Republic v. Sandiganbayan
REITERATIONFacts
1. The Antecedents: The underlying dispute concerns the right of respondent Eduardo Cojuangco, Jr., a stockholder, to inspect the corporate records of San Miguel Corporation (SMC) and United Coconut Planters Bank (UCPB). The Presidential Commission on Good Government (PCGG) had sequestered Cojuangco's shares in these corporations, leading to a conflict over his access to corporate information. 2. Procedural History: Cojuangco, as a stockholder, requested to inspect the corporate records of SMC and UCPB. Both corporations, advised by the PCGG due to the sequestration of Cojuangco's shares, initially required his requests to be coursed through the PCGG. When the PCGG denied these requests, Cojuangco filed separate petitions for prohibition and mandamus before the Sandiganbayan to enforce his right to inspect. The Sandiganbayan issued resolutions allowing Cojuangco to examine the corporate records, prompting the PCGG (petitioner) to file these petitions for certiorari with the Supreme Court. 3. The Petition: The petitioner, the Republic of the Philippines through the PCGG, filed petitions for certiorari assailing the Sandiganbayan's resolutions that permitted Eduardo Cojuangco, Jr., to inspect the corporate records of SMC and UCPB. The petitioner argued that the Sandiganbayan lacked jurisdiction, that the PCGG could validly refuse the inspection due to sequestration, and that the petition before the Sandiganbayan was barred by state immunity. The core of the petitioner's argument was that sequestration automatically suspended a stockholder's right of inspection, a contention the Supreme Court rejected, holding that sequestration does not divest ownership and that the right of inspection under Section 74 of the Corporation Code remains unless specific defenses are proven by the corporation.
Issue(s)
Whether the Sandiganbayan has jurisdiction over the petitions filed by respondent Eduardo Cojuangco, Jr. Whether the PCGG may validly refuse a stockholder's right to inspect corporate records when the shares are sequestered. Whether the petition filed by respondent Cojuangco, Jr., before the Sandiganbayan is barred by the doctrine of state immunity from suit. Whether sequestration automatically deprives a stockholder of their right of inspection under Section 74 of the Corporation Code.
Ruling
The Supreme Court dismissed the petitions for lack of merit and lifted the temporary restraining orders. The Sandiganbayan's resolutions allowing respondent Cojuangco to examine the corporate records of SMC and UCPB were upheld.
Ratio Decidendi
On the Sandiganbayan's Jurisdiction: The Court reiterated that under Executive Order No. 14, all cases involving assets illegally acquired or misappropriated by former President Ferdinand Marcos and his associates, including all incidents arising from, incidental to, or related to such cases, fall under the exclusive and original jurisdiction of the Sandiganbayan. Therefore, the propriety of the PCGG's action in denying Cojuangco's right of inspection, ostensibly based on sequestration orders, could be challenged before the Sandiganbayan. On the PCGG's Refusal of Inspection and Sequestration: The Court ruled that sequestration does not automatically deprive a stockholder of their right to inspect corporate records under Section 74 of the Corporation Code. The PCGG, as a conservator, does not become the owner of the sequestered shares nor the stockholder of record. The Court emphasized that if the PCGG cannot vote sequestered shares, it cannot restrain a stockholder from inspecting corporate records. The right of inspection is granted by law and can only be limited if the demand is not made in good faith or for a legitimate purpose, which must be set up as a defense by the corporation. On State Immunity from Suit: The doctrine of state immunity from suit was deemed inapplicable. The Court clarified that the petition filed by respondent Cojuangco, Jr., before the Sandiganbayan did not demand any affirmative performance from the State in its political capacity. The action sought to enforce a private right of a stockholder against corporate entities, not a claim against the State itself. On the Stockholder's Right of Inspection: The right of inspection under Section 74 of the Corporation Code is a statutory right based on ownership of corporate assets. While not absolute, the limitations require the corporation to prove that the stockholder is not acting in good faith, for a legitimate purpose, or that the demand is purely speculative or to gratify curiosity. In this case, the PCGG failed to discharge the burden of proof to show that respondent Cojuangco, Jr.'s actions were motivated by unlawful or ill-motivated designs. His substantial shareholdings negated the claim of mere curiosity.
Main Doctrine
Sequestration of shares does not automatically deprive a stockholder of their right to inspect corporate records under Section 74 of the Corporation Code, provided the inspection is done at reasonable hours, on business days, and for a legitimate purpose. The burden is on the corporation to prove any improper motive or bad faith.