In Imelda O. Cojuangco, Prime Holdings, Inc., and the Estate of Ramon U. Cojuangco v. Sandiganbayan, Republic of the Philippines, and the Sheriff of Sandiganbayan, the Supreme Court affirmed that when the Republic of the Philippines is declared the owner of illegally acquired shares of stock, it is also entitled to all dividends and interests accruing to those shares from the time of sequestration. This ruling clarifies that ownership includes the right to all benefits derived from the property, ensuring that ill-gotten wealth is fully recovered for the public good. This decision reinforces the principle that the fruits of ownership belong to the owner, even if not explicitly stated in the original judgment.

From Marcos Cronies to Public Funds: Tracing Dividends in Ill-Gotten Wealth

This case arose from the Republic’s efforts to recover ill-gotten wealth accumulated by the late President Marcos and his associates, including shares in the Philippine Long Distance Telephone Company (PLDT). The Republic filed a complaint seeking the reconveyance of these assets, alleging that they were acquired through unlawful means. The legal battle centered on whether the Republic, having been declared the owner of certain shares, was also entitled to the dividends and interests that had accrued on those shares over the years.

The central issue revolved around the interpretation of the Supreme Court’s earlier decision in G.R. No. 153459, which had granted the Republic ownership of 111,415 shares of stock in the Philippine Telecommunications Investment Corporation (PTIC) registered under Prime Holdings, Inc. While the dispositive portion of that decision explicitly ordered the reconveyance of the shares, it did not specifically mention the dividends and interests. The petitioners, Imelda O. Cojuangco, Prime Holdings, Inc., and the Estate of Ramon U. Cojuangco, argued that this omission meant the Republic was not entitled to the additional benefits.

However, the Supreme Court, in this subsequent case, rejected that narrow interpretation. Building on the fundamental concept of ownership, the Court emphasized that the right to receive dividends and interests is an inherent attribute of owning stock. According to the Court, this right is part of the bundle of rights that constitutes ownership, also known as jus utendi, which includes the right to receive what the thing produces. The Court invoked the principle that ownership grants the right to all benefits derived from the property.

The Supreme Court also addressed the argument that the Republic had forfeited its right to the dividends when it later transferred the shares to Metro Pacific Assets Holdings, Inc. The Court clarified that dividends are payable to the stockholders of record as of the date of declaration, or a predetermined future date. Furthermore, the Court referenced Section 63 of the Corporation Code which discusses the transfer of shares:

Sec. 63. Certificate of stock and transfer of shares. — The capital stock of stock corporations shall be divided into shares for which certificates signed by the president or vice-president, countersigned by the secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is recorded in the books of the corporation showing the names of the parties to the transaction, the date of the transfer, the number of the certificate or certificates and the number of shares transferred.

In this context, the Court noted that even if a transfer of shares is not yet recorded in the corporate books, the transferor holds the dividends as a trustee for the real owner. The Court thus determined that the Republic was entitled to the dividends from the time the shares were sequestered in 1986 until their transfer to Metro Pacific, after which the Republic acted as a trustee of those dividends for Metro Pacific. This clarification ensured that the economic benefits of the shares would ultimately accrue to the rightful owner.

The ruling in this case has significant implications for cases involving the recovery of ill-gotten wealth. It reinforces the principle that ownership encompasses all the benefits and advantages that come with it. Moreover, it prevents parties from attempting to circumvent the spirit of court orders by focusing solely on the literal wording of the dispositive portion. It underscores the importance of looking at the intent and reasoning behind a decision to ensure that justice is served.

The Supreme Court also cited the exceptions to the general rule that only the dispositive portion of a decision is subject to execution. One such exception arises when there is ambiguity or uncertainty, allowing reference to the body of the opinion to construe the judgment. Another exception applies when extensive and explicit discussion of the issue is found in the body of the decision. The Court explained:

Contrary to petitioners’ contention, while the general rule is that the portion of a decision that becomes the subject of execution is that ordained or decreed in the dispositive part thereof, there are recognized exceptions to this rule, viz: (a).where there is ambiguity or uncertainty, the body of the opinion may be referred to for purposes of construing the judgment, because the dispositive part of a decision must find support from the decision’s ratio decidendi; and (b).where extensive and explicit discussion and settlement of the issue is found in the body of the decision.

Thus, the Court reasoned that even though the earlier decision did not explicitly mention dividends, the intent to award the Republic full ownership of the shares implied that the dividends should also be included. This interpretation ensures that the Republic can fully recover the ill-gotten wealth and use it for the benefit of the Filipino people.

Ultimately, this case underscores the principle that ownership is not merely a nominal title but a comprehensive right that includes all the benefits derived from the property. It serves as a reminder that courts will look beyond the literal wording of a decision to ensure that the true intent of the judgment is carried out. The Court found that awarding the shares without the dividends would result in a crippled owner, unable to enjoy the full fruits of their property.

FAQs

What was the key issue in this case?	The central issue was whether the Republic of the Philippines, having been declared the owner of shares of stock, was also entitled to the dividends and interests accruing to those shares. The petitioners argued that the earlier court decision did not explicitly mention dividends, so they should not be included.
What did the Supreme Court decide?	The Supreme Court ruled in favor of the Republic, holding that ownership of the shares necessarily includes the right to the dividends and interests accruing to them. The Court reasoned that these benefits are an inherent part of ownership.
What is jus utendi?	Jus utendi is a Latin term that refers to one of the fundamental rights of ownership. It means the right to use and enjoy a thing, including the right to receive its fruits or benefits.
Why didn’t the original decision mention dividends?	Although the original decision did not explicitly mention dividends, the Supreme Court clarified that the intent was to award full ownership of the shares to the Republic. The Court found that awarding the shares without the dividends would render the Republic a “crippled owner.”
What happens when shares are transferred?	When shares are transferred, the dividends are payable to the stockholders of record as of the date of declaration. If the transfer is not yet recorded, the transferor holds the dividends as a trustee for the real owner.
What is the significance of Section 63 of the Corporation Code?	Section 63 of the Corporation Code governs the transfer of shares. It states that a transfer is only valid between the parties until it is recorded in the books of the corporation.
What is a ‘crippled owner’?	A ‘crippled owner’ is a term used by the Court to describe an owner who is unable to exercise the full rights of ownership, particularly the right to enjoy the fruits of the property.
How does this case affect future ill-gotten wealth cases?	This case reinforces the principle that ownership encompasses all benefits derived from the property, preventing parties from circumventing court orders by focusing solely on literal wording. It makes it clear that recovery of ill-gotten wealth includes dividends and interests.

In conclusion, the Supreme Court’s decision in this case reaffirms the comprehensive nature of ownership and the importance of ensuring that ill-gotten wealth is fully recovered for the benefit of the public. The ruling serves as a guiding principle for future cases involving the recovery of assets acquired through unlawful means, emphasizing that ownership includes not only the title to the property but also all the rights and benefits that come with it.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Imelda O. Cojuangco, Prime Holdings, Inc., and the Estate of Ramon U. Cojuangco v. Sandiganbayan, Republic of the Philippines, and the Sheriff of Sandiganbayan, G.R. NO. 183278, April 24, 2009