).
- Inadequate consideration of mandatory constructive trust under Civil Code Art. 1455: stock purchase with public-fund proceeds by fiduciary triggered constructive trust in Go
Case Syllabus (G.R. No. L-46158)
Antecedents
- July 31, 1987: Republic files Civil Case No. 0033 in the Sandiganbayan to recover alleged ill-gotten wealth.
- December 8, 1987 & August 19, 1991: Complaint amended to include additional parties and properties.
- March 24, 1999: Sandiganbayan subdivides Civil Case No. 0033 into eight cases. Civil Case No. 0033-F concerns two blocks of San Miguel Corp. (SMC) shares.
- May 19, 1995: Republic files Third Amended Complaint in Civil Case No. 0033-F against Cojuangco et al., alleging misuse of coconut-levy funds for SMC share purchases.
Parties
- Petitioner: Republic of the Philippines (PCGG, Solicitor General).
- Respondents:
• Eduardo M. Cojuangco, Jr. (former PCA Director, UCPB President–Director)
• Cojuangco-affiliated corporations (44 firms holding the “Cojuangco block”)
• CIIF companies & 14 holding firms (holding the “CIIF block”) - Intervenors: Cocofed, PAKISAMA, SUFAC, MOFAZS; SMC (denied intervention).
Subject Assets
- CIIF block: 33,133,266 SMC shares (approx. 31% of capital stock) owned via CIIF Oil Mills and 14 holding companies.
- Cojuangco block: 27,198,545 SMC shares (approx. 20% of capital stock) owned via 44 Cojuangco companies.
Causes of Action
- Unjust enrichment under Republic Act No. 1379.
- Recovery of ill-gotten wealth under E.O. 1 (1986) and E.O. 2 (1986).
- Breach of public trust, abuse of official position (Cojuangco’s roles at PCA, UCPB, CIIF).
- Constructive trust in favor of coconut farmers; remedy: reconveyance of shares.
Writs of Sequestration
- 1986–1987: PCGG issues nine writs of sequestration over subject shares.
- October 8, 2003: Sandiganbayan lifts all nine writs as void:
• Seven writs lacked two-Commi