Cojuangco, Jr. v. Sandiganbayan

G.R. No. 120640 (August 8, 1996)

Eduardo Cojuangco Jr. won a Supreme Court ruling on board elections at San Miguel Corp.

Facts:

The case arose from the annual stockholders' meeting of San Miguel Corporation (SMC) held on April 18, 1995, where the election of fifteen directors was conducted. Among the nominees were the petitioners, Eduardo M. Cojuangco, Jr., Enrique M. Cojuangco, Manuel M. Cojuangco, Estelito P. Mendoza, and Gabriel L. Villareal, alongside private respondents who were nominated by the Chairman of the Presidential Commission on Good Government (PCGG), Magtanggol Gunigundo. The private respondents were able to qualify for the board seats due to the registration of sequestered shares of stock belonging to various corporate stockholders, which were controlled by the PCGG.

During the election, the votes cast by petitioner Estelito Mendoza, which were based on the same sequestered shares, were not counted in favor of the petitioners. Instead, the private respondents received enough votes to secure the top fifteen positions on the board, while the petitioners ranked from 16th to 20th. Mendoza protested the election results, claiming that his votes had not been properly counted and that he, along with the other petitioners, should have been elected.

In response, the SMC Corporate Secretary maintained that only the PCGG could validly vote the sequestered shares. Consequently, the petitioners filed a petition for quo warranto with the Sandiganbayan, questioning the qualifications of the private respondents to serve on the SMC Board of Directors. The Sandiganbayan, however, dismissed the petition, citing a lack of jurisdiction based on a previous ruling by the Supreme Court in Garcia, Jr. vs. Sandiganbayan, which stated that the Sandiganbayan did not have the authority to issue writs of quo warranto due to the absence of an explicit statutory grant of such jurisdiction.

Legal Issues:

  1. Whether the Sandiganbayan has jurisdiction to hear and decide petitions for quo warranto, particularly in cases involving the PCGG and sequestered shares.
  2. Whether the dismissal of the petition for quo warranto by the Sandiganbayan was justified based on the precedent set in Garcia, Jr. vs. Sandiganbayan.

Arguments:

Petitioners' Arguments:

  • The petitioners contended that the Sandiganbayan has exclusive and original jurisdiction over special civil actions, including quo warranto, particularly those involving incidents related to the powers and functions of the PCGG as outlined in Executive Order No. 14.
  • They argued that the Sandiganbayan's dismissal of their petition was erroneous and ignored applicable decisions that granted it jurisdiction over cases involving alleged ill-gotten wealth and the powers of the PCGG.

Respondents' Arguments:

  • The respondents maintained that the Sandiganbayan was precluded from exercising jurisdiction over the petition for quo warranto based on the ruling in Garcia, Jr. vs. Sandiganbayan, which established that the Sandiganbayan lacked the authority to issue such extraordinary writs.
  • They argued that the case did not involve the direct question of ill-gotten wealth but rather a dispute over the election of directors, which should fall under the jurisdiction of the Securities and Exchange Commission (SEC).

Court's Decision and Legal Reasoning:

The Supreme Court granted the petition, setting aside the Sandiganbayan's resolution dismissing the quo warranto petition. The Court reasoned that while the Sandiganbayan generally does not have jurisdiction over petitions for quo warranto, exceptions exist when the case involves incidents arising from or related to the PCGG's authority over alleged ill-gotten wealth. The Court emphasized that the core issue in the petition was the authority of the PCGG to vote the sequestered shares, which directly related to the jurisdiction granted to the Sandiganbayan under Executive Order No. 14.

The Court distinguished the current case from Garcia, noting that the latter did not involve questions of ill-gotten wealth or the sequestered status of shares. The Court reiterated that the Sandiganbayan's jurisdiction extends to all incidents arising from cases involving the PCGG, thus allowing the petitioners to challenge the qualifications of the private respondents based on the voting of the sequestered shares.

Significant Legal Principles Established:

  • The Sandiganbayan has exclusive and original jurisdiction over cases involving the PCGG and incidents related to alleged ill-gotten wealth, including petitions for quo warranto when they arise from such cases.
  • The ruling in Garcia, Jr. vs. Sandiganbayan does not preclude the Sandiganbayan from exercising jurisdiction in cases that directly challenge the authority of the PCGG over sequestered assets.