February 2010 Philippine Supreme Court Decision on Commercial Law

Corporation; sequestered corporation. Tañada, et al. posit the view that the conversion of shares needs the acquiescence of the 14 CIIF companies.

The SMC shares allegedly owned by the CIIF companies are sequestered assets under the control and supervision of the PCGG pursuant to Executive Order No. 1, Series of 1986.  It is the duty of the PCGG to preserve the sequestered assets and prevent their dissipation. In the exercise of its powers, the PCGG need not seek or obtain the consent or even the acquiescence of the sequestered assets owner with respect to any of its acts intended to preserve such assets. Otherwise, it would be well-nigh impossible for PCGG to perform its duties and exercise its powers under existing laws, for the owner of the sequestered assets will more often than not oppose or resist PCGG’s actions if their consent is a condition precedent. The act of PCGG of proposing the conversion of the sequestered SMC shares to Series 1 Preferred Shares was clearly an exercise of its mandate under existing laws, where the consent of the CIIF Companies is rendered unnecessary.

Additionally, the above contention has been rendered moot with the filing on October 26, 2009 of the Manifestation dated October 23, 2009. Attached to such Manifestation is the Secretary’s Certificate of the 14 CIIF companies approving the conversion of the SMC Common Shares into Series 1 Preferred Shares.  Philippine Coconut Producers Federation, Inc. (COCOFED), et al. vs. Republic of the Philippines, G.R. Nos. 177857-58/G.R. No. 178193/G.R. No. 180705, February 11, 2010.

(Note:  Except for the above case, there is no  February 2010 case that posed a commercial law issue.)