GR 91925; (April, 1991) (Digest)
G.R. No. 91925 & 93005; April 16, 1991
EDUARDO M. COJUANGCO, JR., ET AL., petitioners, vs. ANTONIO J. ROXAS, ET AL., respondents.
FACTS
The consolidated petitions arose from the April 18, 1989 annual stockholders’ meeting of San Miguel Corporation (SMC). Petitioners, Eduardo Cojuangco, Jr., Manuel Cojuangco, and Rafael Abello, were nominees for the board of directors. The Presidential Commission on Good Government (PCGG) voted a large block of shares (27,211,770 shares) it had sequestered from various corporations. The registered stockholders of these “corporate shares” contested the PCGG’s authority to vote them at the meeting, but were overruled.
With the PCGG voting these sequestered shares, its chosen slate of fifteen candidates was elected to the board. Petitioners, who received very few votes, were not elected. They allege that the PCGG’s votes for the corporate shares were illegally cast. They argue that if these votes were instead counted in their favor, they would have been among the top fifteen vote-getters and thus elected to the board.
ISSUE
The core issue is whether the PCGG has the authority to vote sequestered shares of stock in a corporation for the purpose of electing members of the board of directors.
RULING
The Supreme Court ruled that the PCGG does NOT have the authority to vote sequestered shares to elect corporate directors. The legal logic is anchored on the nature and purpose of sequestration under Executive Order Nos. 1, 2, and 14. Sequestration is a conservatory and provisional remedy to prevent the dissipation of assets alleged to be ill-gotten. It is a “freeze” order, not a tool for management takeover.
The Court, citing Bataan Shipyard & Engineering Co., Inc. v. PCGG, held that the PCGG’s role is that of a conservator, not an owner or absolute administrator. Voting sequestered shares to elect directors constitutes an exercise of ownership rights, which remains with the registered stockholder until a final court judgment declares the shares as ill-gotten and orders their reconveyance to the state. The PCGG’s authority is limited to preserving the status quo of the property. By voting the shares, the PCGG effectively installed a new board, thereby altering the corporate control and management—an act that exceeds its conservatory powers. Consequently, the votes cast by the PCGG from the sequestered corporate shares were invalid. The Court remanded the case to the Sandiganbayan to determine the validity of the sequestration orders and for further appropriate proceedings.