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FIRST DIVISION
[ G.R. Nos. 215527-28, March 22, 2023 ]
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, JULIETA C. BERTUBEN, IDE C. TILLAH, EMMANUEL E. CRUZ, SERGIO OSMEÑA III, TIRSO ANTIPORDA JR., VICTOR S. ZIGA, LUIS M. MIRASOL, JR., AND JOSE Y. FERIA, PETITIONERS, VS. EDUARDO M. COJUANGCO JR., ENRIQUEZ M. COJUANGCO, MANUEL M. COJUANGCO,*** ESTELITO P. MENDOZA, AND GABRIEL L. VILLAREAL, RESPONDENTS.
D E C I S I O N
ZALAMEDA, J.:
This is a Petition for Review on Certiorari[1] (Petition) assailing the Decision[2] dated 15 July 2014 (Assailed Decision) and the Resolution[3] dated 25 November 2014 (Assailed Resolution) of the Sandiganbayan in Civil Case SB Nos. 0166 and 0169, which partially granted the petitions for quo warranto[4] filed by respondents Eduardo M. Cojuangco Jr., Enriquez M. Cojuangco, Manuel M. Cojuangco, Estelito P. Mendoza (Mendoza), and Gabriel L. Villareal.
Antecedents
During the 1995 annual stockholders' meeting of San Miguel Corporation (SMC), respondents and individual petitioners Julieta C. Bertuben (Bertuben), Ide C. Tillah (Tillah), Emmanuel E. Cruz (Cruz), Sergio Osmeña III, and Tirso D. Antiporda Jr. (Antiporda), were among the nominees who vied for a seat in the SMC Board of Directors (SMC Board).[5]
Individual petitioners were nominated by petitioner Presidential Commission on Good Government (PCGG) following the registration in their respective names of SMC sequestered shares of stock belonging to some 43[6] corporate stockholders (Corporate Shares), in order to allow the nominees to qualify for the SMC Board.[7] PCGG voted the Corporate Shares in favor of the individual petitioners. On the other hand, Mendoza, as the appointed proxy of said corporate shareholders, voted the Corporate Shares in favor of respondents.[8]
Following the canvass of the votes cast, the individual petitioners were declared to have been the elected as members of the SMC Board. None of the respondents made it.[9]
Mendoza protested the results of the election questioning PCGG's authority to vote the Corporate Shares. He also argued that the registration of the Corporate Shares in the name of individual petitioners was improper, thus, the latter should have been disqualified for not owning at least 5,000 shares in SMC as required under the corporation's By-laws. Petitioner Jose Feria (Feria), then SMC's corporate secretary, overruled the protest.[10] This prompted the filing of the quo warranto petition docketed as Civil Case SB. No. 0166.[11]
A similar factual scenario happened during the 1996 annual shareholders' meeting where individual petitioners Bertuben, Tillah, Cruz, Antiporda, Victor S. Ziga, and Luis M. Mirasol, Jr., as PCGG nominees, were declared elected to the SMC Board.[12] Respondents thereafter filed another quo warranto petition docketed as Civil Case SB. No. 0169.[13]
In its Resolutions dated 09 May 1995 and 07 May 1996, the Sandiganbayan dismissed the quo warranto petitions for lack of jurisdiction.[14] Respondents questioned the said dismissal[15] before this Court in Cojuangco, Jr. v. Sandiganbayan,[16] where We held that Sandiganbayan has jurisdiction over petitions for quo warranto "when it involves incident arising from, or related to PCGG cases over alleged 'ill-gotten wealth' within the context of Section 2 of Executive Order No. 14." Accordingly, the Court directed the Sandiganbayan to give due course to respondents' petitions for quo warranto.[17]
In compliance thereto, the Sandiganbayan directed petitioners to file their responsive pleadings.[18] The order notwithstanding, petitioners filed a Motion to Dismiss dated 17 March 1997 in Civil Case SB No. 0166 on the ground of mootness due to the expiration of the term of the individual petitioners.[19] In Civil Case SB No. 0169, petitioners filed a Motion to Hold in Abeyance dated 10 April 1997 citing the pendency of G.R. No. 115352[20] before this Court, which allegedly involves issues similar to the present case.[21]
Respondents opposed the said motions arguing, among others, that the issues remained relevant despite the lapse of the individual petitioners' term of office and that G.R. No. 115352 cannot be the basis for suspending the proceedings since said case involved the election of the 1993 SMC Board.[22] Respondents then prayed that the petitioners be declared in default for their failure to file responsive pleadings.[23]
Meanwhile, Feria filed a motion to suspend the running of the period to file his responsive pleading pending the resolution of the motion to hold the case in abeyance.[24] Feria subsequently filed an Answer dated 23 December 1997 after the promulgation of the Court's resolution in G.R. No. 115352 remanding to the Sandiganbayan the petition subject thereof.[25]
On 15 July 2014, the Sandiganbayan rendered the Assailed Decision, the dispositive portion of which reads:
Anent the main issue of whether PCGG has authority to vote the Corporate Shares, the Sandiganbayan ruled in the negative.[29] It declared that the registered owners of the Corporate Shares, not the PCGG, had the authority to vote the same[30] citing the pronouncements of the Court in Bataan Shipyard & Engineering Company, Inc. v. PCGG[31] (BASECO) and Republic v. Sandiganbayan[32] (Republic). Consequently, the Sandiganbayan declared the nullity of the election of the individual petitioners, but held that respondents cannot be declared duly elected members of the SMC Board[33] consistent with Cojuangco Jr. v. Roxas[34] (Cojuangco Jr.) and since there was "no showing that [respondent] Mendoza cast his vote and those of the principals he was representing by way of proxy during the election."[35]
Petitioners moved for reconsideration[36] reiterating that the case has been mooted by the expiration of the term of office of the individual petitioners and the promulgation of the decision of the Court in Republic. The motion was denied by the Sandiganbayan in the Assailed Resolution.[37]
Hence, the instant Petition.
Issues
Petitioners maintain that the quo warranto petitions should be dismissed for mootness in view of subsequent elections of the SMC Board from 1997 to the present and the Court's decision in Republic.[38] In the alternative, petitioners contend that if dismissal is not warranted, they should be given the opportunity to present evidence as they were deprived of their right to due process when Sandiganbayan ruled on the merits of the quo warranto petitions in resolving respondents' motion to declare petitioners in default.[39]
Respondents, on the other hand, argue that petitioners' theory that a quo warranto petition automatically becomes moot upon the expiration of term would set a dangerous precedent.[40] They claim that Sandiganbayan correctly ruled that the exceptions to the mootness principle apply in this case.[41] Anent the argument of denial of due process, respondents contend that petitioners were given the opportunity to submit responsive pleadings, which they failed to do.[42]
Ruling of the Court
The Petition is meritorious. The Sandiganbayan should have dismissed the quo warranto petitions for being moot and academic.
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical value.[43] As a rule, courts decline jurisdiction over such case, or dismiss it on ground of mootness.[44]
In Legaspi Towers 300, Inc., v. Muer,[45] a case for nullification of election of the board of directors of Legaspi Towers 300, Inc., the Court affirmed the resolution of the appellate court that the subsequent election of a new set of board of directors rendered the case moot and academic.
Here, the expiration of the term of office of the individual petitioners as members of the SMC Board for the years 1995 and 1996 is a supervening event that renders the quo warranto petitions moot and academic.
In a quo warranto case, where usurpation is found, judgment shall be rendered ousting respondents from the office and determining the respective rights in and to the said office.[46] As correctly argued by petitioners, the grant of the prayer in the quo warranto petitions, i.e., the ouster of the individual petitioners from the SMC Board, would serve no useful purpose as there is no one to oust.
To be clear, this is not to say that the expiration of the term of office automatically results in the dismissal of a quo warranto case. It is well to note that We have previously resolved the quo warranto petitions involving the election of PCGG nominees in the 1989 election of the SMC Board in Cojuangco Jr.,[47] notwithstanding the expiration of the term of office of the PCGG nominees therein. The Court stated:
Relatedly, in Antiporda, Jr. v. Sandiganbayan[49] (Antiporda), the Court ordered the remand of the case in 2001 notwithstanding the fact that the quo warranto case therein pertains to the 1994 SMC Board elections. The Court likewise remanded the case pertaining to the 1998 SMC Board elections in PCGG v. Cojuangco Jr.[50] (PCGG [1999]). Like Cojuangco Jr. [1991], these cases were decided by the Court during the pendency of the main sequestration suit.
The right to vote shares is a mere incident of ownership thereof.[51] The registered owner of the share, as a general rule, exercises such right. However, in sequestration proceedings initiated by the PCGG, the right to vote becomes a separate issue in view of the jurisprudence setting forth exceptions to the aforesaid general rule as will be discussed further below. Nevertheless, the final resolution on the issue of ownership of sequestered shares would necessarily render the incidental issue on the right to vote moot and academic.
Thus, in resolving the issue on who between the PCGG and the corporate stockholders[52] has the right to vote the SMC-sequestered shares during the 1998 SMC Board elections, the Court in PCGG[53] stated:
As admitted by both parties,[59] Republic resolved the issue of ownership of the Corporate Shares. The issue in Civil Case SB Nos. 0166 and 0169 was limited to the right to vote the said shares. Since the right to vote is an incident of ownership, any decision of the Sandiganbayan on the said issue would be subject to the final disposition on the ownership of the Corporate Shares. As such, the disposition of the issue of ownership of the Corporate Shares, as well as the lifting of the writs of sequestration thereon, laid to rest any and all issue on the authority of the PCGG to vote the same.
Further, the Court does not agree with the Sandiganbayan that the exceptions to the mootness principle apply in this case.
At this juncture, it bears emphasizing that the Assailed Decision, in so far as it resolved the authority of the PCGG to vote the Corporate Shares, did not formulate any new principles for the guidance of the bench and the bar. The issues raised do not call for a clarification of any constitutional or legal principle.[60] This is because the scope and extent of PCGG's authority over sequestered shares has long been settled.
In BASECO,[61] the Court laid down the guiding principles in relation to the authority of PCGG over sequestered properties. There, the Court stated that PCGG as a conservator "cannot exercise acts of dominion over property sequestered, frozen or provisionally taken over," and may exercise only powers of administration over the same. However, it was clarified that "in the special instance of a business enterprise shown by evidence to have been 'taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos,' x x x the PCGG may in this case exercise some measure of control in the operation, running, or management of the business itself. But even in this special situation, the intrusion into management should be restricted to the minimum degree necessary to accomplish the legislative will, which is 'to prevent the disposal or dissipation' of the business enterprise." The Court likewise held that "it is within the parameters of these conditions and circumstances that the PCGG may properly exercise the prerogative to vote sequestered stock of corporations".
Cojuangco Jr. then reiterated the principles laid in BASECO, and established minimum safeguards to enable the PCGG to perform its functions as conservator of the sequestered shares of stock pending final determination by the courts as to whether or not the same constitutes ill-gotten wealth or a final compromise agreement between the parties. The Court likewise made a pronouncement on the effect of the nullity of the election of the PCGG nominees to the SMC Board, viz:
Finally, the Court is not convinced that the case is capable of repetition, yet evading review. For the said exception to apply, two elements must concur: (1) the challenged action was in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there was a reasonable expectation that the same complaining party would be subjected to the same action again.[64] Here, the second element is absent in view of Republic, which already laid to rest the controversy on ownership of the Corporate Shares and the incidental issue regarding PCGG's authority to vote the same.
With the foregoing disquisition, the Court finds it unnecessary to discuss the alleged denial of due process.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated 15 July 2014 and the Resolution dated 25 November 2014 by the Sandiganbayan in Civil Case SB Nos. 0166 and 0169 are REVERSED AND SET ASIDE. The petitions for quo warranto in Civil Case SB Nos. 0166 and 0169 are hereby dismissed for being moot and academic.
SO ORDERED.
Hernando (Acting Chairperson), Gaerlan,* and Rosario, JJ., concur.
Marquez,** J., on official business.
* Designated as additional Member vice Chief Justice Gesmundo per Raffle dated 08 March 2023.
** On official business.
*** Manuel Cojuanco was not named as respondent in the first page of the Petition, but was indicated as respondent in the "Parties."
[1] Rollo, pp. 25-53.
[2] Id. at 9-19. Penned by Associate Justice Efren N. Dela Cruz and concurred in by Associate Justices Rodolfo A. Ponferrada and Rafael R. Lagos.
[3] Id. at 20-23. Penned by Associate Justice Efren N. Dela Cruz and concurred in by Associate Justices Rodolfo A. Ponferrada and Rafael R. Lagos.
[4] Id. at 79-106; 107-138.
[5] Id. at 10.
[6] Agricultural Consultancy Services, Inc.; Archipelago Realty Corp.; Balete Ranch, Inc.; Black Stallion Ranch Inc.; Christensen Plantation Company; Discovery Realty Corp.; Dream Pastures, Inc.; Echo Ranch, Inc.; Far East Ranch, Inc.; First United Transport, Inc.; Habagat Realty Development, Inc.; Kalawakan Resorts, Inc.; Kaunlaran Agricultural Corp.; Labayug Air Terminals, Inc.; Landair International Marketing Corporation; LHL Cattle Corporation; Lucena Oil Factory Inc.; Meadow Lark Plantations, Inc.; Metroplex Commodities, Inc.; Misty Mountain Agricultural Corp.; Northeast Contract Traders, Inc.; Northern Carriers Corporation; Oceanside Maritime Ent., Inc.; Oro Verde Services, Inc.; Pastoral Farms, Inc.; PCY Oil Manufacturing Corp.; Philippine Technologies, Inc.; Primavera Farms, Inc.; Punong-Bayan Housing Devt. Corp.; Pura Electric Company, Inc.; Radio Audience Developers Integrated Organization, Inc.; Radyo Pilipino Corporation; Rancho Grande, Inc.; Reddee Developers, Inc.; San Esteban Development Corp.; Silver Leaf Plantations, Inc.; Southern Services Traders, Inc.; Southern Star Cattle Corp.; Spade One Resorts Corp.; Unexplored Land Developers, Inc.; Verdant Plantations, Inc.; Vesta Agricultural Corp.; and Wings Resorts Corporation.
[7] Rollo, p. 83.
[8] Id. at 85.
[9] Id. at 10.
[10] Id. at 86.
[11] Id. at 79-106.
[12] Id. at 114.
[13] Id. at 107-138.
[14] Id. at 10.
[15] Id.
[16] 329 Phil. 238 (1996).
[17] Rollo, p. 10.
[18] Id. at 10b-11.
[19] Id. at 11.
[20] Cojuangco v. Calpo, G.R. No. 115352, 10 June 1993.
[21] Rollo, p. 157.
[22] Id.
[23] Id. at 158.
[24] Id. at 30.
[25] Id.
[26] Id. at 19.
[27] Id. at 14.
[28] Id.
[29] Id. at 15.
[30] Id. at 16.
[31] 234 Phil. 180 (1987).
[32] 663 Phil. 212 (2011).
[33] Rollo, p. 18.
[34] 273 Phil. 168 (1991).
[35] Rollo, pp. 18-19.
[36] Id. 59-58.
[37] Id. at 23.
[38] Id. at 31.
[39] Id. at 46-47.
[40] Id. at 164.
[41] Id.
[42] Id. at 170-171.
[43] The respondents in PCGG are the same corporate stockholders in the instant case. 361 Phil. 892 (1999).
[44] Id.
[45] 688 Phil. 104 (2012).
[46] Section 9, Rule 66 of the Rules on Civil Procedure.
[47] 273 Phil. 168 (1991).
[48] Id. at 186-187. The Sandiganbayan in its Resolution dated 16 November 1989 dismissed the quo warranto petition for lack of cause of action on the ground that the PCGG has the right to vote the sequestered shares.
[49] 410 Phil. 597 (2001).
[50] 361 Phil. 892 (1999).
[51] See Republic v. COCOFED, G.R. 147062-64, 423 Phil. 735 (2001).
[52] The respondents in PCGG are the same corporate stockholders in the instant case.
[53] 361 Phil. 892 (1999).
[54] Id. at 898-899.
[55] 663 Phil. 212 (2011).
[56] Id. at 328.
[57] Civil Case 0033-F is one of the eight (8) subdivided complaints in Civil Case No. 0033 [civil action for recovery of ill-gotten wealth]. It pertains to the alleged unlawful acquisition of SMC shares of stock by Eduardo Cojuangco Jr. and several corporations. Civil Case No. 033-F further distinguished the SMC shares subject of the case into two (2) blocks: the CIIF Block [33 million SMC shares purchased through fourteen (14) holding companies, which are owned by six (6) so-called CIIF companies] and the Cojuangco et al Block [16,276,879 shares in the names of the so-called Cojuangco companies]. The issue of ownership of the CIIF Block of SMC shares has been resolved in the Decision dated 24 January 2012 and Resolution dated 04 September 2012 penned by Justice Presbitero Velasco Jr. in G.R. Nos. 177857-58 & 178193 entitled Philippine Coconut Producers Federation, Inc. v. Republic.
[58] 663 Phil. 212, 331-333 (2011). See footnote 8.
[59] Rollo, p. 37, 172.
[60] See Mattel, Inc. v. Francisco, 582 Phil. 492 (2008).
[61] 234 Phil. 180 (1987).
[62] 423 Phil. 735 (2001).
[63] Id. at 753-757.
[64] Madrilejos v. Gatdula, G.R. No. 184389, 24 September 2019 citing Weinstein et al. v. Bradford, 423 US 147 (1975). See also Pormento v. Estrada, 643 Phil. 735 (2010) and International Service for the Acquisition of Agri-Biotech Applications, Inc. v. Greenpeace Southeast Asia (Philippines), 791 Phil. 243 (2016).
During the 1995 annual stockholders' meeting of San Miguel Corporation (SMC), respondents and individual petitioners Julieta C. Bertuben (Bertuben), Ide C. Tillah (Tillah), Emmanuel E. Cruz (Cruz), Sergio Osmeña III, and Tirso D. Antiporda Jr. (Antiporda), were among the nominees who vied for a seat in the SMC Board of Directors (SMC Board).[5]
Individual petitioners were nominated by petitioner Presidential Commission on Good Government (PCGG) following the registration in their respective names of SMC sequestered shares of stock belonging to some 43[6] corporate stockholders (Corporate Shares), in order to allow the nominees to qualify for the SMC Board.[7] PCGG voted the Corporate Shares in favor of the individual petitioners. On the other hand, Mendoza, as the appointed proxy of said corporate shareholders, voted the Corporate Shares in favor of respondents.[8]
Following the canvass of the votes cast, the individual petitioners were declared to have been the elected as members of the SMC Board. None of the respondents made it.[9]
Mendoza protested the results of the election questioning PCGG's authority to vote the Corporate Shares. He also argued that the registration of the Corporate Shares in the name of individual petitioners was improper, thus, the latter should have been disqualified for not owning at least 5,000 shares in SMC as required under the corporation's By-laws. Petitioner Jose Feria (Feria), then SMC's corporate secretary, overruled the protest.[10] This prompted the filing of the quo warranto petition docketed as Civil Case SB. No. 0166.[11]
A similar factual scenario happened during the 1996 annual shareholders' meeting where individual petitioners Bertuben, Tillah, Cruz, Antiporda, Victor S. Ziga, and Luis M. Mirasol, Jr., as PCGG nominees, were declared elected to the SMC Board.[12] Respondents thereafter filed another quo warranto petition docketed as Civil Case SB. No. 0169.[13]
In its Resolutions dated 09 May 1995 and 07 May 1996, the Sandiganbayan dismissed the quo warranto petitions for lack of jurisdiction.[14] Respondents questioned the said dismissal[15] before this Court in Cojuangco, Jr. v. Sandiganbayan,[16] where We held that Sandiganbayan has jurisdiction over petitions for quo warranto "when it involves incident arising from, or related to PCGG cases over alleged 'ill-gotten wealth' within the context of Section 2 of Executive Order No. 14." Accordingly, the Court directed the Sandiganbayan to give due course to respondents' petitions for quo warranto.[17]
In compliance thereto, the Sandiganbayan directed petitioners to file their responsive pleadings.[18] The order notwithstanding, petitioners filed a Motion to Dismiss dated 17 March 1997 in Civil Case SB No. 0166 on the ground of mootness due to the expiration of the term of the individual petitioners.[19] In Civil Case SB No. 0169, petitioners filed a Motion to Hold in Abeyance dated 10 April 1997 citing the pendency of G.R. No. 115352[20] before this Court, which allegedly involves issues similar to the present case.[21]
Respondents opposed the said motions arguing, among others, that the issues remained relevant despite the lapse of the individual petitioners' term of office and that G.R. No. 115352 cannot be the basis for suspending the proceedings since said case involved the election of the 1993 SMC Board.[22] Respondents then prayed that the petitioners be declared in default for their failure to file responsive pleadings.[23]
Meanwhile, Feria filed a motion to suspend the running of the period to file his responsive pleading pending the resolution of the motion to hold the case in abeyance.[24] Feria subsequently filed an Answer dated 23 December 1997 after the promulgation of the Court's resolution in G.R. No. 115352 remanding to the Sandiganbayan the petition subject thereof.[25]
On 15 July 2014, the Sandiganbayan rendered the Assailed Decision, the dispositive portion of which reads:
WHEREFORE, IN LIGHT OF ALL THE FOREGOING, the Court resolves as follows:The Sandiganbayan, adopting a policy of liberality, treated the motions filed by petitioners as substantial compliance to its orders, albeit not being responsive pleadings.[27] It then rejected petitioners' mootness argument citing two of the established exceptions to the mootness doctrine, i.e., (i) the issue raised requires the formulation of controlling principles to guide the bench, bar and public, and (ii) the case is capable of repetition, yet evading review.[28]SO ORDERED.[26]
- to DENY petitioners' counter-motion to declare respondents in default in both cases;
- to ADMIT respondent Feria's Answer attached to his motion to admit the same;
- to PARTLY GRANT the instant Petitions. The election of respondents Julieta C. Bertuben, Ide C. Tillah, Emmanuel E. Cruz, Sergio Osmeña III, Tirso D. Antiporda, Jr. as members of the Board of Directors of SMC in 1995, and respondents Julieta C. Bertuben, Ide C. Tillah, Emmanuel E. Cruz, Jr., Tirso D. Antiporda, Jr., Victor S. Ziga and Luis M. Mirasol, Jr. as members of the Board of Directors of SMC in 1996, are declared void and are hereby set aside.
Anent the main issue of whether PCGG has authority to vote the Corporate Shares, the Sandiganbayan ruled in the negative.[29] It declared that the registered owners of the Corporate Shares, not the PCGG, had the authority to vote the same[30] citing the pronouncements of the Court in Bataan Shipyard & Engineering Company, Inc. v. PCGG[31] (BASECO) and Republic v. Sandiganbayan[32] (Republic). Consequently, the Sandiganbayan declared the nullity of the election of the individual petitioners, but held that respondents cannot be declared duly elected members of the SMC Board[33] consistent with Cojuangco Jr. v. Roxas[34] (Cojuangco Jr.) and since there was "no showing that [respondent] Mendoza cast his vote and those of the principals he was representing by way of proxy during the election."[35]
Petitioners moved for reconsideration[36] reiterating that the case has been mooted by the expiration of the term of office of the individual petitioners and the promulgation of the decision of the Court in Republic. The motion was denied by the Sandiganbayan in the Assailed Resolution.[37]
Hence, the instant Petition.
Petitioners maintain that the quo warranto petitions should be dismissed for mootness in view of subsequent elections of the SMC Board from 1997 to the present and the Court's decision in Republic.[38] In the alternative, petitioners contend that if dismissal is not warranted, they should be given the opportunity to present evidence as they were deprived of their right to due process when Sandiganbayan ruled on the merits of the quo warranto petitions in resolving respondents' motion to declare petitioners in default.[39]
Respondents, on the other hand, argue that petitioners' theory that a quo warranto petition automatically becomes moot upon the expiration of term would set a dangerous precedent.[40] They claim that Sandiganbayan correctly ruled that the exceptions to the mootness principle apply in this case.[41] Anent the argument of denial of due process, respondents contend that petitioners were given the opportunity to submit responsive pleadings, which they failed to do.[42]
The Petition is meritorious. The Sandiganbayan should have dismissed the quo warranto petitions for being moot and academic.
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical value.[43] As a rule, courts decline jurisdiction over such case, or dismiss it on ground of mootness.[44]
In Legaspi Towers 300, Inc., v. Muer,[45] a case for nullification of election of the board of directors of Legaspi Towers 300, Inc., the Court affirmed the resolution of the appellate court that the subsequent election of a new set of board of directors rendered the case moot and academic.
Here, the expiration of the term of office of the individual petitioners as members of the SMC Board for the years 1995 and 1996 is a supervening event that renders the quo warranto petitions moot and academic.
In a quo warranto case, where usurpation is found, judgment shall be rendered ousting respondents from the office and determining the respective rights in and to the said office.[46] As correctly argued by petitioners, the grant of the prayer in the quo warranto petitions, i.e., the ouster of the individual petitioners from the SMC Board, would serve no useful purpose as there is no one to oust.
To be clear, this is not to say that the expiration of the term of office automatically results in the dismissal of a quo warranto case. It is well to note that We have previously resolved the quo warranto petitions involving the election of PCGG nominees in the 1989 election of the SMC Board in Cojuangco Jr.,[47] notwithstanding the expiration of the term of office of the PCGG nominees therein. The Court stated:
It is true that in G.R. No. 91925 the term of office of the assailed members of the board of directors, private respondents therein, for 1989-1990 had expired. To this extent said petition may be considered moot and academic. However, the issue of whether public respondent Sandiganbayan committed a grave abuse of discretion in rendering the resolution dated November 16, 1989, which affects all subsequent shareholders' meetings and elections of the members of the board of directors of SMC, is a justiciable controversy that must be resolved.Clearly, the Court in Cojuangco Jr. [1991] saw it fit to resolve the quo warranto petitions upon a finding that the case remained justiciable. Indeed, pending the main sequestration suit, the resolution of the right of PCGG to vote the sequestered shares would affect subsequent shareholders' meetings and elections, as it in fact affects the 1991 SMC Board elections subject of G.R. No. 93005.
As to G.R. No. 93005 the term of office of private respondents as members of the SMC board of directors will expire on or after another election is held in April 1991.
Thus, the issue raised in G.R. No. 93005 relating to the election of the members of the board for 1990-1991 pursuant to sequestered shares of stock is a justiciable issue which should be determined once and for all.[48]
Relatedly, in Antiporda, Jr. v. Sandiganbayan[49] (Antiporda), the Court ordered the remand of the case in 2001 notwithstanding the fact that the quo warranto case therein pertains to the 1994 SMC Board elections. The Court likewise remanded the case pertaining to the 1998 SMC Board elections in PCGG v. Cojuangco Jr.[50] (PCGG [1999]). Like Cojuangco Jr. [1991], these cases were decided by the Court during the pendency of the main sequestration suit.
The right to vote shares is a mere incident of ownership thereof.[51] The registered owner of the share, as a general rule, exercises such right. However, in sequestration proceedings initiated by the PCGG, the right to vote becomes a separate issue in view of the jurisprudence setting forth exceptions to the aforesaid general rule as will be discussed further below. Nevertheless, the final resolution on the issue of ownership of sequestered shares would necessarily render the incidental issue on the right to vote moot and academic.
Thus, in resolving the issue on who between the PCGG and the corporate stockholders[52] has the right to vote the SMC-sequestered shares during the 1998 SMC Board elections, the Court in PCGG[53] stated:
The fact that the sequestration remains does not automatically deprive the stockholders of their right to vote those shares which is a basic feature of their ownership — although questioned. But in resolving who should vote the sequestered shares, necessitates a determination of the alleged ill-gotten character of those shares and consequently the rightful ownership thereof, which issue is still the subject of the main case still pending in the courts. In any case, what is involved herein is merely an incident of the main case and is limited only to the stockholders meeting scheduled for April 20, 1998. This resolution is without prejudice to the final disposition of the merits of the main suit.Unlike Cojuangco Jr. [1991], Antiporda, and PCGG [1999], the instant case no longer presents any justiciable controversy in light of the decision of the Court in Republic,[55] which declared the Cojuangco et al. block of SMC shares, or the Corporate Shares herein, as exclusive property of the registered owners thereof. The fallo reads:
Until the main sequestration suit is resolved, the right to vote the SMC sequestered shares depends on whether the two-tiered test set by the Court in its June 10, 1993 Resolution in G.R. No. 115352 (Cojuangco v. Calpo) concurs.[54]
WHEREFORE, the Court dismisses the petitions for certiorari in G.R. Nos. 166859 and 169023; denies the petition for review on certiorari in G.R. No. 180702; and, accordingly, affirms the decision promulgated by the Sandiganbayan on November 28, 2007 in Civil Case No. 0033-F.Republic involved three consolidated petitions relating to the Cojuangco et al. block of SMC shares, which shares were subject of the Third Amended Complaint docketed as Civil Case No. 0033-F.[57] There, We affirmed the ruling of the Sandiganbayan dismissing the Third Amended Complaint for failure of the Republic to establish by preponderance of evidence that the said SMC shares were illegally acquired using coconut-levy funds. The lifting of the writs of sequestration[58] affecting said block of shares was likewise upheld.
The Court declares that the block of shares in San Miguel Corporation in the names of respondents Cojuangco, et al. subject of Civil Case No. 0033-F is the exclusive property of Cojuangco, et al. as registered owners.
Accordingly, the lifting and setting aside of the Writs of Sequestration affecting said block of shares (namely: Writ of Sequestration No. 86-0062 dated April 21, 1986; Writ of Sequestration No. 86-0069 dated April 22, 1986; Writ of Sequestration No. 86-0085 dated May 9, 1986; Writ of Sequestration No. 86-0095 dated May 16, 1986; Writ of Sequestration No. 86-0096 dated May 16, 1986; Writ of Sequestration No. 86-0097 dated May 16, 1986; Writ of Sequestration No. 86-0098 dated May 16, 1986; Writ of Sequestration No. 86-0042 dated April 8, 1986; and Writ of Sequestration No. 87-0218 dated May 27, 1987) are affirmed; and the annotation of the conditions prescribed in the Resolutions promulgated on October 8, 2003 and June 24, 2005 is cancelled.
SO ORDERED.[56] (Emphasis in the original. Italics and underscoring supplied)
As admitted by both parties,[59] Republic resolved the issue of ownership of the Corporate Shares. The issue in Civil Case SB Nos. 0166 and 0169 was limited to the right to vote the said shares. Since the right to vote is an incident of ownership, any decision of the Sandiganbayan on the said issue would be subject to the final disposition on the ownership of the Corporate Shares. As such, the disposition of the issue of ownership of the Corporate Shares, as well as the lifting of the writs of sequestration thereon, laid to rest any and all issue on the authority of the PCGG to vote the same.
Further, the Court does not agree with the Sandiganbayan that the exceptions to the mootness principle apply in this case.
At this juncture, it bears emphasizing that the Assailed Decision, in so far as it resolved the authority of the PCGG to vote the Corporate Shares, did not formulate any new principles for the guidance of the bench and the bar. The issues raised do not call for a clarification of any constitutional or legal principle.[60] This is because the scope and extent of PCGG's authority over sequestered shares has long been settled.
In BASECO,[61] the Court laid down the guiding principles in relation to the authority of PCGG over sequestered properties. There, the Court stated that PCGG as a conservator "cannot exercise acts of dominion over property sequestered, frozen or provisionally taken over," and may exercise only powers of administration over the same. However, it was clarified that "in the special instance of a business enterprise shown by evidence to have been 'taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos,' x x x the PCGG may in this case exercise some measure of control in the operation, running, or management of the business itself. But even in this special situation, the intrusion into management should be restricted to the minimum degree necessary to accomplish the legislative will, which is 'to prevent the disposal or dissipation' of the business enterprise." The Court likewise held that "it is within the parameters of these conditions and circumstances that the PCGG may properly exercise the prerogative to vote sequestered stock of corporations".
Cojuangco Jr. then reiterated the principles laid in BASECO, and established minimum safeguards to enable the PCGG to perform its functions as conservator of the sequestered shares of stock pending final determination by the courts as to whether or not the same constitutes ill-gotten wealth or a final compromise agreement between the parties. The Court likewise made a pronouncement on the effect of the nullity of the election of the PCGG nominees to the SMC Board, viz:
In the light of the foregoing discussion, the Court finds and so holds that the PCGG has no right to vote the sequestered shares of petitioners including the sequestered corporate shares. Only their owners, duly authorized representatives or proxies may vote the said shares. Consequently, the election of private respondents Adolfo Azcuna, Edison Coseteng and Patricio Pineda as members of the board of directors of SMC for 1990-1991 should be set aside.The rules regarding the authority of the PCGG to vote sequestered shares were further elucidated in subsequent cases which were summarized in Republic v. COCOFED,[62] to wit:
However, petitioners cannot be declared duly elected members of the board of directors thereby. An election for the purpose should be held where the questioned shares may be voted by their owners and/or their proxies. Such election may be held at the next shareholders' meeting in April 1991 or at such date as may be set under the by-laws of SMC.
Private respondents in both cases are hereby declared to be de facto officers who in good faith assumed their duties and responsibilities as duly elected members of the board of directors of the SMC. They are thereby legally entitled to the emoluments of the office including salary, fees and other compensation attached to the office until they vacate the same.
Notably, the foregoing principles were applied by the Sandiganbayan in the Assailed Decision.
At the outset, it is necessary to restate the general rule that the registered owner of the shares of a corporation exercises the right and the privilege of voting. This principle applies even to shares that are sequestered by the government, over which the PCGG as a mere conservator cannot, as a general rule, exercise acts of dominion. On the other hand, it is authorized to vote these sequestered shares registered in the names of private persons and acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered test devised by the Court in Cojuangco v. Calpo and PCGG v. Cojuangco Jr., as follows:
(1) Is there prima facie evidence showing that the said shares are ill-gotten and thus belong to the State?
(2) Is there an imminent danger of dissipation, thus necessitating their continued sequestration and voting by the PCGG, while the main issue is pending with the Sandiganbayan?
From the foregoing general principle, the Court in Baseco v. PCGG (hereinafter "Baseco") and Cojuangco Jr. v. Roxas ("Cojuangco-Roxas") has provided two clear "public character" exceptions under which the government is granted the authority to vote the shares:
(1) Where government shares are taken over by private persons or entities who/which registered them in their own names, and
(2) Where the capitalization or shares that were acquired with public funds somehow landed in private hands.x x x x
In short, when sequestered shares registered in the names of private individuals or entities are alleged to have been acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequestered shares in the name of private individuals or entities are shown, prima facie, to have been (1) originally government shares, or (2) purchased with public funds or those affected with public interest, then the two-tiered test does not apply. Rather, the public character exceptions in Baseco v. PCGG and Cojuangco Jr. v. Roxas prevail; that is, the government shall vote the shares.[63]
Finally, the Court is not convinced that the case is capable of repetition, yet evading review. For the said exception to apply, two elements must concur: (1) the challenged action was in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there was a reasonable expectation that the same complaining party would be subjected to the same action again.[64] Here, the second element is absent in view of Republic, which already laid to rest the controversy on ownership of the Corporate Shares and the incidental issue regarding PCGG's authority to vote the same.
With the foregoing disquisition, the Court finds it unnecessary to discuss the alleged denial of due process.
WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated 15 July 2014 and the Resolution dated 25 November 2014 by the Sandiganbayan in Civil Case SB Nos. 0166 and 0169 are REVERSED AND SET ASIDE. The petitions for quo warranto in Civil Case SB Nos. 0166 and 0169 are hereby dismissed for being moot and academic.
SO ORDERED.
Hernando (Acting Chairperson), Gaerlan,* and Rosario, JJ., concur.
Marquez,** J., on official business.
* Designated as additional Member vice Chief Justice Gesmundo per Raffle dated 08 March 2023.
** On official business.
*** Manuel Cojuanco was not named as respondent in the first page of the Petition, but was indicated as respondent in the "Parties."
[1] Rollo, pp. 25-53.
[2] Id. at 9-19. Penned by Associate Justice Efren N. Dela Cruz and concurred in by Associate Justices Rodolfo A. Ponferrada and Rafael R. Lagos.
[3] Id. at 20-23. Penned by Associate Justice Efren N. Dela Cruz and concurred in by Associate Justices Rodolfo A. Ponferrada and Rafael R. Lagos.
[4] Id. at 79-106; 107-138.
[5] Id. at 10.
[6] Agricultural Consultancy Services, Inc.; Archipelago Realty Corp.; Balete Ranch, Inc.; Black Stallion Ranch Inc.; Christensen Plantation Company; Discovery Realty Corp.; Dream Pastures, Inc.; Echo Ranch, Inc.; Far East Ranch, Inc.; First United Transport, Inc.; Habagat Realty Development, Inc.; Kalawakan Resorts, Inc.; Kaunlaran Agricultural Corp.; Labayug Air Terminals, Inc.; Landair International Marketing Corporation; LHL Cattle Corporation; Lucena Oil Factory Inc.; Meadow Lark Plantations, Inc.; Metroplex Commodities, Inc.; Misty Mountain Agricultural Corp.; Northeast Contract Traders, Inc.; Northern Carriers Corporation; Oceanside Maritime Ent., Inc.; Oro Verde Services, Inc.; Pastoral Farms, Inc.; PCY Oil Manufacturing Corp.; Philippine Technologies, Inc.; Primavera Farms, Inc.; Punong-Bayan Housing Devt. Corp.; Pura Electric Company, Inc.; Radio Audience Developers Integrated Organization, Inc.; Radyo Pilipino Corporation; Rancho Grande, Inc.; Reddee Developers, Inc.; San Esteban Development Corp.; Silver Leaf Plantations, Inc.; Southern Services Traders, Inc.; Southern Star Cattle Corp.; Spade One Resorts Corp.; Unexplored Land Developers, Inc.; Verdant Plantations, Inc.; Vesta Agricultural Corp.; and Wings Resorts Corporation.
[7] Rollo, p. 83.
[8] Id. at 85.
[9] Id. at 10.
[10] Id. at 86.
[11] Id. at 79-106.
[12] Id. at 114.
[13] Id. at 107-138.
[14] Id. at 10.
[15] Id.
[16] 329 Phil. 238 (1996).
[17] Rollo, p. 10.
[18] Id. at 10b-11.
[19] Id. at 11.
[20] Cojuangco v. Calpo, G.R. No. 115352, 10 June 1993.
[21] Rollo, p. 157.
[22] Id.
[23] Id. at 158.
[24] Id. at 30.
[25] Id.
[26] Id. at 19.
[27] Id. at 14.
[28] Id.
[29] Id. at 15.
[30] Id. at 16.
[31] 234 Phil. 180 (1987).
[32] 663 Phil. 212 (2011).
[33] Rollo, p. 18.
[34] 273 Phil. 168 (1991).
[35] Rollo, pp. 18-19.
[36] Id. 59-58.
[37] Id. at 23.
[38] Id. at 31.
[39] Id. at 46-47.
[40] Id. at 164.
[41] Id.
[42] Id. at 170-171.
[43] The respondents in PCGG are the same corporate stockholders in the instant case. 361 Phil. 892 (1999).
[44] Id.
[45] 688 Phil. 104 (2012).
[46] Section 9, Rule 66 of the Rules on Civil Procedure.
[47] 273 Phil. 168 (1991).
[48] Id. at 186-187. The Sandiganbayan in its Resolution dated 16 November 1989 dismissed the quo warranto petition for lack of cause of action on the ground that the PCGG has the right to vote the sequestered shares.
[49] 410 Phil. 597 (2001).
[50] 361 Phil. 892 (1999).
[51] See Republic v. COCOFED, G.R. 147062-64, 423 Phil. 735 (2001).
[52] The respondents in PCGG are the same corporate stockholders in the instant case.
[53] 361 Phil. 892 (1999).
[54] Id. at 898-899.
[55] 663 Phil. 212 (2011).
[56] Id. at 328.
[57] Civil Case 0033-F is one of the eight (8) subdivided complaints in Civil Case No. 0033 [civil action for recovery of ill-gotten wealth]. It pertains to the alleged unlawful acquisition of SMC shares of stock by Eduardo Cojuangco Jr. and several corporations. Civil Case No. 033-F further distinguished the SMC shares subject of the case into two (2) blocks: the CIIF Block [33 million SMC shares purchased through fourteen (14) holding companies, which are owned by six (6) so-called CIIF companies] and the Cojuangco et al Block [16,276,879 shares in the names of the so-called Cojuangco companies]. The issue of ownership of the CIIF Block of SMC shares has been resolved in the Decision dated 24 January 2012 and Resolution dated 04 September 2012 penned by Justice Presbitero Velasco Jr. in G.R. Nos. 177857-58 & 178193 entitled Philippine Coconut Producers Federation, Inc. v. Republic.
[58] 663 Phil. 212, 331-333 (2011). See footnote 8.
[59] Rollo, p. 37, 172.
[60] See Mattel, Inc. v. Francisco, 582 Phil. 492 (2008).
[61] 234 Phil. 180 (1987).
[62] 423 Phil. 735 (2001).
[63] Id. at 753-757.
[64] Madrilejos v. Gatdula, G.R. No. 184389, 24 September 2019 citing Weinstein et al. v. Bradford, 423 US 147 (1975). See also Pormento v. Estrada, 643 Phil. 735 (2010) and International Service for the Acquisition of Agri-Biotech Applications, Inc. v. Greenpeace Southeast Asia (Philippines), 791 Phil. 243 (2016).