PCGG v. Cojuangco, Jr.
G.R. No. 133197 (January 27, 1999)
Facts:
The case involves a dispute between the Presidential Commission on Good Government (PCGG) and several private respondents, who are stockholders of San Miguel Corporation (SMC). A stockholders' meeting was scheduled for April 21, 1998, during which the voting rights concerning sequestered shares of SMC were contested. The respondent stockholders filed a motion with the Sandiganbayan to enjoin the PCGG from voting these sequestered shares and to allow them to vote instead. The Sandiganbayan granted this motion, stating that there was no legal basis for preventing the respondents from voting their shares.
The PCGG, without filing a motion for reconsideration, sought a certiorari and mandamus from the Supreme Court, along with a request for a temporary restraining order (TRO) against the Sandiganbayan's resolution. The Supreme Court required the respondents to file a comment but denied the TRO, allowing the stockholders' meeting to proceed. As a result, the respondent stockholders elected three nominees to the SMC Board of Directors during the meeting.
The Supreme Court noted that the PCGG had been voting the sequestered shares since 1986, except for a brief period in 1991 when the Court ruled that the PCGG could not vote the shares as it was merely a conservator and not the owner. The Court emphasized that the right to vote the shares belonged to their owners or authorized representatives, and the PCGG's role was limited to conservatorship.
Legal Issues:
The primary legal issue in this case was who had the right to vote the sequestered shares of SMC during the stockholders' meeting: the PCGG or the respondent stockholders. This issue was complicated by the ongoing sequestration proceedings and the determination of whether the shares were ill-gotten.
Arguments:
Petitioner (PCGG): The PCGG argued that it had the right to vote the sequestered shares as the conservator of the assets pending the resolution of the main case regarding the alleged ill-gotten nature of the shares. The PCGG relied on its historical practice of voting these shares and the need to protect the interests of the state.
Respondents (Stockholders): The respondent stockholders contended that they were the rightful owners of the shares and had the inherent right to vote them. They cited the precedent set in the case of Cojuangco, Jr. vs. Roxas, which established that the PCGG could not exercise acts of strict ownership over sequestered property, including voting rights.
Court's Decision and Legal Reasoning:
The Supreme Court ruled that the PCGG did not have the right to vote the sequestered shares. It reiterated the principle established in the Cojuangco case, which stated that the PCGG is merely a conservator of the sequestered property and cannot perform acts of strict ownership, such as voting shares. The Court emphasized that only the owners or their authorized representatives could vote the shares.
The Court also noted that the issue of whether the shares were ill-gotten and the rightful ownership thereof was still pending in the main sequestration case. Therefore, the right to vote the shares was contingent upon the resolution of these underlying issues. The Court remanded the case to the Sandiganbayan for further proceedings, requiring the respondent stockholders to post a significantly increased bond to ensure that any potential damages to the PCGG or SMC were covered.
Significant Legal Principles Established:
Conservatorship vs. Ownership: The PCGG, as a conservator of sequestered assets, cannot exercise ownership rights, including voting rights, over those assets until a judicial determination of ownership is made.
Voting Rights of Stockholders: The inherent right of stockholders to vote their shares is a fundamental aspect of ownership, which cannot be denied without due process.
Bond Requirement: The Court established that the bond required for the voting of sequestered shares must be commensurate with the value of the shares and the potential impact of the voting on the corporation.