chief justice sereno - dissenting opinion

8/24/12 8:08 PMG. R. No 166859

of 17http://sc.judiciary.gov.ph/166859_sereno.htm

G. R. No 166859 – Republic of the Philippines v. Sandiganbayan (First Division),et al.

G. R. No. 169203 – Republic of the Philippines v. Sandiganbayan (First Division),

et al., G. R. No. 180702 – Republic of the Philippines v. Sandiganbayan (First Division),

et al. X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X

DISSENTING OPINION SERENO, J.: Before the Court are several Motions for Reconsideration of the Court’s

Decision, which declared respondents Cojuangco, et al., as exclusive owners of the

Cojuangco block of shares in San Miguel Corporation (SMC), subject of Civil CaseNo. 0033-F. They have raised new matters which must be addressed by this Courtconsidering the grave prejudice to the coconut farmers who, in being taxed in the form ofthe coconut levy, in effect financed the expansion of the business empire of EduardoCojuangco.

These new matters – and we liberally include herein a breakdown of the illicit actswhich were obscured by the corporate layering scheme employed to acquire the SMCshares – prove: (1) respondent Cojuangco’s close association with former President

Ferdinand Marcos, and (2) the “behest” nature of the loans or advances used to

finance the purchase of the SMC shares.

Atty. Francisco Chavez, who is not a party herein, separately moved that he be

allowed to intercede in the instant consolidated cases and prayed that his Brief beadmitted for the Court’s consideration in the disposition of the pending motions for

reconsideration.

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This Dissent builds on the strong legal foundations that Justice Conchita CarpioMorales already laid down in her main Dissent, and fully adopts its framework of

reasoning.

I. Four Groups or Points of Evidence to Prove thatCojuangco is a Close Associate of Marcos

This Court has interpreted the term “close associate” to be manifest either in theperson’s complicity with the deposed President in the accumulation of ill-gotten wealth,or in former President Marcos’ acquiescence in the person’s own accumulation of ill-

gotten wealth. It includes non-relatives who assisted President Marcos or his family inthe accumulation of ill-gotten wealth, or who illegally accumulated wealth themselves,regardless of whether they were private citizens or had assumed official positions.

It is true that a private individual who had business dealings with the formerPresident at one time or another during the latter’s administration does not translateautomatically to a condemnation of all of the person’s properties, interest or assetsaccumulated through or arising from those business dealings. Likewise, all governmentofficials or employees who served during the administration of former President Marcosare not immediately considered his “subordinates” or “close associates” under PCGG’sjurisdiction. In actions for forfeiture, to be considered a “close associate” under thejurisdiction of PCGG, it must be shown that the person’s various business interestsenjoyed considerable privileges obtained from the former President during the latter’stenure as Chief Executive, in violation of existing laws – privileges that could not have

been obtained were it not for the close association between them.

In the Decision subject of the instant Motion for Reconsideration, the Court allegedthat the Republic failed to substantiate, with competent evidence, as to who were the

close associates of former President Marcos, and consequently does not believe thatrespondent Cojuangco is a “close associate” under the laws governing the PCGG’sjurisdiction. As petitioner Republic and petitioners-intervenors pointed out, more thansufficient evidence on record and judicial pronouncements unequivocally demonstrate

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that respondent Cojuangco was a close associate or subordinate of the former President.Respondent Cojuangco was no ordinary “close associate” – he was even touted at onepoint to have been one of the “closest cronies” and the “most likely successor” of

Marcos. It is unbelievable that the fallacy that the two of them were not closeassociates, and that respondent did not enjoy considerable privileges during the deposed

President’s administration could be proposed now.

The first group of evidence on the matter is respondent Cojuangco’s appointmentand service as Director of the Philippine Coconut Authority (PCA) and President and

member of the Board of Directors of UCPB, among others. With respect to hisposition in the PCA, which was the government agency tasked to impose and collect

coconut levies, it is uncontroverted that members of the agency’s governing board

were appointed by the former President himself, either for a given term or, at the

very least, at his pleasure as the appointing authority. At the same time, respondentCojuangco’s participation in the management of UCPB is evidence of his influence overthe disposition of the coco levy funds. Using the Coconut Consumer Stabilization Fund(CCSF), the PCA was authorized and enabled to acquire UCPB under Presidential

Decree No. 755. In turn, UCPB was tasked under the same decree to provide readilyavailable credit facilities to coconut farmers at preferential rates using the coco levy

funds. Both the PCA and the UCPB played key roles in the collection, administration

and/or disbursement of those funds, which were imposed through a series of

“tailored” executive issuances during the time of former President Marcos.Respondent enjoyed key positions in relation to the coco levy funds with the blessings ofthe former President, and these positions naturally confirm his close association with theappointing power. Respondent Cojuangco could not have obtained business opportunitiesand privileges with respect to the coco levy funds on his own merits, unless he waslooked upon with favor by former President Marcos, and unless he took undue advantageof his appointment to those key agencies that were exercising management and control of

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the coco levy funds.

Second, the Court’s own previous characterization of Cojuangco affirms what haslong been within the realm of public knowledge – that respondent Cojuangco is a “closeassociate” of Marcos.

The Court had adopted in another case a finding of the Court of Appeals thatrespondent Cojuangco was “a very close political and business associate of the formerPresident.” In a case in a lower court, respondent Cojuangco had sued FernandoCarrascoso, Jr., of the Philippine Charity Sweepstakes for damages, after the latterwithheld respondent’s winnings in several horse races. Carrascoso raised good faith inhis defense and argued that his actions were based only upon the advice given by thePCGG. In finding that Carrascoso did not act in bad faith, this Court affirmed theappellate court’s observation regarding respondent Cojuangco’s association with formerpresident Marcos:

We do not believe that the above judicially settled nature of bad faith characterizedthe questioned acts of Respondent Carrascoso. On the contrary, we believe that there issufficient evidence on record to support Respondent Court's conclusion that he did not actin bad faith. It reasoned, and we quote with approval:

“Correspondingly, in a letter dated June 13, 1986 (Exhibit 2) PCGGCommissioner Ramon A. Diaz authorized the payment to the trainer and thegroom but instructed the withholding of the amounts due plaintiff EduardoCojuangco. This piece of evidence should be understood and appreciated inthe light of the circumstances prevailing at the time. PCGG was just a newlyborn legal creation and ‘sequestration’ was a novel remedy which even legalluminaries were not sure as to the actual procedure, the correct approach andthe manner how the powers of the said newly created office should beexercised and the remedy of sequestration properly implemented withoutviolating due process of law. To the mind of their newly installed power, theimmediate concern is to take over and freeze all properties of formerPresident Ferdinand E. Marcos, his immediate families, close associates andcronies. There is no denying that plaintiff is a very close political andbusiness associate of the former President. Under those equivocalities,defendant Carrascoso could not be faulted in asking further instructionsfrom the PCGG, the official government agency on the matter, on what todo with the prize winnings of the plaintiff, and more so, to obey theinstructions subsequently given. The actions taken may be a hard blow onplaintiff but defendant Carrascoso had no alternative. It was the safest hecould do in order to protect public interest, act within the powers of hisposition and serve the public demands then prevailing. More importantly, itwas the surest way to avoid a possible complaint for neglect of duty or

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misfeasance of office or an anti-graft case against him.” (Emphasissupplied)

In approving the appellate court’s Decision, the Court itself confirmed the publicperception that respondent Cojuangco was a close political and business associate offormer President Marcos. It can no longer backpedal a decade later to deny the closeassociation between the two for alleged lack of “competent evidence” after approving alower court’s judicial notice of what is accepted public knowledge.

Third, the Court confirmed that respondent Cojuangco and former President

Marcos were indeed “close associates” when it declared in a separate case that theshares of stock in the Bulletin Publishing Corporation (Bulletin) in the name ofrespondent Cojuangco was ill-gotten wealth of former President Marcos. In Republic v.

Estate of Hans Menzi, which Atty. Chavez himself noted, respondentCojuangco was found to have acted as dummy, nominee or agent of the Marcosspouses in acquiring substantial Bulletin shares. The Court then declared that respondentCojuangco’s Bulletin shares were ill-gotten wealth and affirmed the dispositive portionof the Sandiganbayan’s Decision, which reads:

“WHEREFORE, judgment is hereby rendered:1. Declaring that the following Bulletin shares are the ill-gotten wealth of the

defendant Marcos spouses:A. The 46,626 Bulletin shares in the name of defendant Eduardo M.

Cojuangco, Jr., subject of the Resolution of the Supreme Court dated April 15, 1988in G.R. No. 79126.

…B. The 198,052.5 Bulletin shares in the names of:

No. of SharesJose Y. Campos 90,866.5Eduardo M. Cojuangco, Jr. 90,877Cesar C. Zalamea 16,309 ––––––Total 198,052.5which they transferred to HM Holdings and Management, Inc. on August 17, 1983,

and which the latter sold to Bulletin Publishing Corporation on February 21, 1986. Theproceeds from this sale are frozen pursuant to PCGG's Writ of Sequestration datedFebruary 12, 1987, and this writ is the subject of the Decision of the Supreme Court dated

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January 31, 2002 in G.R. No. 135789. Accordingly, the proceeds from the sale of these 198,052.5 Bulletin shares, under

Philtrust Bank Time Deposit Certificate No. 136301 dated March 3, 1986 in the amount ofP19,390,156.68 plus interest earned, in the amount of P104,967,112.62 as of February 28,2002, per Philtrust Bank's Motion for Leave to Intervene and to consign the Proceeds ofTime Deposits of HMHMI, filed on February 28, 2002 with the Supreme Court in G.R. No.135789, are hereby declared forfeited in favor of the plaintiff Republic of the Philippines.

… (Emphasis supplied)

In that case, the Sandiganbayan rejected Cojuangco’s contention that the Bulletinshares registered in his name “were not acquired and held by him as dummy, nomineeand/or agent of defendants Ferdinand E. Marcos and Imelda Romualdez Marcos.” Theanti-graft court found that “Cojuangco failed to present evidence necessary to establishhis affirmative defense” that he held the properties “upon the request, and as nominee, of

the late Hans Menzi who owned and delivered to him said shares.” In affirming theSandiganbayan’s findings, the Court noted that that there was not enough evidence toprove that respondent Cojuangco was a nominee of the late Hans Menzi but that the share

he held were ill-gotten wealth of the Marcoses. Consequently, since the Court haddeclared that the Bulletin shares held under the name of respondent Cojuangcowere ill-gotten wealth of the Marcos spouses, then he was necessarily their dummy,nominee or agent, which was another badge indicating that he had indeed enjoyedan illicit confidential relationship with the Marcos spouses.

Fourth, we state the conclusions of two foreign courts on the relationship betweenrespondent Cojuangco and former President Marcos. In separate actions filed in theUnited States of America, a Falcon aircraft was allegedly leased by a Hong Kongcorporation (Faysound Limited) to a domestic corporation (United Coconut Chemicals),but was eventually sequestered by the PCGG for purportedly being ill-gotten wealth ofrespondent Cojuangco. The controversy in these two foreign cases arose when the PCGGsold the deteriorating sequestered property to an American corporation (Walter FullerAircraft Sales, Inc.) and had the aircraft flown to the United States, when the true ownerof the property (whether Faysound Limited, United Coconut Chemicals, or respondentCojuangco) had yet to be judicially determined in the Philippines. Both Courts made adefinitive finding as to respondent Cojuangco’s association with former President

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Marcos.

In Walter Fuller Aircraft Sales, Inc., v. Republic of the Philippines, the UnitedStates Court of Appeals (Fifth Circuit) stated that:

Cojuangco was a wealthy businessman with a substantial interest in UNICHEM

(United Coconut Chemicals, Inc.), and had ties to former President Marcos.(Emphasis supplied)

In Faysound Ltd., v. Walter Fuller Aircraft Sales, Inc., the United States DistrictCourt also stated that:

Cojuangco was a multimillionaire businessman with substantial interest in

UNICHEM and undoubtedly a close friend and adviser to Marcos. (Emphasissupplied)

The PCGG expropriated an expensive airplane without any legal basis whatsoever.Although the plane was leased to a company in which an associate (Cojuangco) ofFerdinand Marcos was a stockholder, the Marcos associate owned no interestwhatsoever in the plane, and the lease was near the end of its term. The plane wasnevertheless seized and sold in a transaction having the strong odor of corruption. The salewas made in the face of an adverse ruling by the Philippine court having supervision over it—a ruling never reversed by the Philippine Supreme Court. The seizure and sale violatedthe specific terms of the Treaty known as the Geneva Convention covering property rightsin aircraft. It violated principles of international law, the Second HickenlooperAmendment, as well as principles of Philippine law enunciated by the Philippine court

having jurisdiction over this matter. (Emphasis supplied)

The above-cited cases, domestic and foreign – which are demonstrably within therealm of knowledge of judges – sufficiently justify the Court in taking judicial notice of

respondent Cojuangco’s close association with former President Marcos. No lessthan respondent himself has publicly declared that he has never denied his associationwith Marcos, only his alleged participation in the latter’s greed:

[Cojuangco] does not, however, deny, nor is he ashamed of, his relationshipwith the late dictator, but he distances himself from Marcos’s greed. “I have never denied my association with Marcos. And to my dying day, I willnever deny it. But it’s the connotation of the word ‘crony’ – magnanakaw – that hurts.Kasi wala akong alam na ninakaw ko, eh,” he contends, adding, “Naniniwala ako saginagawa ni Marcos bilang pangulo ng ating inang bayan … Pero kung sasabihin mong

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nagnakaw si Marcos (at) ninakawan ko, hindi ako parte.” (Emphasis supplied)

II. Respondent Cojuangco took advantage of his officialposition in order to obtain, directly and indirectly,shares of stock in SMC

Even assuming arguendo that the loan proceeds extended to respondentsCojuangco, et al., are private in nature, and that the acquisition of substantial holdings inSMC can somehow tangentially be justified as being compliant with the expressedpurposes of the coco levy funds, the SMC shares are still subject to forfeiture, sincerespondent Cojuangco took undue advantage of his positions and his relationship withformer President Marcos to accumulate for himself substantial and valuable holdings in aprivate corporation.

Respondent Cojuangco was deeply involved in the agencies that collected,managed, and administered the coco levy funds, specifically the PCA, UCPB and theCIIF Oil Mills. He admitted being at one time a director of both the PCA and UCPB,

even assuming the presidency of the latter corporation. As mentioned earlier, theposition of respondent Cojuangco as a director of PCA was through the graces of hispatron, former President Marcos, who had the sole authority to appoint the members of

the body’s governing board. PCA, which collected the coco levies imposed by the

Marcos administration, was authorized to funnel the public funds to UCPB. Itobtained a controlling equity in UCPB by purchasing respondent Cojuangco’s alleged

option to acquire 72.2% of the bank’s predecessor, FUB. In turn, PCA-controlledUCPB was empowered to make investments in private corporations for the benefit of thecoconut farmers, using that part of the Coconut Industry Development Fund (CIDF)

referred to as the Coconut Industry Investment Fund (CIIF). Pursuant to its mandate,

UCPB gained controlling interest in the CIIF Oil Mills, and respondent Cojuangco

was likewise elected as a director in some of these CIIF Oil Mills. As a director ofPCA, UCPB and some of the CIIF Oil Mills, he enjoyed the privileged position of

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collecting, managing and administering the coco levies, the public funds deposited inUCPB, and consequently, disbursing those funds through loans or cash advances.

Respondent Cojuangco took undue advantage of his positions in these publiccorporations, which granted him favorable conditions and allowed him to direct the flowof coco levy funds for his own personal gain through a conduit, his “dummy”

corporations.

First, respondent Cojuangco unduly took advantage of his position in the PCA tobroker the terms of purchase of UCPB in his favor. Instead of purchasing the shares ofFUB directly, PCA had to settle for a purported “exclusive option” to purchase shares in

the bank. Thus, even though respondent did not own any share in the predecessorbank, subject of the “exclusive option,” he received from PCA the full amount of thepurchase price for the same shares. It appears highly disadvantageous for a public entityto apply public funds for the acquisition of a mere inchoate option (albeit exclusive) tostockholdings of a commercial bank in an amount equal to the value of the sharesthemselves. Furthermore, respondent was even able to register, in his own name, some ofthe FUB shares acquired by PCA, without even contributing anything.

Second, after the bank was acquired by PCA, collections from the coco levy fundswere deposited interest-free at UCPB, which would now be able to administer the fundsas it pleased. With respondent Cojuangco as director and president of UCPB, respondentsCojuangco, et al., were able to obtain from the bank substantial loans that were used topurchase the SMC shares, directly in respondent Cojuangco’s name or indirectly throughhis dummy corporations. The preferential treatment extended by UCPB to respondentsCojuangco Corporations can be attributed to nothing else but the undue influence ofrespondent Cojuangco over the bank. Respondents Cojuangco, et al., were not able toshow how they were able to borrow substantial amounts from UCPB without anycollateral or security, despite the opportunity to do so in the trial proceedings below.Neither was it demonstrated how allowing respondent Cojuangco corporations to borrowpublic funds from UCPB could directly benefit the coconut industry. The purchase ofSMC shares using the loan proceeds from UCPB deviated from the purpose of the cocolevy funds – to improve and contribute to the development of the coconut industry. That

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respondent Cojuangco, through his lawyers, had to resort to corporate layering, ratherthan obtaining a direct loan in his name demonstrates a manifest intent to build asemblance of propriety in the loan applications and conceal the identity of the truebeneficiary of the UCPB’s excessive magnanimity. In sum, respondents Cojuangcocorporations were organized and established as fronts of respondent Cojuangco for thesole reason of purchasing the SMC shares by distributing the favorably obtained creditfrom UCPB to different entities instead of just a single natural person who had directlinks with the control and management of the bank.

Respondent Cojuangco would not have received the same favorable treatmentif his dummy corporations had applied for the loan in any other bank. Noreasonable banking institution would allow a single entity to borrow funds not forthe purpose of improving its business, but simply to acquire shares of stock inanother unrelated business; much less, if no security or collateral was even offered.Even if it can be argued that investing in SMC was a risk-free and profitable enterprise,there was no reason why UCPB could not have exercised the option to purchase the saidshares for itself and thus, directly enjoyed the benefits of ownership instead of passing onthe opportunity to a third party.

As stated by Justice Carpio Morales, respondent Cojuangco’s self-dealing andultimately self-serving scheme likewise constituted a violation of his fiduciary duty as adirector of UCPB and some of the CIIF Oil Mills. Assuming that the investment in SMCwas secure and lucrative, respondent as a fiduciary officer should have first offered thecreditor bank the opportunity to exercise the option, before he acquired it for his ownpersonal gain through the use of corporate funds (which are prima facie public funds), tothe detriment of the corporation. Rather than work to further the bank’s interests, herobbed it of a business opportunity for his own advantage, maneuvered the public fundsmanaged by them, and even diverted the funds towards his dummy corporations.

The same self-dealing scheme can be seen in his position as director of some of theCIIF Oil Mills that had loaned amounts to respondents Cojuangco corporations for thepurchase of the Cojuangco block of SMC shares. With UCPB enjoying controllinginterest in the CIIF Oil Mills and with himself as president and director of the said bank,respondent Cojuangco was also able to sit in the board of directors in some of the CIIF

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Oil Mills during the time of the purchase of the SMC shares. Again, instead ofallowing the CIIF Oil Mills the opportunity to use the public funds under its control toacquire the SMC shares, respondent Cojuangco instead directed them to extend loans andcash advances to respondent Cojuangco corporations, to finance the acquisition. Aspresident and director, he unduly deprived the CIIF Oil Mills of a gainful andcommercial opportunity and even used prima facie public funds (derived from the cocolevy) to purchase substantial amounts of SMC shares.

In addition, as Justice Carpio Morales also earlier stated in her Dissent, respondent

Cojuangco violated existing banking laws at that time when he (through therespondent Cojuangco corporations) indirectly obtained loans from UCPB, in which heserved as director and president, without the written approval of the majority of thedirectors of the bank. The prohibition on extension of loans to the bank’s directors and

corporate officers includes indirect borrowing using representatives or agents, whichis clearly applicable in the case of respondents Cojuangco corporations. RespondentCojuangco, with the assistance of his lawyers, established the dummy corporations to actas indirect borrowers of the public funds in UCPB, the proceeds from which were used to

purchase the SMC shares. Respondent Cojuangco corporations, which obtained loansfrom UCPB, were specifically organized and established as fronts for respondentCojuangco, as he himself admits that 99.6% of the shares in Meadowlark Plantations,Inc., and Prima Vera Farms, Inc. (two of the respondent Cojuangco corporations thatacquired some of the SMC shares) were in the name of only one person, his private

lawyer, who likewise executed a Declaration of Trust and Assignment of Subscription

in favor of an unnamed assignee.

The strategy employed by respondent Cojuangco to circumvent the requirementsfor a direct loan to a director or corporate officer was to course his application throughthird-party corporations, wherein almost all the shares would be held by his lawyers ortrusted associates. These nominee stockholders would then assign, in blank, the saidsubscribed shares, and he would then physically hold these deeds of assignments.

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Evidently, respondent Cojuangco exploited the corporate layering and assignment inblank specifically to muddle the series of transactions and thus elude detection in theevent of the scheme being unearthed.

It has therefore been strongly established that respondent Cojuangco tookadvantage of his close association with President Marcos in order to gain key positions in

agencies responsible for the coco levy funds. As petitioners explained, he used thosespecial privileges and his positions to obtain favorable treatment for himself and hisdummy corporations in the extension of loans and/or cash advances from public entitiesin order to solely finance his private interest in acquiring shareholdings in SMC. Allproperties from the unlawful and wrongful exploitation of one’s public position duringthe Marcos regime is necessarily ill-gotten wealth and is subject of forfeiture.

A Final Word

The recovery of ill-gotten wealth and of the government’s own properties involves,as a matter of public record and knowledge, the material and moral recovery of thenation, marked as the Marcos regime was by the obliteration of any line between privatefunds and the public treasury and abuse of unlimited power and elimination of any

accountability in public office. For if there is a lesson that should be learned from the

national trauma that was the rule of Marcos, it is that kleptocracy cannot pay.

Under the scheme of our democratic government, the judiciary, in conjunctionwith its main task of dispensing justice, acts as an official repository of the country’shistory through the decisions it renders. Lest the forces of martial law revisionismtriumph in the future and crony capitalism be slowly erased from public memory, thepresent opinion is offered so that the people may be afforded the opportunity to judge forthemselves now or in the future the weight of the reasoning propounded by both sides.

Respondent Cojuangco’s acquisition of a majority share in SMC during theMarcos regime was built on the sweat of coconut farmers. Through his positions in keypublic agencies and corporations directly collecting and managing the coco levy funds,he was able to convert public funds and take advantage of his position and closerelationship with former President Marcos in order to gain considerable profits in a very

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lucrative business enterprise. Respondent Cojuangco employed a scheme of corporatelayering and multi-level loan transactions to divert public funds in blatant disregard ofhis fiduciary duties. These series of anomalous transactions have left an indelible mark inthe country’s history of recovering ill-gotten wealth. By awarding respondent Cojuangcowith regained control of the SMC shares, the majority effectively impedes the gainsaccomplished by the PCGG’s efforts to retrieve public funds misappropriated by Marcoscronies.

Despite the setback to the efforts of the government and the coconut farmers towrestle ownership over the Cojuangco block of SMC shares, prescription, laches orestoppel will not bar a subsequent action to recover unlawfully acquired property by

public officials or their dummies. As public funds, coco levy funds, including itsproceeds and whatever form they may have taken in the past or will take in the future, areto be held by public officers and their assigns or transferees under a continuing publictrust in favor of the coconut farmers and the public at large. When the time comes thatthe legal impediment presented before the Court today is lifted (perhaps through newlydiscovered evidence or another justifiable reason), the opportunity to revisit the ruling ofthis Court may present itself, and Philippine history may have a chance to be redeemed inpart.

I vote to grant the Motions for Reconsideration and find the Cojuangco block ofSMC Shares to have been acquired with public funds and thus, public assets that areforfeited in favor of the government.

MARIA LOURDES P. A. SERENO Associate Justice

[1] “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.” (Decision dated 12 April 2011, at71)[2]

Respondents Cojuangco, et al., refer to individual respondent Eduardo Cojuangco, Jr., and his corporations or companiesholding shares of stock in San Miguel Corporations, in contradistinction to the 6 coconut oil mill corporations and their 14 holdingcompanies, likewise impleaded in Civil Case No. 33-F. (Decision dated 12 April 2011, at 9-10)

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[3] The “Cojuangco block of SMC shares” refers to those shares in the name of several corporations purportedly under respondent

Cojuangco’s control and used by him to acquire shares of SMC stock totaling 16,276,879 (representing approximately 20% of thecapital stock of SMC). In contradistinction, the “CIIF block of SMC shares” refers to the approximately 33,000,000 shares of SMCstock acquired through the 14 holding companies owned by the CIIF Oil Mills, which were forfeited in favor of the governmentbased on the Sandiganbayan’s Partial Summary Judgment dated 07 May 2004. (Decision dated 12 April 2011, at 9-10)[4]

Petitioner Republic’s Motion for Reconsideration dated 28 April 2011, at 58-66.[5]

Petitioner-intervenors’ Motion for Reconsideration dated 27 April 2011, at 18-20.[6]

Chavez’s Omnibus Motion dated 02 May 2011; rollo (166859) at 1235-12343.[7]

Chavez’s Brief for Citizen-in-Intercessor dated 02 May 2011; rollo (166859) at 1244-1319.[8]

Justice Conchita Carpio Morales, Dissenting Opinion, Decision dated 12 April 2011.[9]

“Ramas’ position alone as Commanding General of the Philippine Army with the rank of Major General does not suffice tomake him a ‘subordinate’ of former President Marcos for purposes of EO No. 1 and its amendments. The PCGG has to provide aprima facie showing that Ramas was a close associate of former President Marcos, in the same manner that business associates,dummies, agents or nominees of former President Marcos were close to him. Such close association is manifested either byRamas’ complicity with former President Marcos in the accumulation of ill-gotten wealth by the deposed President or byformer President Marcos' acquiescence in Ramas’ own accumulation of ill-gotten wealth if any.” (Republic v.Sandiganbayan, G. R. No. 104768, 21 July 2003, 407 SCRA 10; emphasis supplied)[10]

Silverio v. PCGG, G. R. No. 77645, 26 October 1987, 155 SCRA 60.[11]

“Accordingly, the Republic should furnish to the Sandiganbayan in proper judicial proceedings the competent evidenceproving who were the close associates of President Marcos who had amassed assets and properties that would be rightlyconsidered as ill-gotten wealth.” (Decision at 50)[12]

“Danding Cojuangco (respondent Cojuangco), who controlled the coconut industry, was not only a member of this group(oligarchs who controlled almost every economic activity in the country). He was said to be primus inter pares, the first amongequals. He was one of Marcos’s closest cronies, even seen by many then as the dictator’s most likely successor.

“Cases filed by the PCGG against Danding have alleged that at the height of martial law, he and Marcos helped each other insystematically robbing the country. In fact, Danding was described by an American newspaper as ‘second only to Marcos in thesystematic looting of the Philippines.’” (Earl G. Parreño, Boss Danding [First Quarter Storm Foundation, Inc.] 2003, at 9-11, citingLos Angeles Times, 30 December 1990, as quoted by Ricardo Manapat in Some Are Smarter than Others, New York: AlitheaPublication, 1991, at 216)[13]

“The argument that Cojuangco was not a subordinate or close associate of the Marcoses is the biggest joke to hit the century.”(Dissenting Opinion of Justice Carpio Morales at 57)[14]

Respondent Cojuangco’s Answer dated 23 June 1999, para.2.01, at 2-3.[15]

Presidential Decree No. 1468, Sec. 3 (d).[16]

The PCA was to be governed first by a Board composed of eleven members, three of whom would be representatives at-largeof the private sector, who would be appointed by the President. (Presidential Decree No. 232, Sec. 4) Subsequently, the Board ofthe PCA was later reduced to seven members, with all of them being appointed by the President. (Presidential Decree No. 1468,Sec. 4)[17]

“From these amendments to the PCA charter, two things remain crystal clear – first, that the members of PCA Board were tobe appointed by the President either for a given term or, at the very least, at his pleasure as the appointing authority; and second,that the members of the PCA Board had been given vast authority in managing and disbursing the coconut levy funds, whichincludes the corporations formed and organized therefrom and all assets acquired therefrom, such as the CIIF Oil Mills”(Dissenting Opinion of Justice Carpio Morales at 60)[18]

The Court has categorically stated that PCA acquired UCPB with the use of the coco levy funds (Coconut ConsumerStabilization Fund). (Presidential Decree No. 755, Sec. 2; COCOFED v. PCGG, G. R. No. 75713, 02 October 1989, 178 SCRA236; Republic v. Sandiganbayan, G. R. No. 118661, 22 January 2007, 512 SCRA 25; Republic v. COCOFED, G. R. No. 147062-64, 14 December 2001, 372 SCRA 462).

















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[19] “It is hereby declared that the policy of the State is to provide readily available credit facilities to the coconut farmers at

preferential rates; that this policy can be expeditiously and efficiently realized by the implementation of the ‘Agreement for theAcquisition of a Commercial Bank for the benefit of the Coconut Farmers’ executed by the Philippine Coconut Authority, theterms of which ‘Agreement’ are hereby incorporated by reference; and that the Philippine Coconut Authority is hereby authorizedto distribute, for free, the shares of stock of the bank it acquired to the coconut farmers under such rules and regulations it maypromulgate.” (Presidential Decree No. 755, Sec. 1; emphasis supplied)[20]

“Playing key roles in the collection, administration and/or use of the Fund were the Philippine Coconut Authority (PCA),formerly the Philippine Coconut Administration (PHILCOA), United Coconut Producers Bank (UCPB), and Philippine CoconutProducers Federation, Inc., or the COCOFED.” (Republic v. PCGG,[21]

As Justice Carpio Morales earlier recalled, the genesis of the coconut levy funds was already described in Philippine CoconutFederation, Inc. (COCOFED) v. PCGG, G. R. No. 75713, 02 October 1989, 178 SCRA 236. (Dissenting Opinion of JusticeCarpio Morales at 43-47)[22]

Cojuangco, Jr., v. Court of Appeals, G. R. No. 119398, 02 July 1999, 309 SCRA 602.[23]

Republic v. Estate of Hans Menzi, G. R. No. 152578, 154487 and 154518, 23 November 2005, 476 SCRA 20, cited in Atty.Chavez’s Brief dated 02 May 2011, at 6- 7.[24]

Republic v. Estate of Hans Menzi, id.[25]

Chavez’s Brief for Citizen-in-Intercessor dated 02 May 2011, at 6-7.[26]

Id.[27]

Id.[28]

“In light of the foregoing, we are not inclined to disturb the Sandiganbayan’s evaluation of the weight and sufficiency of theevidence presented by the Republic and its finding that the evidence adduced by the Estate of Menzi and HMHMI do not provetheir allegation that Campos, Cojuangco and Zalamea are Menzi’s nominees, taking into account the express admission of Camposthat he owned the shares upon Marcos' instruction, the declaration of Zalamea that he does not claim true and beneficial ownershipof the shares, and the absolute dearth of evidence regarding Cojuangco's assertion that he is Menzi's nominee.” (Republic v. Estateof Hans Menzi, id.)[29]

Walter Fuller Aircraft Sales, Inc., v. Republic of the Philippines, 965 F.2d. 1375, 1378 (08 July 1992), Circuit Judge King ofthe United States Court of Appeals (Fifth Circuit).[30]

Faysound, Ltd., v. Walter Fuller Aircraft Sales, Inc., 748 F.Supp. 1365, 1366 (29 October 1990), District Judge Henry Woodsof the United States District Court, E. D. Arkansas, Western Division.[31]

Id. at 1374.[32]

“A court may take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration,or ought to be known to judges because of their judicial functions.” (Rule 130, Sec. 2)[33]

Earl G. Parreño, Boss Danding [First Quarter Storm Foundation, Inc.] 2003, at 209-210, citing Sayson, Ian, Manila Times,November 1998.[34]

Respondent Cojuangco’s Answer dated 23 June 1999, para 2.01(a) and (b), at 2-3.[35]

“The corporate powers and duties of the Authority (PCA) shall be vested on and exercised by a Governing Board of seven (7)members to be appointed by the President.” (Presidential Decree No. 1468, Sec. 4)[36]

Presidential Decree No. 1468, Sec. 3(i).[37]

Presidential Decree No. 755, Sec. 2.[38]

Republic v. Sandiganbayan, G. R. No. 118661, 22 January 2007, 512 SCRA 25.[39]

“The UCPB was thereafter empowered by PD 1468 to ‘(make) investments for the benefit of the coconut farmers’ using thatpart of the CIDF referred to as the CIIF. Thus were organized the ‘CIIF companies’ subject of the sequestration orders hereinassailed. As in the case of the shares of stock in the UCPB, the law provided for the ‘equitable distribution’ to the coconut farmers,free, of the investments made in the CIIF companies. Among the corporations in which the UCPB has come to have substantial






















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shareholdings are the COCOFED Marketing Corporation (COCOMARK), United Coconut Planters' Life Insurance (COCOLIFE),GRANEX, ILICOCO, Southern Island Oil Mill, Legaspi Oil of Davao City and of Cagayan de Oro City, Anchor InsuranceBrokerage, Inc., Southern Luzon Coconut Oil Mills, and San Pablo Oil Manufacturing Co., Inc.” (Philippine Coconut Federation,Inc. (COCOFED) v. PCGG, G. R. No. 75713, 02 October 1989, 178 SCRA 236)[40]

UCPB gained controlling interests in the CIIF Oil Mills using the CIIF. (Sandiganbayan Order dated23 February 2004, citedin Sandiganbayan’s Partial Summary Judgment dated 07 May 2004)[41]

From 1983-1984, respondent Cojuangco was found to have served as president and member of the board of directors ofLegaspi Oil Company, Inc., San Pablo Manufacturing, Corp., and Granexport Manufacturing Corp. (Annexes “A” to “C” ofpetitioner Republic’s Reply dated 02 October 2003; rollo [G. R. No. 180702], Vol. II, at 808-813)[42]

“It was during his incumbency as Director of the Governing Board of the PCA, President of the UCPB and Director of theCIIF Oil Mills that respondent Cojuangco, Jr. acquired the subject twenty percent (20%) of the outstanding capital stock of SMC.He did so by using proceeds of loans from the coconut levy-funded UCPB and credit advances from the similarly coconut levy-funded CIIF Oil mills, and registered said shares of stock in his name and in the names of his respondent companies.” (Petitioners’Motion for Reconsideration dated 28 April 2011, at 66)[43]

“Thereafter, in the Agreement for the Acquisition of a Commercial Bank for the Benefit of the Coconut Farmers of thePhilippines dated May 25, 1975, respondent Cojuangco, Jr. assigned to the PCA his purported right to purchase the FUB shares.Under the aforestated Agreement, respondent Cojuangco, Jr. got ten percent (10%) of the shares worth Twenty Eight MillionPesos (P28,000,000.00) acquired from the Pedro Cojuangco Group using the coconut levy fund (established in P. D. No. 582).”(Petitioners’ Motion for Reconsideration dated 28 April 2011, at 62)[44]

Annexes “A” to “C” of petitioner Republic’s Reply dated 02 October 2003; rollo (G. R. No. 180702), Vol. II, at 808-813.[45]

“No director or officer of any banking institution shall, either directly or indirectly, for himself or as the representative oragent of other, borrow any of the deposits of funds of such banks, nor shall he become a guarantor, indorser, or surety for loansfrom such bank to others, or in any manner be an obligor for money borrowed from the bank or loaned by it, except with thewritten approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be enteredupon the records of the corporation and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. Theoffice of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and thedirector or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not lessthan one thousand nor more than ten thousand pesos.

The Monetary Board may regulate the amount of credit accommodations that may be extended, directly or indirectly, bybanking institutions to their directors, officers, or stockholders. However, the outstanding credit accommodations which a bankmay extend to each of its stockholders owning two per cent (2%) or more of the subscribed capital stock, its directors, or itsofficers, shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capitalcontribution in the bank: Provided, however, That loans and advances to officers in the form of fringe benefits granted inaccordance with rules and regulations as may be prescribed by the Monetary Board shall not be subject to the precedinglimitation.” (Republic Act No. 337, Sec. 83, as amended by Presidential Decree No. 1795; cited in Dissenting Opinion of JusticeCarpio Morales, at 67-68)[46]

“The prohibition in Section 83 is broad enough to cover various modes of borrowing. It covers loans by a bank director orofficer (like herein petitioner) which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the representative oragent of others. It applies even if the director or officer is a mere guarantor, indorser or surety for someone else's loan or is in anymanner an obligor for money borrowed from the bank or loaned by it. The covered transactions are prohibited unless the approval,reportorial and ceiling requirements under Section 83 are complied with. The prohibition is intended to protect the public,especially the depositors, from the overborrowing of bank funds by bank officers, directors, stockholders and related interests, assuch overborrowing may lead to bank failures. It has been said that ‘banking institutions are not created for the benefit of thedirectors [or officers]. While directors have great powers as directors, they have no special privileges as individuals. They cannotuse the assets of the bank for their own benefit except as permitted by law. Stringent restrictions are placed about them so thatwhen acting both for the bank and for one of themselves at the same time, they must keep within certain prescribed lines regardedby the legislature as essential to safety in the banking business.’” (Soriano v. People, G. R. No. 162336, 01 February 2010, 611SCRA 191)[47]

In Republic v. Sandiganbayan, 240 SCRA 376 (1995), the Court noted that the records bared confessions of cloakedownership as regards several Cojuangco companies sequestered by the PCGG, including those involved in the instant case.[48]

Atty. Jose Concepcion, one of the ACCRA lawyers described in Justice Carpio Morales’ Dissent.










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[49] Respondent Cojuangco’s Answer dated 23 June 1999, para.5.02(i) and 5.02(j), at 10-11.

[50] “Its unwavering position has always been that respondent Cojuangco, Jr. used his close ties and association with the late

President Ferdinand E. Marcos to become a Member Director of the Governing Board of the PCA, president of the UCPB and aDirector of the CIIF Oil Mills. Through these positions, he was able to unlawfully acquire the shares of stock representing twentypercent (20%) of the outstanding capital stock of SMC, using coconut levy funds or funds of coconut levy-funded companies,which were registered in his name and in the name of his respondent companies.” (Petitioners’ Motion for Reconsideration dated28 April 2011, at 77)[51]

PCGG v. Peña, G. R. No. 77663, 12 April 1988, 159 SCRA 556.[52]

Republic v. Tuvera, G. R. No. 148246, 16 February 2007, 516 SCRA 113.[53]

CONSTITUTION, Art. XI, Sec. 15.






chief justice sereno - dissenting opinion

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