Cojuangco, Jr. v. Roxas
MODIFICATIONFacts
The Antecedents: The underlying dispute concerns the right of the Presidential Commission on Good Government (PCGG) to vote sequestered shares of San Miguel Corporation (SMC) and, consequently, to elect members to its board of directors. Petitioners, who are stockholders of SMC, assert that the PCGG unlawfully exercised dominion over these shares, thereby interfering with their fundamental shareholder rights. The core of the controversy lies in whether the PCGG, as a conservator of sequestered assets, can perform acts of strict ownership, such as voting shares in corporate elections. Procedural History: In G.R. No. 91925, after the 1989 SMC shareholders' meeting where the PCGG allegedly voted sequestered shares resulting in the election of certain directors, petitioners filed a petition for quo warranto with the Sandiganbayan. The Sandiganbayan, while affirming its jurisdiction, dismissed the petition for lack of cause of action, ruling that the PCGG had the right to vote sequestered shares. This ruling led to the filing of a petition for certiorari with the Supreme Court. In G.R. No. 93005, a similar situation arose following the 1990 SMC shareholders' meeting, and given the adverse ruling in the first case and the urgency of the matter, petitioners directly filed a petition for quo warranto with the Supreme Court, raising identical issues. The Petition: Petitioners seek a writ of certiorari and/or quo warranto to annul the Sandiganbayan's resolution and to declare that the PCGG cannot vote sequestered shares of stock. They argue that the right to vote such shares remains with the actual owners, not the PCGG, which acts merely as a conservator. Petitioners contend that the PCGG's actions in voting the sequestered shares during the SMC shareholders' meetings were ultra vires and deprived them of their right to participate in the election of the board of directors. They seek to have the elections set aside and to be recognized as duly elected directors, or at least to have a new election where their shares are properly voted.
Issue(s)
Whether the PCGG has the right to vote sequestered shares of stock. Whether the PCGG can elect members of the board of directors of a corporation using sequestered shares. Whether the Sandiganbayan committed grave abuse of discretion in affirming the PCGG's right to vote sequestered shares.
Ruling
The Supreme Court granted the petitions, ruling that the PCGG has no right to vote sequestered shares of stock. Consequently, the election of private respondents Adolfo Azcuna, Edison Coseteng, and Patricio Pineda as members of the SMC Board of Directors for 1990-1991 was set aside. However, the Court ordered a new election where petitioners could vote their shares, and declared the private respondents as de facto officers entitled to emoluments until they vacate their offices. The Sandiganbayan's resolution was set aside.
Ratio Decidendi
On the right of the PCGG to vote sequestered shares: The Court reiterated the ruling in BASECO vs. PCGG that the PCGG cannot exercise acts of dominion over sequestered property. The PCGG acts as a conservator, not an owner, and its powers are limited to administration. Voting sequestered shares and electing directors are acts of strict ownership, which the PCGG cannot perform. The Court emphasized that sequestration does not divest title, and the PCGG's role is to preserve assets, not to manage or control them as an owner would. The only conceivable exception is in cases of takeover of businesses actually belonging to the government or funded by public funds, which is not the situation in the present case. On the election of directors: The election of members of the board of directors is a clear act of ownership. Since the PCGG cannot perform acts of strict ownership, it cannot vote sequestered shares to elect directors. The Court found that the petitioners, as stockholders, have the right to vote their shares and to be voted for as members of the board. The PCGG's claim that voting shares is necessary to prevent dissipation of assets was rejected, as other means exist to preserve assets, such as restraining their sale or encumbrance. On the Sandiganbayan's resolution: The Court found that the Sandiganbayan committed a grave abuse of discretion in affirming the PCGG's right to vote sequestered shares. This resolution affected all subsequent shareholders' meetings and elections. The Court noted that while the petition in G.R. No. 91925 might be moot due to the expiration of the term of office, the issue of grave abuse of discretion remained a justiciable controversy. For G.R. No. 93005, the issue was still live as the term of office had not yet expired.
Main Doctrine
The Presidential Commission on Good Government (PCGG) cannot exercise acts of dominion over sequestered property, including voting sequestered shares of stock and electing members of the board of directors. The PCGG acts as a conservator, not an owner, and its powers are limited to administration.