PCGG vs. Cojuangco Jr.

A quo warranto petition challenging an election to a corporate board becomes moot and academic upon the expiration of the respondents' term of office, especially when the ownership of the sequestered shares voted in that election has already been definitively resolved in a separate final judgment.

The Presidential Commission on Good Government (PCGG) was tasked with recovering ill-gotten wealth accumulated during the Marcos administration, including sequestered shares of stock in San Miguel Corporation (SMC). To prevent the dissipation of sequestered assets, the PCGG would register sequestered shares in the names of its nominees to qualify them for election to the SMC Board of Directors, thereby exercising voting rights over the shares pending the resolution of ownership in the main sequestration suit.

During the 1995 annual stockholders' meeting of San Miguel Corporation (SMC), respondents Eduardo M. Cojuangco Jr., Enriquez M. Cojuangco, Manuel M. Cojuangco, Estelito P. Mendoza, and Gabriel L. Villareal vied for seats in the SMC Board of Directors. Individual petitioners, nominated by the Presidential Commission on Good Government (PCGG), were also nominees. The PCGG registered SMC sequestered shares belonging to some 43 corporate stockholders in the names of the individual petitioners to allow them to qualify for the board. The PCGG voted these Corporate Shares in favor of the individual petitioners, while Mendoza, acting as the appointed proxy of the corporate shareholders, voted the same shares in favor of the respondents. Following the canvass, the individual petitioners were declared elected, and none of the respondents made it to the board. Mendoza protested the results, questioning the PCGG's authority to vote the Corporate Shares and the propriety of registering them in the names of the individual petitioners. Petitioner Jose Feria, SMC's corporate secretary, overruled the protest, prompting the respondents to file a quo warranto petition docketed as Civil Case SB. No. 0166.

A similar scenario occurred during the 1996 annual stockholders' meeting, where individual petitioners were again declared elected to the SMC Board as PCGG nominees. Respondents filed another quo warranto petition, docketed as Civil Case SB. No. 0169. The Sandiganbayan initially dismissed both petitions for lack of jurisdiction, but the Supreme Court in Cojuangco Jr. vs. Sandiganbayan directed the Sandiganbayan to give due course to the petitions. Petitioners then filed motions to dismiss or hold the cases in abeyance, arguing mootness due to the expiration of the individual petitioners' terms and the pendency of a related case.

On July 15, 2014, the Sandiganbayan partially granted the quo warranto petitions, declaring the election of the individual petitioners void. It rejected the mootness argument, applying exceptions to the doctrine, and ruled that the registered owners, not the PCGG, had the authority to vote the Corporate Shares. However, it did not declare the respondents duly elected. Petitioners moved for reconsideration, which was denied, leading to the instant Petition for Review on Certiorari before the Supreme Court.

• Mootness: Petitioners maintained that the quo warranto petitions should be dismissed for mootness in view of the subsequent elections of the SMC Board from 1997 to the present and the Court's decision in Republic vs. Sandiganbayan, which resolved the ownership of the sequestered shares.
• Due Process: Petitioners argued in the alternative that if dismissal was not warranted, they should be given the opportunity to present evidence as they were deprived of their right to due process when the Sandiganbayan ruled on the merits while resolving the respondents' motion to declare petitioners in default.

• Dangerous Precedent: Respondents argued that petitioners' theory that a quo warranto petition automatically becomes moot upon the expiration of term would set a dangerous precedent.
• Exceptions to Mootness: Respondents claimed that the Sandiganbayan correctly ruled that the exceptions to the mootness principle apply in this case.
• Opportunity to Plead: Respondents contended that petitioners were given the opportunity to submit responsive pleadings, which they failed to do, thus there was no denial of due process.

• Mootness: Whether the quo warranto petitions challenging the election of PCGG nominees to the SMC Board for 1995 and 1996 should be dismissed as moot and academic due to the expiration of their terms and the resolution of ownership in Republic vs. Sandiganbayan.
• Due Process: Whether the Sandiganbayan denied petitioners their right to due process by ruling on the merits of the quo warranto petitions in resolving the motion to declare them in default.

• Mootness: Yes. The quo warranto petitions were rendered moot and academic by the expiration of the individual petitioners' terms of office and the definitive resolution of the ownership of the Corporate Shares in Republic vs. Sandiganbayan.
• Due Process: N/A. The Court found it unnecessary to discuss the alleged denial of due process in light of the dismissal on mootness grounds.

• Mootness: A moot and academic case ceases to present a justiciable controversy by virtue of supervening events, rendering a declaration of no practical value. The expiration of the term of office of the individual petitioners as members of the SMC Board for 1995 and 1996 is a supervening event that renders the quo warranto petitions moot. In a quo warranto case, judgment involves ousting the respondent from office; since the terms have expired, there is no one to oust. While the Court previously resolved similar quo warranto petitions during the pendency of the main sequestration suit because the resolution of the right to vote would affect subsequent elections, the instant case no longer presents a justiciable controversy. This is because Republic vs. Sandiganbayan already declared the Cojuangco block of SMC shares as the exclusive property of the registered owners and lifted the writs of sequestration. Since the right to vote is a mere incident of ownership, the final disposition on the ownership of the Corporate Shares laid to rest any issue on the authority of the PCGG to vote them. The exceptions to the mootness doctrine do not apply because the Assailed Decision did not formulate any new principles for the guidance of the bench and bar, and the case is not capable of repetition yet evading review, as there is no reasonable expectation that the same complaining party would be subjected to the same action again in light of Republic.
• Due Process: N/A.

• Moot and Academic Case Doctrine — A case ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical value. Courts decline jurisdiction over such cases. Exceptions apply when the issue requires the formulation of controlling principles to guide the bench, bar, and public, or when the case is capable of repetition yet evading review. Here, the expiration of the terms of the PCGG nominees and the final resolution of the ownership of the sequestered shares in Republic vs. Sandiganbayan rendered the quo warranto petitions moot. Neither exception applied because no new principles were formulated and there was no reasonable expectation of repetition.
• PCGG Authority to Vote Sequestered Shares — As a general rule, the registered owner of the shares exercises the right to vote, and the PCGG, as a mere conservator, cannot exercise acts of dominion over sequestered property. The PCGG may vote sequestered shares if it satisfies a two-tiered test: (1) prima facie evidence that the shares are ill-gotten and belong to the State, and (2) imminent danger of dissipation necessitating continued sequestration. Exceptions exist for shares originally belonging to the government or acquired with public funds. In this case, because Republic vs. Sandiganbayan declared the shares as the exclusive property of the registered owners and lifted the sequestration writs, the PCGG's authority to vote the shares was definitively resolved, mooting the quo warranto issue.

• "The expiration of the term of office of the individual petitioners as members of the SMC Board for the years 1995 and 1996 is a supervening event that renders the quo warranto petitions moot and academic." — This passage states the ratio decidendi, identifying the expiration of terms as the supervening event that moots the quo warranto petitions.
• "Since the right to vote is an incident of ownership, any decision of the Sandiganbayan on the said issue would be subject to the final disposition on the ownership of the Corporate Shares." — This explains the relationship between the right to vote and ownership, justifying why the prior resolution of ownership in Republic vs. Sandiganbayan rendered the voting rights issue moot.
• "Here, the second element is absent in view of Republic, which already laid to rest the controversy on ownership of the Corporate Shares and the incidental issue regarding PCGG's authority to vote the same." — This demonstrates the application of the "capable of repetition, yet evading review" exception to the mootness doctrine, showing why it fails in this case.

• Legaspi Towers 300, Inc. vs. Muer, 688 Phil. 104 (2012) — Cited to support the proposition that the subsequent election of a new set of board of directors renders a case for nullification of the prior election moot and academic.
• Cojuangco Jr. vs. Sandiganbayan, 329 Phil. 238 (1996) — Cited for the ruling that the Sandiganbayan has jurisdiction over quo warranto petitions involving PCGG cases. Also distinguished, as the Court in that 1991 case resolved the petitions on the merits because the main sequestration suit was still pending, unlike in the instant case.
• Republic vs. Sandiganbayan, 663 Phil. 212 (2011) — Controlling precedent. This case declared the Cojuangco block of SMC shares as the exclusive property of the registered owners and lifted the writs of sequestration, thereby resolving the ownership issue and rendering the incidental issue of PCGG's authority to vote the shares moot.
• Bataan Shipyard & Engineering Company, Inc. vs. PCGG, 234 Phil. 180 (1987) — Cited for the guiding principles on PCGG's authority over sequestered properties, establishing that PCGG as a conservator cannot exercise acts of dominion but only powers of administration.
• Republic vs. COCOFED, 423 Phil. 735 (2001) — Cited for the summary of rules regarding the authority of the PCGG to vote sequestered shares, including the general rule, the two-tiered test, and the public character exceptions.

• Section 2, Executive Order No. 14 — Defines the context of PCGG cases over alleged "ill-gotten wealth," which gives the Sandiganbayan jurisdiction over related quo warranto petitions.
• Section 9, Rule 66 of the Rules on Civil Procedure — Provides that in a quo warranto case where usurpation is found, judgment shall be rendered ousting the respondent from the office and determining the respective rights to the said office. This supports the conclusion that ousting individuals whose terms have expired serves no useful purpose.

Hernando (Acting Chairperson), Gaerlan, and Rosario, JJ., concur. Marquez, J., on official business.