G. R.

No 166859

8/24/12 8:08 PM

G. R. No 166859 G. R. No. 169203 G. R. No. 180702

Republic of the Philippines v. Sandiganbayan (First Division), et al. Republic of the Philippines v. Sandiganbayan (First Division), et al., 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 Courts [1] [2] Decision, which declared respondents Cojuangco, et al., as exclusive owners of the [3] Cojuangco block of shares in San Miguel Corporation (SMC), subject of Civil Case No. 0033-F. They have raised new matters which must be addressed by this Court considering the grave prejudice to the coconut farmers who, in being taxed in the form of the coconut levy, in effect financed the expansion of the business empire of Eduardo Cojuangco. These new matters and we liberally include herein a breakdown of the illicit acts which were obscured by the corporate layering scheme employed to acquire the SMC shares prove: (1) respondent Cojuangcos close association with former President [4] Ferdinand Marcos, and (2) the behest nature of the loans or advances used to [5] finance the purchase of the SMC shares. Atty. Francisco Chavez, who is not a party herein, separately moved that he be [6] allowed to intercede in the instant consolidated cases and prayed that his Brief be admitted for the Courts consideration in the disposition of the pending motions for [7] reconsideration.
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This Dissent builds on the strong legal foundations that Justice Conchita Carpio Morales already laid down in her main Dissent, and fully adopts its framework of [8] reasoning. I. Four Groups or Points of Evidence to Prove that Cojuangco is a Close Associate of Marcos

This Court has interpreted the term close associate to be manifest either in the persons complicity with the deposed President in the accumulation of ill-gotten wealth, or in former President Marcos acquiescence in the persons own accumulation of ill[9] gotten wealth. It includes non-relatives who assisted President Marcos or his family in the 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 former President at one time or another during the latters administration does not translate automatically to a condemnation of all of the persons properties, interest or assets accumulated through or arising from those business dealings. Likewise, all government officials or employees who served during the administration of former President Marcos are not immediately considered his subordinates or close associates under PCGGs jurisdiction. In actions for forfeiture, to be considered a close associate under the jurisdiction of PCGG, it must be shown that the persons various business interests enjoyed considerable privileges obtained from the former President during the latters tenure as Chief Executive, in violation of existing laws privileges that could not have [10] been obtained were it not for the close association between them. In the Decision subject of the instant Motion for Reconsideration, the Court alleged that the Republic failed to substantiate, with competent evidence, as to who were the [11] close associates of former President Marcos, and consequently does not believe that respondent Cojuangco is a close associate under the laws governing the PCGGs jurisdiction. As petitioner Republic and petitioners-intervenors pointed out, more than sufficient 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 one point to have been one of the closest cronies and the most likely successor of [12] Marcos. It is unbelievable that the fallacy that the two of them were not close associates, and that respondent did not enjoy considerable privileges during the deposed [13] Presidents administration could be proposed now. The first group of evidence on the matter is respondent Cojuangcos appointment and service as Director of the Philippine Coconut Authority (PCA) and President and [14] member of the Board of Directors of UCPB, among others. With respect to his position in the PCA, which was the government agency tasked to impose and collect [15] coconut levies, it is uncontroverted that members of the agencys governing board [16] were appointed by the former President himself, either for a given term or, at the [17] very least, at his pleasure as the appointing authority. At the same time, respondent Cojuangcos participation in the management of UCPB is evidence of his influence over the disposition of the coco levy funds. Using the Coconut Consumer Stabilization Fund (CCSF), the PCA was authorized and enabled to acquire UCPB under Presidential [18] Decree No. 755. In turn, UCPB was tasked under the same decree to provide readily available credit facilities to coconut farmers at preferential rates using the coco levy [19] funds. Both the PCA and the UCPB played key roles in the collection, administration [20] and/or disbursement of those funds, which were imposed through a series of [21] tailored executive issuances during the time of former President Marcos. Respondent enjoyed key positions in relation to the coco levy funds with the blessings of the former President, and these positions naturally confirm his close association with the appointing power. Respondent Cojuangco could not have obtained business opportunities and privileges with respect to the coco levy funds on his own merits, unless he was looked upon with favor by former President Marcos, and unless he took undue advantage of his appointment to those key agencies that were exercising management and control of
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the coco levy funds. Second, the Courts own previous characterization of Cojuangco affirms what has long been within the realm of public knowledge that respondent Cojuangco is a close associate of Marcos. The Court had adopted in another case a finding of the Court of Appeals that respondent Cojuangco was a very close political and business associate of the former President. In a case in a lower court, respondent Cojuangco had sued Fernando Carrascoso, Jr., of the Philippine Charity Sweepstakes for damages, after the latter withheld respondents winnings in several horse races. Carrascoso raised good faith in his defense and argued that his actions were based only upon the advice given by the PCGG. In finding that Carrascoso did not act in bad faith, this Court affirmed the appellate courts observation regarding respondent Cojuangcos association with former president Marcos:
We do not believe that the above judicially settled nature of bad faith characterized the questioned acts of Respondent Carrascoso. On the contrary, we believe that there is sufficient evidence on record to support Respondent Court's conclusion that he did not act in bad faith. It reasoned, and we quote with approval: Correspondingly, in a letter dated June 13, 1986 (Exhibit 2) PCGG Commissioner Ramon A. Diaz authorized the payment to the trainer and the groom but instructed the withholding of the amounts due plaintiff Eduardo Cojuangco. This piece of evidence should be understood and appreciated in the light of the circumstances prevailing at the time. PCGG was just a newly born legal creation and sequestration was a novel remedy which even legal luminaries were not sure as to the actual procedure, the correct approach and the manner how the powers of the said newly created office should be exercised and the remedy of sequestration properly implemented without violating due process of law. To the mind of their newly installed power, the immediate concern is to take over and freeze all properties of former President Ferdinand E. Marcos, his immediate families, close associates and cronies. There is no denying that plaintiff is a very close political and business associate of the former President. Under those equivocalities, defendant Carrascoso could not be faulted in asking further instructions from the PCGG, the official government agency on the matter, on what to do with the prize winnings of the plaintiff, and more so, to obey the instructions subsequently given. The actions taken may be a hard blow on plaintiff but defendant Carrascoso had no alternative. It was the safest he could do in order to protect public interest, act within the powers of his position and serve the public demands then prevailing. More importantly, it was 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. supplied)

[22]

(Emphasis

In approving the appellate courts Decision, the Court itself confirmed the public perception that respondent Cojuangco was a close political and business associate of former President Marcos. It can no longer backpedal a decade later to deny the close association between the two for alleged lack of competent evidence after approving a lower courts 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 the shares of stock in the Bulletin Publishing Corporation (Bulletin) in the name of respondent Cojuangco was ill-gotten wealth of former President Marcos. In Republic v. [25] [24] Estate of Hans Menzi, which Atty. Chavez himself noted, respondent Cojuangco was found to have acted as dummy, nominee or agent of the Marcos spouses in acquiring substantial Bulletin shares. The Court then declared that respondent Cojuangcos Bulletin shares were ill-gotten wealth and affirmed the dispositive portion of the Sandiganbayans 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, 1988 in G.R. No. 79126. B. The 198,052.5 Bulletin shares in the names of: No. of Shares 90,866.5 90,877 16,309 198,052.5 [23]

Jose Y. Campos Eduardo M. Cojuangco, Jr. Cesar C. Zalamea Total

which 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. The proceeds from this sale are frozen pursuant to PCGG's Writ of Sequestration dated February 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 of P19,390,156.68 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 of Time 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. [26] (Emphasis supplied)

In that case, the Sandiganbayan rejected Cojuangcos contention that the Bulletin shares registered in his name were not acquired and held by him as dummy, nominee and/or agent of defendants Ferdinand E. Marcos and Imelda Romualdez Marcos. The anti-graft court found that Cojuangco failed to present evidence necessary to establish his affirmative defense that he held the properties upon the request, and as nominee, of [27] the late Hans Menzi who owned and delivered to him said shares. In affirming the Sandiganbayans findings, the Court noted that that there was not enough evidence to prove that respondent Cojuangco was a nominee of the late Hans Menzi but that the share [28] he held were ill-gotten wealth of the Marcoses. Consequently, since the Court had declared that the Bulletin shares held under the name of respondent Cojuangco were 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 enjoyed an illicit confidential relationship with the Marcos spouses. Fourth, we state the conclusions of two foreign courts on the relationship between respondent Cojuangco and former President Marcos. In separate actions filed in the United States of America, a Falcon aircraft was allegedly leased by a Hong Kong corporation (Faysound Limited) to a domestic corporation (United Coconut Chemicals), but was eventually sequestered by the PCGG for purportedly being ill-gotten wealth of respondent Cojuangco. The controversy in these two foreign cases arose when the PCGG sold the deteriorating sequestered property to an American corporation (Walter Fuller Aircraft Sales, Inc.) and had the aircraft flown to the United States, when the true owner of the property (whether Faysound Limited, United Coconut Chemicals, or respondent Cojuangco) had yet to be judicially determined in the Philippines. Both Courts made a definitive finding as to respondent Cojuangcos association with former President
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Marcos. In Walter Fuller Aircraft Sales, Inc., v. Republic of the Philippines, the United States Court of Appeals (Fifth Circuit) stated that:
Cojuangco was a wealthy businessman with a substantial interest in UNICHEM [29] (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 District Court also stated that:
Cojuangco was a multimillionaire businessman with substantial interest in [30] UNICHEM and undoubtedly a close friend and adviser to Marcos. (Emphasis supplied) The PCGG expropriated an expensive airplane without any legal basis whatsoever. Although the plane was leased to a company in which an associate (Cojuangco) of Ferdinand Marcos was a stockholder, the Marcos associate owned no interest whatsoever in the plane, and the lease was near the end of its term. The plane was nevertheless seized and sold in a transaction having the strong odor of corruption. The sale was 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 violated the specific terms of the Treaty known as the Geneva Convention covering property rights in aircraft. It violated principles of international law, the Second Hickenlooper Amendment, as well as principles of Philippine law enunciated by the Philippine court [31] having jurisdiction over this matter. (Emphasis supplied)

The above-cited cases, domestic and foreign which are demonstrably within the realm of knowledge of judges sufficiently justify the Court in taking judicial notice of [32] respondent Cojuangcos close association with former President Marcos. No less than respondent himself has publicly declared that he has never denied his association with Marcos, only his alleged participation in the latters greed:
[Cojuangco] does not, however, deny, nor is he ashamed of, his relationship with the late dictator, but he distances himself from Marcoss greed. I have never denied my association with Marcos. And to my dying day, I will never deny it. But its the connotation of the word crony magnanakaw that hurts. Kasi wala akong alam na ninakaw ko, eh, he contends, adding, Naniniwala ako sa ginagawa ni Marcos bilang pangulo ng ating inang bayan Pero kung sasabihin mong

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[33] nagnakaw si Marcos (at) ninakawan ko, hindi ako parte. (Emphasis supplied)

II.

Respondent Cojuangco took advantage of his official position in order to obtain, directly and indirectly, shares of stock in SMC

Even assuming arguendo that the loan proceeds extended to respondents Cojuangco, et al., are private in nature, and that the acquisition of substantial holdings in SMC can somehow tangentially be justified as being compliant with the expressed purposes of the coco levy funds, the SMC shares are still subject to forfeiture, since respondent Cojuangco took undue advantage of his positions and his relationship with former President Marcos to accumulate for himself substantial and valuable holdings in a private corporation. Respondent Cojuangco was deeply involved in the agencies that collected, managed, and administered the coco levy funds, specifically the PCA, UCPB and the CIIF Oil Mills. He admitted being at one time a director of both the PCA and UCPB, [34] even assuming the presidency of the latter corporation. As mentioned earlier, the position of respondent Cojuangco as a director of PCA was through the graces of his patron, former President Marcos, who had the sole authority to appoint the members of [35] the bodys governing board. PCA, which collected the coco levies imposed by the [36] [37] Marcos administration, was authorized to funnel the public funds to UCPB. It obtained a controlling equity in UCPB by purchasing respondent Cojuangcos alleged option to acquire 72.2% of the banks predecessor, FUB. In turn, PCA-controlled UCPB was empowered to make investments in private corporations for the benefit of the coconut farmers, using that part of the Coconut Industry Development Fund (CIDF) [39] referred to as the Coconut Industry Investment Fund (CIIF). Pursuant to its mandate, [40] UCPB gained controlling interest in the CIIF Oil Mills, and respondent Cojuangco [41] was likewise elected as a director in some of these CIIF Oil Mills. As a director of PCA, UCPB and some of the CIIF Oil Mills, he enjoyed the privileged position of
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[38]

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collecting, managing and administering the coco levies, the public funds deposited in UCPB, and consequently, disbursing those funds through loans or cash advances. Respondent Cojuangco took undue advantage of his positions in these public corporations, which granted him favorable conditions and allowed him to direct the flow of coco levy funds for his own personal gain through a conduit, his dummy [42] corporations. First, respondent Cojuangco unduly took advantage of his position in the PCA to broker the terms of purchase of UCPB in his favor. Instead of purchasing the shares of FUB directly, PCA had to settle for a purported exclusive option to purchase shares in [43] the bank. Thus, even though respondent did not own any share in the predecessor bank, subject of the exclusive option, he received from PCA the full amount of the purchase price for the same shares. It appears highly disadvantageous for a public entity to apply public funds for the acquisition of a mere inchoate option (albeit exclusive) to stockholdings of a commercial bank in an amount equal to the value of the shares themselves. Furthermore, respondent was even able to register, in his own name, some of the FUB shares acquired by PCA, without even contributing anything. Second, after the bank was acquired by PCA, collections from the coco levy funds were deposited interest-free at UCPB, which would now be able to administer the funds as it pleased. With respondent Cojuangco as director and president of UCPB, respondents Cojuangco, et al., were able to obtain from the bank substantial loans that were used to purchase the SMC shares, directly in respondent Cojuangcos name or indirectly through his dummy corporations. The preferential treatment extended by UCPB to respondents Cojuangco Corporations can be attributed to nothing else but the undue influence of respondent Cojuangco over the bank. Respondents Cojuangco, et al., were not able to show how they were able to borrow substantial amounts from UCPB without any collateral or security, despite the opportunity to do so in the trial proceedings below. Neither was it demonstrated how allowing respondent Cojuangco corporations to borrow public funds from UCPB could directly benefit the coconut industry. The purchase of SMC shares using the loan proceeds from UCPB deviated from the purpose of the coco levy 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, rather than obtaining a direct loan in his name demonstrates a manifest intent to build a semblance of propriety in the loan applications and conceal the identity of the true beneficiary of the UCPBs excessive magnanimity. In sum, respondents Cojuangco corporations were organized and established as fronts of respondent Cojuangco for the sole reason of purchasing the SMC shares by distributing the favorably obtained credit from UCPB to different entities instead of just a single natural person who had direct links with the control and management of the bank. Respondent Cojuangco would not have received the same favorable treatment if his dummy corporations had applied for the loan in any other bank. No reasonable banking institution would allow a single entity to borrow funds not for the purpose of improving its business, but simply to acquire shares of stock in another 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 said shares for itself and thus, directly enjoyed the benefits of ownership instead of passing on the opportunity to a third party. As stated by Justice Carpio Morales, respondent Cojuangcos self-dealing and ultimately self-serving scheme likewise constituted a violation of his fiduciary duty as a director of UCPB and some of the CIIF Oil Mills. Assuming that the investment in SMC was secure and lucrative, respondent as a fiduciary officer should have first offered the creditor bank the opportunity to exercise the option, before he acquired it for his own personal gain through the use of corporate funds (which are prima facie public funds), to the detriment of the corporation. Rather than work to further the banks interests, he robbed it of a business opportunity for his own advantage, maneuvered the public funds managed 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 the CIIF Oil Mills that had loaned amounts to respondents Cojuangco corporations for the purchase of the Cojuangco block of SMC shares. With UCPB enjoying controlling interest 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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[44] Oil Mills during the time of the purchase of the SMC shares. Again, instead of allowing the CIIF Oil Mills the opportunity to use the public funds under its control to acquire the SMC shares, respondent Cojuangco instead directed them to extend loans and cash advances to respondent Cojuangco corporations, to finance the acquisition. As president and director, he unduly deprived the CIIF Oil Mills of a gainful and commercial opportunity and even used prima facie public funds (derived from the coco levy) to purchase substantial amounts of SMC shares. In addition, as Justice Carpio Morales also earlier stated in her Dissent, respondent [45] Cojuangco violated existing banking laws at that time when he (through the respondent Cojuangco corporations) indirectly obtained loans from UCPB, in which he served as director and president, without the written approval of the majority of the directors of the bank. The prohibition on extension of loans to the banks directors and [46] corporate officers includes indirect borrowing using representatives or agents, which is clearly applicable in the case of respondents Cojuangco corporations. Respondent Cojuangco, with the assistance of his lawyers, established the dummy corporations to act as indirect borrowers of the public funds in UCPB, the proceeds from which were used to [47] purchase the SMC shares. Respondent Cojuangco corporations, which obtained loans from UCPB, were specifically organized and established as fronts for respondent Cojuangco, 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 that acquired some of the SMC shares) were in the name of only one person, his private [48] lawyer, who likewise executed a Declaration of Trust and Assignment of Subscription [49] in favor of an unnamed assignee. The strategy employed by respondent Cojuangco to circumvent the requirements for a direct loan to a director or corporate officer was to course his application through third-party corporations, wherein almost all the shares would be held by his lawyers or trusted associates. These nominee stockholders would then assign, in blank, the said subscribed shares, and he would then physically hold these deeds of assignments.
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Evidently, respondent Cojuangco exploited the corporate layering and assignment in blank specifically to muddle the series of transactions and thus elude detection in the event of the scheme being unearthed. It has therefore been strongly established that respondent Cojuangco took advantage of his close association with President Marcos in order to gain key positions in [50] agencies responsible for the coco levy funds. As petitioners explained, he used those special privileges and his positions to obtain favorable treatment for himself and his dummy corporations in the extension of loans and/or cash advances from public entities in order to solely finance his private interest in acquiring shareholdings in SMC. All properties from the unlawful and wrongful exploitation of ones public position during the Marcos regime is necessarily ill-gotten wealth and is subject of forfeiture. A Final Word The recovery of ill-gotten wealth and of the governments own properties involves, as a matter of public record and knowledge, the material and moral recovery of the nation, marked as the Marcos regime was by the obliteration of any line between private funds and the public treasury and abuse of unlimited power and elimination of any [51] accountability in public office. For if there is a lesson that should be learned from the [52] national trauma that was the rule of Marcos, it is that kleptocracy cannot pay. Under the scheme of our democratic government, the judiciary, in conjunction with its main task of dispensing justice, acts as an official repository of the countrys history through the decisions it renders. Lest the forces of martial law revisionism triumph in the future and crony capitalism be slowly erased from public memory, the present opinion is offered so that the people may be afforded the opportunity to judge for themselves now or in the future the weight of the reasoning propounded by both sides. Respondent Cojuangcos acquisition of a majority share in SMC during the Marcos regime was built on the sweat of coconut farmers. Through his positions in key public 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 close relationship 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 corporate layering and multi-level loan transactions to divert public funds in blatant disregard of his fiduciary duties. These series of anomalous transactions have left an indelible mark in the countrys history of recovering ill-gotten wealth. By awarding respondent Cojuangco with regained control of the SMC shares, the majority effectively impedes the gains accomplished by the PCGGs efforts to retrieve public funds misappropriated by Marcos cronies. Despite the setback to the efforts of the government and the coconut farmers to wrestle ownership over the Cojuangco block of SMC shares, prescription, laches or estoppel will not bar a subsequent action to recover unlawfully acquired property by [53] public officials or their dummies. As public funds, coco levy funds, including its proceeds and whatever form they may have taken in the past or will take in the future, are to be held by public officers and their assigns or transferees under a continuing public trust in favor of the coconut farmers and the public at large. When the time comes that the legal impediment presented before the Court today is lifted (perhaps through newly discovered evidence or another justifiable reason), the opportunity to revisit the ruling of this Court may present itself, and Philippine history may have a chance to be redeemed in part. I vote to grant the Motions for Reconsideration and find the Cojuangco block of SMC Shares to have been acquired with public funds and thus, public assets that are forfeited 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, at 71) [2] Respondents Cojuangco, et al., refer to individual respondent Eduardo Cojuangco, Jr., and his corporations or companies holding shares of stock in San Miguel Corporations, in contradistinction to the 6 coconut oil mill corporations and their 14 holding companies, 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 Cojuangcos control and used by him to acquire shares of SMC stock totaling 16,276,879 (representing approximately 20% of the capital stock of SMC). In contradistinction, the CIIF block of SMC shares refers to the approximately 33,000,000 shares of SMC stock acquired through the 14 holding companies owned by the CIIF Oil Mills, which were forfeited in favor of the government based on the Sandiganbayans Partial Summary Judgment dated 07 May 2004. (Decision dated 12 April 2011, at 9-10) [4] Petitioner Republics Motion for Reconsideration dated 28 April 2011, at 58-66. [5] Petitioner-intervenors Motion for Reconsideration dated 27 April 2011, at 18-20. [6] Chavezs Omnibus Motion dated 02 May 2011; rollo (166859) at 1235-12343. [7] Chavezs 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 to make him a subordinate of former President Marcos for purposes of EO No. 1 and its amendments. The PCGG has to provide a prima 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 by Ramas complicity with former President Marcos in the accumulation of ill-gotten wealth by the deposed President or by former 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 evidence proving who were the close associates of President Marcos who had amassed assets and properties that would be rightly considered 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 among equals. He was one of Marcoss closest cronies, even seen by many then as the dictators 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 in systematically robbing the country. In fact, Danding was described by an American newspaper as second only to Marcos in the systematic looting of the Philippines. (Earl G. Parreo, Boss Danding [First Quarter Storm Foundation, Inc.] 2003, at 9-11, citing Los Angeles Times, 30 December 1990, as quoted by Ricardo Manapat in Some Are Smarter than Others, New York: Alithea Publication, 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 Cojuangcos 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-large of the private sector, who would be appointed by the President. (Presidential Decree No. 232, Sec. 4) Subsequently, the Board of the 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 to be 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, which includes 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 Consumer Stabilization Fund). (Presidential Decree No. 755, Sec. 2; COCOFED v. PCGG, G. R. No. 75713, 02 October 1989, 178 SCRA 236; Republic v. Sandiganbayan, G. R. No. 118661, 22 January 2007, 512 SCRA 25; Republic v. COCOFED, G. R. No. 14706264, 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 the Acquisition of a Commercial Bank for the benefit of the Coconut Farmers executed by the Philippine Coconut Authority, the terms of which Agreement are hereby incorporated by reference; and that the Philippine Coconut Authority is hereby authorized to distribute, for free, the shares of stock of the bank it acquired to the coconut farmers under such rules and regulations it may promulgate. (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 Coconut Producers 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 Coconut Federation, Inc. (COCOFED) v. PCGG, G. R. No. 75713, 02 October 1989, 178 SCRA 236. (Dissenting Opinion of Justice Carpio 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. Chavezs Brief dated 02 May 2011, at 6- 7. [24] Republic v. Estate of Hans Menzi, id. [25] Chavezs 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 Sandiganbayans evaluation of the weight and sufficiency of the evidence presented by the Republic and its finding that the evidence adduced by the Estate of Menzi and HMHMI do not prove their allegation that Campos, Cojuangco and Zalamea are Menzis nominees, taking into account the express admission of Campos that he owned the shares upon Marcos' instruction, the declaration of Zalamea that he does not claim true and beneficial ownership of the shares, and the absolute dearth of evidence regarding Cojuangco's assertion that he is Menzi's nominee. (Republic v. Estate of 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 of the 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 Woods of 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. Parreo, Boss Danding [First Quarter Storm Foundation, Inc.] 2003, at 209-210, citing Sayson, Ian, Manila Times, November 1998. [34] Respondent Cojuangcos 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 that part of the CIDF referred to as the CIIF. Thus were organized the CIIF companies subject of the sequestration orders herein assailed. 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 Insurance Brokerage, 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, cited in Sandiganbayans 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 of Legaspi Oil Company, Inc., San Pablo Manufacturing, Corp., and Granexport Manufacturing Corp. (Annexes A to C of petitioner Republics 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 the CIIF 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 levyfunded 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 the Philippines 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 Million Pesos (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 Republics 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 or agent of other, borrow any of the deposits of funds of such banks, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or in any manner be an obligor for money borrowed from the bank or loaned by it, except with the written approval of the majority of the directors of the bank, excluding the director concerned. Any such approval shall be entered upon the records of the corporation and a copy of such entry shall be transmitted forthwith to the Superintendent of Banks. The office of any director or officer of a bank who violates the provisions of this section shall immediately become vacant and the director or officer shall be punished by imprisonment of not less than one year nor more than ten years and by a fine of not less than 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, by banking institutions to their directors, officers, or stockholders. However, the outstanding credit accommodations which a bank may extend to each of its stockholders owning two per cent (2%) or more of the subscribed capital stock, its directors, or its officers, shall be limited to an amount equivalent to the respective outstanding deposits and book value of the paid-in capital contribution in the bank: Provided, however, That loans and advances to officers in the form of fringe benefits granted in accordance with rules and regulations as may be prescribed by the Monetary Board shall not be subject to the preceding limitation. (Republic Act No. 337, Sec. 83, as amended by Presidential Decree No. 1795; cited in Dissenting Opinion of Justice Carpio 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 or officer (like herein petitioner) which are made either: (1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent 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 any manner 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, as such overborrowing may lead to bank failures. It has been said that banking institutions are not created for the benefit of the directors [or officers]. While directors have great powers as directors, they have no special privileges as individuals. They cannot use the assets of the bank for their own benefit except as permitted by law. Stringent restrictions are placed about them so that when acting both for the bank and for one of themselves at the same time, they must keep within certain prescribed lines regarded by the legislature as essential to safety in the banking business. (Soriano v. People, G. R. No. 162336, 01 February 2010, 611 SCRA 191) [47] In Republic v. Sandiganbayan, 240 SCRA 376 (1995), the Court noted that the records bared confessions of cloaked ownership 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] [50]

Respondent Cojuangcos Answer dated 23 June 1999, para.5.02(i) and 5.02(j), at 10-11.

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 a Director of the CIIF Oil Mills. Through these positions, he was able to unlawfully acquire the shares of stock representing twenty percent (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 dated 28 April 2011, at 77) [51] PCGG v. Pea, 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.

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