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SC nixes gov’t bid for 24M shares of SMC

/ 03:46 AM November 03, 2016

The Supreme Court has rejected due to a technicality the government’s petition to include 25.45 million San Miguel Corp. (SMC) shares as part of the multibillion peso coco levy assets that were ordered returned to the state in the landmark 2012 high court ruling.

In a 27-page en banc resolution on Oct.  5 but released to media yesterday, the SC magistrates voted 7-2 with six abstentions to deny the Philippine government’s bid  to take  back the SMC shares (that have been converted to nonvoting Treasury shares) under the control of SMC since the high court had no jurisdiction over the case as  the  diversified conglomerate was never a party to the government’s case—Civil Case (CC) No. 0033.

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The civil case was filed in 1987 by the Presidential Commission on Good Government (PCGG) with the Sandiganbayan against former President Ferdinand Marcos and  SMC chair Eduardo “Danding” Cojuangco Jr.  to recover  SMC shares of stock registered in the name of the Coconut Industry Investment Fund (CIIF) holding companies.

 Due process

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But Justice Presbitero J. Velasco Jr., who wrote the decision, said the high court’s ruling would not preempt the government from seeking legal action to resolve ownership of the disputed  SMC treasury shares.

Velasco also stressed that the court should not be misconstrued as allowing SMC to hold on to the disputed shares “under the guise of a technicality” as the high court was merely giving SMC due process.

“Indeed, it is unsporting, nay the height of injustice a clear violation of the due process guarantee, to order SMC to comply with any decision rendered in CC 0033-F when it was never given the opportunity to present, explain and prove its claim over the presently contested shares,” Velasco said.

The ruling also clarified that only the 753,848,312 SMC shares under the CIIF were declared by the high court in its September 2012 resolution to be part of the coco levy assets which should be returned to the state.  “Thus the 5.5 million shares with the PCGG, and the 25.45 million shares with SMC, were no longer included therein,” it said.

Velasco said SMC had “a legitimate claim” over the 25.45 million shares as the shares  were acquired “at arms-length and not made through public funds.”

The disputed shares were bought by SMC, then under the management of Andres Soriano III,  from the CIIF, through the United Coconut Planters Bank,  in March 1986,  just a few days before the shares were sequestered by the PCGG.

SMC paid only P500 million for the shares in the first installment but did not pay the balance of the P3.31 billion sale price due to the sequestration order.

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Velasco noted that the government did not return the P500 million initial payment even after the deal was voided.

The shares were the subject of a compromise agreement between SMC and UCPB in March 1990 which the high court noted was upheld  by the government-dominated SMC board before it was rescinded by the Sandiganbayan a few years later.

Chief Justice Maria Lourdes P. A. Sereno and Justice Marvic M.V.F. Leonen voted against the ruling.

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TAGS: CIIF, coco levy funds, Coconut Industry Investment Fund, Danding Cojuangco, Eduardo Cojuangco Jr., Presbiterio Velasco Jr., San Miguel Corp., SMC
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