The Supreme Court has rejected the government’s petition to reconvey the 25.45-million shares in San Miguel Corp. from coconut levy funds subject of a 1990 compromise agreement.
In a 27-page resolution dated last October 5 but released only on Wednesday, the SC denied the government’s motion seeking to include the SMC shares in the assets to be forfeited in favor of the state in Civil Case No. 0033, which involves the recovery of ill-gotten wealth.
The SC held that the motion was denied simply because SMC is not a party in the civil case filed by the government to recover the SMC shares of stock registered in the name of the Coconut Industry Investment Fund Holding Companies (CIIF) Holding Companies.
The high court highlighted the fact that SMC cannot be compelled to surrender the shares because it has not been “given a chance to justify, let alone ventilate, its claim over 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.”
“Indeed, it is unsporting, nay the height of injustice a clear violation of the due process guarantee, to order SMC to comply with any decision rendered in Civil Case 0033-F when it was never given the opportunity to present, explain, and prove its claim over the presently contested shares,” stated Associate Justice Presbitero Velasco Jr. in the decision.
The Supreme Court faulted the government, citing its opposition to the bid of SMC to intervene in the case and present its argument.
In March 1990, a Compromise Agreement was entered into by the SMC Group and the United Coconut Planters Bank Group, which contained as its subject the contested 25.45-million SMC shares. SMC subsequently converted these to treasury shares.
The Supreme Court also elaborated the government actually participated and approved the compromise deal since majority of SMC board members that forged the agreement were nominated and elected by government at that time.
“Indeed, for all intents and purposes, it is safe to state that SMC is an innocent bystander caught in 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,” it pointed out.
The SC also stated that the present case involving these SMC shares are not the same from those filed by the Presidential Commission on Good Government.
“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 days prior to the actual sequestration…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,” it explained.
On the last note, the Supreme Court pointed out the lack of proof that there was an offer by the government to return the P500 million to the SMC Group in exchange for the reconveyance of the 25.45-million shares.
“Elementary rules against unjust enrichment, 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,” it added.
Associate Justices Arturo Brion, Lucas Bersamin, Mariano del Castillo, Jose Portugal Perez, Jose Catral Mendoza and Bienvenido Reyes concurred of this ruling.
Chief Justice Maria Lourdes Sereno and Associate Justice Marvic Leonen dissented from the ruling. The remaining six justices – Senior Associate Justice Antonio Carpio and Associate Justices Teresita Leonardo-de Castro, Diosdado Peralta, Estela Perlas – Bernabe, Francis Jardeleza and Alfredo Benjamin Caguioa – inhibited from the case.
