OLD DISPUTE SETTLED: GOVT LOSES DANDING SHARES IN SAN MIGUEL
MANILA, NOVEMBER 29, 2007 (STAR) By Sandy Araneta - The Sandiganbayan First Division dismissed yesterday the government’s claim to 17-percent stake in San Miguel Corp. making its chairman Eduardo “Danding” Cojuangco the undisputed owner of the stocks.
The decision, which came after a two-decade dispute and is open to appeal, allows Cojuangco to sell his shares if he wants to. The shares originally represented 20 percent of SMC, before it was diluted by a rights offer.
The government said earlier it wanted to sell next year another block of SMC shares representing about 24 percent of the company, after a final ruling on the ownership of the stake. The Court awarded that block to the government, but coconut farmers claiming the shares filed an appeal.
In a 55-page decision, penned by Associate Justice Diosdado Peralta, the Sandiganbayan said yesterday it dismissed the government’s claim to the disputed shares due to lack of evidence.
“Plaintiff did not present any other evidence during the trial of this case but instead, merely used the same evidence it had already relied upon when it moved for partial summary judgment over the Cojuangco block of SMC shares,” the Sandiganbayan said.
“Altogether, the Court finds the same insufficient to prove plaintiff’s allegations in the complaint,” it added.
The court also ruled that the government failed to prove that the loans obtained by Cojuangco were used to pay for the SMC shares.
“The scheme alleged to have been taken by defendant Cojuangco Jr. was not even established by any paper trail or testimonial evidence that would have identified the same,” the decision stated.
In its ruling, the Sandiganbayan also said that a separate claim by the Philippine Coconut Producers Federation (Cocofed) has been “overtaken by developments” because the issue of ownership is already resolved.
“Intervenors COCOFED et al, while notified of the proceedings (trial on merits over the 20-percent block), took no stand to participate therein. As it is, the Court can only conclude that COCOFED et al’s interest does not so much lie therein except to disprove that COCOFED acted as dummy of defendants Cojuangco et al,” the Sandiganbayan said.
The government said Cojuangco illegally used coconut levy funds, a special tax levied on coconut farmers by the Marcos administration, to acquire some 47 percent of SMC.
For his defense, Cojuangco and co-defendant Agricultural Consultancy Services Inc. said the court should first establish whether the coconut levy funds are public or private funds.
Cojuangco’s camp described the Third Amended Complaint against him as “abundant in accusatory conclusions but scarce in statement of ultimate facts because all causes of action cited do not state the ultimate facts upon which each cause of action was based.”
“The proceeding from the fact upon which the complaint is founded, that the SMC shares belong to, and are registered in the respective names of defendants, it follows that the money used to acquire the shares belonged to the defendant shareholders,” he emphasized.
The court also rebuffed claims of wrongdoing on the part of Cojuangco when he acquired the SMC shares when he was director of the Philippine Coconut Authority and chairman of the United Coconut Planters Bank (UCPB).
“On account of (Cojuangco’s) positions in the UCPB, PCA, and the CIIF Oil Mills, the Court cannot conclude that he violated the fiduciary obligations of the positions he held in the absence of proof that he was so actuated and that he abused his positions,” the court said.
Cojuangco already sold part of the disputed shares for P4.82 billion to the San Miguel Retirement Fund. The shares were sold to pay off SMC debt to UCPB. The shares represent 2.3 percent of the company’s total capitalization of around P6.05 billion.
In May, the Sandiganbayan authorized the sale on the condition that the proceeds would only be used to settle loans with the lender. The government disputed the ruling.
Analysts said the government and Cojuangco may eventually team up to offload their respective stakes in SMC in a joint sale early next year. At current prices, Cojuangco’s stake is worth about P25 billion and the government stake, P35.6 billion.
Malacañang distanced itself from the ruling, but said the decision might pave the way for a compromise deal between the Cojuangco camp and the Presidential Commission on Good Government.
“The Palace does not meddle with the work of the PCGG,” President Arroyo’s chief lawyer Sergio Apostol said. Mrs. Arroyo last July placed the PCGG under the supervision of the DOJ.
He said the PCGG could also file a motion for reconsideration or later appeal the case before the Supreme Court.
Cojuangco was a close business associate of Marcos and fled the country on the same plane as the dictator in 1986 after a popular revolt. He was chairman of SMC at the time.
In 1998, the Court gave him voting rights over the contested shares, allowing him a dramatic comeback to manage SMC – just weeks after actor-politician Joseph Estrada, also a close political ally, was declared president.
Cojuangco, who now lives mostly in Australia, is also known to be close to Mrs. Arroyo. His nephew, Gilberto Teodoro, is the defense secretary. – With Paolo Romero, Reuters
Chief News Editor: Sol Jose Vanzi
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