ECJ and Sons Agricultural Enterprises v. Presidential Commission on Good Government
REITERATIONFacts
The Antecedents: Petitioners, ECJ and Sons Agricultural Enterprises, et al. (collectively, ECJ and Sons, et al.), were stockholders of record of United Coconut Planters Bank (UCPB). The Presidential Commission on Good Government (PCGG) issued two Writs of Sequestration: one on May 9, 1986, against Autonomous Development Corporation's assets, including its UCPB shares (Sequestration Order No. 86-0089), and another on June 6, 1986, against ECJ and Sons, et al.'s UCPB shares (Sequestration Order No. 86-0126). Procedural History: On July 31, 1987, the PCGG filed Civil Case No. 0033, which was later divided into eight complaints, including Civil Case No. 0033-A, concerning the allegedly anomalous purchase and use of UCPB shares. ECJ and Sons, et al. were among the assets of Eduardo Cojuangco, Jr. named in Civil Case No. 0033-A. On January 7, 1991, ECJ and Sons, et al. filed a Petition for Certiorari, Prohibition, and Injunction (Civil Case No. 0112) before the Sandiganbayan, assailing the validity of the sequestration orders, arguing lack of prima facie evidence of ill-gotten wealth and the lapse of the six-month period for filing a judicial action. On June 9, 2011, the Sandiganbayan granted their petition, declaring the sequestration orders void and lifting them. However, upon reconsideration, the Sandiganbayan reversed its decision on December 21, 2012, reinstating the sequestration orders, citing this Court's rulings in Republic v. COCOFED and Cojuangco, Jr. v. Republic. The Sandiganbayan denied ECJ and Sons, et al.'s motion for reconsideration on June 17, 2013. The Petition: ECJ and Sons, et al. filed a Petition for Review on Certiorari before the Supreme Court, arguing that the Sandiganbayan erred in restoring the writs of sequestration, claiming the cited cases did not involve their shares and that the issue of ill-gotten wealth is a question of fact resolved in their favor in the June 9, 2011 Decision. They also asserted their shares were not part of the 72.2% mentioned in the cited cases and that they were not impleaded in Civil Case No. 0033-A.
Issue(s)
Whether petitioners ECJ and Sons Agricultural Enterprises, et al. may be bound by the rulings in Republic v. COCOFED and Cojuangco, Jr. v. Republic despite not being impleaded in these cases. Whether the nature of petitioners ECJ and Sons Agricultural Enterprises, et al.'s shares of stock in United Coconut Planters Bank was settled in Republic v. COCOFED and Cojuangco, Jr. v. Republic. Whether the Sandiganbayan correctly restored the writs of sequestration over petitioners ECJ and Sons Agricultural Enterprises, et al.'s shares of stock in United Coconut Planters Bank.
Ruling
The Supreme Court partially granted the petition, setting aside the Sandiganbayan's December 21, 2012 and June 17, 2013 Resolutions, and ordered the lifting of Sequestration Order Nos. 86-0089 and 86-0126. The case was remanded to the Sandiganbayan for the disposition of the subject shares in accordance with this Court's final rulings in Cojuangco, Jr. v. Republic of the Philippines.
Ratio Decidendi
On the issue of whether petitioners may be bound by Republic v. COCOFED and Cojuangco, Jr. v. Republic despite not being impleaded: The Court held that petitioners can be bound by these rulings. It reiterated the principle that due to the nature of corporations, impleading all alleged repositories of ill-gotten wealth is not necessary for a comprehensive judgment. The Court cited Republic v. Sandiganbayan (First Division), explaining that corporations used as instruments or conduits for ill-gotten wealth, or whose shares were purchased with such wealth, are considered the 'res' of the action, and their impleading is not always required. Furthermore, the Court noted that the complaint in Civil Case No. 0033-A was amended to implead petitioners, a procedural act sanctioned by jurisprudence. Thus, petitioners are bound by the proceedings, including the Partial Summary Judgment. On the issue of whether the nature of petitioners' UCPB shares was settled in Republic v. COCOFED and Cojuangco, Jr. v. Republic: The Court found that while Republic v. COCOFED only made a prima facie finding regarding the public character of sequestered UCPB shares for the purpose of voting rights and did not settle all questions on sequestration, Cojuangco, Jr. v. Republic directly applied to petitioners. The dispositive portion of Cojuangco, Jr. explicitly stated that UCPB shares of stock of alleged fronts, nominees, and dummies of Eduardo M. Cojuangco, Jr., which form part of the 72.2% shares paid for by public funds, belong to the Republic of the Philippines. Petitioners were identified as among these "alleged fronts, nominees and dummies." The Court dismissed the certification from the UCPB Corporate Secretary as hearsay and not formally offered, and emphasized that Cojuangco, Jr. had already settled the ownership issue. On the issue of whether the Sandiganbayan correctly restored the writs of sequestration: The Court ruled that the Sandiganbayan erred in restoring the writs. It explained that sequestration is a provisional remedy to preserve property until final disposition. In this case, the final disposition of the ownership of the UCPB shares held by petitioners was settled by this Court's final and executory ruling in Cojuangco, Jr. v. Republic, which declared the shares as belonging to the Republic of the Philippines. Consequently, the sequestration orders became functus officio (having served their purpose) upon this final determination of ownership. Restoring the writs would unduly diminish the rights of the true owner and was therefore improper.
Main Doctrine
Sequestration orders become functus officio when the ownership of the sequestered properties has been conclusively determined by final judgment, rendering further sequestration unnecessary and improper.