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CASES REPORTED

SUPREME  COURT  REPORTS  ANNOTATED

____________________

G.R. Nos. 177857-58.  October 5, 2016.*

 
PHILIPPINE COCONUT PRODUCERS FEDERATION, INC.
(COCOFED), MANUEL V. DEL ROSARIO, DOMINGO P.
ESPINA, SALVADOR P. BALLARES, JOSELITO A.
MORALEDA, PAZ M. YASON, VICENTE A. CADIZ, CESARIA
DE LUNA TITULAR, and RAYMUNDO C. DE VILLA,
petitioners, vs. REPUBLIC OF THE PHILIPPINES, respondent.
 
WIGBERTO E. TAÑADA, OSCAR F. SANTOS, SURIGAO DEL
SUR FEDERATION OF AGRICULTURAL COOPERATIVES
(SUFAC) and MORO FARMERS ASSOCIATION OF
ZAMBOANGA DEL SUR (MOFAZS), represented by ROMEO

_______________

*  EN BANC.

 
 
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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.

Republic

C. ROYANDOYAN, intervenors.

G.R. No. 178193.  October 5, 2016.*

 
DANILO B. URSUA, petitioner, vs. REPUBLIC OF THE
PHILIPPINES, respondent.

Constitutional Law; Due Process; It is elementary that every person

must be heard and given his day in court before a judgment involving his
life, liberty or property issues against him.—It is elementary that every
person must be heard and given his day in court before a judgment
involving his life, liberty or property issues against him. This rule is
enshrined no less in the very first section of the Bill of Rights of our
Constitution: SECTION 1. No person shall be deprived of life, liberty or
property without due process of law, nor shall any person be denied the
equal protection of the laws.
Same; Same; Corporations; Corporate persons, needless to stress, are
entitled to the due process protection.—Cor­porate persons, needless to
stress, are entitled to the due process protection. Thus, in Palm Avenue
Holding Co., Inc. v. Sandiganbayan, 732 SCRA 156 (2014), the Court
echoed our ruling in PCGG v. Sandiganbayan, 290 SCRA 639 (1998), that
the failure to implead a corporation in a suit for the recovery of ill-gotten
wealth against its stockholders cannot bind the corporation itself; otherwise,
its fundamental right to due process will be violated, viz.: The Court’s ruling
in Presidential Commission on Good Government v. Sandiganbayan,
which remains good law, reiterates the necessity of the Republic to
actually implead corporations as defendants in the complaint, out of
recognition for their distinct and separate personalities, failure to do so
would necessarily be denying such entities their right to due process.
Here, the writ of sequestration issued against the assets of the Palm
Companies is not valid because the suit in Civil Case No. 0035 against
Benjamin Romualdez as shareholder in the Palm Companies is not a
suit against the latter. The Court has held, contrary to the assailed
Sandiganbayan Resolution in G.R. No. 173082, that failure to implead
these corporations as defendants and merely annexing a list of such
corporations to the complaints is a violation of their right to due process
for it would be, in effect, disregard-

 
 

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.

Republic

ing their distinct and separate personality without a hearing. Here,

the Palm Companies were merely mentioned as Item Nos. 47 and 48, Annex
A of the Complaint, as among the corporations where defendant Romualdez
owns shares of stocks. Furthermore, while the writ of sequestration was
issued on October 27, 1986, the Palm Companies were impleaded in the
case only in 1997, or already a decade from the ratification of the
Constitution in 1987, way beyond the prescribed period.
Remedial Law; Civil Procedure; Execution of Judgments; The Supreme
Court (SC) has held that execution may issue only upon a person who is a
party to the action or proceeding, and not against one who did not have or
was denied his day in court.—As a corollary rule, this Court has held that
execution may issue only upon a person who is a party to the action or
proceeding, and not against one who did not have or was denied his day in
court. We said as much in Atilano II v. Asaali, 680 SCRA 345 (2012): It is
well-settled that no man shall be affected by any proceeding to which he
is a stranger, and strangers to a case are not bound by a judgment
rendered by the court. Execution of a judgment can only be issued against
one who is a party to the action, and not against one who, not being a party
thereto, did not have his day in court. Due process dictates that a court
decision can only bind a party to the litigation and not against innocent third
parties.
Same; Same; Judgments; In a plethora of cases, the Supreme Court
(SC) has emphasized the well-entrenched principle that a judgment rendered
without jurisdiction cannot be the source of any right nor the creator of any
obligation.—In a plethora of cases, the Court has emphasized the well-
entrenched principle that a judgment rendered without jurisdiction
cannot be the source of any right nor the creator of any obligation. We
said as much in Florete v. Florete, 781 SCRA 255 (2016) and Arcelona v.
Court of Appeals, 280 SCRA 20 (1997): A void judgment for want of
jurisdiction is no judgment at all. It cannot be the source of any right
nor the creator of any obligation. All acts performed pursuant to it and all
claims emanating from it have no legal effect. Hence, it can never become
final and any writ of execution based on it is void: “. . . it may be said to be
a lawless thing which can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head.” The acknowledgment
that the Court

 
 

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Republic

has no jurisdiction over SMC in the present case is not “allow[ing] San
Miguel Corporation to keep these treasury shares under the guise of
technicalities.” The question of jurisdiction, the Court has repeatedly
explained, is not a mere question of technicality or a simple matter of
procedure but an element of due process. Indeed, it is unsporting, nay the
height of injustice and a clear violation of the due process guarantee, to
order SMC to comply with any decision rendered in CC 0033-F when it was
never given the opportunity to present, explain, and prove its claim over the
presently contested shares.
Constitutional Law; Due Process; The Supreme Court (SC) cannot set
the benchmark of due process at the lowest level by considering each
pleading submitted by a party as enough to satisfy the requirements of this
Constitutional protection.—The Court cannot set the benchmark of due
process at the lowest level by considering each pleading submitted by a
party as enough to satisfy the requirements of this Constitutional protection.
If this Court is to animate the spirit of the Constitution and maintain in full
strength the substance of the due process protection, it must afford each
party the full legal opportunity to be heard and present evidence in support
of his or her contentions. SMC must, therefore, be given full opportunity to
proffer evidence on its claim of ownership over the treasury shares in a
proper case before the right court.
Estoppel; While the general rule is that the State cannot be put in
estoppel by the mistakes or errors of its officials or agents, it is established
that “[t]he rule on non-estoppel of the government is not designed to
perpetrate an injustice.”—While the general rule is that the State cannot be
put in estoppel by the mistakes or errors of its officials or agents, it is
established that “[t]he rule on non-estoppel of the government is not
designed to perpetrate an injustice.” Thus, several exceptions to the
Republic’s non-estoppel have been recognized. In Republic of the
Philippines v. Court of Appeals, 301 SCRA 366 (1999), the Court held: The
general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents. However, like all general rules, this is also
subject to exceptions, viz.: “Estoppel against the public are little favored.
They should not be invoked except in rare and unusual circumstances and
may not be invoked where they would operate to defeat the effective
operation of a polity adopted to protect the public. They must be applied
with cir-

 
 

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Republic

cumspection and should be applied only in those special cases where

the interests of justice clearly require it. Nevertheless, the government
must not be allowed to deal dishonorably or capriciously with its
citizens, and must not play an ignoble part or do a shabby thing; and
subject to limitations .  .  . the doctrine of equitable estoppel may be
invoked against public authorities as well as against private individuals.”

 
SERENO,  CJ., Dissenting Opinion:
 

Civil Law; Contracts; Suspensive Condition; View that when a contract

is subject to a suspensive condition, its birth or effectivity can take place
only if and when the condition happens or is fulfilled.—When a contract is
subject to a suspensive condition, its birth or effectivity can take place only
if and when the condition happens or is fulfilled. In this case, the
Sandiganbayan has not approved the Compromise Agreement or made any
ruling thereon. Thus, without the fulfillment of the condition that the
imprimatur of the Sandiganbayan be obtained, the Compromise Agreement
can neither be considered effective nor the source of rights on the treasury
shares as invoked by SMC.
Remedial Law; Evidence; Admissions; Judicial Admissions; View that
a party who judicially admits a fact cannot later challenge that fact as
judicial admissions are a waiver of proof; production of evidence is
dispensed with.—To my mind, SMC made a judicial admission, which has
been elucidated by this Court in this wise: A party who judicially admits a
fact cannot later challenge that fact as judicial admissions are a waiver of
proof; production of evidence is dispensed with. A judicial admission also
removes an admitted fact from the field of controversy. Consequently, an
admission made in the pleadings cannot be controverted by the party
making such admission and are conclusive as to such party, and all proofs to
the contrary or inconsistent therewith should be ignored, whether objection
is interposed by the party or not. The allegations, statements or admissions
contained in a pleading are conclusive as against the pleader. A party cannot
subsequently take a position contrary of or inconsistent with what was
pleaded.

 
 

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LEONEN,  J., Dissenting Opinion:

 

Coconut Levy Funds; View that it is both illogical and absurd — and
hence, a grave abuse of discretion on the part of this Court — to declare
that the shares purchased with “coco levy” funds are government-owned yet
remove 24.45 million shares of “treasury shares of San Miguel
Corporation” from its purview.—It is both illogical and absurd — and
hence, a grave abuse of discretion on the part of this Court — to declare that
the shares purchased with “coco levy” funds are government-owned yet
remove 24.45 million shares of “treasury shares of San Miguel Corporation”
from its purview. Notably, the CIIF Companies sold these shares in March
1986 just days after Former President Ferdinand E. Marcos (Former
President Marcos) was deposed in the People Power Revolution. It was the
subject of a “Compromise Agreement” that was not approved by the
Sandiganbayan. It was also the subject of a Decision of this Court ordering
San Miguel Corporation to deliver it to the PCGG. Yet, there was no
compliance by San Miguel Corporation. Today, we reward the contumacy as
well as complete deprivation of rights of coconut farmers.
Remedial Law; Civil Procedure; Judgments; Nunc Pro Tunc Orders;
View that a nunc pro tunc order merely supplies something that was present
in the records but was omitted in the judgment by mistake. It cannot correct
judicial errors or supply a judicial action that was omitted by the court.—
A  nunc pro tunc  order merely supplies something that was present in the
records but was omitted in the judgment by mistake. It cannot correct
judicial errors or supply a judicial action that was omitted by the
court. Lichauco, et al. v. Tan Pho, et al., 51 Phil. 862 (1923) explains: The
office of a judgment nunc pro tunc is to record some act of the court done at
a former time which was not then carried into the record, and the power of a
court to make such entries is restricted to placing upon the record evidence
of judicial action which has been actually taken. It may be used to make the
record speak the truth, but not to make it speak what it did not speak but
ought to have spoken. If the court has not rendered a judgment that it might
or should have rendered, or if it has rendered an imperfect or improper
judgment, it has no power to remedy these errors or omissions by ordering
the entry nunc pro tunc  of a proper judgment. Hence a court in entering a
judgment nunc pro tunc has no power to construe what the judgment means,
but only to enter of record such judgment as had been formerly rendered,
but

 
 

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which had not been entered of record as rendered. In all cases the
exercise of the power to enter judgments  nunc pro tunc  presupposes the
actual rendition of a judgment, and a mere right to a judgment will not
furnish the basis for such an entry.
Constitutional Law; Due Process; View that due process is the right to
be heard. It is, by its simplest interpretation, to hear the other side of the
argument before making a judgment.—Due process is the right to be heard.
It is, by its simplest interpretation, to hear the other side of the argument
before making a judgment.  In  Ynot v. Intermediate Appellate Court, 148
SCRA 659 (1987): The closed mind has no place in the open society. It is
part of the sporting idea of fair play to hear “the other side” before an
opinion is formed or a decision is made by those who sit in judgment.
Obviously, one side is only one-half of the question; the other half must also
be considered if an impartial verdict is to be reached based on an informed
appreciation of the issues in contention. It is indispensable that the two sides
complement each other, as unto the bow the arrow, in leading to the correct
ruling after examination of the problem not from one or the other
perspective only but in its totality. A judgment based on less that this full
appraisal, on the pretext that a hearing is unnecessary or useless, is tainted
with the vice of bias or intolerance or ignorance, or worst of all, in
repressive regimes, the insolence of power. The essence of due process is to
be given an opportunity to be heard and the right to be able to present
evidence on one’s behalf. The opportunity to be heard may be accomplished
through notice and hearing, or the submission of pleadings.
Same; Coconut Levy Funds; Public Properties; View that the laws
creating the “coco levy” funds were declared unconstitutional and the funds
were considered as public funds.—The laws creating the “coco levy” funds
were declared unconstitutional and the funds were considered as public
funds. As the CIIF Companies’ shares of stock were acquired using these
funds, the CIIF Companies could not have validly sold these shares to San
Miguel Corporation since they could not sell something they did not
actually own. The parties to an illegal sale are considered to be in  pari
delicto, and neither can seek any affirmative relief with the courts. In the
January 24, 2012 Decision,  this Court declared Presidential Decree Nos.
755, 961, and 1468 as unconstitutional since public funds cannot be used to
purchase shares of stock to be given for free to private individuals. This

 
 

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Court found that this was a direct violation of Article VI, Section 29(3)
of the Constitution.
Same; Same; Same; View that the Supreme Court (SC) stated that “any
property purchased by means of the coconut levy funds should likewise be
treated as public funds or public property, subject to burdens and
restrictions attached by law to such property.”—This Court likewise stated
that “any property purchased by means of the coconut levy funds should
likewise be treated as public funds or public property, subject to burdens and
restrictions attached by law to such property.” The 33,133,126 San Miguel
Corporation shares sold by the CIIF Companies in March 1986 are to be
treated as public funds or public property. The CIIF Companies had no
authority to sell the shares of stock to any other private individual, including
San Miguel Corporation. The sale of the shares of stock was done one (1)
month after the February 25, 1986 Revolution, on March 26, 1986. Former
President Corazon Aquino already issued Executive Order No. 1,  which
created the PCGG to recover all of Former President Marcos’ ill-gotten
wealth, as well as the ill-gotten wealth of his cronies. The sale occurred after
the issuance of Executive Order No. 2,  which authorized the PCGG to
freeze all assets and properties of Former President Marcos and his cronies.
Merely one (1) week prior to the sale, the PCGG sequestered all the shares
of the United Coconut Planter Banks purportedly issued to coconut
farmers. Given the factual antecedents, it is obvious that the sale was made
in bad faith. The sale was clearly an attempt by the CIIF Companies to
dispose of their assets before the PCGG could sequester it.
Civil Law; Obligations; In Pari Delicto; View that parties in pari
delicto cannot use for specific performance, recover property previously
sold and delivered, or ask for a refund of money previously paid.—Both the
CIIF Companies and San Miguel Corporation were in pari delicto when it
attempted the sale of 33,133,126 San Miguel Corporation shares of stock on
March 26, 1986. San Miguel Corporation cannot now claim that it is entitled
to the shares equivalent to the P500 million it previously paid as a first
installment. Parties in  pari delicto cannot sue for specific performance,
recover property previously sold and delivered, or ask for a refund of money
previously paid.  The law, as well as the courts, will not grant them any
affirmative relief.  If this Omnibus Motion is denied and the fallo of the
September 4, 2012 Resolution is allowed to stand, this Court will have
legitimized an illegal sale of public property.

 
 

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Remedial Law; Civil Procedure; Judgments; View that it is simply

unfair for a party to decline to follow a final and executory order of the
Supreme Court (SC) in one case and then cry due process in another.—It is
the duty of this Court to see through the elaborate legal machinations of
parties who have substantial resources by using the light of principle and the
true spirit of our fundamental laws in order to achieve social justice. It is
simply unfair for a party to decline to follow a final and executory order of
this Court in one case and then cry due process in another. Social justice is
not mere shibboleth. It is a constitutional fiat. Not only is it a juridical
necessity; it is also the basis of a humane society.

MANIFESTATION AND OMNIBUS MOTION in the Supreme

Court.
The facts are stated in the resolution of the Court.
    Angara, Abello, Concepcion, Regala & Cruz for petitioners
COCOFED, et al.
   Gregorio S. Diño for petitioner Danilo B. Ursua.
    Efren Moncupa and Wigberto E. Tañada for movants-
intervenors in G.R. Nos. 177857-58.
   Estelito P. Mendoza for San Miguel Corporation.
    Cesar G. David and Francisco B.A. Saavedra for movant-
intervenor UCPB.

 
RESOLUTION
 
VELASCO, JR.,  J.:
 
For consideration is the Manifestation and Omnibus Motion
(Omnibus Motion) dated October 12, 2012 interposed by respondent
Republic of the Philippines (Republic). In it, respondent claims that
the Court, in its September 4, 2012 Resolution, has not included as
part of its assets to be reconveyed to it the 25.45 million San Miguel
Corporation (SMC)
 
 

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shares subject of the Compromise Agreement dated March 20 and

22, 1990 entered into by and between the SMC Group and the
United Coconut Planters Bank (UCPB) Group that SMC
subsequently converted to treasury shares.
 
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Antecedents
 
On March 26, 1986, the Coconut Industry Investment Fund
Holding Companies (“CIIF”) sold 33,133,266 SMC common shares
to Andres Soriano III of the SMC Group for P3,313,326,600.00,
payable in four (4) installments. On April 1, 1986, the SMC Group
paid the initial purchase price of P500 million to the UCPB as
administrator of the CIIF (the “UCPB Group”). The sale was
transacted through the stock exchange and the shares were then
registered in the name of Anscor-Hagedorn Securities, Inc. (AHSI).1
On April 7, 1986, the Presidential Commission on Good
Government (PCGG) sequestered the shares of stock. Due to the
sequestration, the SMC Group suspended payment of the balance of
the purchase price of the subject stocks. In retaliation, the UCPB
Group attempted to rescind the sale by filing a complaint with the
Regional Trial Court of Makati. The complaint, however, was
eventually ordered dismissed for lack of jurisdiction.2
Early 1989 developments saw the SMC and UCPB groups
successfully threshing out their dispute over the aborted sale of the
over 33.1 million SMC shares which have meanwhile ballooned to
175,274,960 as a consequence of dividends and stock splits. But
because any settlement required PCGG’s intervention, Andres
Soriano III, for SMC, and Ramon Y. Sy, for UCPB, in a joint letter
of October 31, 1989, informed the

_______________

1   See San Miguel Corporation v. Sandiganbayan, G.R. Nos. 104637-38,

September 14, 2000, 340 SCRA 289, 295; and Republic v. Sandiganbayan, G.R. No.
118661, January 22, 2007, 512 SCRA 25, 34.
2  See Soriano III v. Yuzon, G.R. No. 74910, August 10, 1988, 164 SCRA 226.

 
 

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PCGG about a proposal which would have the two groups give
PCGG an “arbitration fee” in the form of 5,500,000 SMC shares to
support the Comprehensive Agrarian Reform Program (CARP).3
PCGG approved the proposal. Thus, on March 20 and 22, 1990,
SMC and UCPB representing the CIIF signed a Compromise
Agreement and Amicable Settlement (“Compromise Agreement”). Its
pertinent provisions state:

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3.1.  The sale of the shares covered by and corresponding to the first
installment of the 1986 Stock Purchase Agreement consisting of Five
Million SMC Shares is hereby recognized by the parties as valid and
effective as of 1 April 1986. Accordingly, said shares and all stock and cash
dividend declared thereon after 1 April 1986 shall pertain, and are hereby
assigned, to SMC. x x x
 
3.2.  The First Installment Shares shall revert to the SMC treasury for
dispersal pursuant to the SMC Stock Dispersal Plan attached as Annex “A-
1” hereof. The parties are aware that these First Installment Shares shall be
sold to raise funds at the soonest possible time for the expansion program of
SMC. x x x
 
3.3.  The sale of the shares covered by and corresponding to the second,
third and fourth installments of the 1986 Stock Purchase Agreement is
hereby rescinded effective 1 April 1986 and deemed null and void, and of
no force and effect. Accordingly, all stock and cash dividends declared after
1 April 1986 corresponding to the second, third and fourth installments shall
pertain to CIIF Holding Corporations. x x x

 
On March 23, 1990, the SMC and the UCPB Groups filed with
the Sandiganbayan a Joint Petition for Approval of the

_______________

3  See Republic v. Sandiganbayan, supra note 1.

 
 

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Compromise Agreement and Amicable Settlement (“Joint Petition”),

docketed as CC No. 0102.4
On June 18, 1990, the PCGG joined the OSG in praying that the
SMC and UCPB Groups’ Joint Petition be treated as an incident of
Civil Case (CC) No. 0033, a case for the recovery of ill-gotten
wealth instituted by the PCGG with the Sandiganbayan against
former President Ferdinand Marcos, Eduardo Cojuangco, Jr.
(“Cojuangco”), et al. on July 31, 1987. PCGG, however, interposed
no objection to the implementation of the Compromise Agreement
subject to some conditions.5
On July 4, 1991, the SMC and UCPB Groups filed a Joint
Manifestation of Implementation of Compromise Agreement and of
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Withdrawal of Petition therein stating that they have implemented

the Compromise Agreement with the conditions set by the PCGG
and, accordingly, withdrawing their Joint Petition. They informed
the Sandiganbayan of the execution of the following corporate acts:

a.  On instructions of the SMC Group, the certificates of stock registered in

the name of Anscor-Hagedorn Securities, Inc. (AHSI) representing
175,274,960 SMC shares were surrendered to the SMC corporate secretary.6

_______________

4  San Miguel Corporation v. Sandiganbayan, supra note 1.

5  One of the conditions stated, viz.: “5.  The consent of PCGG to the transfer of
the sequestered shares of stock in accordance with the COMPROMISE, and to the
lifting of the sequestration thereon to permit such transfer, shall be effective only
when approved by the Sandiganbayan. The Commission makes no determination of
the legal rights of the parties as against each other. The consent it gives here conforms
to its duty to care for the sequestered assets, and to its purpose to prevent the
repetition of the national plunder. It is not to be construed as indicating any
recognition of the legality or sufficiency of any act of any of the parties.” (emphasis
supplied)
6   By 1991, the 33,133,266 shares have increased to 175,274,960 due to stock
dividends and stock splits.

 
 

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b.  The said SMC shares were reissued and registered in the record books
of SMC in the following manner: i) Certificates for 25,450,000 SMC shares
were registered in the name of SMC, as treasury; ii) Certificates for
144,324,960 SMC shares were registered in the name of the CIIF Holding
Companies; iii) Certificates for 5,500,000 SMC shares were registered in the
name of the PCGG.
 
c.  The UCPB Group has delivered to the SMC Group the amount of
P500,000,000.00 in full payment of the UCPB preferred shares.
 
d.  The SMC Group delivered to the UCPB Group the amount of
481,628,055.99 representing accumulated dividends (from April 1, 1986) on
the shares reverted to the CIIF Holding Companies.

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The PCGG, for its part, manifested that it has no objection to

the action thus taken by the SMC and UCPB Groups.7
COCOFED, et al. and Cojuangco filed their respective motions, both
dated July 4, 1991, to nullify the implementation of the Compromise
Agreement. Acting on the Joint Manifestation of Implementation of
Compromise Agreement and of Withdrawal of Petition, the
Sandiganbayan on July 5, 1991 noted the same.8
On July 16, 1991, SMC filed its Manifestation where it declared
that Stock Certificate Nos. A 0004129 and A 0015556 representing
25,450,000 shares were issued in the name of SMC as treasury
stocks.
On October 25, 1991, the Sandiganbayan issued a Resolution
requiring SMC to deliver the 25.45 million SMC treasury shares to
the PCGG.9 On March 18, 1992, the Sandiganbayan denied the
SMC Group’s Motion for Reconsideration.10

_______________

7   See San Miguel Corporation v. Sandiganbayan, supra note 1 at p. 303; and

Republic v. Sandiganbayan, supra note 1 at p. 41.
8   Id.
9   Id.
10  Id.

 
 

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14 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

Later, the Sandiganbayan ordered on December 8, 1994 that the

causes of action in CC No. 0033 be divided and litigated separately.
In Compliance, the Republic subdivided CC No. 0033 into eight
complaints, two of which became:
a. CC No. 0033-A, entitled Third Amended Complaint
(Subdivided) [Re: Anomalous Purchase and Use of First
United Bank (now “United Coconut Planters Bank”)], the
subject matter of which is the sequestered shares of stock of
UCPB registered in the names of the coconut farmers (the
UCPB shares) and of Cojuangco; and
b. CC No. 0033-F, entitled Third Amended Complaint
(Subdivided) [Re: Acquisition of San Miguel Corporation],
the subject matter of which is the shares of stock of SMC
registered in the names of the CIIF Holding Companies (the
SMC shares).

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In a Resolution, the Sandiganbayan admitted the eight
subdivided complaints on March 24, 1999.11
Meanwhile, respondent Republic filed in CC No. 0033-A a
Motion for Partial Summary Judgment, which the Sandiganbayan
granted on 1 July 11, 2003 via a Partial Summary Judgment (PSJ)
holding that the coco levy fund is public in nature.
On February 2, 2004, SMC filed in CC No. 0033-F a
Complaint-in-Intervention praying that any judgment forfeiting
the CIIF block of shares should exclude the “treasury shares.”
Herein respondent opposed the SMC’s motion to intervene in
said case. By Resolution of May 6, 2004, the graft court denied
the desired intervention.
The next day, the Sandiganbayan granted the Republic’s Motion
for Judgment on the Pleadings and/or Partial Sum-

_______________

11  Annex “W” of the Class Action Petition for Review on Certiorari.

 
 

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mary Judgment in CC No. 0033-F in its May 7, 2004 PSJ, holding

that “[t]he CIIF Companies having been acquired with public funds,
the 14 CIIF-Holding Companies and all their assets, including the
CIIF Block of SMC Shares, being public in character, belong to the
government.”12 In so ruling, the Sandiganbayan declared the
33,133,266 sequestered SMC shares subject of the stock purchase
agreement by the CIIF Holding Companies and Andres Soriano III
as owned by the Republic in trust for the coconut farmers.13
In its Resolution of May 11, 2007 in CC No. 0033-F, the
Sandiganbayan held that there is no need for further trial on the
issue regarding the actual percentage of the sequestered CIIF Block
of SMC shares vis-à-vis the outstanding capital

12  PSJ dated May 7, 2004, p. 64.

13  Rollo (G.R. Nos. 177857-58), pp. 404-405. On the issue regarding the actual
percentage of the sequestered CIIF Block of SMC shares vis-à-vis the outstanding
capital stock of SMC, the Sandiganbayan stated in its May 7, 2004 PSJ, thus:

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The subject matter of the Motion for Partial Summary Judgment is the CIIF block
of San Miguel Corporation shares or the shares of the 14 CIIF Holding Companies.
While the plaintiff (Republic) claims that this would constitute twenty-seven percent
(27%) of the SMC capital stock, COCOFED, et al. and Ballares, et al. claim that the
said shares constitute 31.23% of the issued and outstanding capital stock of SMC
based on the 33,133,266 SMC shares owned by the 14 Holding Companies in 1983
which they alleged now total 880,720,162.71 SMC shares by reason of stock dividends
that should have been declared and delivered in the respective names of the 14
Holding Companies. Defendants Cojuangco, et al. allege that a portion of the 27%
SMC shares mentioned by plaintiff are now treasury shares, possibly referring to the
shares involved in the SMC Motion for Intervention, which has already been denied by
this Court. PSJ dated May 7, 2004, p. 46 (id., at p. 386).

 
 

16

16 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

stock of SMC, effectively deleting the last paragraph of the

dispositive portion of its May 7, 2004 PSJ.14

_______________

14  The dispositive portion of the May 11, 2007 Sandiganbayan Resolution reads:

WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL SUMMARY

JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF STOCK) dated August 8, of
the plaintiff is hereby denied for lack of merit. However, this Court orders the
severance of this particular claim of Plaintiff. The Partial Summary Judgment dated
May 7, 2004 is now considered a separate final and appealable judgment with respect
to the said CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered in May 7, 2004 is modified by deleting
the last paragraph of the dispositive portion which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF Companies, 14
Holding Companies and Cocofed, et al.) filed by Plaintiff is hereby GRANTED.
ACCORDINGLY, the CIIF COMPANIES, NAMELY:
x x x x
AS WELL AS THE 14 HOLDING COMPANIES, NAMELY:
x x x x
AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC) SHARES
OF STOCK TOTALING 33,133,266 SHARES AS OF 1983, TOGETHER WITH
ALL DIVIDENDS DECLARED, PAID AND ISSUED THEREON AS WELL AS
ANY INCREMENTS THERE­TO ARISING FROM, BUT NOT LIMITED TO,
EXERCISE OF PREEMPTIVE RIGHTS ARE DECLARED OWNED BY THE

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GOVERNMENT IN TRUST FOR ALL THE COCONUT FARMERS AND

ORDERED RECONVEYED TO THE GOVERNMENT.
The aforementioned Partial Summary Judgment is now deemed a separate
appealable judgment which finally disposes of the ownership of the CIIF Block of
SMC

 
 

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

It is upon the foregoing factual backdrop and proceedings that

herein petitioners have filed the captioned consolidated Petitions for
Review on Certiorari in May 2007.
Awaiting the decision thereon, COCOFED filed on July 24, 2009
an Urgent Motion to Approve the Conversion of the SMC Common
Shares into SMC Series 1 Preferred Shares15 praying for the
approval of the conversion of the Class “A” and Class “B” common
shares registered in the name of the 14 CIIF Holding Companies
(listed in Annex “D” of the motion)16 into SMC Series 1 Preferred
Shares.
By then, the 14 CIIF Holding Companies’ registered
shareholdings in SMC already totaled 753,848,312 shares after
dividend yields and availment by the CIIF of stock rights offering on
April 11, 2005 of additional 28,645,672 shares.17
On September 17, 2009, this Court issued a Resolution18
approving with qualification the conversion, viz.:

WHEREFORE, the Court APPROVES the conversion of the

753,848,312, SMC Common Shares registered in the CIIF companies to
SMC SERIES 1 PREFERRED SHARES of 753,848,312, the converted
shares to be registered in the names of the CIIF companies in accordance
with the terms and conditions specified in the conversion offer set forth in
SMC’s Information Statement and ap-

_______________

Shares, without prejudice to the continuation of the proceedings with respect

to the remaining claims particularly those pertaining to the Cojuangco, et al.
block of SMC shares.
15  Rollo (G.R. Nos. 177857-58), Vol. 3, pp. 1760-1775.
16  Id., at p. 1842.
17   With the stock dividends declared by SMC from 1991 to 2001, the SMC
shares registered in the name of the CIIF Holding Companies increased to
752,202,640. SMC conducted a stock rights offering on April 11, 2005 and the CIIF
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Holding Companies subscribed to 28,645,672 shares resulting in an increase to

753,848,312 shares. (Rollo [G.R. No. 178193, Vol. 3], p. 1596)
18  Rollo (G.R. Nos. 177857-58, Vol. 3), pp. 1881-1913.

 
 

18

18 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

pended as Annex “A” of COCOFED’s Urgent Motion to Approve the

Conversion of the CIIF SMC Common Shares into Series 1 Preferred
Shares. The preferred shares shall remain in custodia legis and their
ownership shall be subject to the final ownership determination of the Court.
Until the ownership issue has been resolved, the preferred shares in the
name of the CIIF Companies shall be placed under sequestration and PCGG
management.
 
x x x x
 
Once the conversion is accomplished, the SMC Common Shares
previously registered in the names of the CIIF companies shall be released
from sequestration.19

 
Notably, the Court’s September 17, 2009 Resolution was limited
only to the 753,848,312 common shares that were registered in the
name of the CIIF Companies. To stress, a part of these shares
evolved from the 144,324,960 shares registered in the name of the
CIIF Holding Companies following the implementation of the
Compromise Agreement and augmented by the 28,645,672 shares
availed during the stock rights offering in April 2005. The
September 17, 2009 Resolution did not include the 25.45 million
shares in the name of SMC as treasury shares. Neither did the same
Resolution encompass the “arbitration fee” shares which already
amounted to 27,571,409 Class “A” and Class “B” shares as of July
30, 2009.20
On June 28, 2011, respondent Republic filed with the Court an
Urgent Motion to Direct the San Miguel Corporation (SMC) to
Comply with the Final and Executory Resolutions dated October 24,
1991 and March 18, 1992 of the Sandiganbayan21

_______________

19  Id., at p. 1911. Underscoring supplied.

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20   A separate Urgent Motion to Approve the Conversion of the PCGG-ITF-

CARP-SMC Common Shares into SMC Series 1 Preferred Shares September 30,
2009 was filed by the Republic, id., at pp. 2103-2110. See also PCGG Resolution No.
2009-037-756, id., at p. 2004.
21  Id. (Vol. 4A), pp. 3322-3349.

 
 

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

praying that this Court direct SMC to comply with the

Sandiganbayan’s October 25, 1991 and March 18, 1992
Resolutions. In a Resolution dated July 5, 2011, this Court required
SMC to file a Comment on the Republic’s Urgent Motion.22
On January 24, 2012, this Court finally rendered judgment on the
captioned consolidated petitions and affirmed with modification the
PSJs of the Sandiganbayan holding that the CIIF Companies and the
CIIF block of SMC shares are public funds/assets.
Petitioners COCOFED, et al. interposed their Motion for
Reconsideration dated February 14, 2012 of this Court’s January 24,
2012 Decision.
Pending the resolution of the petitioners’ motion for
reconsideration, SMC filed its Comment on the Urgent Motion to
Direct the San Miguel Corporation (SMC) to Comply with the Final
and Executory Resolutions Dated October 24, 1991 and March 18,
1992 of the Sandiganbayan on March 30, 2012 opposing the
Republic’s motion on procedural and substantive grounds. In the
main, SMC argued that the Compromise Agreement whence it
derives its right on the treasury shares is effective and the Republic
has no ground to assail it.
In its September 4, 2012 Resolution denying COCOFED’s
motion for reconsideration, the Court sought to reflect the current
number of the shares registered in the name of the CIIF companies
and so held:

As of 1983, the Class A and B San Miguel Corporation (SMC)

common shares in the names of the 14 CIIF Holding Companies are
33,133,266 shares. From 1983 to November 19, 2009 when the Republic of
the Philippines representing the Presidential Commission on Good
Government (PCGG) filed the “Motion To Approve Sale of CIIF SMC
Series 1 Preferred Shares,” the common shares of the CIIF Holding
companies

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_______________

22  Id., at pp. 3423A-B.

 
 
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20 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

increased to 753,848,312 Class A and B SMC common shares.

Owing, however, to a certain development that altered the factual
situation then obtaining in G.R. Nos. 177857-58, there is, therefore, a
compelling need to clarify the fallo of the January 24, 2012 Decision to
reconcile it, vis-à-vis the shares of stocks in SMC which were declared
owned by the Government, with this development. We refer to the
Resolution issued by the Court on September 17, 2009 in the then
consolidated cases docketed as G.R. Nos. 177857-58, G.R. No. 178193
and G.R. No. 180705. In that Resolution which has long become final
and executory, the Court, upon motion of COCOFED and with the
approval of the Presidential Commission on Good Government,
granted the conversion of 753,848,312 Class “A” and Class “B” SMC
common shares registered in the name of the CIIF companies to SMC
Series 1 Preferred Shares of 753,848,312, subject to certain terms and
conditions. The dispositive portion of the aforementioned Resolution states:
 
x x x x
 
The CIIF block of SMC shares, as converted, is the same shares of
stocks that are subject matter of, and declared as owned by the Government
in, the January 24, 2012 Decision. Hence, the need to clarify.
WHEREFORE, the Court resolves to DENY with FINALITY the
instant Motion for Reconsideration dated February 14, 2012 for lack of
merit.
The Court further resolves to CLARIFY that the 753,848,312 SMC
Series 1 preferred shares of the CIIF companies converted from the CIIF
block of SMC shares, with all the dividend earnings as well as all
increments arising from, but not limited to, the exercise of preemptive rights
subject of the September 17, 2009 Resolution, shall now be the subject
matter of the January 24, 2012 Decision and shall be declared owned by the
Government and be used only for the benefit of all coconut farmers and for
the development of the coconut industry.

 
 

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21

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

As modified, the fallo of the January 24, 2012 Decision shall read, as
follows:

WHEREFORE, the petitions in G.R. Nos. 177857-58 and

178793 are hereby DENIED. The Partial Summary Judgment dated
July 11, 2003 in Civil Case No. 0033-A as reiterated with
modification in Resolution dated June 5, 2007, as well as the Partial
Summary Judgment dated May 7, 2004 in Civil Case No. 0033-F,
which was effectively amended in Resolution dated May 11, 2007,
are AFFIRMED with MODIFICATION, only with respect to those
issues subject of the petitions in G.R. Nos. 177857-58 and 178193.
However, the issues raised in G.R. No. 180705 in relation to Partial
Summary Judgment dated July 11, 2003 and Resolution dated June 5,
2007 in Civil Case No. 0033-A, shall be decided by this Court in a
separate decision.
The Partial Summary Judgment in Civil Case No. 0033-A dated
July 11, 2003, is hereby MODIFIED, and shall read as follows:
 
x x x x
 
SO ORDERED.
The Partial Summary Judgment in Civil Case No. 0033-F dated
May 7, 2004, is hereby MODIFIED, and shall read as follows:

WHEREFORE, the MOTION FOR EXECUTION OF

PARTIAL SUMMARY JUDGMENT (RE: CIIF BLOCK
OF SMC SHARES OF STOCK) dated August 8, 2005 of
the plaintiff is hereby denied for lack of merit. However, this
Court orders the severance of this particular claim of Plaintiff.
The Partial Summary Judgment dated May 7, 2004 is now
considered a separate final and appealable judgment with
respect to the said CIIF Block of SMC shares of stock.

 
 

22

22 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

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The Partial Summary Judgment rendered on May 7, 2004

is modified by deleting the last paragraph of the dispositive
portion, which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re:
Defendants CIIF Companies, 14 Holding Companies and
Cocofed, et al.) filed by Plaintiff is hereby GRANTED.
ACCORDING­LY, THE CIIF COMPANIES, NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL),
AS WELL AS THE 14 HOLDING COMPANIES,
NAMELY:
1. Soriano Shares, Inc.;
2. ACS Investors, Inc.;
3. Roxas Shares, Inc.;
4. Arc Investors, Inc.;
5. Toda Holdings, Inc.;
6. AP Holdings, Inc.;
7. Fernandez Holdings, Inc.;
8. SMC Officers Corps, Inc.;
9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.

 
 

23

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
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AND THE CONVERTED SMC SERIES 1

PREFERRED SHARES TOTALING 753,848,312
SHARES SUBJECT OF THE RESOLUTION OF THE
COURT DATED SEPTEMBER 17, 2009 TOGETHER
WITH ALL DIVIDENDS DECLARED, PAID OR
ISSUED THEREON AFTER THAT DATE, AS WELL AS
ANY INCREMENTS THERETO ARISING FROM, BUT
NOT LIMITED TO, EXERCISE OF PREEMPTIVE

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RIGHTS ARE DECLARED OWNED BY THE

GOVERNMENT TO BE USED ONLY FOR THE
BENEFIT OF ALL COCONUT FARMERS AND FOR
THE DEVELOPMENT OF THE COCONUT
INDUSTRY, AND ORDERED RECONVEYED TO THE
GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS
ISSUED BY THE SANDIGANBAYAN ON JUNE 5, 2007
IN CIVIL CASE NO. 0033-A AND ON MAY 11, 2007 IN
CIVIL CASE NO. 0033-F, THAT THERE IS NO MORE
NECESSITY OF FURTHER TRIAL WITH RESPECT
TO THE ISSUE OF OWNERSHIP OF (1) THE
SEQUESTERED UCPB SHARES, (2) THE CIIF BLOCK
OF SMC SHARES, AND (3) THE CIIF COMPANIES, AS
THEY HAVE FINALLY BEEN ADJUDICATED IN THE
AFOREMENTIONED PARTIAL SUMMARY
JUDGMENTS DATED JULY 11, 2003 AND MAY 7, 2004.
SO ORDERED.

 
On October 15, 2012, respondent Republic filed the present
Manifestation and Omnibus Motion dated October 12, 2012
particularly asserting that the 753,848,312 SMC Series 1 Preferred
Shares mentioned in this Court’s September 4, 2012 Resolution does
not equate to the 33,133,266 SMC common shares specified in its
January 24, 2012 Decision. The Republic posits that the 25.45
million SMC treasury shares form
 
 

24

24 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

part of the CIIF block of SMC shares totaling 33,133,266 shares as

of 1983, which the Court has declared to be owned by the
Government. Hence, the Republic prays that a new resolution be
issued:

1.  AMENDING the Resolution dated September 4, 2012 to include the

“treasury shares” which are part and parcel of the 33,133,266 CIIF Block of
Shares as of 1983 decreed as owned by the Government;
2.  DIRECTING the San Miguel Corporation to comply with the
Sandiganbayan’s Resolution promulgated on October 24, 1991 and March
18, 1992 in Civil Case No. 0102 (integrated in Civil Case No. 0033 [Civil
Case No. 0033-F]) as affirmed by the Honorable Court in the consolidated

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cases in G.R. Nos. 104037-38 and 109797 which directed the delivery to the
[PCGG] of the treasury shares, including all the accrued cash and stock
dividends from 1986 up to the present;
3.  AWARDING actual damages in favor of the Republic of the
Philippines in the form of legal interest on the cash and cash value of the
stock dividends and cash dividends which ought to have accrued and
delivered to the Republic and the PCGG by the SMC in compliance with the
aforesaid resolutions and decision of the Sandiganbayan and the Honorable
Court.23

 
In its Comment24 dated December 2, 2013 on the above
Manifestation and Omnibus Motion, SMC maintains that the
adverted SMC treasury shares belong to SMC pursuant to the March
20 and 22, 1990 Compromise Agreement and that this Court is
without jurisdiction to order it to deliver the 25.45 million treasury
shares to the Government since SMC’s intervention in CC No. 0033-
F was denied and so it is a nonparty in said case.

_______________

23  Rollo (G.R. No. 178193, Vol. 3), pp. 1443-1444.

24  Id., at pp. 1583-1696.

 
 
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Our Ruling
 
No Jurisdiction over
SMC since it is not a

party to the case

 
It is elementary that every person must be heard and given his
day in court before a judgment involving his life, liberty or property
issues against him. This rule is enshrined no less in the very first
section of the Bill of Rights of our Constitution:

SECTION  1.  No person shall be deprived of life, liberty or property

without due process of law, nor shall any person be denied the equal
protection of the laws. (emphasis supplied)

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Corporate persons, needless to stress, are entitled to the due

process protection. Thus, in Palm Avenue Holding Co., Inc. v.
Sandiganbayan,25 the Court echoed our ruling in PCGG v.
Sandiganbayan26 that the failure to implead a corporation in a suit
for the recovery of ill-gotten wealth against its stockholders cannot
bind the corporation itself; otherwise, its fundamental right to due
process will be violated, viz.:

The Court’s ruling in Presidential Commission on Good Government v.

Sandiganbayan, which remains good law, reiterates the necessity of the
Republic to actually implead corporations as defendants in the
complaint, out of recognition for their distinct and separate
personalities, failure to do so would necessarily be denying such entities
their right to due process. Here, the writ of sequestration issued against
the assets of the Palm Companies is not valid because the suit in Civil
Case No. 0035 against Benjamin Romualdez as shareholder in the Palm
Companies is not a suit against the lat-

_______________

25  G.R. Nos. 173082 and 195795, August 6, 2014, 732 SCRA 156.
26  353 Phil. 80, 92; 290 SCRA 639, 649 (1998).

 
 

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26 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

ter. The Court has held, contrary to the assailed Sandiganbayan Resolution
in G.R. No. 173082, that failure to implead these corporations as
defendants and merely annexing a list of such corporations to the
complaints is a violation of their right to due process for it would be, in
effect, disregarding their distinct and separate personality without a
hearing. Here, the Palm Companies were merely mentioned as Item Nos.
47 and 48, Annex A of the Complaint, as among the corporations where
defendant Romualdez owns shares of stocks. Furthermore, while the writ
of sequestration was issued on October 27, 1986, the Palm Companies
were impleaded in the case only in 1997, or already a decade from the
ratification of the Constitution in 1987, way beyond the prescribed
period.

 
As a corollary rule, this Court has held that execution may issue
only upon a person who is a party to the action or proceeding,

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and not against one who did not have or was denied his day in court.
We said as much in Atilano II v. Asaali:27

It is well-settled that no man shall be affected by any proceeding to

which he is a stranger, and strangers to a case are not bound by a
judgment rendered by the court. Execution of a judgment can only be
issued against one who is a party to the action, and not against one who, not
being a party thereto, did not have his day in court. Due process dictates that
a court decision can only bind a party to the litigation and not against
innocent third parties. (emphasis and underscoring added)

_______________

27  G.R. No. 174982, September 10, 2012, 680 SCRA 345, 351, citing Fermin v.
Esteves, G.R. No. 147977, March 26, 2008, 549 SCRA 424, 428.

 
 

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Even the Rules of Court provides that judgments can, in

appropriate cases, only be executed against a judgment obligor.28

_______________

28  SECTION  8.  Issuance, form, and contents of a writ of execution.—The writ

of execution shall: (1) issue in the name of the Republic of the Philippines from the
court which granted the motion; (2) state the name of the court, the case number and
title, the dispositive part of the subject judgment or order; and (3) require the sheriff
or other proper officer to whom it is directed to enforce the writ according to its
terms, in the manner hereinafter provided:
(a)  If the execution be against the property of the judgment obligor, to satisfy the
judgment, with interest, out of the real or personal property of such judgment
obligor;
(b)  If it be against real or personal property in the hand of personal
representatives, heirs, devisees, legatees, tenants, or trustees, of the judgment
obligor, to satisfy the judgment, with interest, out of such property;
x x x x
SECTION  9.  Execution of judgments for money, how enforced.—(a) 
Immediate payment on demand.—The officers shall enforce an execution of a
judgment for money by demanding from the judgment obligor the immediate
payment of the full amount, stated in the writ of execution and all lawful fees. The
judgment obligor shall pay in cash, certified bank check payable to the judgment
obligee, or any other form of payment acceptable to the latter, the amount of the
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judgment debt under proper receipt directly to the judgment obligee or his authorized
representative if present at the time of payment. x x x If the judgment obligee or his
authorized representative is not present to receive payment, the judgment obligor
shall deliver the aforesaid payment to the executing sheriff. x x x
(b)  Satisfaction by levy.—If the judgment obligor cannot pay all or part of the
obligation in cash, certified bank check or other mode of payment acceptable to the
judgment obligee, the officer shall levy upon the properties of the judgment obligor of
every kind and nature whatsoever which may be disposed of for value and otherwise
exempt from execution x x x.
(c)  Garnishment of debts and credits.—The officer may levy on debts due the
judgment obligor and other credits, including

 
 

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28 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

As it were, SMC was never made a party to CC No. 0033-F filed

by respondent Republic to recover the SMC shares of stock
registered in the name of the CIIF Holding Companies. It was not
given a chance to justify, let alone ventilate, its claim ever the 25.45
million shares it has in its possession even when it had volunteered
to participate and moved to intervene in the said case, as will be
expounded below.
Certainly, SMC cannot, under the premises, be considered as
such judgment obligor in CC 0033-F as it was not impleaded by
respondent Republic as a party despite the clear mandate of the
Rules of Court that “parties-in-interest without whom no final
determination can be had of an action shall be joined as plaintiffs or
defendants.”29
It has been advanced, however, that “[SMC] need not be [a party]
because its interests have already been clearly and finally addressed
by this Court.”30
This view, however, fails to consider that SMC’s interests over
these 25.45 million shares have not yet been addressed31 precisely
because SMC was not impleaded in the case when its legal presence
is an absolute pre­requisite before a prejudicial and confiscatory
decision can be issued against it.32 In other words, the nonjoinder of
SMC as a party in CC 0033-F did not confer upon this Court
jurisdiction over the juridical person of SMC and so the Court is
without power to order SMC to comply with any
pronouncement made in the case involving, adversely at that, its
property.

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_______________

bank deposits, financial interests, royalties, commissions and other personal property
not capable of manual delivery in the possession or control of third parties. x  x  x
(emphasis supplied)
29  Section 7, Rule 3 of the Rules of Court.
30  Justice Leonen’s Dissent.
31  Id.
32   De Galicia v. Mercado, G.R. No. 146744, March 6, 2006, 484 SCRA 131,
136-137.

 
 

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In a plethora of cases,33 the Court has emphasized the well-

entrenched principle that a judgment rendered without
jurisdiction cannot be the source of any right nor the creator of
any obligation. We said as much in Florete, Jr. v. Florete, Sr.34 and
Arcelona v. Court of Appeals:35

A void judgment for want of jurisdiction is no judgment at all. It

cannot be the source of any right nor the creator of any obligation. All
acts performed pursuant to it and all claims emanating from it have no legal
effect. Hence, it can never become final and any writ of execution based on
it is void: “. . . it may be said to be a lawless thing which can be treated as
an outlaw and slain at sight, or ignored wherever and whenever it exhibits
its head.”36

 
The acknowledgment that the Court has no jurisdiction over
SMC in the present case is not “allow[ing] San Miguel Corporation
to keep these treasury shares under the guise of technicalities.”37
The question of jurisdiction, the Court has repeatedly explained,
is not a mere question of technicality or a simple matter of
procedure but an element of due process.38 Indeed, it is
unsporting, nay the height of injustice and a clear violation of the
due process

_______________

33  See Metropolitan Bank & Trust Company v. Alejo, 417 Phil. 303; 364 SCRA
812 (2001); Divinagracia v. Parilla, G.R. No. 196750, March 11, 2015, 753 SCRA
87; Macawadib v. Philippine National Police Directorate for Personnel and Records

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Management, G.R. No. 186610, July 29, 2013, 702 SCRA 496; People v. Go, G.R.
No. 201644, September 24, 2014, 736 SCRA 501; Valdez-Tallorin v. Heirs of Juanito
Tarona, 620 Phil. 268; 605 SCRA 259 (2009).
34  G.R. No. 174909, January 20, 2016, 781 SCRA 255.
35  345 Phil. 250, 287; 280 SCRA 20, 57 (1997).
36  Emphasis supplied.
37  Justice Leonen’s Dissent.
38   See David v. Paragas, Jr., G.R. No. 176973, February 25, 2015, 751 SCRA
648; and Sy v. Court of Appeals, G.R. No. 94285, August 31, 1999, 313 SCRA 328.

 
 

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

guarantee, to order SMC to comply with any decision rendered in

CC 0033-F when it was never given the opportunity to present,
explain, and prove its claim over the presently contested shares.
It may be that in Republic v. Sandiganbayan (First Division),
Maria Clara Lobregat, et al. (Lobregat),39 one of the cases that
sprung forth from the sequestration made by PCGG of properties
suspected ill-gotten by former President Marcos and his cronies,
including the CIIF Companies and its SMC shares, the Court
mentioned that there is no need to implead SMC in cases seeking to
recover sequestered SMC shares.40
Our pronouncements in Lobregat, however, are not applicable
herein. Unlike in the foregoing cases, SMC presently has a
legitimate claim over the 25.45 million shares in its treasury by a
commercial transaction not otherwise alleged to be conducted
under any “illicit or anomalous conditions.” SMC and the CIIF
Companies (through UCPB) entered into the contract of sale in
March 1986 and SMC paid P500 million on April 1, 1986 or
several

_______________

39  G.R. No. 96073, January 23, 1995, 240 SCRA 376.

40  The Court held, thus:
B.  Impleading Unnecessary in Cases for Recovery of Shares of Stock or Bank
Deposits.
As regards actions in which the complaints seek recovery of defendants’
shares of stock in existing corporations (e.g., San Miguel Corporation, Benguet
Corporation, Meralco, etc.) because allegedly purchased with misappropriated
public funds, in breach of fiduciary duty, or otherwise under illicit or anomalous

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conditions, the impleading of said firms would clearly appear to be unnecessary.

If warranted by the evidence, judgments may be handed down against the
corresponding defendants divesting them of ownership of their stock, the acquisition
thereof being illegal and consequently burdened with a constructive trust, and
imposing on them the obligation of surrendering them to the Government. (emphasis
supplied)

 
 

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days prior to the actual sequestration. The consequent transfer of

the 5 million shares (now 26.45 million shares) to SMC vests in
SMC the proprietary right over these shares. Put differently, as the
manner of SMC’s acquisition of these shares was arms-length and
not made through public funds, the present issue does not fall within
the ambit of our pronouncements in Republic v. Sandiganbayan,
which refer to corporations as repositories of shares acquired by
misappropriated public funds or “ill-gotten wealth.”
More significantly, this Court, in PCGG v. Interco,41 Republic v.
Sandiganbayan, Sipalay Trading Corp. and Allied Banking Corp.42
and PCGG v. Sandiganbayan and Aerocom Investors and Managers,
Inc.43 effectively abrogated its ruling in Lobregat when it hewed to
the lone dissent of Justice Teodoro R. Padilla in the very same
Lobregat, to wit:

.  .  . failure to implead these corporations as defendants and merely

annexing a list of such corporations to the complaints is a violation of their
right to due process for it would in effect be disregarding their distinct and
separate personality without a hearing.
In cases where stocks of a corporation were allegedly the fruits of ill-
gotten wealth, it should be remembered that in most of these cases the
stocks involved constitute a substantial if not controlling interest in the
corporations. The basic tenets of fair play demand that these
corporations be impleaded as defendants since a judgment in favor of
the government will undoubtedly substantially and decisively affect the
corporations as distinct entities. The judgment could strip them of
everything without being previously heard as they are not parties to the
action in which the judgment is rendered.
. . . Holding that the ‘corresponding judicial action or proceeding’
contemplated by the Constitution is any

_______________

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41  G.R. No. 92755, July 26, 1991, En Banc Minute Resolution.

42  G.R. Nos. 112708-09, March 29, 1996, 255 SCRA 438.
43  G.R. No. 125788, June 5, 1998, 290 SCRA 39.

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
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action concerning or involving the corporation under sequestration is

oversimplifying the solution, the result of which is antagonistic to the
principles of justice and fair play.
. . . the actions contemplated by the Constitution should be those which
include the corporation not as a mere annex to the complaint but as
defendant. This is the minimum requirement of the due process guarantee.
Short of being impleaded, the corporation has no standing in the
judicial action. It cannot adequately defend itself. It may not even be
heard.
On the . . . opinion that alternatively the corporations can be impleaded
as defendants by amendment of the complaint, Section 26, Article XVIII of
the Constitution would appear to preclude this procedure, for allowing
amendment of the complaint to implead theretofore unimpleaded
corporations would in effect allow complaints against the corporation to be
filed beyond the periods fixed by said Section 26.
 
x x x x
 
  While government efforts to recover illegally amassed wealth should
have support from all its branches, eagerness and zeal should not be
allowed to run berserk, overriding in the process the very principles
that it is sworn to uphold. In our legal system, the ends do not always
justify the means. Wrongs are never corrected by committing other
wrongs, and as above discussed the recovery of ill-gotten wealth does
not and should never justify unreasonable intrusions into
constitutionally forbidden grounds. . . .

 
Indeed, it is but in keeping with fair play that parties are
allowed to present their respective claims in a full-blown trial
regarding the “sale” of the 25.45 million SMC shares for P500
million. This is not, at the first instance, the appropriate case to
make a final judgment over the ownership of the 25.45 million
shares.
 
 
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Nonetheless, it is advanced that SMC had already been afforded

an opportunity to air its side in San Miguel Corporation v.
Sandiganbayan44 and in this very case where it filed its Comment on
the Republic’s Omnibus Motion. With all due respect, the posture
fails to consider that the issue of ownership was never tackled in San
Miguel and, certainly, the Comment filed by SMC in this case, over
its repeated manifestation that it is not party to the instant case45 and
continuing objection on

_______________

44  San Miguel Corporation v. Sandiganbayan, supra note 1.

45   Prior to filing its Comment on the Omnibus Motion, a “Manifestation Re:
“Resolution” Dated November 20, 2012 dated December 17, 2012 was filed. It
stated:
4.00  Second, SMC, which is being required to comment on the “Manifestation
and Omnibus Motion .  .  .” dated October 12, 2012, as well as the “Manifestation”
dated October 4, 2012, is not a party in the instant cases. Nor has it been
furnished a copy of the Court’s Resolution. Nonetheless, in light of the foregoing,
although the suggestion may appear officious, if indeed SMC is being required to
comment on the matter subject of the “Resolution” of November 20, 2012, perhaps a
copy of the “Resolution” should be furnished on SMC itself. (emphasis and
underscoring supplied; Rollo [G.R. Nos. 177857-58, Vol. 6], p. 5008)
In an Omnibus Motion dated September 3, 2013, SMC again emphasized, viz.:
“2.  However, SMC has not been furnished with copies of the various
pleadings in regard which it is required to comment as enumerated above. It
must be emphasized that SMC is not a party in either G.R. Nos. 177857-58
(COCOFED, et al. v. Republic of the Philippines) or G.R. No. 178193 (Danilo B.
Ursua v. Republic of the Philippines)
x x x x
5.  SMC is not a party in either G.R. Nos. 177857-58 (COCOFED, et al. v.
Republic of the Philippines) or G.R. No. 178193 (Danilo B. Ursua v. Republic of the
Philippines). Preparation of the comment will require a study of the cases, the record
of which are voluminous and cover a long period of time. x  x  x (emphasis and
underscoring supplied; id., at pp. 5056-5057)

 
 

34

34 SUPREME COURT REPORTS ANNOTATED

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Philippine Coconut Producers Federation, Inc. (COCOFED) vs.

Republic

this Court’s jurisdiction, is hardly enough to satisfy the requirements

of due process.
The Court cannot set the benchmark of due process at the lowest
level by considering each pleading submitted by a party as enough
to satisfy the requirements of this Constitutional protection. If this
Court is to animate the spirit of the Constitution and maintain in full
strength the substance of the due process protection, it must afford
each party the full legal opportunity to be heard and present
evidence in support of his or her contentions. SMC must, therefore,
be given full opportunity to proffer evidence on its claim of
ownership over the treasury shares in a proper case before the right
court.
In fact, SMC should have been allowed to participate and present
its evidence in CC 0033-F. To recall, SMC filed a “Motion to
Intervene” with attached “Complaint-Intervention” dated February
2, 2004 with the Sandiganbayan.46 It alleged, among other things,
that it had an interest in the matter in dispute being the owner by
purchase of a portion of the so-called “CIIF block of SMC shares of
stock” sought to be recovered by the Republic as alleged ill-gotten
wealth.47 SMC prayed, thus:

WHEREFORE, it is respectfully prayed that the SMC shares comprising

the “compromise shares” between SMC and defendant CIIF Companies,
and covered by Certificate Nos. A0004129 and B0015556, be adjudged
excluded (a) from the “CIIF Block of SMC shares” subject of plaintiff’s
forfeiture action, and (b) from any judgment that may be rendered in this
suit as to such forfeiture claim.48

_______________

46  Decision, Republic v. Cojuangco, et al., CC No. 0033-F, November 28, 2007,

p. 27; Rollo (G.R. No. 178193, Vol. 1), p. 492.
47  Id.
48   Comment of San Miguel Corporation on the “Manifestation and Omnibus
Motion,” p. 44.

 
 

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The Republic, however, opposed the intervention and found the

same improper.49 COCOFED and Ursua likewise posed their
Opposition.50 On May 6, 2004, the Sandiganbayan promulgated a
Resolution finding SMC’s motion to intervene devoid of merit.51
SMC moved for reconsideration but to no avail.52 Soon thereafter, or
on May 7, 2004, the Sandiganbayan issued the Partial Summary
Judgment in CC 0033-F53 that was assailed in these consolidated
petitions.
Undeniably, SMC was not given the proper chance to be heard
and furnish proof on its claim of ownership over the treasury shares.
That was a denial of its right to due process. It should be corrected.
 
The Clarification in the September
4, 2012 Resolution
 
A review of the past underlying transactions that led to the
acquisition of the so-called “treasury shares” would indicate that
SMC had acquired colorable title to retain possession of the 25.45
million shares of what were once CIIF shares prior to the
sequestration of these CIIF shares on April 7, 1986 and the
institution of CC Nos. 0033 and 0033-F on July 31, 1987.
It is worthy to consider that the original contract of sale between
the SMC and UCPB Groups over a block of SMC shares, which was
later the subject of the Compromise Agreement, was executed on
March 26, 1986 and, as mentioned, SMC paid P500 million as first
installment on April 1, 1986 or several days before the
government sequestered the 33,133,266 shares, on April 7, 1986.

_______________

49  Decision, Republic v. Cojuangco, et al., CC No. 0033-F, November 28, 2007,

supra note 46.
50  Id.
51  Id.
52  Id., at p. 28; Rollo (G.R. No. 178193, Vol. 1), p. 493.
53  Id.

 
 

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36 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

Because of differences regarding the implementation of the

purchase agreement after the shares were sequestered, SMC and

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UCPB (acting on behalf of the CIIF companies) entered into a

Compromise Agreement and Amicable Settlement in March 1990
wherein the P500 million first installment paid by SMC was
considered as full payment for 5 million SMC shares, which by then
had increased to 26,450,000 shares.
As a consequence of the implementation of this Compromise
Agreement in July 1991, the CIIF-SMC shares which then numbered
175,274,960 were, thus, distributed among the CIIF Holding
Companies, SMC-Treasury and the PCGG, which helped bring to
reality the Compromise Agreement and agreed to hold the
“arbitration fees” in trust for the CARP. The following illustrates the
evolution of the CIIF shares before their sequestration until this
Court’s September 4, 2012 Resolution:

_______________

54   The 144,324,960 increased to 725,202,640 from 1991 to 2001. In 2005, the

CIIF subscribed to 28,645,672 shares when SMC conducted a stocks right offering.
Thus, the total shares registered in the name of the CIIF in 2009 reached
55  UCPB Group contributed 4,500,000 shares; SMC Group contributed 1,000,000
shares.

 
 

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In sum, the 753,848,312 SMC shares now reflected in the fallo

of the September 4, 2012 Resolution in these captioned cases, are
the only remaining SMC shares in the name of the CIIF
companies that can be, and were in fact, declared as owned by
the Government. Hence, the need to clarify the Court’s January
2012 Decision.
On this note, there was no mistake in the dispositive portion of
the September 4, 2012 Resolution. The fallo was clarified precisely
to reflect the present number of shares registered in the name of the
CIIF companies. Thus, the 5.5 million shares with the PCGG, and
the 25.45 million shares with SMC, were no longer included therein.
There was never an equivalence made or implied between the
33,133,266 common shares and the 753,848,312 SMC Series 1
Preferred Shares. As observed, the current number of 753,848,312
SMC Series 1 Preferred Shares was taken from this Court’s
September 17, 2009 Resolution, where there was no mention of the
original 33,133,266 common shares. The September 17, 2009

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Resolution limited itself to the conversion of the shares remaining in

the name of the CIIF companies from common to Series 1 Preferred
shares, i.e., those arising from the 144,324,960 shares registered in
the name of CIIF companies following the implementation of the
compromise agreement and the additional 28,645,672 subscribed by
them in April 1995 following SMC’s stock rights offering. This is so
considering that COCOFED’s “Urgent Motion: To Approve the
Conversion of the SMC Common Shares Into SMC Series 1
Preferred Shares” dated July 24, 2009 specifically asked for the
exchange of “ALL THE SHARES OF STOCK OF SMC THAT
ARE PRESENTLY SEQUESTERED AND REGISTERED IN
THE RESPECTIVE NAMES OF THE 14 CIIF HOLDING
COMPANIES IN THE TOTAL NUMBER OF 753,848,312.”56
COCOFED did not ask for the conversion of all the shares that arose
from the original 33,133,266 SMC

_______________

56  Emphasis supplied.

 
 

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38 SUPREME COURT REPORTS ANNOTATED

Philippine Coconut Producers Federation, Inc. (COCOFED) vs.
Republic

Common Shares given the claim and possession of the remaining

portion by the PCGG and the SMC over the remainder.
In other words, COCOFED did not ask for the conversion of the
5.5 million arbitration shares already in the name of PCGG because
the shares were already transferred and registered in the name of
PCGG as of July 1991.57 Likewise, COCOFED did not ask for the
conversion of the SMC treasury shares because it had no claim on
them anymore, as the same were already transferred and registered
in the name of SMC.58 As a matter of fact, certificates of stocks were
issued to SMC and PCGG, specifically: (1) Certificate Nos. 004127,
004128, and 015555 for PCGG; and (2) Certificate Nos. 004129 and
015556 for SMC. Thus, the PCGG shares and the SMC treasury
shares were no longer included in the September 17, 2009

_______________

57  On July 4, 1991, SMC and the UCPB Group filed a Joint Manifestation with
the Sandiganbayan that they have implemented the Compromise Agreement and
Amicable Settlement with the conditions set by the PCGG and accordingly, withdrew

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their Joint Petition. They informed that they have executed the following corporate
acts:
a. On instructions of the SMC Group, the certificates of stock registered in
the name of Anscor-Hagedorn Securities, Inc. (AHSI) representing
175,274,960 SMC shares were surrendered to the SMC corporate secretary.
b. The said SMC shares were reissued and registered in the record
books of SMC in the following manner:
i) Certificates for 25,450,000 SMC shares were registered in the
name of SMC, as treasury;
ii) Certificates for 144,324,960 SMC shares were registered in the
name of the CIIF Holding Companies;
iii) Certificates for 5,500,000 SMC shares were registered in the
name of the PCGG. (emphasis supplied; San Miguel Corporation v.
Sandiganbayan, supra note 1).
58  Id.

 
 

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and September 4, 2012 Resolutions, which were limited to the

753,848,312 shares still registered in the name of COCOFED.
There is no gainsaying that the treasury shares were originally
derived from the more than 33.13 million shares acquired by the
CIIF shares in 1983. However, SMC is persistent in its claim of
ownership over the 25.45 million shares following the events that
transpired after the purchase by the CIIF of the shares in 1983. Thus,
it is not incompatible, much less “illogical,” to hold that the original
33,133,266 SMC common shares were bought with public funds in
1983 and yet the treasury shares may not now belong to the
government given the foregoing events that supervened after the
purchase of these shares, which, as will be discussed, bore the
imprimatur of the government agency appointed to administer them.
 
The Republic participated in
the Compromise Agreement

 
To sway this Court, the Republic relies on the fact that the
Compromise Agreement between SMC and the CIIF Companies
ratifying the sale of the first installment shares had been submitted
but has not been approved by the Sandiganbayan. But note, neither
has the Compromise Agreement been disapproved by that or this
Court. Nowhere in San Miguel Corporation v. Sandiganbayan59 did

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the Court rule on the validity of the Compromise Agreement, much

less “indirectly [deny] approval of the Compromise Agreement,”60
since it was not the issue presented for the Court’s resolution.61
The absence of an explicit approval of the Compromise
Agreement by the Sandiganbayan, however, did not and does not
preclude the PCGG from recognizing the agreement. In

_______________

59  Id.
60  Justice Leonen’s Dissent.
61  Id.

 
 

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fact, the PCGG exercised ownership over the arbitration shares by

asking, through the OSG, for the conversion of the PCGG shares
into preferred shares per a Motion dated September 30, 2009.62
More importantly, it retained ownership of the said arbitration fee
shares from 1991 up to the present. Undoubtedly, the Republic,
through the PCGG, implicitly recognized the validity of the
Compromise Agreement.
The graft court’s disinclination to explicitly approve the
Compromise Agreement was, as admitted in the Dissent, only
intended to prevent any “prejudice [of] their eventual delivery to
their lawful owner or owners who will be determined at the close of
the judicial proceeding.”63 In effect, the Sandiganbayan intended to
conserve the SMC shares for the party who will eventually be
declared the beneficial owner thereof.
Per this Court’s January 2012 Decision, beneficial ownership of
the shares pertains to the Republic. But as things stood, the
Republic was actually involved in the Compromise Agreement
and its implementation.
It is not lost on this Court that the PCGG, the government’s
primary representative in sequestration proceedings, virtually gave
its consent to SMC’s continuous possession of the 25.45 million
shares by approving the Compromise Agreement on which SMC
predicates its claim over the shares and continuing its possession of
the so-called “arbitration fee” shares that came out of the same
Compromise Agreement.

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Put differently, the PCGG, the government agency empowered to

exercise sequestration powers over the 25.45 SMC treasury shares,
gave its consent to SMC’s claim of ownership and possession of the
treasury shares by approving the Com-

_______________

62   Urgent Motion to Approve the Conversion of the PCGG-ITF-CARP SMC

Common Shares Into SMC Series 1 Preferred Shares dated September 30, 2009,
Rollo (G.R. Nos. 177857-89, Vol. 3), pp. 2103-2110.
63   Justice Leonen’s Dissent; citing Rollo (G.R. Nos. 117857-58, Vol. 4A), pp.
3353-3354.

 
 

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promise Agreement on which SMC predicates its claim and also

asserting and exercising ownership and possession of the so called
“arbitration fees of 5.5 SMC shares that came out of the
Compromise Agreement.” This may be the real reason why PCGG
did not implement the SB orders dated October 25, 1991 and March
18, 1992 which ordered SMC to surrender the treasury shares.
What is more, at the time the Compromise Agreement was
signed, SMC’s board was dominated by PCGG nominees and other
government representatives.
The facts recited in Cojuangco, Jr. v. Roxas64 reveal that on April
18, 1989, the annual meeting of SMC shareholders was held.
Among the matters taken up was the election of fifteen (15)
members of the board of directors for the ensuing year. On such
date, there were 140,849,970 shares outstanding, of which
133,224,130 shares, or 94.58%, were present at the meeting, either
in person or by proxy.
Because of PCGG’s claim that the shares of stock were under
sequestration, PCGG was allowed to represent and vote 85,756,279
shares of stocks, or almost 2/3 of the actual votes cast. With PCGG
voting the 85,756,279 shares or 1,286,744,185 votes, the following
were elected members of the SMC Board:

  1. Mr. Eduardo De Los Angeles

  2. Mr. Feliciano Belmonte, Jr.
  3. Mr. Teodoro L. Locsin
  4. Mr. Domingo Lee
  5. Mr. Philip Ella Juico
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  6. Mr. Patrick Pineda

  7. Mr. Adolfo Azcuna
  8. Mr. Edison Coseteng
  9. Mr. Andres Soriano III
10. Mr. Eduardo Soriano
11. Mr. Francisco C. Eizmendi, Jr.
12. Mr. Benigno P. Toda, Jr.

_______________

64  G.R. No. 91925, April 16, 1991, 195 SCRA 797.

 
 

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13. Mr. Antonio J. Roxas

14. Mr. Jose L. Cuisia, Jr.
15. Mr. Oscar Hilado

 
Out of the 15 men elected to the board, eight (8) were PCGG
nominees,65 one (1) was nominated by SSS,66 one by GSIS, and only
five (5) were nominated by nongovernment institutions and/or
individuals.67 Similar facts attended the election of the directors of
the SMC Board on April 17, 1990. Hence, 10 out of the 15 members
of the SMC Board were government-nominated and elected.68
It would, therefore, be fair to state that the 10 men nominated and
elected by the government to the SMC Board for the years 1989-
1990 and 1990-1991 have actually acted to advance the interest of
the Republic at the time that the Compromise Agreement was signed
and implemented.
Without a doubt, the Republic had a hand in the transactions that
eventually led to the designation of the more than 25.45 million
shares as SMC treasury shares. Indeed, it is not disputed that the
PCGG and, ergo, the Republic had an “influence” in the execution
and eventual implementation of the Compromise Agreement
through their representatives in the SMC Board.
Furthermore, neither has the PCGG ever moved for the actual
execution of the Sandiganbayan’s October 25, 1991 and March 18,
1992 Orders now relied upon by the Republic in claiming its
renewed interest on the treasury shares. Twenty-four (24) years had
elapsed and the Republic, either through

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_______________

65  Mr. Teodoro L. Locsin; Mr. Eduardo De Los Angeles; Mr. Domingo Lee; Mr.
Patrick Pineda; Mr. Philip Ella Juico; Mr. Oscar Hilado; Mr. Edison Coseteng; and
Mr. Adolfo Azcuna.
66  Mr. Jose L. Cuisia, Jr.
67  Mr. Andres Soriano III; Mr. Benigno P. Toda, Jr.; Mr. Francisco C. Eizmendi,
Jr.; Mr. Antonio J. Roxas; Mr. Antonio J. Roxas; and Mr. Eduardo Soriano.
68  Cojuangco, Jr. v. Roxas, supra note 64.

 
 

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the OSG or the PCGG, has not lifted even a finger to execute and
enforce the said Sandiganbayan Orders. It should have filed a
motion or instituted an action therefor within five (5) or ten (10)
years, as the case may be, as prescribed under the Rules of Court.69
At the very least, the Republic should have asked for a citation of
contempt. Regrettably, the Republic did nothing.
Certainly, the PCGG and, ergo, the Republic had no interest to do
so given the 5.5 million, now more than 27.5 million, shares it had
accepted as “arbitration fees.” Evidently, whatever will be the
outcome of CC 0033-F, i.e., whether the courts grant the shares to
the Republic, COCOFED, or the coconut farmers, the Republic
through the PCGG was already assured of a piece of the pie.
Indeed, for all intents and purposes, it is safe to state that SMC is
an innocent bystander caught between the conflict between the
government, certain individuals, and COCOFED over the shares.
There is, therefore, no reason for the Court to now resolve the
incident at bar to benefit the Republic at the expense of SMC.
 
Unjust Enrichment and Estoppel
bar the Republic’s Motion

 
There is nothing on record that says that the government offered
to return the P500 million to the SMC Group. That is to say, while
the respondent Republic is asking for the delivery and reconveyance
of the 25.45 million shares, it has not

_______________

69   Rules of Court, Rule 39, Sec.  6.  Execution by Motion or by Independent

Action.—A final and executory judgment or order may be executed on motion within
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five (5) years from the date of its entry. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action. The
revived judgment may also be enforced by motion within five (5) years from the date
of its entry and thereafter by action before it is barred by the statute of limitations.

 
 

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intimated its intention to return the P500 million it received (through

the CIIF Companies now declared as government-owned) for the
same shares. The inevitable conclusion that can be made is the
Republic plans to keep the P500 million along with the 25.45
million shares. Such retention and acquisition of the P500 million
would, in context, amount to a flagrant and arbitrary deprivation of
SMC’s property in violation of the company’s due process right.
This act definitely trenches on the sacred Constitutional guarantee of
due process.
Elementary rules against unjust enrichment,70 if not the sporting
idea of fair play, forbid the Republic to retain the P500 million with
the over 25.45 million shares it now claims. At the very least,
everyone has a reasonable expectation that the Republic follow its
own laws, foremost of which is the Constitution.
In sum, by keeping the P500 million first installment, approving
through the PCGG the Compromise Agreement, and even taking and
keeping an “arbitration fee,” the government descended to the level
of an ordinary citizen and stripped itself of the vestiges of immunity
that is otherwise available to it in the performance of governmental
acts.71 Clearly, it is now

_______________

70  The equitable principle against unjust enrichment is encapsulated in Article 22

of the Civil Code, viz.:

Art.  22.  Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just or legal
ground, shall return the same to him.

71  Republic of Indonesia v. Vinzon, G.R. No. 154705, June 26, 2003, 405 SCRA
126; Air Transportation Office v. Ramos, G.R. No. 159402, February 23, 2011, 644
SCRA 36. See also Minucher v. Court of Appeals, G.R. No. 142396, February 11,
2003, 397 SCRA 244; citing Maxis, Gary L., “International Law, An Introduction,”

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University Press of America, p. 119 (1984); D.W. Grieg, “International Law,”

London Butterworths, p. 221 (1970).

 
 

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vulnerable to the application of the principle of estoppel which

militates against the grant of respondent’s motion.
While the general rule is that the State cannot be put in estoppel
by the mistakes or errors of its officials or agents, it is established
that “[t]he rule on non-estoppel of the government is not designed to
perpetrate an injustice.”72 Thus, several exceptions to the Republic’s
non-estoppel have been recognized. In Republic of the Philippines v.
Court of Appeals,73 the Court held:

The general rule is that the State cannot be put in estoppel by the
mistakes or errors of its officials or agents. However, like all general rules,
this is also subject to exceptions, viz.:

“Estoppel against the public are little favored. They should not be
invoked except in rare and unusual circumstances and may not be
invoked where they would operate to defeat the effective operation of
a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases
where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or
capriciously with its citizens, and must not play an ignoble part
or do a shabby thing; and subject to limitations . . . the doctrine
of equitable estoppel may be invoked against public authorities
as well as against private individuals.”

In Republic v. Sandiganbayan, the government, in its effort to recover ill-

gotten wealth, tried to skirt the application of estoppel against it by invoking
a specific constitutional provision. The Court countered:

_______________

72  Leca Realty Corporation v. Republic, G.R. No. 155605, September 27, 2006,
503 SCRA 563.
73  G.R. No. 116111, January 21, 1999, 301 SCRA 366.

 
 

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“We agree with the statement that the State is immune from
estoppel, but this concept is understood to refer to acts and mistakes
of its officials especially those which are irregular (Sharp
International Marketing v. Court of Appeals, 201 SCRA 299, 306
[1991]; Republic v. Aquino, 120 SCRA 186 [1983]), which peculiar
circumstances are absent in the case at bar. Although the State’s right
of action to recover ill-gotten wealth is not vulnerable to estoppel[;] it
is non sequitur to suggest that a contract, freely and in good faith
executed between the parties thereto is susceptible to disturbance
ad infinitum. A different interpretation will lead to the absurd
scenario of permitting a party to unilaterally jettison a
compromise agreement which is supposed to have the authority
of res judicata (Article 2037, New Civil Code), and like any other
contract, has the force of law between parties thereto. (Article
1159, New Civil Code; Hernaez v. Kao, 17 SCRA 296 [1966]; 6
Padilla, Civil Code Annotated, 7th ed., p. 711, 1987; 3 Aquino, Civil
Code, p. 463, 1990 ed.) . . .”

The Court further declared that “(t)he real office of the equitable norm of
estoppel is limited to supply[ing] deficiency in the law, but it should not
supplant positive law.”74

 
The exception established in the foregoing cases is appropriate in
the present case since the Compromise Agreement partook of the
nature of a bona fide proprietary business transaction of the
government and was not undertaken as an incident to any of its
governmental functions.
Clearly, issues regarding SMC’s right over the 25.45 million
treasury shares or the entitlement to the alleged dividends on said
shares or to the interests and increase in value

_______________

74   Citing 31 CJS 675-676; Republic v. Sandiganbayan, G.R. No. 108292,

September 10, 1993, 226 SCRA 314. Emphasis and underscoring supplied.

 
 

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of the P500 million remain unresolved. These issues are better

ventilated and threshed out in a proper proceeding before the right
forum where SMC will be accorded due process.
With respect to the Republic’s “Urgent Motion to Direct the San
Miguel Corporation (SMC) to Comply with the Final and Executory
Resolutions Dated October 24, 1991 and March 18, 1992 of the
Sandiganbayan,” the same is noted without action in view of the
ruling of the Court that jurisdiction has not been acquired over SMC.
WHEREFORE, the Republic of the Philippines’ Manifestation
and Omnibus Motion dated October 12, 2012 is DENIED without
prejudice to the right of respondent Republic to institute the
appropriate action or proceeding where SMC’s alleged right over the
25.45 million SMC treasury shares will be determined and finally
resolved.
SO ORDERED.

Brion, Bersamin, Del Castillo, Perez and Reyes, JJ., concur.

Sereno,** CJ., On Official Business.
Carpio,*** (Acting CJ.), Leonardo-De Castro, Peralta, Perlas-
Bernabe, Jardeleza and Caguioa, JJ., No part.
Mendoza, J., joining dissent of Justice Leonen.
Leonen, J., I dissent. See Separate Opinion.

 
DISSENTING OPINION
 
SERENO,  CJ.:
 
The matter before the Court in these cases is the correctness of
the modification made in the Resolution dated 4 September 2012, to
wit:

_______________

** As per ponencia, CJ. Sereno left her Dissenting Opinion.

*** Per Special Order No. 2386 dated September 29, 2016.

 
 

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Republic

WHEREFORE, the Court resolves to DENY with FINALITY the

instant Motion for Reconsideration dated February 14, 2012 for lack of
merit.
The Court further resolves to CLARIFY that the 753,848,312 SMC
Series 1 preferred shares of the CIIF companies converted from the CIIF
block of SMC shares, with all the dividend earnings as well as all
increments arising from, but not limited to, the exercise of preemptive rights
subject of the September 17, 2009 Resolution, shall now be the subject
matter of the January 24, 2012 Decision and shall be declared owned by the
Government and be used only for the benefit of all coconut farmers and for
the development of the coconut industry.1

 
According to the Republic,2 this Court ended up substantially
modifying or altering the Decision dated 24 January 2012, which
equated the 753,848,312 SMC Series 1 Preferred Shares with the
33,133,266 CIIF block of San Miguel Corporation (SMC) shares as
of 1983 and the stock dividends accruing thereafter.3 This Court
affirmed the Sandiganbayan resolutions directing the SMC to
deliver the treasury shares to the Presidential Commission on Good
Government (PCGG) in San Miguel Corporation v.
Sandiganbayan.4 The Republic alleged that despite this ruling,
which had long become final and

_______________

1  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 694

Phil. 43, 47-48; 679 SCRA 604, 609 (2012).
2  Rollo, pp. 4800-4822; Manifestation and Omnibus Motion: (1) To Amend the
Resolution promulgated on September 4, 2012 to include the “Treasury Shares”
which are part and parcel of the 33,133,266 Coconut Industry Investment Fund (CIIF)
Block of San Miguel Corporation (SMC) Shares as of 1983 Decreed by the
Sandiganbayan, and Sustained by the Honorable Court, as Owned by the
Government; and (2) To Direct San Miguel Corporation (SMC) to Comply with the
Final and Executory Resolutions dated October 24, 1991 and March 18, 1992 of the
Sandiganbayan which were affirmed by the Honorable Court in G.R. Nos. 104637-38
dated 12 October 2012.
3  Id., at pp. 4810-4811.
4  394 Phil. 608; 340 SCRA 289 (2000).

 
 

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Republic

executory, SMC obstinately refused and continued to refuse to

deliver the treasury shares and all the dividends therefrom.5
The Manifestation and Omnibus Motion of the Republic
compelled me, as one of those who concurred in the Resolution
dated 4 September 2012, to reflect on whether this Court indeed
made a mistake in making the questioned modification. I humbly
submit that it did.
The modification in the Resolution dated 4 September 2012
stemmed from that which was dated 17 September 2009, approving
the conversion of the 753,848,312 SMC Common Shares registered
in the name of CIIF companies to the SMC Series 1 Preferred Shares
of 753,848,312. It also ordered that the preferred shares remain in
custodia legis, and that their ownership be subject to a final
ownership determination by the Court.
Notably, a thorough reading of the Resolution dated 17
September 2009 shows nowhere was there any reference to the
amount “33,133,266.”
What is clear, however, is the following statement in the
Resolution dated 17 September 2009:

As records show, PCGG sequestered the 753,848,312 SMC common

shares registered in the name of CIIF companies on April 7, 1986. From
that time on, these sequestered shares became subject to the management,
supervision, and control of PCGG, pursuant to Executive Order No. (EO) 1,
Series of 1986, creating that commission x x x6 (Emphasis supplied)

 
The first sentence above has for its reference Republic v.
Sandiganbayan,7 the pertinent portion of which reads:

_______________

5  Rollo, p. 4818.
6  Philippine Coconut Producers Federation, Inc. v. Republic, 616 Phil. 94, 108;
600 SCRA 102, 118 (2009).
7  541 Phil. 24; 512 SCRA 25 (2007).

 
 

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On April 7, 1986, the PCGG sequestered the subject 33.1 Million

SMC shares, the PCGG noting in its letter to Soriano III that said shares
came “from the shareholdings of Mr. Eduardo Cojuangco, Jr. which are
listed [as owned by the 14 CIIF Holding Companies].”8 (Emphasis
supplied)

 
The date “7 April 1986” is crucial here, because in San Miguel
Corporation v. Sandiganbayan,9 that was the date when the PCGG
sequestered the 33,133,266 shares. To be precise, this Court ruled:

It appears that on March 26, 1986, the Coconut Industry Investment

Fund Holding Companies (“CIIF” for brevity) sold 33,133,266 shares of
the outstanding capital stock of San Miguel Corporation to Andres
Soriano III of the SMC Group payable in four (4) installments.
On April 1, 1986, Andres Soriano III paid the initial P500 million to the
UCPB as administrator of the CIIF. The sale was transacted through the
stock exchange and the shares were registered in the name of Anscor
Hagedorn Securities, Inc. (AHSI).
On April 7, 1986, the Presidential Commission on Good Government
(PCGG) then led by the former President of the Senate, the Honorable
Jovito R. Salonga, sequestered the shares of stock subject of the sale.10
(Emphases supplied)

 
From the foregoing, the Resolution dated 17 September 2009
created equivalence between the 33,133,266 shares of the
outstanding capital stock of SMC that were sold by the CIIF
companies to Andres Soriano III and eventually sequestered by the
PCGG on 7 April 1986, on the one hand, and the converted
753,848,312 SMC Series 1 Preferred Shares that

_______________

8   Id., at p. 36; p. 34.

9   San Miguel Corporation v. Sandiganbayan, supra note 4.
10  Id., at pp. 620-621; pp. 295-296.

 
 

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were registered in the name of the CIIF companies and ordered to

remain in custodia legis, on the other.

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This supposed equivalence was repeated in the Resolution dated

4 September 2012, to wit:

As of 1983, the Class A and B San Miguel Corporation (SMC) common

shares in the names of the 14 CIIF Holding Companies are 33,133,266
shares. From 1983 to November 19, 2009 when the Republic of the
Philippines representing the Presidential Commission on Good Government
(PCGG) filed the “Motion to Approve Sale of CIIF SMC Series 1 Preferred
Shares,” the common shares of the CIIF Holding companies increased to
753,848,312 Class A and B SMC common shares.11 (Emphases supplied)

 
The use of the word “increased” connotes that by the mere
passage of time and appreciation of value, the former 33,133,266
shares became 753,848,312.
In fact, even the ponente cited12 this portion of the Resolution
dated 4 September 2012 showing that the 33,133,266 common
shares in the names of the 14 CIIF companies “increased” to
753,848,312 Class A and B SMC common shares. Notably, there
was no mention of any deduction involving the 25.45 million
treasury shares.
It thus became a matter of concern for me when, later in the
Resolution, it was ruled that the 753,848,312 SMC Series 1
Preferred Shares as reflected in the fallo of the Resolution dated 4
September 2012 “are the only remaining shares in the name of
the CIIF companies that can be, and were in fact, declared as
owned by the Government,”13 due to the deduction of the 25.45
million SMC treasury shares and the 5.5 million shares in the form
of arbitration fees for the PCGG.

_______________

11  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,

supra note 1 at p. 46; p. 607.
12  Resolution dated 5 October 2016, p. 8.
13  Id., at pp. 18-19.

 
 

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If the Court made a mistake in the modification of the Resolution

dated 4 September 2012, it seems the most opportune time to correct
that inadvertence. The Court has always proceeded under the
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assumption of equivalence between the 33,133,266 common shares

and the 753,848,312 SMC Series 1 Preferred Shares. If it is now
apparent that there is no such equivalence, then this Court may want
to revisit the modification made in the Resolution dated 4 September
2012. Our Decision dated 24 January 2012 should stand, in that the
entire 33,133,266 common shares as of 1983 are declared owned by
the government and, as such, are to be used only for the benefit of all
coconut farmers and for the development of the coconut industry.
Hence, the entire 33,133,266 common shares as of 1983 in whatever
form they may now be — should be ordered reconveyed to the
government.
 
Approval of the Compromise
Agreement
 
We note the provisions of the Compromise Agreement and
Amicable Settlement14 (Compromise Agreement) forged between
SMC, Neptunia Corporation Limited, Andres Soriano III, and
ANSCOR Hagedorn Securities, Inc. (SMC Group); and United
Coconut Planters Bank, the 14 corporations collectively referred to
as the CIIF Holding Corporations, and the 10 corporations
collectively referred to as the CIIF Copra Trading Companies
(UCPB Group). The pertinent provisions of the agreement are
quoted as follows:

1. All the terms of this Agreement are subject to approval by the

Presidential Commission on Good Government (PCGG) as may be
required by Executive Orders numbered 1, 14, and 14-A. This
Agreement and the PCGG approval thereof shall be submitted to the
Sandiganbayan.

_______________

14  Rollo, pp. 1658-1667.

 
 

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x x x x
 
3.1. The sale of the shares covered by and corresponding to the
first installment of the 1986 Stock Purchase Agreement
consisting of Five Million SMC Shares is hereby recognized
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by the parties as valid and effective as of 1 April 1986.

Accordingly, said shares and all stock and cash dividends
declared thereon after 1 April 1986 shall pertain, and are
hereby assigned, to SMC. x x x
3.2. The First Installment Shares shall revert to the SMC treasury
for dispersal pursuant to the SMC Stock Dispersal Plan
attached as Annex “A-1” hereof. The parties are aware that
these First Installment Shares shall be sold to raise funds at the
soonest possible time for the expansion program of SMC.
x x x
3.3. The sale of the shares covered by and corresponding to the
second, third and fourth installments of the 1986 Stock
Purchase Agree­ment is hereby rescinded effective 1 April
1986 and deemed null and void, and of no force and effect.
Accordingly, all stock and cash dividends declared after 1
April 1986 corresponding to the second, third and fourth
installments shall pertain to CIIF Holding Corporations.

x x x x
 
5. Unless extended by mutual agreement of the parties, the “Delivery Date”
shall be on the 10th Day from and after receipt by any party of the notice
of approval of this Compromise Agreement and Amicable Settlement by
the Sandiganbayan. Upon receipt of such notice, all other parties shall be
immediately informed.15 (Emphases supplied)

_______________

15  Id., at pp. 1659 and 1664; Compromise Agreement and Amicable Settlement,
pp. 2 and 7.

 
 

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The parties submitted the Compromise Agreement to the

Sandiganbayan for approval on 23 March 1990.16 While the
Republic opposed, the PCGG interposed no objection to the
implementation thereof, subject to certain conditions.17 Fore-

_______________

16  San Miguel Corporation v. Sandiganbayan, supra note 4 at p. 621; p. 297.

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17  PCGG interposed no objection to the implementation of the Compromise

Agreement subject to the incorporation of the following provisions:
1. As stated in the COMPROMISE, the 5 million SMC shares (now
26,450,000) paid for by the P500 million first installment shall be delivered to
SMC, kept in treasury, and sold as soon as feasible in accordance with a plan
to be agreed upon by the Commission and SMC; provided, that SMC shall not
unreasonably withhold its consent to a sales plan approved by PCGG.
The P500 million paid by SMC as first installment shall be accounted for by
UCPB and the CIIF companies to the extent respectively received by them,
and any portion thereof in excess of the usual business needs of the possessor
shall be delivered by it to the Commission, to be held in escrow for the
ultimate owner.
2. On Delivery Date, the stock certificates for the balance of the SHARES in
the name of the 14 holding companies shall be delivered to PCGG and
deposited with the Central Bank for safekeeping to await their sale in
accordance with the plan of dispersal that PCGG and UCPB shall agree to
establish for them. As soon as practicable, but with proper account of market
conditions, all those shares shall be sold, and the proceeds thereof disposed as
provided below. UCPB shall not unreasonably withhold its consent to a sales
plan approved by PCGG in accordance with this paragraph.
3. So much of the proceeds of the sale as may be necessary shall be used a) to
finance the obligations of the CIIF Companies under the COMPROMISE, and
b) to liquidate the obligations of the CIIF Companies to UCPB for the
purchase price of the SHARES. The balance shall be kept by the PCGG in
escrow to await final judicial determina-

 
 

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most among the conditions imposed by the PCGG is that its consent
to the transfer of the sequestered shares of stock and to the lifting of
the sequestration to permit the transfer shall be effective only when
the Compromise Agreement is approved by the Sandiganbayan.
The SMC and UCPB Group filed a Joint Manifestation that they
had implemented the Compromise Agreement in accordance with
the conditions set by the PCGG.18 On 5 July 1991, the
Sandiganbayan noted the implementation “with the observation that
the PCGG, the UCPB Group and the SMC Group shall always act
with due regard to the sequestered character of the shares of stock
involved herein as well as the

_______________

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tion of the ownership of the various coconut-related companies and of all the
other assets involved here. The cash dividends that have been declared on the
SHARES may be applied for the above purposes before proceeds from the
sale of shares are realized. The balance of such cash dividends shall be held in
escrow in the same manner as the sales proceeds.
4. All SHARES shall continue to be sequestered even beyond Delivery Date.
Sequestration on them shall be lifted as they are sold consequent to approval
of the sale by the Sandiganbayan, and in accordance with the dispersal plan
approved by the Commission. All of the SHARES that are unsold will
continue to be voted by PCGG while still unsold.
5. The consent of PCGG to the transfer of the sequestered shares of stock in
accordance with the COMPROMISE, and to the lifting of the sequestration
thereon to permit such transfer, shall be effective only when approved by the
Sandiganbayan. The Commission makes no determination of the legal rights
of the parties as against each other. The consent it gives here conforms to its
duty to care for the sequestered assets, and to its purpose to prevent the
repetition of the national plunder. It is not to be construed as indicating any
recognition of the legality or sufficiency of any act of any of the parties. (Id.,
at pp. 624-626; pp. 299-300)
18  San Miguel Corporation v. Sandiganbayan, supra note 4 at p. 628; p. 301.

 
 

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fruits thereof, more particularly to prevent the loss or dissipation of

their value”19 and “without prejudice to whatever might be the
resolution of this Court on the Motion to Nullify the Compromise
Agreement filed by Eduardo Cojuangco, Jr.”20
On 25 October 1991, the Sandiganbayan ordered SMC to deliver
to the PCGG the 25.45 million treasury shares, subject of the
Compromise Agreement.21 On 18 March 1992, after denying the
motion for reconsideration filed by the SMC Group, the
Sandiganbayan further ordered it to pay dividends on the said
treasury shares and to deliver these to the PCGG.22
When a contract is subject to a suspensive condition, its birth or
effectivity can take place only if and when the condition happens or
is fulfilled.23 In this case, the Sandiganbayan has not approved the
Compromise Agreement or made any ruling thereon. Thus, without
the fulfillment of the condition that the imprimatur of the
Sandiganbayan be obtained, the Compromise Agreement can neither
be considered effective nor the source of rights on the treasury
shares as invoked by SMC.

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When the Sandiganbayan Resolutions dated 25 October 1991

and 18 March 1992 were assailed in a petition for certiorari, the
Court — speaking through then Associate Justice, later Chief
Justice, Reynato S. Puno — ruled that there was no grave abuse of
discretion on the part of the Sandiganbayan when the latter ordered
the SMC Group to deliver the treasury shares and pay the
corresponding dividends thereon to the PCGG.24

_______________

19  Id., at p. 629; p. 303.

20  Id.
21  Id., at p. 631; p. 305.
22  Id.
23  Coronel v. Court of Appeals, G.R. No. 103577, 7 October 1996, 263 SCRA 15.
24  San Miguel Corporation v. Sandiganbayan, supra note 4 at p. 631; p. 311.

 
 

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The Court ruled that the Compromise Agreement involved

sequestered shares of stock, the ownership of which was still under
litigation. Because it is not yet known whether the sequestered
shares are part of the alleged ill-gotten wealth of former President
Marcos and his “cronies,” any disposition concerning these shares
falls within the unquestionable jurisdiction of the Sandiganbayan
and is subject to its approval. Furthermore, its order regarding the
treasury shares is merely preservative in nature.
The Court quoted with approval the Sandiganbayan ruling with
regard to the contention of the SMC Group that the latter could no
longer turn over the certificates of stock for the 25.45 million
sequestered shares, because they had become treasury shares.25 The
Sandiganbayan ruled that these sequestered shares can only become
SMC’s treasury shares or reacquired property if the sale between the
UCPB Group and the SMC Group is allowed. Moreover, SMC
cannot be deemed to have reacquired the shares, because it is only
one among several buyers thereof. Even assuming that these have
indeed become treasury shares, the Sandiganbayan ruled that they
remain sequestered and cannot be subject to acts that would remove
them from custodia legis.
Considering the foregoing, the following pronouncements in the
Resolution appears to be not in order:

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1. “[T]he Compromise Agreement partook of the nature of a bona
fide proprietary business transaction of the government.”26
2. “[T]he PCGG, the government’s primary representative in
sequestration proceedings, virtually gave its consent to the
SMC’s continuous possession of the 25.45 million shares by
approving the Compromise Agreement on which SMC
predicates its

_______________

25  Id., at pp. 639-642; pp. 316-318.

26  Resolution dated 5 October 2016, p. 25.

 
 

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claim over the shares and continuing its possession of the so-
called ‘arbitration fee’ shares that came out of the same
Compromise Agreement.”27
3. “[T]he Republic had a hand in the transactions that eventually
led to the designation of the more than 25.45 million shares as
SMC treasury shares.”28
 
The Compromise Agreement requires the Sandiganbayan’s
approval for two things: (1) the consent of the PCGG; and (2) the
effectivity of the agreement in general. The SMC and UCPB Group
needed that approval in a form that was unequivocal, and not merely
implied from a lack of disapproval. Absent such approval, there is
no Compromise Agreement to speak of. No rights can emanate from
that transaction, because its existence depends on the fulfillment of a
condition voluntarily imposed by the parties.
For the Court to require the Republic to return the P500 million
to SMC at this time would be tantamount to saying that the
Compromise Agreement has been disapproved by the
Sandiganbayan. Again, there has been no pronouncement regarding
the approval or disapproval of the Compromise Agreement. Thus,
the declaration that the Republic had been unjustly enriched or was
estopped from claiming ownership over the 25.45 million treasury
shares may prove to be too early if not unfair.
There seems to be no basis for the Court to conclude that “the
Republic plans to keep the 500 million along with the 25.45 million

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29
shares.” Likewise without apparent basis is the statement of the
Court that to “resolve the incident at bar [would be] to benefit the
Republic at the expense of SMC.”30 These statements may be
properly juxtaposed with the aver-

_______________

27  Id., at p. 21.

28  Id., at p. 22.
29  Id., at p. 23.
30  Id.

 
 

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ment of the Republic that the present value of the shares is “17.65
billion pesos”31 had they not been reverted to the SMC treasury
pursuant to the implementation of the Compromise Agreement
without the imprimatur of the Sandiganbayan.
There should be an effort to distinguish between the government
ownership of the CIIF companies and the entire CIIF block of SMC
shares on the one hand and the validity of the Compromise
Agreement on the other. The first has been unequivocally declared
by this Court in the Decision dated 24 January 2012. The second is
still pending before the Sandiganbayan. The correctness of the
modification made in the Resolution dated 4 September 2012 bears
heavily on the first, while the question regarding the 5.5 million
shares in the form of arbitration fees for the PCGG and the 25.45
million SMC treasury shares is dependent on the second. The first is
our concern at the moment; the second is not.
The Resolution has correctly stated that the issues regarding
SMC’s right over the 25.45 million treasury shares remain
unresolved.32 As such, it is not proper for the Court to declare that
the 753,848,312 SMC SMC Series 1 Preferred Shares are the only
ones that remained of the 33,133,266 CIIF block of SMC shares,
because the 5.5 million shares in the form of arbitration fees for the
PCGG and the 25.45 million SMC treasury shares should no longer
be included therein. The appropriate course of action is to order all
33,133,266 CIIF block of SMC shares to be reconveyed to the
government and then thresh out in a separate proceeding whether
SMC had a right over the 25.45 million shares allegedly bought
under the Compromise Agreement. This Resolution may even be

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utilized by SMC to invoke the principle of res judicata in that

envisioned separate action or proceeding to be instituted by the
Republic.33

_______________

31  Rollo, p. 813.

32  Resolution dated 5 October 2016, p. 25.
33  Id.

 
 

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It is inconsistent for the Resolution to claim that “the manner of

SMC’s acquisition of the shares was arms-length and not made
through public funds,”34 and yet point out that the SMC board was
dominated by PCGG nominees and other government
representatives at the time the Compromise Agreement was
signed.35 That kind of influence, as illustrated by the Resolution,
negates the meaning of an arms-length transaction.
Furthermore, the circumstances surrounding the acquisition of
the shares make it suspect. The sale of the 33,133,266 common
shares took place a month after the EDSA Revolution.36 On 1 April
1986 or six days before the PCGG sequestered the shares of stock
subject of the sale, the initial installment of P500 million was paid.37
The timing practically shows that the sale was made in order to
avoid scrutiny by the succeeding administration.
 
The Right of SMC to be Heard
 
I find myself unable to agree with the pronouncement in the
Resolution that SMC “was not given a chance to justify, let alone
ventilate, its claim over the 25.45 million shares it has in its
possession.”38
Despite the denial by the Sandiganbayan of the Motion for
Intervention filed by SMC in Civil Case No. 0033-F, the latter was
given many opportunities to air its side, albeit many chances also to
demonstrate its obstinate refusal to comply with the Sandiganbayan
directives.
When SMC and UCPB filed a Joint Manifestation informing the
anti-graft court that they had implemented the Com-

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_______________

34  Id., at p. 15.

35  Id., at p. 21.
36  San Miguel Corporation v. Sandiganbayan, supra note 4 at p. 620; p. 295.
37  Id., at p. 621; pp. 296-297.
38  Resolution dated 5 October 2016, p. 13.

 
 

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promise Agreement; that the certificates of stocks were surrendered

to the SMC Corporate Secretary; and that the certificates for the
25.45 million shares were registered in the name of the SMC as
treasury shares, the anti-graft court issued the Resolution dated 23
July 1991 requiring that all the certificates of stock representing all
of the sequestered shares be physically deposited with the PCGG.
Rather than comply with the directive, SMC instead filed yet
another Manifestation and Motion dated 21 August 1991 praying
that it be allowed to keep the certificates of stock representing the
sequestered shares.
This eventually led to the issuance of Resolutions dated 24
October 1991 and 18 March 1992 by the Sandiganbayan, the
dispositive portions of which provide:

WHEREFORE, the Manifestation and Motion of the “SMC Group”

dated August 21, 1991, which in effect, seeks a reconsideration of this
Court’s resolution of July 23, 1991 requiring that all Certificates of Stock
representing the sequestered shares in the SMC be physically deposited with
the Presidential Commission on Good Government is denied.
Additionally, the San Miguel Corporation is now ordered:
1) To inform this Court of the amount of the cash dividends due to or
actually earned by the 25,450,000 shares of stock represented by the
Stock Certificates No. A0004129 for 15,274,484 class “A” shares
and No. B00015556 for 10,175,516 calls “B” shares; and
2) To deliver the check representing that amount to the Presidential
Commission on Good Government for the latter to deposit in or place
with government bank offering at the best terms and conditions.

 
 

62

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This deposit or placement shall be made in the name of the Presidential

Commission on Good Government in trust for whomever said shares of
stock may eventually be adjudicated.
Future dividends, whether of cash and/or of stock, which may hereafter
be declared on the shares represented by the above stock certificates shall be
similarly treated by the Presidential Commission on Good Government until
further orders from this Court.
Compliance hereon shall be reported to this Court:
a. By the San Miguel Corporation within ten (10) days from receipt
hereof; and
b. By the Presidential Commission on Good Government, with regard to
its receipt and custody of the two certificates of stock above
mentioned as well as with regard to its placement or deposit of the
cash dividends thereon, within twenty (20) days from receipt hereof.
The individual Commissioners of the Presidential Commission on Good
Government shall be responsible to this Court for the care, custody and
disposition of the dividends, subject matter hereof.
SO ORDERED.39
 
x x x x
 
WHEREFORE, the San Miguel Corporation’s Motion for
Reconsideration [of the Resolution dated] October 24, 1991 is DENIED.
The San Miguel Corporation through its President and Corporate
Secretary are now ordered:
1. To deliver to PCGG the 25.45 million shares represented by the
following certificates of stock:
A 0004129                15,274,484 shares

_______________

39  Rollo, pp. 802-803.

 
 

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B 0015556 10,175,516

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and the other 1 million shares of stock forming part of the so-called
First Installment Shares;
2. To deliver to PCGG the cash and/or stock dividends which have
accrued to the above shares of stock from March 26, 1986 to dates
and which might have further accrued thereto had not said shares of
stock been declared Treasury Shares;
3. To report compliance therewith within fifteen (15) days from receipt
hereof.
SO ORDERED.40

 
These Resolutions were later affirmed by this Court in San
Miguel Corporation v. Sandiganbayan, which in turn became final
and executory on 27 June 2001.
Yet again, when the Republic filed its Urgent Motion41 before
this Court to direct SMC to comply with the above mentioned
Sandiganbayan Resolutions, SMC once more ventilated its position
as it filed its Comment.42 It prayed that the Urgent Motion be denied
for lack of merit and reasoned that this Court has no jurisdiction to
act on the motion since this Court never acquired jurisdiction over
case SB No. 0102;43 the Resolutions are merely interlocutory and
have no life independent of SB No. 0102 where no final judgment
has been made rendering the said resolutions functus officio;44 and in
any case, the SMC treasury shares are not part of the shares
adjudicated in Civil Case No. 0033-F and have been validly

_______________

40  Id., at pp. 803-804.

41  Id., at pp. 794-820.
42  Id., at pp. 4583-4628.
43  Id., at p. 4596.
44  Id., at p. 4605.

 
 
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transferred from the CIIF Companies to the SMC on the basis of a

perfected contract of sale and an effective compromise.45
SMC also filed a Comment46 on the Republic’s Manifestation
and Omnibus Motion opposing the relief demanded by the Republic.
Certainly, these pleadings and the reliefs SMC asked through these
pleadings cannot be overlooked.
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More importantly, in that Comment, SMC in fact reiterated the

following allegations it had made in its Motion to Intervene in Civil
Case No. 0033:

1.28. On top of all of the above, SMC filed before the Sandiganbayan in
Civil Case No. 0033-F a “Motion to Intervene” dated February 2, 2004
through a “Complaint-in-Intervention” of even date in which it alleged,
as follows:
2.  SMC has an interest in the matter in dispute between plaintiff and
defendants CIIF companies, being the owner by purchase of a portion of
the so-called “CIIF block of SMC shares of stock” which plaintiff
seeks to recover in this case as alleged ill-gotten wealth.47 (Emphasis
supplied)

 
To my mind, SMC made a judicial admission, which has been
elucidated by this Court in this wise:

A party who judicially admits a fact cannot later challenge that fact as
judicial admissions are a waiver of proof; production of evidence is
dispensed with. A judicial admission also removes an admitted fact from the
field of controversy. Consequently, an admission made in the pleadings
cannot be controverted by the party making such admission and are
conclusive as to such party, and all proofs to the contrary or inconsistent
therewith

_______________

45  Id., at p. 4606.

46  Id., at pp. 5180-5234.
47  Id., at p. 5228; Comment of San Miguel Corporation on the Manifestation and
Omnibus Motion, p. 44.

 
 

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should be ignored, whether objection is interposed by the party or not. The

allegations, statements or admissions contained in a pleading are conclusive
as against the pleader. A party cannot subsequently take a position contrary
of or inconsistent with what was pleaded.48

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SMC had its chances to be heard, asked for reliefs, and as

discussed above, even admitted that the treasury shares were part of
the entire 33,133,266 SMC common shares that were sequestered
and kept under legal custody in Civil Case No. 0033.
On this score, I must point out that in the Decision dated 24
January 2012, the Court has already made a pronouncement on the
nature of the CIIF companies and the CIIF block of SMC shares as
follows:

Since the CIIF companies and the CIIF block of SMC shares were
acquired using coconut levy funds — funds, which have been established to
be public in character — it goes without saying that these acquired
corporations and assets ought to be regarded and treated as government
assets. Being government properties, they are accordingly owned by the
Government, for the coconut industry pursuant to currently existing laws.
It may be conceded hypothetically, as COCOFED, et al. urge, that the 14
CIIF holding companies acquired the SMC shares in question using
advances from the CIIF companies and from UCPB loans. But there can be
no gainsaying that the same advances and UCPB loans are public in
character, constituting as they do assets of the 14 holding companies, which
in turn are wholly-owned subsidiaries of the 6 CIIF Oil Mills. And these oil
mills were organized, capitalized and/or financed using coconut levy funds.
In net effect, the CIIF block of SMC shares are simply the fruits of the
coconut levy funds acquired at the expense of the coconut industry. In
Repub-

_______________

48  Alfelor v. Halasan, 520 Phil. 982, 991; 486 SCRA 451, 459-460 (2006).

 
 

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lic v. COCOFED, the En Banc Court, speaking through Justice (later Chief
Justice) Artemio Panganiban, stated: “Because the subject UCPB shares
were acquired with government funds, the government becomes their prima
facie beneficial and true owner.” By parity of reasoning, the adverted block
of SMC shares, acquired as they were with government funds, belong to the
government as, at the very least, their beneficial and true owner.
We thus affirm the decision of the Sandiganbayan on this point. But as
We have earlier discussed, reiterating our holding in Republic v.
COCOFED, the States avowed policy or purpose in creating the coconut
levy fund is for the development of the entire coconut industry, which is one
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of the major industries that promotes sustained economic stability, and not
merely the livelihood of a significant segment of the population.
Accordingly, We sustain the ruling of the Sandiganbayan in CC No. 0033-F
that the CIIF companies and the CIIF block of SMC shares are public funds
necessary owned by the Government. We, however, modify the same in the
following wise: These shares shall belong to the Government, which shall
be used only for the benefit of the coconut farmers and for the development
of the coconut industry.49

 
It was only because of the obstinate refusal of SMC to heed the
Sandiganbayan’s directives to deliver the shares, and its stark
circumvention of the sequestration proceedings that the Compromise
Agreement was brazenly implemented despite the absence of the
Sandiganbayan’s approval. This Court cannot countenance these
acts of SMC by holding it blameless and putting the Republic in
estoppel through the delayed action of its agents.
I therefore vote to GRANT the Republic’s motion.

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49  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 679

Phil. 508, 621-622; 663 SCRA 514, 623-624 (2012).

 
 

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DISSENTING OPINION
 
LEONEN,  J.:
 
This Court has just failed to do justice for millions of
impoverished coconut farmers.
By denying the Manifestation and Omnibus Motion filed by the
Republic of the Philippines, the ponencia effectively reconsiders the
long­-settled cases of  San Miguel Corporation, et al. v.
Sandiganbayan (First Division),1 COCOFED, et al. v. Republic,2
and  Republic v. COCOFED, et al.3 It also effectively weakens the
claim of millions of impoverished coconut farmers to profitable
assets bought through exactions imposed on them throughout
Martial Law. In the process, the rich become richer; the poor, poorer.
Before this Court is a Manifestation and Omnibus Motion4 filed
by the Republic of the Philippines, alleging that this Court’s
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September 4, 2012 Resolution5 did not include 25.45 million San

Miguel Corporation treasury shares for reconveyance to the
Republic as part of the “coco levy” funds. The treasury shares were
the subject of a “Compromise Agreement” dated March 20 and 22,
1990, entered into by San Miguel Corporation and the United
Coconut Planters Bank. San Miguel Corporation subsequently
converted these shares into treasury shares.6

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1  394 Phil. 608; 340 SCRA 289 (2000) [Per J. Puno, En Banc].
2  679 Phil. 508; 663 SCRA 514 (2012) [Per J. Velasco, Jr., En Banc] and 694
Phil. 43; 679 SCRA 604 (2012) [Per J. Velasco, Jr., En Banc].
3  423 Phil. 735; 372 SCRA 462 (2001) [Per J. Panganiban, En Banc].
4  Rollo, pp. 4800-4855.
5  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra.
6  San Miguel Corporation v. Sandiganbayan (First Division), supra at p. 624; pp.
317, 319.

 
 

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The “Compromise Agreement” was never approved by the

Sandiganbayan. The subject of the “Compromise Agreement” now
at issue was required by this Court to be transferred to the
Presidential Commission on Good Governance (PCGG). San Miguel
Corporation refused to transfer the certificates of the shares of stock
and, in various comments filed before this Court, still refused to
transfer the shares in question.
A brief genesis of the “coco levy” funds must first be discussed
in order to clarify which San Miguel Corporation treasury shares are
now being claimed by the Republic.
During the Marcos regime, a levy was instituted on the sale of
coconut products, purportedly for the benefit of the coconut industry.
Four (4) different levy funds were created by various laws.
The first was the  Coconut Investment Fund, created under
Republic Act No. 6260.7 This Fund was derived from the levy of
P0.55 for the first domestic sale of every 100 kilograms of copra or
its equivalent coconut product. Fifty centavos (P0.50) would accrue
to the Fund, three centavos (P0.03) would go to the Philippine
Coconut Administration, and two centavos (P0.02) would be at the

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disposition of the Philippine Coconut Producers Federation

(COCOFED).8 The Fund was to be “used exclusively to pay the
subscription by the Philippine Government for and in behalf of the
coconut farmers to the capital stock of [the Coconut Investment
Company].”9
The Coconut Investment Company would “grant medium and
long term loans to Filipino citizens or enterprises”10 or

_______________

7   Rep. Act No. 6260 (1971), Coconut Investment Act.

8    Id., Sec. 8. See also Philippine Coconut Producers Federation, Inc.
(COCOFED) v. Presidential Commission on Good Government, 258-A Phil. 1; 178
SCRA 236 (1989) [Per J. Narvasa, En Banc].
9   Id.
10  Id., Sec. 5(a).

 
 

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“invest in shares of stock of corporations”11 for “the establishment,

development and expansion of new and/or existing coconut
agricultural, industrial or other productive enterprises with proven
profitability or great profit potential.”12 It was also empowered to do
acts necessary for the development of the coconut industry.13 The
Fund collected from the levy would be used to pay for shares of
stock in the Coconut Investment Company, which were held by
government on behalf of the coconut farmers, the transfer of which
would be upon “full payment of the authorized capital stock . . . or
upon termination of a ten-year period from the start of the collection
of the levy as provided in section eight hereof, whichever comes
first.”14
The second was the  Coconut Consumer Stabilization Fund,
created by Presidential Decree No. 276.15 The Fund was derived
from the levy of P15.00 for every 100 kilograms of copra resecada
or its equivalent product in order to “subsidize the sale of coconut-
based products at prices set by the Price Control Council.”16 The
Fund was supposed to last only one (1) year;17 however, Presidential
Decree No. 41418 extended its duration indefinitely.
The third was the  Coconut Industry Development Fund,
created by Presidential Decree No. 582.19 The Fund

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11  Id., Sec. 5(b).

12  Id., Sec. 5(a).
13  Id., Sec. 5.
14  Id., Sec. 7.
15  Pres. Decree No. 276 (1973), Establishing a Coconut Consumers
Stabilization Fund.
16  Id., Sec. 1(b).
17  Id., Sec. 2.
18  Pres. Decree No. 414 (1974), Further Amending Presidential Decree No. 232
as amended. Pres. Decree No. 232 created the Philippine Coconut Authority.
19  Pres. Decree No. 582 (1974), Further Amending Presidential Decree No.
232, as amended.

 
 

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was derived from the levy of “Twenty centavos (P0.20) per kilogram
of copra resecada or its equivalent out of its current collections of
the coconut [consumer] stabilization levy”20 for the “establishment,
operation and maintenance of a hybrid coconut seednut farm.”21
The previous “coco levy” laws were codified into Presidential
Decree No. 961, otherwise known as the Coconut Industry Code,22
in 1976. The Coconut Industry Code was later amended in 1978 by
Presidential Decree No. 1468, or the Revised Coconut Industry
Code.23
Article III, Section 924 of the Revised Coconut Industry Code
authorized the use of “the Coconut Consumers Stabilization Fund
and/or the Coconut Industry Development Fund not required to
finance the replanting program”25 for the pur-

_______________

20  Id., Sec. 2.

21  Id.
22  Pres. Decree No. 961 (1976).
23  Pres. Decree No. 1468 (1978).
24  Id., Sec. 9 provides:
SECTION  9.  Investments for the Benefit of the Coconut Farmers.—
Notwithstanding any law to the contrary, the bank acquired for the benefit of
the coconut farmers under PD 755 is hereby given full power and authority to
make investments in the form of shares of stock in corporations organized, for
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the purpose of engaging in the establishment and the operation of industries

and commercial activities and other allied business undertakings relating to
the coconut and other palm oils industry in all its aspects and the
establishment of a research into the commercial and industrial uses of coconut
and other oil industry. For that purpose, the Authority shall, from time to time,
ascertain how much of the collections of the Coconut Consumers Stabilization
Fund and/or the Coconut Industry Development Fund is not required to
finance the replanting program and other purposes herein authorized and such
ascertained surplus shall be utilized by the bank for the investments herein
authorized.
25  Pres. Decree No. 1468 (1978), Sec. 9.

 
 

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chase “of shares of stock in corporations organized, for the purpose

of engaging in the establishment and the operation of industries and
commercial activities and other allied business undertakings relating
to the coconut and other palm oils industry in all its aspects.”26
These investments were eventually referred to as the  Coconut
Industry Investment Fund.27 The First United Bank was acquired
and renamed as the United Coconut Planters Bank in order to make
investments using the Coconut Industry Investment Fund.28
The fourth fund created by the levies was the Coconut Industry
Stabilization Fund, created by Presidential Decree No. 1699.29 In
1980, the collection of the Coconut Consumer Stabilization Fund
and the Coconut Industry Development Fund were suspended due to
the “drastic decline of coconut prices.”30 In 1981, however, the
collection of the levies was brought back31 with the Coconut
Consumer Stabilization Fund renamed as the Coconut Industry
Stabilization Fund.32
The levy imposed was P50.00 for every 100 kilos copra rese­cada
or its equivalent product.33 The proceeds of the Fund were to be
divided “[t]o finance the cost of the coconut hybrid replanting
program”;34 “[t]o defray the cost of the scholarship program for the
deserving and gifted children of the coconut farmers”;35 “[t]o defray
the cost of the life and accident insur-

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26  Id.

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27  See Philippine Coconut Producers Federation, Inc. (COCOFED) v.

Presidential Commission on Good Government, supra note 8 at pp. 8-9; pp. 243-244.
28  See Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra note 2 at p. 532; pp. 524-525.
29  Pres. Decree No. 1699 (1980).
30  Id.
31  See Pres. Decree No. 1841 (1981).
32  Id., Sec. 6.
33  Id., Sec. 1.
34  Id.
35  Id.

 
 

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ance on the lives of the coconut farmers”;36 ”[t]o defray the

operating expenses of the Philippine Coconut Producers
Federation”;37 and “the Philippine Coconut Authority”; 38 and “[t]o
defray the costs of the coconut industry rationalization program.”39
The authoritarian Marcos regime ended with his sudden
departure following major mobilizations in what is now referred to
as the People Power Revolution on February 24, 1986.40
On March 19, 1986, the PCGG sequestered, among others, shares
of stock of the United Coconut Planters Bank purportedly issued to
1,405,366 coconut farmers.41
The sequestration of the shares of stock became the subject of
Case No. 0033 before the Sandiganbayan First Division against
Eduardo Cojuangco, Jr. (Cojuangco, Jr.) and the heads and
incorporators of the 14 Coconut Industry Investment Fund
Companies (CIIF Companies).42
The complaint against Cojuangco, Jr. and CIIF Companies
alleged that:

1)  in 1975, with the active collaboration of his codefendants, Cojuangco

manipulated the purchase by the Philippine Coconut Authority (PCA) of
72.2% of the outstanding capital stock of the First United Bank (FUB)

_______________

36  Id.
37  Id.
38  Id.
39  Id.
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40  See Javier v. Commission on Elections, 228 Phil. 193; 144 SCRA 194 (1986)
[Per J. Cruz, En Banc].
41  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential
Commission on Good Government, supra note 8 at p. 12; pp. 467-468.
42  Republic v. Sandiganbayan (First Division), 310 Phil. 401, 449-460; 240
SCRA 379, 417 (1995) [Per CJ. Narvasa, En Banc]. The 14 CIIF Companies are also
referred to as the UCPB Group.

 
 

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which was subsequently converted into a universal bank named United

Coconut Planters Bank (UCPB); this was accomplished by the use of
P85,773,100.00 initially from the Coconut Consumers Stabilization Fund
(CCSF) levy — contrary to law and the specific purposes for which said
levy was imposed and collected under PD 276 — and under anomalous
circumstances, to wit:

a)  he (Cojuangco) used the coconut levy funds to exercise his

private option to buy controlling interest in FUB; claiming that the
72.2% of the outstanding capital stock of FUB could only be
purchased and transferred through the exercise of his “personal and
exclusive option to acquire the 144,000 shares” of said bank, he and
the Philippine Coconut Authority (PCA), represented by Maria Clara
Lobregat, executed on May 26, 1975, a purchase agreement
providing, among others, for the cession to him as compensation
thereof 95,383 shares worth P1,444,000.00, with the further
condition that he shall manage and control the bank as Director and
President for a term of five (5) years renewable for another five (5)
years, and have authority to name for election three (3) persons of his
choice as members of the bank’s Board of Directors;
b)  he caused the issuance by Pres. Marcos of PD 755: (a)
declaring that the coconut levy funds shall not be considered special
fiduciary and trust funds and do not form part of the general funds of
the National Government — repealing for that purpose PD Nos. 276
and 414 declaring the character of the coconut levy funds as special
fiduciary trust and governmental funds, (b) confirming the agreement
between him (Cojuangco) and PCA regarding the purchase of FUB,
by incorporating that private commercial agreement by reference in
PD 755;
c)  to consolidate his control of UCPB, he (Cojuangco) imposed
as a condition attendant upon his purchase of its stock that he should
receive and own one out of every nine shares given to PCA; and
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d)  to make use of the coconut levy funds to build his economic
empire, to the prejudice of the government, he (Cojuangco) caused
the issuance by Pres. Marcos of PD 1468 requiring the deposit with
UCPB of all coconut levy funds, interest free;

2)  again with the use of coconut levy funds, he (Cojuang­co) created and/or
funded various corporations such as the Philippine Coconut Producers
Federation, Inc. (COCOFED), Coconut Investment Company (CIC),
COCOFED Marketing Corporation (COCOMARK), and the United
Coconut Planters Life Assurance Corporation (COCO­LIFE) with the active
collaboration and participation of his codefendants Juan Ponce Enrile, Maria
Clara Lobregat, Rolando de la Cuesta, Jose R. Eleazar, Jr., Jose Reynaldo
Morente, Eladio Chatto, Domingo Espina, Anastacio Emanol Sr.,
Bienvenido Marquez, Jose Gomez, Inaki Mendezona, Manuel del Rosario,
Sulpicio Granada, Jose Martinez Jr., Emmanuel Almeda, Danilo Ursua,
Herminigildo Zayco and Celestino Zabate, most of whom comprised the
interlocking sets of officers and directors of said companies; and he and his
codefendants dissipated, misused and/or misappropriated a substantial part
of said coconut levy funds and allotted to themselves excessive salaries,
allowances, bonuses and other emoluments, for their own personal benefit,
including huge cash advances in millions of pesos which, to date remain
unliquidated and unaccounted for; and finally, gained ownership and control
of the UCPB by misusing the names and/or identities of the so-called “more
than one million coconut farmers”;
 
3)  he misappropriated, misused and dissipated P840 million of the
Coconut Industry Development Funds (CIDF) deposited with the National
Industry Development Corporation (NIDC) as administrator­ trustee of said
shares and later with UCPB of which he (Cojuangco) was the Chief
Executive Officer in connection with the (1) development, improvement,
operation and maintenance of the Bugsuk Island Seed Garden (“Bugsuk”)
with Agricultural Investors, Inc. (“AII”) as developer (both Bugsuk and AII
being beneficially held and controlled by Co-

 
 

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juangco); (2) payment of liquidated damages in the amount of

P640,856,878.67 and arbitration fees of P150,000.00 pursuant to a decision
rendered by a Board of Arbitration against UCPB for alleged breach of
contract;
4)  he misappropriated and dissipated the coconut levy funds by
withdrawing therefrom tens of millions of pesos in order to pay damages
adjudged against UNICOM, headed and controlled by Cojuangco, as
aforestated, in an anti-trust suit in California, USA;
 
5)  he established and caused to be funded with coconut levy funds, with
the active collaboration of Pres. Marcos (through the issuance of LOI 926)
and of defendants Juan Ponce Enrile, Jose R. Eleazar, Jr., Maria Clara
Lobregat, Jose C. Concepcion, Inaki Mendoza, Douglas Luym, Teodoro D.
Regala, Emmanuel Almeda, Eduardo Escueta, Leo Palma and Rolando de la
Cuesta, the United Coconut Oil Mills, Inc. (UNICOM), a corporation
beneficially controlled by him (Cojuangco), and bought sixteen (16) other
competing and/or nonoperating oil mills at exorbitant prices in the total
amount of P184,935 million, to control the prices of copra and other
coconut products, and assumed and paid the outstanding loan obligations of
seven (7) of those purchased oil mills in the total amount of P805,984
million with the express consent and approval of Pres. Marcos, thereby
establishing a coconut monopoly for their own benefit;
 
. . . . 
 
8)  he misused, dissipated and unlawfully disbursed coconut levy funds
with the active collaboration and participation of defendants Maria Clara
Lobregat, Juan Ponce Enrile, Jose Eleazar Jr., Rolando de la Cuesta and
Herminigildo Zayco for projects of Imelda Marcos, including various
donations made by PCA such as the amount of P400,000.00 and P10 million
for social services and Mrs. Marcos’ health and medical assistance projects;
P125,000.00 for the yearly Malang  pasko  project; P10 million to the
Cultural Center of the Philippines; P5 million to the Philippine Youth Health
and Special Center; P50 million for the construction of the Tahanang
Maharlika Building, and

 
 

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P6 million to COCOFED; and other donations made by the UCPB of

P100,000.00 to the Manila International Film Festival; P10 million to the
UP Faculty Development Fund; P50,000.00 to the Manila Symphony
Foundation, Inc., a parcel of land located at Baguio City to the University of
Life and “other similar unlawful disbursements,” which remain unaccounted
for to date;
 
9)  he misused coconut levy funds to buy out the majority of the
outstanding shares of stock of San Miguel Corporation in order to control
the largest agri-business food and beverage company in the country[.]43

 
On March 26, 1986, the CIIF Companies sold 33,133,266 shares
of its outstanding capital stock of San Miguel Corporation to Andres
Soriano III (Soriano III) of the San Miguel Group. The shares would
be payable in four (4) installments and were subsequently registered
in the name of Anscor­Hage­­dorn Securities, Inc.44
On April 1, 1986, Soriano III paid the initial P500 million to the
United Coconut Planters Bank as the administrator of the Coconut
Industry Investment Fund.45
On April 21, 1986, the PCGG sequestered the shares of stock.46
As a consequence of the sequestration, the San Miguel Group
suspended the payment of the balance; hence, the United Coconut
Planters Bank rescinded the sale.47
The rescission became part of a civil case before the Regional
Trial Court of Makati.48 The rescission was not con-

_______________

43  Id., at pp. 450-453; pp. 417-420.

44  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
620; p. 295.
45  Id., at p. 621; p. 295.
46  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Presidential
Commission on Good Government, supra note 8 at p. 12; p. 246.
47  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
621; pp. 295-296.
48  Soriano III v. Yuzon, 247 Phil. 191; 164 SCRA 226 (1988) [Per J. Narvasa, En
Banc].

 
 

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firmed since this Court dismissed the rescission case without

prejudice to the resolution of the parties’ claims before the
Sandiganbayan in the Decision dated August 10, 1988.49
On March 1990, San Miguel Corporation and the United
Coconut Planters Bank signed a “Compromise Agreement and
Amicable Settlement” (the “Compromise Agreement”) providing,
in part:50

3.1.  The sale of the shares covered by and corresponding to the first
installment of the 1986 Stock Purchase Agreement consisting of Five
Million SMC Shares is hereby recognized by the parties as valid and
effective as of 1 April 1986. Accordingly, said shares and all stock and cash
dividends declared thereon after 1 April 1986 shall pertain, and are hereby
assigned, to SMC. . . .
 
3.2.  The First Installment Shares shall revert to the SMC treasury for
dispersal pursuant to the SMC Stock Dispersal Plan attached as Annex “A-
1” hereof. The parties are aware that these First Installment Shares shall be
sold to raise funds at the soonest possible time for the expansion program of
SMC. . . .
 
3.3.  The sale of the shares [co]vered by and corresponding to the second,
third and fourth installments of the 1986 Stock Purchase Agreement is
hereby rescinded effective 1 April 1986 and deemed null and void, and of
no force and effect. Accordingly, all stock and cash dividends declared after
1 April 1986 corresponding to the second, third and fourth installments shall
pertain to CIIF Holding Corporations.51

 
The parties also agreed to pay an “arbitration fee” of 5.5 million
San Miguel Corporation shares of stock to the PCGG, to be held in
trust for the Comprehensive Agrarian Reform Program.52

_______________

49  Id., at p. 208; p. 242.

50  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
621; p. 296.
51  Id., at pp. 621-622; pp. 296-297.
52  Id., at p. 622; p. 297

 
 

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Republic

On March 23, 1990, San Miguel Corporation and the United

Coconut Planters Bank filed before the Sandiganbayan a Joint
Petition for the Approval of the Compromise Agree­ment and
Amicable Settlement.53 On April 25, 1990, the Republic filed its
Opposition to the Joint Petition alleging that the sequestered shares
were part of the “coco levy” funds under litigation.54
On June 18, 1990, the PCGG filed a Manifestation praying that
the Joint Petition be treated as an incident of Case No. 0033.55
However, it had no objection to the implementation of the
“Compromise Agreement,” subject to the following conditions:56

1.  As stated in the COMPROMISE, the 5 million SMC shares (now

26,450,000) paid for by the P500 million first installment shall be delivered
to SMC, kept in treasury, and sold as soon as feasible in accordance with a
plan to be agreed upon by the Commission and SMC; provided, that SMC
shall not unreasonably withhold its consent to a sales plan approved by
PCGG.
 
The P500 million paid by SMC as first installment shall be accounted for by
UCPB and the CIIF companies to the extent respectively received by them,
and any portion thereof in excess of the usual business needs of the
possessor shall be delivered by it to the Commission, to be held in escrow
for the ultimate owner.
 
2.  On Delivery Date, the stock certificates for the balance of the SHARES
in the name of the 14 holding companies shall be delivered to PCGG and
deposited with the Central Bank for safekeeping to await their sale in
accordance with the plan of dispersal that PCGG and UCPB shall agree to
establish for them. As soon as practicable, but with proper account of
market conditions, all

_______________

53  Id.
54  Id., at pp. 622-623; pp. 297-298.
55  Id., at p. 624; p. 299.
56  Id.

 
 

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those shares shall be sold, and the proceeds thereof disposed as provided
below. UCPB shall not unreasonably withhold its consent to a sales plan
approved by PCGG in accordance with this paragraph.
 
3.  So much of the proceeds of the sale as may be necessary shall be used
a) to finance the obligations of the CIIF Companies under the
COMPROMISE, and b) to liquidate the obligations of the CIIF Companies
to UCPB for the purchase price of the SHARES. The balance shall be kept
by the PCGG in escrow to await final judicial determination of the
ownership of the various coconut-related companies and of all the other
assets involved here. The cash dividends that have been declared on the
SHARES may be applied for the above purposes before proceeds from the
sale of shares are realized. The balance of such cash dividends shall be held
in escrow in the same manner as the sales proceeds.
 
4.  All SHARES shall continue to be sequestered even beyond Delivery
Date. Sequestration on them shall be lifted as they are sold consequent to
approval of the sale by the Sandiganbayan, and in accordance with the
dispersal plan approved by the Commission. All of the SHARES that are
unsold will continue to be voted by PCGG while still unsold.
 
5.  The consent of PCGG to the transfer of the sequestered shares of
stock in accordance with the COMPROMISE, and to the lifting of the
sequestration thereon to permit such transfer, shall be effective only when
approved by the Sandiganbayan. The Commission makes no
determination of the legal rights of the parties as against each other. The
consent it gives here conforms to its duty to care for the sequestered
assets, and to its purpose to prevent the repetition of the national plunder.
It is not to be construed as indicating any recognition of the legality or
sufficiency of any act of any of the parties.57 (Emphasis and underscoring
supplied)

_______________

57  Id., at pp. 625-626; pp. 299-300.

 
 

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The Republic, through the Office of the Solicitor General,

however, maintained its Opposition to the Joint Petition.58

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On June 3, 1991, the Sandiganbayan issued the Resolution that

did not approve the “Compromise Agreement”:

It appearing that the sequestered character of the shares of stock subject

of the instant petition for the approval of the compromise agreement, which
are shares of stock in the San Miguel Corporation in the name of the CIIF
Corporations, is independent of the transaction involving the contracting
parties in the Compromise Agreement between what may be labeled as the
“SMC Group” and the “UCPB Group,” and it appearing further that the said
sequestered SMC shares of stock have not been physically seized nor taken
over by the PCGG, so much so that the reversions contemplated in said
Compromise Agreement are without prejudice to the perpetuation of the
sequestration thereon, until such time as a judgment might be rendered on
said sequestration (which issue is not before this Court as [sic] this time),
and it appearing finally that the PCGG has not interposed any objection to
the contractual resolution of the problems confronting the “SMC Group”
and the “UCPB Group” to the extent that the sequestered character of the
shares in question is not affected, this Court will await the pleasure of the
Presidential Commission on Good Government before consideration of the
Compromise Agreement is reinstated in the Court’s calendar.
While this is, in effect, a denial of the “UCPB Group’s” Motion to set
consideration of the Compromise Agreement herein, this denial is without
prejudice to a reiteration of the motion or any other action by the parties
should developments hereafter justify the same.”59 (Emphasis supplied)

_______________

58  Id., at p. 627; p. 301.

59  Id., at pp. 627-628; p. 302.

 
 

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Despite lack of approval, on July 4, 1991, San Miguel

Corporation and the United Coconut Planters Bank filed a Joint
Manifestation that they had already implemented the “Compromise
Agreement” and were accordingly withdrawing their Joint
Petition.60 They also manifested that the certificates of stock
previously registered in the name of Anscor-Hagedorn Securities
representing  175,274,960 San Miguel Corporation shares of
stock have been divided as follows:
(a) 25,450,000 shares were registered in the name of San Miguel
Corporation as treasury;
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(b) 144,324,960 shares were registered in the name of 14 CIIF

Companies; and
(c) 5,500,000 shares were registered in the name of the PCGG.61
 
On July 16, 1991, San Miguel Corporation and the United
Coconut Planters Bank filed a Manifestation declaring the
25,450,000 shares as treasury shares.62 The shares were marked
“sequestered” by San Miguel Corporation and were allegedly in the
custody of the PCGG.63
On July 23, 1991, the Sandiganbayan noted the Manifestations.64
Upon motion for clarification by the PCGG, the Sandiganbayan
issued the Order dated August 5, 1991 requiring San Miguel
Corporation to deliver the certificates of stock to the PCGG.65 On
October 25, 1991, it issued another Resolution requiring San Miguel
Corporation to deliver the 25,450,000 treasury shares to the PCGG,
and that dividends should be paid pending the resolution of Civil
Case No. 0033.66

_______________

60  Id., at p. 628; p. 302.

61  Id.
62  Id. at p. 630; p. 304.
63  Id.
64  Id.
65  Id.
66  Id., at p. 631; p. 305.

 
 

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As a result, San Miguel Corporation and the United Coconut

Planters Bank filed before this Court a petition assailing the
Sandiganbayan issuances, docketed as G.R. No. 104637-38 (San
Miguel Corporation v. Sandiganbayan).67
On September 14, 2000, this Court rendered the Decision holding
that the Sandiganbayan’s order for the delivery of the treasury
shares were merely “preservative in nature”68 in view of “many
contested provisions”69 in the “Compromise Agreement.” It held
that the shares should be in the custody of the PCGG while the
determination of its ownership was still under litigation.70

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On December 30, 2001, this Court in Republic v. COCOFED, et

71
al. declared that the “coco levy” funds were prima facie public
funds; thus, all sequestered shares of stock bought from these levies
were also prima facie public funds.
Subsequently, a class action suit was brought by COCO­FED
members and alleged coconut farmers to this Court to assail the July
11, 2003 Partial Summary Judgment of the Sandiganbayan.72 In
particular, they assailed the Sandiganbayan’s declaration that the
64.98% shares of stock in the United Coconut Planters Bank
purportedly belonging to coconut farmers were conclusively owned
by the Republic.73 The case was docketed as G.R. Nos. 177857-58.
While the case was pending, COCOFED filed an Urgent Motion
to Approve the Conversion of SMC Common Shares

_______________

67  Id.
68  Id., at p. 639; p. 314.
69  Id., at p. 640; p. 314.
70  Id., at p. 645; p. 321.
71  Republic v. Philippine Coconut Producers Federation, Inc. (COCOFED),
supra note 3.
72  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra note 2.
73  Id., at p. 614; p. 551.

 
 

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into SMC Series 1 Preferred Shares.74 The Urgent Motion sought the
approval of the conversion of 753,848,312 Class “A” shares and
Class “B” common shares of San Miguel Corporation registered in
the name of the CIIF Companies.75
On September 17, 2009, this Court approved the conversion on
the ground that the conversion would guarantee an 8% dividend per
annum, which was higher than the dividend rate of a common
share.76 Former Associate Justice Conchita Carpio-Morales,
however, disagreed with the majority and opined that since the
prevailing market price was higher than the issue price, the PCGG
would, at the redemption period, be redeeming the shares below its
actual market value.77

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A Motion for Reconsideration was filed, but it was denied by this

Court in the Resolution78 dated February 11, 2010.
On January 24, 2012, this Court rendered its Decision in G.R. Nos.
177857-58.79 The Decision declared that:

Since the CIIF companies and the CIIF block of SMC shares were
acquired using coconut levy funds — funds,

_______________

74  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic, 616

Phil. 94, 102; 600 SCRA 102, 111 (2009) [Per J. Velasco, Jr., En Banc].
75  Id.
76  Id., at p. 140; p. 125. The common shares were valued at P53.50 and P54.00 as
of June 1, 2009. The conversion would place the issue price at P75.00.
77  See J. Carpio-Morales, Dissenting Opinion in Philippine Coconut Producers
Federation, Inc. (COCOFED) v. Republic, supra  at pp. 135-141; pp. 146-152. The
shares were redeemed at P75.00, and the proceeds of the redemption were turned over
to the Republic. See Rollo, pp. 5100-5161, in compliance with this Court’s Resolution
dated September 4, 2012 denying the Motion for Reconsideration of the January 24,
2012 Decision.
78  Philippine Coconut Producers Federation, Inc. v. Republic, 626 Phil. 157; 612
SCRA 255 (2010) [Per J. Velasco, Jr. En Banc].
79  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra note 2 at p. 621; p. 623.

 
 

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which have been established to be public in character — it goes without

saying that these acquired corporations and assets ought to be regarded and
treated as government assets. Being government properties, they are
accordingly owned by the Government, for the coconut industry pursuant to
currently existing laws.80

 
The dispositive portion of the Decision held, in part:

The Partial Summary Judgment in Civil Case No. 0033-F dated May 7,
2004, is hereby MODIFIED, and shall read as follows:
WHEREFORE, THE MOTION FOR EXECUTION OF PARTIAL
SUMMARY JUDGMENT (RE: CIIF BLOCK OF SMC SHARES OF
STOCK) dated August 8, 2005 of the plaintiff is hereby denied for lack of

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merit. However, this Court orders the severance of this particular claim of
Plaintiff. The Partial Summary Judgment dated May 7, 2004 is now
considered a separate final and appealable judgment with respect to the said
CIIF Block of SMC shares of stock.
The Partial Summary Judgment rendered on May 7, 2004 is modified by
deleting the last paragraph of the dispositive portion, which will now read,
as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF
Companies, 14 Holding Companies and Cocofed, et al.) filed by Plaintiff is
hereby GRANTED. Accordingly, the CIIF Companies, namely:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);

_______________

80  Id.

 
 

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5. Granexport Manufacturing Corp. (GRANEX); and

6. Legaspi Oil Co., Inc. (LEGOIL),
As well as the 14 Holding Companies, namely:
  1. Soriano Shares, Inc.;
  2. ACS Investors, Inc.;
  3. Roxas Shares, Inc.;
  4. Arc Investors, Inc.;
  5. Toda Holdings, Inc.;
  6. AP Holdings, Inc.;
  7. Fernandez Holdings, Inc.;
  8. SMC Officers Corps, Inc.;
  9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;
13. Valhalla Properties Ltd., Inc.; and
14. First Meridian Development, Inc.
 

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AND THE CIIF BLOCK OF SAN MIGUEL CORPORATION (SMC)

SHARES OF STOCK TOTALING 33,133,266 SHARES AS OF 1983
TOGETHER WITH ALL DIVIDENDS DECLARED, PAID AND ISSUED
THEREON AS WELL AS ANY INCREMENTS THERETO ARISING
FROM, BUT NOT LIMITED TO, EXERCISE OF PRE­EMPTIVE RIGHTS
ARE DECLARED OWNED BY THE GOVERNMENT TO BE USED
ONLY FOR THE BENEFIT OF ALL COCONUT FARMERS AND FOR
THE DEVELOPMENT OF THE COCONUT INDUSTRY, AND
ORDERED RECONVEYED TO THE GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE
SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-A AND
ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT THERE IS NO
MORE NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE
ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES,
(2) THE CIIF BLOCK OF SMC SHARES, AND (3) THE CIIF
COMPANIES AS THEY

 
 

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HAVE FINALLY BEEN ADJUDICATED IN THE AFOREMENTIONED

PARTIAL SUMMARY JUDGMENTS DATED JULY 11, 2003 AND MAY
7, 2004.81

 
Upon motion for reconsideration, however, this Court issued its
Resolution dated September 4, 2012  clarifying  the fallo  of the
January 24, 2012 Decision that the San Miguel Corporation shares
to be reconveyed to the Republic were the 753,848,312 SMC Series
1 Preferred Shares, subject of the Resolution dated September 17,
2009.82 The modified fallo states, in part:

WHEREFORE, the petitions in G.R. Nos. 177857-58 and 178793 are

hereby DENIED. The Partial Summary Judgment dated July 11, 2003 in
Civil Case No. 0033-A as reiterated with modification in Resolution dated
June 5, 2007, as well as the Partial Summary Judgment dated
May 7, 2004 in Civil Case No. 0033-F, which was effectively
amended in
Resolution dated May 11, 2007, are AFFIRMED with MODIFICATION,
only with respect to those issues subject of the petitions in G.R. Nos.
177857-58 and 178193. However, the issues raised in G.R. No. 180705 in
relation to Partial Summary Judgment dated July 11, 2003 and Resolution
dated June 5, 2007 in Civil Case No. 0033-A, shall be decided by this Court
in a separate decision.
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The Partial Summary Judgment in Civil Case No. 0033-A dated July 11,
2003, is hereby MODIFIED, and shall read as follows:
 
. . . .
 
The Partial Summary Judgment in Civil Case No. 0033-F dated May 7,
2004, is hereby MODIFIED, and shall read as follows:
WHEREFORE, the MOTION FOR EXECUTION OF PARTIAL
SUMMARY JUDGMENT (RE: CIIF BLOCK

_______________

81  Id., at pp. 638-640; pp. 641-642.

82  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra note 2 at p. 51; pp. 612-613.

 
 

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OF SMC SHARES OF STOCK) dated August 8, 2005 of the plaintiff is

hereby denied for lack of merit. However, this Court orders the severance of
this particular claim of Plaintiff. The Partial Summary Judgment dated May
7, 2004 is now considered a separate final and appealable judgment with
respect to the said CIIF Block of SMC shares of stock. The Partial Summary
Judgment rendered on May 7, 2004 is modified by deleting the last
paragraph of the dispositive portion, which will now read, as follows:
WHEREFORE, in view of the foregoing, we hold that:
The Motion for Partial Summary Judgment (Re: Defendants CIIF
Companies, 14 Holding Companies and Cocofed, et al.) filed by Plaintiff is
hereby GRANTED. ACCORDINGLY, THE CIIF COMPANIES, NAMELY:
1. Southern Luzon Coconut Oil Mills (SOLCOM);
2. Cagayan de Oro Oil Co., Inc. (CAGOIL);
3. Iligan Coconut Industries, Inc. (ILICOCO);
4. San Pablo Manufacturing Corp. (SPMC);
5. Granexport Manufacturing Corp. (GRANEX); and
6. Legaspi Oil Co., Inc. (LEGOIL),
As well as the 14 Holding Companies, namely:
  1. Soriano Shares, Inc.;
  2. ACS Investors, Inc.;
  3. Roxas Shares, Inc.;
  4. Arc Investors, Inc.;
  5. Toda Holdings, Inc.;

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  6. AP Holdings, Inc.;
  7. Fernandez Holdings, Inc.;
  8. SMC Officers Corps, Inc.;
  9. Te Deum Resources, Inc.;
10. Anglo Ventures, Inc.;
11. Randy Allied Ventures, Inc.;
12. Rock Steel Resources, Inc.;

 
 

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13. Valhalla Properties Ltd., Inc.; and

14. First Meridian Development, Inc.
 
AND THE CONVERTED SMC SERIES 1 PREFERRED SHARES
TOTALING 753,848,312 SHARES SUBJECT OF THE RESOLUTION OF
THE COURT DATED SEPTEMBER 17, 2009 TOGETHER WITH ALL
DIVIDENDS DECLARED, PAID OR ISSUED THEREON AFTER THAT
DATE, AS WELL AS ANY INCREMENTS THERETO ARISING FROM,
BUT NOT LIMITED TO, EXERCISE OF PREEMPTIVE RIGHTS ARE
DECLARED OWNED BY THE GOVERNMENT TO REUSED ONLY
FOR THE BENEFIT OF ALL COCONUT FARMERS AND FOR THE
DEVELOPMENT OF THE COCONUT INDUSTRY, AND ORDERED
RECONVEYED TO THE GOVERNMENT.
THE COURT AFFIRMS THE RESOLUTIONS ISSUED BY THE
SANDIGANBAYAN ON JUNE 5, 2007 IN CIVIL CASE NO. 0033-A AND
ON MAY 11, 2007 IN CIVIL CASE NO. 0033-F, THAT THERE IS NO
MORE NECESSITY OF FURTHER TRIAL WITH RESPECT TO THE
ISSUE OF OWNERSHIP OF (1) THE SEQUESTERED UCPB SHARES,
(2) THE CIIF BLOCK OF SMC SHARES, AND (3) THE CIIF
COMPANIES, AS THEY HAVE FINALLY BEEN ADJUDICATED IN
THE AFOREMENTIONED PARTIAL SUMMARY JUDGMENTS
DATED JULY 11, 2003 AND MAY 7, 2004.
SO ORDERED.83

 
On October 15, 2012, the Republic filed the present
Manifestation and Omnibus Motion84 arguing that the 753,848,312
SMC Series 1 Preferred Shares referred to in the September 4, 2012
Resolution should include the reconveyance of the 25.45 million San
Miguel Corporation treasury shares that were previously the subject

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of the “Compromise Agreement” between San Miguel Corporation

and the United Coconut

_______________

83  Id., at pp. 48-51; pp. 609-613.

84  Rollo, pp. 4800-4827.

 
 

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Planters Bank.85 It points out that the exclusion of these treasury

shares would result in government losing billions that could have
been otherwise used to benefit the coconut farmers and develop the
coconut industry.86
For its part, San Miguel Corporation insists that the disputed
treasury shares already belong to it as a result of the “Compromise
Agreement.”87 It posits that the disputed treasury shares should not
be lumped together with the San Miguel Corporation shares of stock
owned by the CIIF Companies since these shares were segregated by
the “Compromise Agreement” as the result of the P500 million
down payment paid by Soriano III.88 It also argues that this Court
has no jurisdiction to direct it to deliver the treasury shares since its
intervention in Civil Case No. 0033 was denied.89
From the arguments of the parties, the issue before us is whether
the Resolution dated September 4, 2012 should have included the
25.45 million San Miguel Corporation treasury shares subject of the
“Compromise Agreement.”
The ponencia, in denying the Republic’s Omnibus Motion,
makes three (3) points:
First, the September 4, 2012 Resolution on the 753,848,312
SMC Series 1 Preferred Shares referred to the shares discussed in
the September 17, 2009 Resolution.90 It did not include the 25.45
million treasury shares subject of a “Compromise Agreement”;91

_______________

85  Id., at pp. 4812-4814, Manifestation and Omnibus Motion.

86  Id.
87  Id., at p. 5191, Comment on the Manifestation and Omnibus Motion.
88  Id., at pp. 5194-5196.
89  Id., at p. 5213.

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90  Ponencia, p. 37.

91  Id.

 
 

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Second, the “Compromise Agreement” was valid because it was

with the consent and participation of the PCGG and indirectly
approved by the Sandiganbayan;92 and
Lastly, San Miguel Corporation cannot be ordered to deliver the
25.45 million since it was never a party to the case.93
 
I
 
The September 4, 2012 Resolution should include reconveyance
to the Republic of the 25.45 million San Miguel Corporation
treasury shares.
To recall, on March 26, 1986, the CIIF Companies sold
33,133,266 shares of San Miguel Corporation stock to Soriano III
and the shares were subsequently registered in the name of Anscor-
Hagedorn Securities.94 These shares were sequestered on April 7,
1986.95
On July 4, 1991, San Miguel Corporation, the CIIF Companies,
and United Coconut Planters Bank submitted before the
Sandiganbayan a Joint Manifestation Implementing the Compromise
Agreement. The parties manifested that 175,274,960 San Miguel
Corporation shares of stock owned by Anscor-Hagedorn Securities,
Inc. were surrendered to the corporate secretary of San Miguel
Corporation. Of these shares, 25.45 million shares96 were registered
in the name of San Miguel Corporation as treasury, 144,324,960
shares were registered in the name of the CIIF Companies, while
5,500,000 shares were registered in the name of the PCGG.97

_______________

92  Id., at pp. 39-43.

93  Id., at pp. 25-35.
94  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
620; p. 295.
95  Id., at p. 621; pp. 295-296.
96  The sale of P500 million shares to San Miguel Corporation was recognized by
the parties as valid in view of Soriano III’s payment of the first installment. Id., at p.

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628; p. 303.
97  Id.

 
 

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In other words, the 33,133,266 San Miguel Corporation shares of

stock sold to Soriano III in 1986 and registered in the name of
Anscor­ Hagedorn Securities, Inc. eventually became 175,274,960
shares by the time the parties submitted their Joint Manifestation to
the Sandiganbayan in 1991.
It was the 33,133,266 San Miguel Corporation shares of stock
(eventually 175,274,960 shares) that were subject of the January 24,
2012 Decision98 in these cases. These were the shares that this Court
declared were government assets held in trust for the coconut
industry:

Since the CIIF companies and the CIIF block of SMC shares were
acquired using coconut levy funds — funds, which have been established to
be public in character — it goes without saying that these acquired
corporations and assets ought to be regarded and treated as government
assets. Being government properties, they are accordingly owned by the
Government, for the coconut industry pursuant to currently existing laws.99

 
However, despite the final Decision of this Court in G.R. Nos.
104637-38 and the lack of approval of the “Compromise
Agreement,” the 25.45 million shares were converted to treasury
shares per Manifestation of San Miguel Corporation and the CIIF
Companies to the Sandiganbayan dated July 16, 1991.100 These
shares, valued by COCOFED in 2000 at nine billion pesos
(P9,000,000,000.00),101 are now the subject of the present Omnibus
Motion.
To underscore, both groups of shares — that is, the treasury
shares and the CIIF Company shares — were the subject

_______________

98  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,

supra note 2.
99  Id., at p. 621; p. 623.
100  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
630; p. 304.

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101  Id., at p. 653; p. 311.

 
 

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of the same “Compromise Agreement.” All these shares were

derived from the 33,133,126 shares sold to Soriano III in 1986, the
same 33,133,126 shares that were the subject of this Court’s January
24, 2012 Decision.
According to footnote 54 of the ponencia, the 144,324,960 CIIF
Companies shares increased from 144,324,960 to 725,202,640 from
1991 to 2001.102 It reached 753,848,312 shares by 2009.103 These
shares were the subject of conversion to preferred shares in this
Court’s September 19, 2009 Resolution and reconveyance to the
Republic in the September 4, 2012 Resolution.
This Court denied the Motion for Reconsideration to its January
24, 2012 Decision dealing with the 33,133,266 shares (which should
have become 175,274,960 shares). Inexplicably, however, by
changing the nature of the shares and limiting the focus to only the
753,848,312 preferred shares, the September 4, 2012 Resolution
dropped the 25.45 million shares without changing the ponencia.
In other words, nine billion pesos (P9,000,000,000.00) worth of
San Miguel Corporation shares, which was the subject of litigation
before the Sandiganbayan and declared by this Court to be owned
by government in trust for millions of coconut farmers, was “lost” to
them with a change in the numbers in the fallo.
Thus, a Manifestation and Omnibus Motion104 dated October 12,
2012 was timely filed. San Miguel Corporation filed its

_______________

102  Ponencia, p. 36.

103  Id.
104  The full title is Manifestation and Omnibus Motion 1) To amend the
Resolution promulgated on September 4, 2012 to include the “treasury shares” which
are part and parcel of the 33,133,266 Coconut Industry Investment Fund (CIIF) block
of San Miguel Corporation (SMC) shares as of 1983 decreed by the Sandiganbayan,
and sustained by the Honorable Court, as owned by the government; and 2) to direct
San Miguel Corporation (SMC) to comply with the final and executory Resolu-

 
 

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Comment105 on December 3, 2013, fully ventilating its position on

the issue in a 50-page pleading.
It is both illogical and absurd — and hence, a grave abuse of
discretion on the part of this Court — to declare that the shares
purchased with “coco levy” funds are government-owned yet
remove 24.45 million shares of “treasury shares of San Miguel
Corporation” from its purview.
Notably, the CIIF Companies sold these shares in March 1986
just days after Former President Ferdinand E. Marcos (Former
President Marcos) was deposed in the People Power Revolution. It
was the subject of a “Compromise Agreement” that was not
approved by the Sandiganbayan. It was also the subject of a
Decision of this Court ordering San Miguel Corporation to deliver it
to the PCGG. Yet, there was no compliance by San Miguel
Corporation. Today, we reward the contumacy as well as complete
deprivation of rights of coconut farmers.
I dissent.
 
II
 
It was erroneous for the ponencia to state that the 753,848,312
SMC 1 Preferred Shares were the only remaining San Miguel
Corporation shares that could be declared owned by the Republic106
since the 25.45 million treasury shares were already sold to San
Miguel Corporation as part of the “Compromise Agreement.”
This reasoning is a complete misinterpretation of  San Miguel
Corporation, et al. v. Sandiganbayan (First Division), et al.107

_______________

tions dated October 24, 1991 and March 18, 1992 of the Sandiganbayan
which were affirmed by the Honorable Court in G.R. Nos. 104637-38.
105  Rollo, pp. 5185-5237.
106  Ponencia, p. 37.
107  San Miguel Corporation v. Sandiganbayan (First Division),  supra note 1.

 
 

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In page 35 of the ponencia:

A review of past underlying transactions led to the acquisition of the so-

called “treasury shares” would indicate that SMC had acquired colorable
title to retain possession of the 25.45 million shares of what were once CIIF
shares prior to the sequestration of these CIIF shares on April 7, 1986 and
the institution of CC Nos. 0033 and 0033-F on July 31, 1987.108

 
In San Miguel:

On August 5, 1991, the Sandiganbayan issued an order requiring SMC

to deliver the certificates of stock representing the subject matter of the
Compromise Agreement to the PCGG in view of the oral manifestations of
Commissioner Maceren seeking clarification of portions of
Sandiganbayan’s July 23, 1991 Resolution.
 
. . . .
 
On October 25, 1991, the Sandiganbayan issued another Resolution
requiring SMC to deliver the 25.45 million SMC treasury shares to the
PCGG. On March 18, 1992, it denied petitioners’ Motion for
Reconsideration and further ordered SMC to pay dividends on the said
treasury shares and to deliver them to the PCGG.
 
. . . .
 
The order of the Sandiganbayan regarding the subject treasury shares is
merely preservative in nature. When the petitioners and UCPB Group filed
their Joint Manifestation of Implementation of the Compromise Agreement
and of Withdrawal of Petition, the Sandiganbayan cautioned that “the
PCGG, the UCPB and the SMC Group shall always act with due regard to
the sequestered character of the shares of stock involved as well as the fruits
thereof, more particularly to prevent the loss or dissipation of their value.”
The caution was

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108  Ponencia, p. 35.

 
 

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wisely given in view of the many contested provisions of the Compromise

Agreement. For one, the Sandiganbayan observed that the conversion of the
SMC shares to treasury shares will result in a change in the status of the
sequestered shares in that:
1.  When the SMC converts these common shares to treasury stock, it is
converting those outstanding shares into the corporation’s property for
which reason treasury shares do not earn dividends.
2.  The retained dividends which would have accrued to those shares if
converted to treasury would go into the corporation and enhance the
corporation as a whole. The enhancement to the specific sequestered shares,
however, would be only to the extent aliquot in relation to all the other
outstanding SMC shares.
3.  By converting the 26.45 million shares of stock into treasury shares,
the SMC has altered not only the voting power of those shares of stock since
treasury shares do not vote, but the SMC will have actually enhanced the
voting strength of the other outstanding shares of stock to the extent that
these 26.45 million shares no longer vote.109 (Emphasis supplied)

 
These Sandiganbayan Resolutions were the assailed judgments
in  San Miguel, which were eventually upheld by this Court in its
September 14, 2000 Decision in G.R. Nos. 104637-38. Despite the
Decision, San Miguel Corporation never actually surrendered these
treasury shares to the PCGG.
Sometime in 2003, Former PCGG Chair Haydee B. Yorac wrote
to San Miguel Corporation reminding San Miguel of this Court’s
September 14, 2000 Decision and the order to deliver the treasury
shares.110 On January 20, 2004, San Miguel, through counsel,
replied that the shares were already validly sold to it since the
“Compromise Agreement” proves that

_______________

109  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at

pp. 630-640; pp. 304-314.
110  Rollo, pp. 3413-3414.

 
 

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these shares were sold as of April 1, 1986, days before the

sequestration on April 7, 1986.111
On June 16, 2011, the Republic eventually filed in this case
an  Urgent Motion to Direct San Miguel Corporation (SMC) to
Comply with the Final and Executory Resolutions dated October 24,
1991 and March 18, 1992 of the Sandiganbayan.112
It was similarly erroneous for the ponencia to state that:

More importantly, the PCGG, the government agency empowered to

exercise sequestration powers over the 25.45 [million] SMC treasury shares,
gave its imprimatur to SMC’s ownership and possession of said shares by
approving the Compromise Agreement on which SMC predicates its claim
and further asserting its ownership and possession of the so-called
“arbitration fees of 5.5 million SMC shares that came out of the
Compromise Agreement.”113

 
In  San Miguel, this Court denounced the payment as ‘“illegal,
shocking and unconscionable”:114

For another, the payment to the PCGG of an arbitration fee in the form of
5,500,000 of SMC shares is denounced as illegal, shocking and
unconscionable. COCOFED, et al. have assailed the legal right of PCGG to
act as arbiter as well as the fairness of its acts as arbiter. COCOFED, et al.
estimate that the value of the SMC shares given to PCGG as arbitration fee
which allegedly is not deserved, can run to P1,966,635,000.00. This is a
serious allegation and the Sandiganbayan cannot be[ ]charged with grave
abuse of discretion when it ordered that SMC should be temporarily
dispossessed of the subject treasury shares and that SMC should pay their
dividends

_______________

111  Id., at pp. 3415-3416.

112  Id., at pp. 3322-3351.
113  Ponencia, pp. 40-41.
114  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at p.
641; p. 315.

 
 

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while the Compromise Agreement involving them is still under question.

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. . . .
 
.  .  . Petitioners cannot insist on their right to have their Compromise
Agreement approved on the ground that it bears the imprimatur of the
PCGG. To be sure,  the consent of the PCGG is a factor that should be
considered in the approval or disapproval of the subject Compromise
Agreement but it is not the only factor.115 (Emphasis supplied)

 
This Court also noted that even the parties admitted that the
“Compromise Agreement” should be with the consent of the PCGG,
and its consent was “effective only when approved by the
Sandiganbayan”:116

1.  The Compromise Agreement subject matter of this petition

categorically states that “(a)ll the terms of th(e) Agreement are subject to
approval by the Presidential Commission on Good Government (PCGG) as
may be required by Executive Orders numbered 1, 2, 14 and 14-A. (T)he
Agreement and the PCGG approval thereof shall be submitted to the
Sandiganbayan. . . .
PCGG has consented to the Compromise Agreement. But its consent is
“effective only when approved by the Sandiganbayan” (PCGG Resolution
dated 15 June 1990, In Re: Compromise Agreement between San Miguel
Corporation, et al. and United Coconut Planters Bank, et al.).  Petitioners
accepted this condition, and incorporated by [sic] reference such condition
as an integral part of the Compromise Agreement.117 (Emphasis supplied)

_______________

115  Id., at pp. 641-652; pp. 315-325.

116  Id., at p. 639; p. 312, citing the Manifestation dated March 15, 1991 of San
Miguel Corporation.
117  Id., at pp. 638-639; pp. 312-313, citing the Manifestation dated March 15,
1991 of San Miguel Corporation.

 
 

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Clearly, the consent of the PCGG is only effective if the

“Compromise Agreement” is actually approved by the
Sandiganbayan. Until then, even the PCGG is deemed not to have
given its consent to the “Compromise Agreement.”
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Strangely, the ponencia erroneously concludes that the “Com-­­

promise Agreement” was “not disapproved” by the San­di­ganbayan
and, therefore, must be deemed to have approved it:

To sway this Court, the Republic relies on the fact that the Compromise
Agreement between SMC and the CIIF Companies ratifying the sale of the
first installment shares had been submitted but has not been approved by the
Sandiganbayan. But note, neither has the Compromise Agreement been
disapproved by that or this Court. Nowhere in San Miguel Corporation v.
Sandiganbayan  did the Court rule on the validity of the Compromise
Agreement, much less “indirectly [deny] approval of the Compromise
Agreement,” since it was not the issue presented for the Court’s
Resolution.118

 
There are compromise agreements involving private interests
where judicial approval is not necessary.119 The “Compromise
Agreement” in this case did not involve purely private interests. The
“Compromise Agreement” involved shares of stock sequestered by
government under the allegation that these were bought using the
“ill-gotten wealth” by Former

_______________

118  Ponencia, p. 39.

119  See Civil Code, Art. 2028, in relation to Art. 2032, which provide:

Article  2028.  A compromise is a contract whereby the parties, by making reciprocal

concessions, avoid a litigation or put an end to one already commenced.
. . . .
Article  2032.  The court’s approval is necessary in compromises entered into by
guardians, parents, absentee’s representatives, and administrators or executors of
decedent’s estates.

 
 

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President Marcos and his cronies. The parties recognized this and,
therefore, made the consent of the PCGG and the approval of the
Sandiganbayan a condition sine qua non to its effectivity:

The cases at bar do not merely involve a compromise agreement dealing

with private interest. The Compromise Agreement here involves sequestered
shares of stock now worth more than nine (9) billions of pesos, per estimate
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given by COCOFED. Their ownership is still under litigation. It is not yet

known whether the shares are part of the alleged ill­-gotten wealth of former
President Marcos and his “cronies.”  Any Compromise Agreement
concerning these sequestered shares falls within the unquestionable
jurisdiction of and has to be approved by the Sandiganbayan. The parties
themselves recognized this jurisdiction.  In the Compromise Agreement
itself, the petitioners and the UCPB Group expressly acknowledged the need
to obtain the approval by the Sandiganbayan of its terms and conditions,
thus:

5.  Unless extended by mutual agreement of the parties, the

‘Delivery Date’ shall be on the 10th  Day from and after receipt by
any party of the notice of approval of this Compromise Agreement
and Amicable Settlement by the Sandiganbayan. Upon receipt of
such notice, all other parties shall be immediately informed.

The PCGG Resolution of June 15, 1990 also imposed the approval of the
Sandiganbayan as a condition sine qua non for the transfer of these
sequestered shares of stock, viz.:

“4.  All SHARES shall continue to be sequestered even beyond

Delivery Date. Sequestration on them shall be lifted as they are sold
consequent to approval of the sale by the Sandiganbayan, and in
accordance with the dispersal plan approved by the Commission.

 
 

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All of the SHARES that are unsold will continue to be voted by

PCGG while still unsold.
 
5.  The consent of PCGG to the transfer of the sequestered shares of
stock in accordance with the COMPROMISE, and to the lifting of the
sequestration thereon to permit such transfer, shall be effective only
when approved by the Sandiganbayan.  The Commission makes no
determination of the legal rights of the parties as against each other.
The consent it gives here conforms to its duty to care for the
sequestered assets, and to its purpose to prevent the repetition of the
national plunder. It is not to be construed as indicating any
recognition of the legality or sufficiency of any act of any of the
parties.”120 (Emphasis supplied)

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The effectivity of the “Compromise Agreement” depends on

whether the Sandiganbayan actually gave its approval.
A closer look at the Sandiganbayan’s October 25, 1991
Resolution reveals that the Sandiganbayan actually ordered that
nothing should be done with the treasury shares “which might
prejudice their eventual delivery to their lawful owner or owners
who will be determined at the close of the Judicial proceeding”:121

At this time the Court has not approved any Compromise Agreement
between the so-called “UCPB” and the “SMC Group.” As of July 23, 1991,
this Court has merely noted the Manifestation of these two groups, as well
as the PCGG’s and that of the SMC Corporate Secretary, that the contending
groups had executed a Compromise Agreement in resolution of their
difference.

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120  San Miguel Corporation v. Sandiganbayan (First Division), supra note 1 at

pp. 637-638; pp. 311-312.
121  Rollo, pp. 3351-3354.

 
 

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Consistent with this Court’s earlier position as stated in its Resolution of

June 3, 1991, this Court’s continuing interest in the shares of stock subject
of the Compromise Agreement between the so-called SMC and UCPB
Groups remains only with respect to those shares of stock which are
sequestered. These shares of stock are precisely the SMC shares owned by
the CIIF Companies,  as well as the so-called “first installment shares”
represented by the stock certificate No. A0004129 representing 15,274,484
shares and stock certificate No. B0001556 representing 10,175,516 shares
(for a total of 25,450,000 shares).
At issue is now the physical custody of these two certificates of stock.
As with all sequestered property, the true or final ownership of the shares
of stock is still unresolved at this time. Should San Miguel Corporation be
found not to be entitled thereto in the end, as when these shares are found to
have been “ill-gotten property” after all (should things turn out this way),
these shares of stock and all their fruits must be turned over to the
government.
Put differently, until the sequestration of these shares represented by the
aforementioned stock certificates has been lifted by this Court, their
conversion to Treasury Shares of SMC and their subsequent dispersal to
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SMC stockholders are merely a declaration of an intention made by the

parties to the Compromise Agreement.
These 25,450,000 shares of stock are today sequestered stock and at this
time nothing may be done with them which might prejudice their eventual
delivery to their lawful owner or owners who will be determined at the close
of these judicial proceedings. Conversion of these shares of stock into
Treasury Shares (and their dispersal as intimated in the Compromise
Agreement) could prevent their delivery as well as the delivery of the fruits
of these shares to anybody later found by the Court to be entitled thereto.
The intended declaration of these shares as Treasury Shares is, therefore,
not capable of implementation

 
 

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at this time and the rules governing Treasury Shares cannot yet be deemed
enforceable over them.122 (Emphasis supplied)

 
This Sandiganbayan Resolution was upheld by this Court in San
Miguel.  In  San Miguel, this Court upheld the Sandiganbayan’s
finding that the provisions of the “Compromise
Agreement,”  including those of the treasury shares, should remain
ineffective until a definite ruling on its ownership has been rendered
by the courts. It did not outright say that it disapproved the
“Compromise Agreement” since the issue before this Court was the
delivery of the treasury shares, not the validity of the “Compromise
Agreement.” Former Associate Justice Bernardo P. Pardo’s
Dissenting Opinion is telling in this regard:

I regret to dissent from the majority decision upholding the disapproval

of the compromise agreement by the Sandiganbayan.
The resolutions of the Sandiganbayan, subject of the two (2) petitions for
review on certiorari before the Court would bar the implementation of a
compromise agreement entered into by the SMC Group and the UCPB
Group regarding the thirty (30) million plus shares of SMC in the name of
the fourteen (14) holding companies of the CIIF Group of companies.123

 
On April 17, 2001, this Court issued a minute Resolution
denying with finality the Motion for Reconsideration filed by
COCOFED in G.R. Nos. 104637-38.124 Entry of judgment of the

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September 14, 2000 Decision in G.R. Nos. 104637-38 was made on

August 7, 2001.125 To now say, therefore, that the

_______________

122  Id.
123  J. Pardo, Dissenting Opinion in San Miguel Corporation v. Sandiganbayan
(First Division), supra note 1 at p. 654; pp. 327-328.
124  Rollo, p. 583.
125  Id., at p. 598.

 
 

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“Compromise Agreement” was actually valid is a complete

misinterpretation of San Miguel.
The nature of the ownership of these shares was resolved in these
cases. Hence:

Since the CIIF companies and the CIIF block of SMC shares were
acquired using coconut levy fund — funds, which have been established to
be public in character — it goes without saying that these acquired
corporations and assets ought to be regarded and treated as government
assets. Being government properties, they are accordingly owned by the
Government, for the coconut industry pursuant to currently existing laws.126

 
III
 
The September 4, 2012 Resolution of this Court was a nunc pro
tunc order that went beyond the fallo it was clarifying.
The September 4, 2012 denied with finality the Motion for
Reconsideration but sought to clarify the  fallo  of the January 24,
2012 Decision in view of “a certain development that altered the
factual situation then obtaining in G.R. Nos. 177857-58,”127 which
was referring to the September 17, 2009 Decision that converted the
CIIF Companies’ 144,324,960 shares from common to preferred
shares. It was, in effect, a nunc pro tunc order affirming the January
24, 2012 Decision, but correcting the  fallo  to include a fact
previously omitted.
The “clarification” made, however, effectively overturned San
Miguel. It also expanded the January 24, 2012 Decision by indirectly

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implying that the “Compromise Agreement” was valid. This is not

within the competence of a nunc pro tunc order.

_______________

126  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,

supra note 2 at p. 621; p. 623.
127  Philippine Coconut Producers Federation, Inc (COCOFED) v. Republic,
supra note 2 at p. 46; p. 607.

 
 

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A  nunc pro tunc  order merely supplies something that was

present in the records but was omitted in the judgment by mistake. It
cannot correct judicial errors or supply a judicial action that was
omitted by the court. Lichauco, et al. v. Tan Pho, et al.128 explains:

The office of a judgment nunc pro tunc is to record some act of the court
done at a former time which was not then carried into the record, and the
power of a court to make such entries is restricted to placing upon the record
evidence of judicial action which has been actually taken. It may be used to
make the record speak the truth, but not to make it speak what it did not
speak but ought to have spoken. If the court has not rendered a judgment
that it might or should have rendered, or if it has rendered an imperfect or
improper judgment, it has no power to remedy these errors or omissions by
ordering the entry  nunc pro tunc  of a proper judgment. Hence a court in
entering a judgment nunc pro tunc has no power to construe what the
judgment means, but only to enter of record such judgment as had been
formerly rendered, but which had not been entered of record as rendered. In
all cases the exercise of the power to enter judgments  nunc pro
tunc presupposes the actual rendition of a judgment, and a mere right to a
judgment will not furnish the basis for such an entry.
There can be no doubt that such an entry may operate so as to save
proceedings which have been had before it is made, but where no
proceedings have been had and the jurisdiction of the court over the subject
has been withdrawn in the meantime, a court has no power to make a nunc
pro tunc order. If the court has omitted to make an order, which it might or
ought to have made, it cannot, at a subsequent term, be made nunc pro tunc.
According to some authorities, in all cases in which an entry nunc pro tunc
is made, the record should show the facts which authorize the entry, but
other courts hold that in entering an order nunc pro tunc the court is not

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128  51 Phil. 862 (1923) [Per J. Romualdez, En Banc].

 
 

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confined to an examination of the judge’s minutes, or written evidence, but

may proceed on any satisfactory evidence, including parol testimony. In the
absence of a statute or rule of court requiring it, the failure of the judge to
sign the journal entries or the record does not affect the force of the order
granted.
The phrase nunc pro tunc signifies ‘now for then,’ or that a thing is done
now that shall have the same legal force and effect as if done at the time it
ought to have been done. A court may order an act done nunc pro tunc when
it, or some one of its immediate ministerial officers, has done some act
which for some reason has not been entered of record or otherwise noted at
the time the order or judgment was made or should have been made to
appear on the papers or proceedings by the ministerial officer.
The object of a judgment  nunc pro tunc  is not the rendering of a new
judgment and the ascertainment and determination of new rights, but is one
placing in proper form on the record, the judgment that had been previously
rendered, to make it speak the truth, so as to make it show what the judicial
action really was, not to correct judicial errors, such as to render a judgment
which the court ought to have rendered, in place of the one it did
erroneously render, nor to supply nonaction by the court, however erroneous
the judgment may have been.
A  nunc pro tunc  entry in practice is an entry made now of something
which was actually previously done, to have effect as of the former date. Its
office is not to supply omitted action by the court, but to supply an omission
in the record of action really had, but omitted through inadvertence or
mistake.
Except as to the rights of third parties, a judgment  nunc pro tunc  is
retrospective, and has the same force and effect, to all intents and purposes,
as if it had been entered at the time when the judgment was originally
rendered.
It is competent for the court to make an entry  nunc pro tunc  after the
term at which the transaction oc-

 
 

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curred, even though the rights of third persons may be affected. But
entries  nunc pro tunc  will not be ordered except where this can be done
without injustice to either party, and as a nunc pro tunc order is to supply on
the record something which has actually occurred, it cannot supply omitted
action by the court. Record entries nunc pro tunc can properly be made only
when based on some writing in a cause which directly or by fair inference
indicates the purpose of the entry so sought to be made, or on the personal
knowledge and recollection of the court; but in a case where a statement of
facts was filed after adjournment of the court for the term, but within the
time allowed by an order not entered in the minutes on an oral motion made
therefore at the trial, the court at a subsequent term was held to have
jurisdiction to permit the filing of such order  nunc pro tunc  on the
recollection of the judge and other parol testimony that the order had been
applied for and granted during the previous term, without any memorandum
or other written evidence thereof. A nunc pro tunc entry will be treated as a
verity where not appealed from.129 (Citations omitted)

 
The September 4, 2012 Resolution went beyond the Decision it
was trying to correct. If this Court intended to redefine the number
of San Miguel Corporation shares of stock bought from the “coco
levy” funds, it should have issued a full resolution explaining the
modification. It cannot, by way of a nunc pro tunc order, overturn a
long-decided Decision of this Court.
 
IV
 
It is erroneous for the ponencia to conclude that San Miguel
Corporation is not a party to this case.
The Omnibus Motion concerns the 25.45 million treasury shares
subject to the “Compromise Agreement” in San Miguel. In
September 14, 2000, this Court upheld the Sandigan-

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129  Id., at pp. 879-881.

 
 

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bayan’s orders to San Miguel Corporation to deliver the certificates

of stock of these shares to the PCGG.
This Court ordered San Miguel Corporation to comment on the
Omnibus Motion, which it did on December 3, 2013.
Due process is the right to be heard.130 It is, by its simplest
interpretation, to hear the other side of the argument before making a
judgment.131 In Ynot v. Intermediate Appellate Court:132

The closed mind has no place in the open society. It is part of the
sporting idea of fair play to hear “the other side” before an opinion is
formed or a decision is made by those who sit in judgment. Obviously, one
side is only one-half of the question; the other half must also be considered
if an impartial verdict is to be reached based on an informed appreciation of
the issues in contention. It is indispensable that the two sides complement
each other, as unto the bow the arrow, in leading to the correct ruling after
examination of the problem not from one or the other perspective only but
in its totality. A judgment based on less that this full appraisal, on the
pretext that a hearing is unnecessary or useless, is tainted with the vice of
bias or intolerance or ignorance, or worst of all, in repressive regimes, the
insolence of power.133

 
The essence of due process is to be given an opportunity to be
heard and the right to be able to present evidence on one’s behalf.134
The opportunity to be heard may be accomplished through notice
and hearing, or the submission of pleadings.135

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130  Ynot v. Intermediate Appellate Court, 232 Phil. 615, 631; 148 SCRA 659, 674
(1987) [Per J. Cruz, En Banc].
131  Id., at p. 624; p. 668.
132  Id.
133  Id.
134  Mutuc v. Court of Appeals, 268 Phil. 37, 43; 190 SCRA 43, 49 (1990) [Per J.
Paras, Second Division].
135  Id., citing Yap Say v. Intermediate Appellate Court, 242 Phil. 802; 159 SCRA
325 (1988) [Per J. Sarmiento, Second Division].

 
 

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Before the January 24, 2012 Decision was promulgated, the

Republic filed an Urgent Motion to Direct San Miguel Corporation
(SMC) to Comply with the Final and Executory Resolutions dated
October 24, 1991 and March 18, 1992 of the Sandiganbayan.136
This Court directed San Miguel Corporation to comment on the
Urgent Motion.137 San Miguel Corporation’s Comment was noted in
the Resolution dated October 4, 2010.138
When the Republic filed its Omnibus Motion, San Miguel
Corporation was able to file its Comment139 on December 2, 2013,
outlining its argument that these treasury shares were already fully
paid by the time the “Compromise Agreement was implemented. It
also attached various documents proving its allegations, from Annex
“A” to Annex D-27.”140
San Miguel Corporation was given every opportunity to be heard
in this case. It was able to convey all its arguments and present
evidence on its behalf, both before the January 24, 2012 Decision
was promulgated, and even after, when the Republic filed its
Omnibus Motion. There can be no deprivation of due process as
long as a party is given the opportunity to defend its cause.141
 
V
 
The laws creating the “coco levy” funds were declared
unconstitutional and the funds were considered as public funds. As
the CIIF Companies’ shares of stock were acquired using these
funds, the CIIF Companies could not have validly sold

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136  Rollo, pp. 3322-3350.

137  Id., at pp. 3423A-3423C.
138  Id., at p. 598.
139  Id., at pp. 5189-5237.
140  Id., at pp. 5238-5289.
141  See Dumo v. Espinas, 515 Phil. 685, 699; 480 SCRA 53, 68 (2006) [Per J.
Austria-Martinez, First Division], citing Estares v. Court of Appeals, 498 Phil. 640,
658-659; 459 SCRA 604, 623 (2005) [Per J. Austria-Martinez, Second Division].

 
 

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these shares to San Miguel Corporation since they could not sell
something they did not actually own. The parties to an illegal sale
are considered to be in  pari delicto, and neither can seek any
affirmative relief with the courts.142
In the January 24, 2012 Decision,143 this Court declared
Presidential Decree Nos. 755, 961, and 1468 as unconstitutional
since public funds cannot be used to purchase shares of stock to be
given for free to private individuals. This Court found that this was a
direct violation of Article VI, Section 29(3) of the Constitution,
which provides:

 
ARTICLE VI 
Legislative Department
 
. . . .
 
SECTION 29. . . . .
 
. . . .
(3)  All money collected on any tax levied for a special purpose shall be
treated as a special fund and paid out for such purpose only. If the purpose
for which a special fund was created has been fulfilled or abandoned, the
balance, if any, shall be transferred to the general funds of the Government.

 
This Court likewise stated that “any property purchased by
means of the coconut levy funds should likewise be treated as public
funds or public property, subject to burdens and restrictions attached
by law to such property.”144 The 33,133,126 San Miguel
Corporation shares sold by the CIIF Companies in March 1986 are
to be treated as public funds or public property. The CIIF Companies
had no authority to sell the

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142  See Bough and Bough v. Cantiveros and Hanopol, 40 Phil. 209, 216 (1919)
[Per J. Malcolm, En Banc] and Rellosa v. Gaw Chee Hun, 93 Phil. 827, 832-833
(1953) [Per J. Bautista-Angelo, En Banc].
143  Philippine Coconut Producers Federation, Inc. (COCOFED) v. Republic,
supra note 2.
144  Id., at p. 620; p. 622.

 
 

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shares of stock to any other private individual, including San Miguel

Corporation.
The sale of the shares of stock was done one (1) month after the
February 25, 1986 Revolution, on March 26, 1986. Former President
Corazon Aquino already issued Executive Order No. 1,145 which
created the PCGG to recover all of Former President Marcos’ ill-
gotten wealth, as well as the ill-gotten wealth of his cronies. The sale
occurred after the issuance of Executive Order No. 2,146 which
authorized the PCGG to freeze all assets and properties of Former
President Marcos and his cronies. Merely one (1) week prior to the
sale, the PCGG sequestered all the shares of the United Coconut
Planters Bank purportedly issued to coconut farmers.147 Given the
factual antecedents, it is obvious that the sale was made in bad faith.
The sale was clearly an attempt by the CIIF Companies to dispose of
their assets before the PCGG could sequester it.
Ex dolo malo non oritur actio. In pari delicto potior est conditio
defendentis.148
Both the CIIF Companies and San Miguel Corporation were in
pari delicto when it attempted the sale of 33,133,126 San Miguel
Corporation  shares of stock on March 26, 1986. San Miguel
Corporation cannot now claim that it is entitled to the shares
equivalent to the P500 million it previously paid as a first
installment. Parties in pari delicto cannot sue for specific
performance, recover property previously sold and delivered, or ask
for a refund of money previously paid.149 The law,

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145  Enacted February 28, 1986.

146  Enacted March 12, 1986.
147  See Philippine Coconut Producers Federation, Inc. (COCOFED) v.
Presidential Commission on Good Government, supra note 8.
148  Bough and Bough v. Cantiveros and Hanopol, supra note 142 at p. 216: “[A]
party to an illegal contract cannot come into a court of law and ask to have his illegal
objects carried out. . . . The law will not aid either party to an illegal agreement; it
leaves the parties where it finds them.”
149  See Rellosa v. Gaw Chee Hun, supra note 142 at pp. 823-833.

 
 

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as well as the courts, will not grant them any affirmative relief.150 If
this Omnibus Motion is denied and the fallo of the September 4,
2012 Resolution is allowed to stand, this Court will have legitimized
an illegal sale of public property.
It is the duty of this Court to see through the elaborate legal
machinations of parties who have substantial resources by using the
light of principle and the true spirit of our fundamental laws in order
to achieve social justice. It is simply unfair for a party to decline to
follow a final and executory order of this Court in one case and then
cry due process in another. Social justice is not mere shibboleth. It is
a constitutional fiat. Not only is it a juridical necessity; it is also the
basis of a humane society.
The majority’s position falls short of achieving this ideal. It has
made it more difficult for impoverished coconut farmers to gain
what is truly owing to them after suffering the exactions of the
Martial Law years.
I dissent. I do so emphatically.
ACCORDINGLY, I vote to GRANT the Omnibus Motion.

Manifestation and Omnibus Motion denied without prejudice to

the right of respondent Republic to institute appropriate action or
proceeding.

Notes.—Rule 41 of the Revised Rules of Court states that no

appeal may be taken from an order of execution; Exceptions. (Dela
Cruz, Sr. vs. Fankhauser, 677 SCRA 744 [2012])
Execution of a judgment can only be issued against one who is a
party to the action, and not against one who, not being a party
thereto, did not have his day in court. (Atilano II vs. Asaali, 680
SCRA 345 [2012])
 
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150  Id.

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