Cojuangco vs. Sandiganbayan

The dispositive portion of a final judgment may be construed by referring to the body of the decision when there is ambiguity or when the body contains extensive and explicit discussion of the issue. Ownership of shares necessarily includes the right to dividends and all fruits, so an order reconveying shares carries with it the fruits accruing from them. Dividends are payable to the stockholder of record as of the declaration date, and an unrecorded transfer is valid only between the parties, making the transferor a trustee of dividends for the real owner.

In 1987, the Republic sought recovery of ill-gotten wealth from the Marcoses and their cronies via Civil Case No. 0002 before the Sandiganbayan. The complaint alleged that shares in PLDT held through PTIC and registered in the name of Prime Holdings, Inc. formed part of the Marcoses’ hidden assets. The Sandiganbayan initially dismissed the claim for the PLDT shares. The Republic appealed and the Supreme Court, in its January 20, 2006 Decision in G.R. No. 153459 (consolidated with other related cases), ruled in favor of the Republic, declaring it the owner of 111,415 PTIC shares registered in the name of Prime Holdings. That decision became final and executory on October 26, 2006.

• The Complaint for Recovery of Ill-Gotten Wealth: On July 16, 1987, the Republic filed Civil Case No. 0002 before the Sandiganbayan seeking reconveyance of assets acquired by former President Ferdinand Marcos, former First Lady Imelda Marcos, and their cronies, as ill-gotten wealth. The complaint, as amended, alleged that 2.4 million PLDT shares held through PTIC and registered in the name of Prime Holdings, Inc. — a corporation associated with Ramon and Imelda Cojuangco — formed part of that illegally acquired wealth.

• The Supreme Court’s January 20, 2006 Decision: The Sandiganbayan dismissed the complaint insofar as it sought recovery of the PLDT shares. On appeal, the Supreme Court in G.R. No. 153459 (consolidated with related petitions) reversed and declared the Republic the owner of 111,415 PTIC shares registered in the name of Prime Holdings. The dispositive portion of the decision stated: “WHEREFORE, the petition of the Republic of the Philippines in G.R. No. 153459 is GRANTED to the extent that it prays for the reconveyance to the Republic of 111,415 PTIC shares registered in the name of PHI. …” The body of the decision described the shares as part of the Marcoses’ ill-gotten wealth and public money. The decision became final and executory on October 26, 2006.

• Post-Judgment Execution Proceedings: The Republic moved for issuance of a writ of execution, seeking cancellation of the certificates, annotation of ownership, and an order for PTIC to account for all cash and stock dividends declared by PLDT in favor of PTIC on those shares from 1986 onward, including compounded interest. The Sandiganbayan initially granted execution only for reconveyance of the shares, denying the accounting of dividends. On Republic’s motion for reconsideration, the Sandiganbayan issued the first assailed Resolution on November 7, 2007, directing PTIC to deliver the cash and stock dividends, including compounded interests, on the rationale that the Supreme Court’s decision adjudged the Republic owner of the shares and therefore entitled to all fruits. Petitioners sought reconsideration, contending that the dispositive portion did not cover dividends. The Sandiganbayan partly granted the motion on June 13, 2008 by ordering legal interest but not compounded interest, and issued the corresponding Writ of Execution.

• Petitioners’ Factual Allegations: Petitioners insisted that the Supreme Court’s prior decision confined itself to reconveyance of the shares and made no mention of dividends, interests, or earnings. They further asserted that the Republic had transferred the shares to Metro Pacific Assets Holdings, Inc. via a Sale and Purchase Agreement dated February 28, 2007, and had thus yielded its right to the fruits thereof.

• Literal Reading of the Dispositive Portion: Petitioners maintained that execution must strictly conform to the dispositive portion of the judgment, which in G.R. No. 153459 ordered only the reconveyance of shares and did not mention dividends, interest, or earnings. They argued that the Sandiganbayan exceeded its jurisdiction by ordering delivery of fruits not decreed in the final decision.

• Effect of the Sale to Metro Pacific: Petitioners contended that the Republic, by selling the subject shares to Metro Pacific on February 28, 2007, relinquished any right to dividends and interests accruing after the sale, and therefore the Sandiganbayan’s order improperly awarded fruits to a party that was no longer the beneficial owner.

• Ownership Includes Fruits: Respondent Republic argued that the Supreme Court’s adjudication of ownership of the 111,415 PTIC shares carried with it, as a matter of law, the right to all fruits, including dividends and interests. The Sandiganbayan’s order merely enforced the logical and necessary consequences of full ownership.

• Construing the Dispositive Portion With the Body: The Republic and the Sandiganbayan maintained that the body of the Court’s decision in G.R. No. 153459 extensively discussed the shares as ill-gotten wealth belonging to the Republic, rendering them public money. Under established exceptions, the dispositive portion may be read in light of the ratio decidendi, allowing execution to encompass the fruits unequivocally intended.

• Dividends After Sale Held in Trust: The Republic countered that under the Corporation Code, the transfer of shares is not binding on the corporation until recorded in the stock and transfer book. Since the Republic remained the stockholder of record, it was entitled to receive dividends declared up to the time of transfer, and thereafter held them in trust for the transferee, subject to the terms of the sale agreement.

• Inclusion of Dividends in the Writ of Execution: Whether the Sandiganbayan gravely abused its discretion in ordering the accounting, delivery, and remittance of stock, cash, and property dividends when the Supreme Court’s final decision in G.R. No. 153459 did not expressly award such dividends.

• Entitlement After Sale of Shares: Whether the Republic, having transferred the shares to Metro Pacific, is entitled to the dividends, interests, and earnings accruing to the shares.

• Inclusion of Dividends in the Writ of Execution: The Sandiganbayan did not commit grave abuse of discretion. The right to dividends is an incident of stock ownership. The Supreme Court’s decision in G.R. No. 153459 declared the Republic the owner of the 111,415 PTIC shares, which necessarily included all fruits. While the general rule is that execution must conform to what is ordained in the dispositive part, recognized exceptions allow reference to the body of the decision when there is ambiguity or when the body contains extensive and explicit discussion of the issue. Here, the body of the decision clearly established that the shares were ill-gotten wealth and public money, and that the adjudication in favor of the Republic was meant to restore full ownership. To exclude the dividends would render the Republic a “crippled owner” unable to exercise the essential attributes of ownership. Thus, the Sandiganbayan correctly directed delivery of the dividends and legal interest (excluding compounded interest) in faithful execution of the Court’s prior ruling.

• Entitlement After Sale of Shares: The Republic is entitled to all dividends declared while it was the stockholder of record. Under Section 63 of the Corporation Code, shares may be transferred by delivery of indorsed certificates, but no transfer is valid, except as between the parties, until recorded in the corporate books. Consequently, the corporation properly pays dividends to the registered owner, who serves as trustee of the real owner for dividends received after an unrecorded transfer. The Republic’s sale of the shares to Metro Pacific on February 28, 2007 did not divest it of the right to dividends that had accrued from the time of sequestration in 1986 up to the date of sale. For dividends declared after the sale, the Republic holds them in trust for Metro Pacific, subject to the terms of their agreement.

• Ownership carries the right to the fruits (jus fruendi). Ownership is the complete subjection of a thing to a person’s will, encompassing the right to receive what the thing produces (jus utendi). An owner deprived of the fruits is a “crippled owner.” Applied to shares, the adjudication of ownership includes dividends and interests.

• Dispositive portion may be construed by reference to the body of the decision. The general rule that execution is limited to the dispositive part yields to exceptions: (a) where the dispositive part is ambiguous or uncertain, the body may be consulted to construe the judgment, because the disposition must find support in the ratio decidendi; and (b) where the body contains extensive and explicit discussion and settlement of the issue. The Court relied on this exception to hold that the silence of the dispositive portion in G.R. No. 153459 on dividends did not preclude their inclusion in execution.

• Stockholder of record entitled to dividends; unrecorded transfer creates a trustee relationship. Dividends are payable to the stockholder of record as of the date of declaration or the record date. A transfer of shares not recorded in the corporation’s books is binding only between the parties, leaving the transferor as the record holder who receives dividends as trustee for the transferee, subject to the contract between them. This doctrine flows from Section 63 of the Corporation Code.

• Accessories follow the principal (accessorium sequitur principale). The fruits of a thing are accessories that belong to the owner of the principal. The Court implicitly applied this principle in ruling that the adjudication of the shares necessarily included the dividends.

• “It would be absurd to award the shares to the Republic as their owner and not include the dividends and interests accruing thereto. An owner who cannot exercise the ‘juses’ or attributes of ownership — the right to possess, to use and enjoy, to abuse or consume, to accessories, to dispose or alienate, to recover or vindicate, and to the fruits — is a crippled owner.” — This passage encapsulates the core ratio that ownership of shares cannot be divorced from the right to dividends.

• “…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.” — This statement of the exception to the execution rule is frequently cited in subsequent jurisprudence.

• “Dividends are payable to the stockholders of record as of the date of the declaration of dividends or holders of record on a certain future date, as the case may be, unless the parties have agreed otherwise. … a transfer of shares which is not recorded in the books of the corporation is valid only as between the parties, hence, the transferor has the right to dividends as against the corporation without notice of transfer but it serves as trustee of the real owner of the dividends, subject to the contract between the transferor and transferee as to who is entitled to receive the dividends.” — The Court’s articulation of the rules on dividend entitlement and the trustee status of the transferor under Section 63 of the Corporation Code.

• Yuchengco v. Sandiganbayan, G.R. Nos. 149802, 150320, 150367, 153207, and 153459, January 20, 2006, 479 SCRA 1 — The prior consolidated decision that declared the Republic owner of the 111,415 PTIC shares. The enforcement of this decision was the subject of the present petition.

• Insular Life v. Toyota Bel-Air, G.R. No. 137884, March 28, 2008 — Cited for the rule that the body of a decision may be referred to when there is ambiguity in the dispositive portion or when the body extensively discusses the issue.

• Distilleria Washington, Inc. v. La Tondeña Distillers, Inc., G.R. No. 120961, October 2, 1997, 280 SCRA 116 — Cited for the definition of ownership and its attributes, including the right to the fruits.

• Samartino v. Raon, G.R. No. 131482, July 3, 2002, 383 SCRA 664 — Relied upon for the concept of a “crippled owner” — one who holds title but cannot exercise the essential attributes of ownership.

• Section 63, Corporation Code (Batas Pambansa Blg. 68) — Governs the form and transfer of shares. It provides that shares may be transferred by indorsed delivery of certificates, but no transfer is valid, except between the parties, until recorded in the corporation’s stock and transfer book. The Court applied this provision to hold that the Republic, as the stockholder of record, was entitled to receive dividends from the corporation despite having sold the shares to Metro Pacific, and that it held dividends received after the sale in trust for the real owner.

Chief Justice Reynato S. Puno, Associate Justice Leonardo A. Quisumbing (on official leave), Associate Justice Antonio T. Carpio, Associate Justice Consuelo Ynares-Santiago, Associate Justice Ma. Alicia Austria-Martinez, Associate Justice Renato C. Corona, Associate Justice Dante O. Tinga, Associate Justice Minita V. Chico-Nazario, Associate Justice Antonio Eduardo B. Nachura, Associate Justice Presbitero J. Velasco, Jr., Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Arturo D. Brion, Associate Justice Diosdado M. Peralta, and Associate Justice Lucas P. Bersamin.

• N/A (The decision was reached unanimously; no dissenting opinion was recorded.)