January 2006 - Philippine Supreme Court Decisions/Resolutions
SEPARATE DISSENTING OPINION - SANDOVAL-GUTIERREZ, J.: G.R. NO. 149802, G.R. NO. 150320, G.R. NO. 150367, G.R. NO. 153207 and G.R. NO. 153459 - ALFONSO T. YUCHENGCO, ET AL. v. THE HONORABLE SANDIGANBAYAN, ET AL. - 479 SCRA 1; 515 Phil. 1
(479 SCRA 1; 515 Phil. 1)
[G.R. NO. 149802 - January 20, 2006]
ALFONSO T. YUCHENGCO AND Y REALTY CORPORATION, Petitioners, v. THE HONORABLE SANDIGANBAYAN, FOURTH DIVISION, REPUBLIC OF THE PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, PRIME HOLDINGS, INC., ESTATE OF RAMON U. COJUANGCO, represented by IMELDA O. COJUANGCO, and IMELDA O. COJUANGCO, Respondents.
[G.R. NO. 150320 - January 20, 2006]
ALFONSO T. YUCHENCGO AND Y REALTY CORPORATION, Petitioners, v. THE HONORABLE SANDIGANBAYAN, FOURTH DIVISION, REPUBLIC OF THE PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, PRIME HOLDINGS, INC., ESTATE OF RAMON U. COJUANGCO represented by IMELDA O. COJUANGCO, and IMELDA O. COJUANGCO, Respondents.
[G.R. NO. 150367 - January 20, 2006]
REPUBLIC OF THE PHILIPPINES, Petitioner, v. HON. SANDIGANBAYAN (FOURTH DIVISION), ESTATE OF FERDINAND E. MARCOS (represented by its Administrator, the Bureau of Internal Revenue), IMELDA R. MARCOS, PRIME HOLDINGS, INC., ESTATE OF RAMON U. COJUANGCO (represented by its Administratrix, IMELDA O. COJUANGCO), IMELDA O. COJUANGCO, ALFONSO T. YUCHENGCO, and Y REALTY CORPORATION, Respondents.
[G.R. NO. 153207 - January 20, 2006]
ALFONSO T. YUCHENGCO AND Y REALTY CORPORATION, Petitioners, v. REPUBLIC OF THE PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, PRIME HOLDINGS, INC., ESTATE OF RAMON U. COJUANGCO represented by IMELDA O COJUANGCO, and IMELDA O. COJUANGCO, Respondents.
[G.R. NO. 153459 - January 20, 2006]
REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner, v. ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, IMELDA (IMEE) R. MARCOS-MANOTOC, TOMAS MANOTOC, IRENE R. MARCOS-ARANETA, GREGORIO MA. ARANETA, III, FERDINAND R. MARCOS, JR., IMELDA COJUANGCO, ESTATE OF RAMON COJUANGCO (represented by the Administratrix, IMELDA COJUANGCO), PRIME HOLDINGS, INC., ALFONSO T. YUCHENGCO, AND Y. REALTY CORPORATION, Respondents.
In civil suits for forfeiture before the Sandiganbayan, like the instant case, the Republic must meet the burden of proof and establish with a preponderance of evidence that the property in question
". . . are assets and properties purportedly pertaining to former President Ferdinand E. Marcos and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents or nominees which had been or were acquired by them directly or indirectly, through or as a result of the improper or illegal use of funds or properties owned by the Government of the Philippines or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking advantage of their office, authority, influence, connections or relationships, resulting in their unjust enrichment, and causing damage and prejudice to the Filipino people and the Republic of the Philippines."1The alleged ill-gotten assets in this case are shares of stock in Prime Holdings Inc. (PHI) which, in turn, holds shares in Philippine Telecommunications Investment Corporation (PTIC), a shareholder in the Philippine Long Distance Telephone Company (PLDT). The Republic's case is premised on the theory that PHI is a "dummy corporation," not owned by private respondent Cojuangco family, but merely held in beneficial trust for former President Ferdinand E. Marcos.
I have closely reviewed the records and revisited both factual and legal bases of the Sandiganbayan Decision, and found that the Republic failed to prove its case by preponderance of evidence.
The Republic's case is anchored almost entirely upon the testimonies of Messrs. Jose Y. Campos, Rolando Gapud and Francisco de Guzman. They attempted to prove that PHI was a corporate vehicle "organized for" Marcos. As "beneficial owner" of PHI, Marcos used Ramon U. Cojuangco as a "dummy" controlling PHI and its assets.
The same witnesses identified the modus operandi employed by Marcos to hide his ill-gotten wealth. Unfortunately, the evidence for the Republic fails to show that PHI is Marcos' "dummy corporation."
Witness Campos, in describing the modus operandi behind dummy corporations "organized for" Marcos, stated:
"In the organization, administration and management of the above-named corporations, as it was my policy that whenever such a corporation is organized for and on behalf of the intended beneficiaries, I execute and I require all my said associates to execute a Deed of Trust or Deed of Assignment duly signed in favor of an unnamed beneficiary and to deliver the original copy thereof to the former President. It is in fact my policy and procedure that we disclaim completely any interest in any such business and make it clear to the former President that we hold such interests on his behalf."In his affidavit, Campos named PHI as one of the companies he organized for President Marcos. Yet, when asked if the modus operandi was applied to PHI as it was with the other Marcos dummy corporations, he vacillated,2 thus:
"3. In your Sworn Statement, page 2, you stated that with respect to the corporations you held in trust for President Marcos, it was your "policy" that whenever such a corporation was organized, you executed, and you required all your business associates to execute, a Deed of Trust or Deed of Assignment in favor of an "unnamed beneficiary," and delivered the originals thereof to President Marcos. xxx Was this "policy" FOLLOWED IN THE CASE OF [PHI]" xxxCampos also testified that he had never communicated in any manner whatsoever with President Marcos, his alleged principal, nor with Ramon Cojuangco regarding Marcos' beneficial ownership of shares of stock in PHI or PTIC or Prime Holdings, Inc., thus:
ANSWER: "All the corporations I organized - that was the standard policy - that we surrendered direct to President Marcos.'"
"7. Did you ever have any discussions or correspondences with President Marcos regarding his beneficial ownership or the beneficial ownership by any member of his family, directly or indirectly, of shares of stock in Philippine Long Distance Telephone Company (PLDT), Philippine Telecommunications Investment Corporation (PTIC) or Prime Holdings, Inc."Considering the fact that Campos - by his own admission - was the organizer of dummy corporations for Marcos, it is contrary to human experience that he never had any discussion with the former President about PHI, if indeed it was such a dummy corporation.
Answer: No, Ma'am.
Did you ever have any discussions or correspondences with Ramon U. Cojuangco regarding the beneficial ownership by President Marcos or any member of his family, directly or indirectly, of shares of stock in PLDT, PTIC or Prime Holdings, Inc.?
Answer: No, Ma'am."
Obviously, there was nothing to discuss with President Marcos about PHI because it was not one of his dummy corporations. In fact, the Republic's other witness, Atty. Francisco de Guzman, admitted that PHI did not meet the description of a Marcos dummy corporation, thus, to quote the very same passage cited in the Dissent:
"Q: Was it the standard operating procedure in Jose Yao Campos holdings companies that the stock certificates of the stockholders would be endorsed in blank?If, according to the Republic's own witness, the shares of a Marcos dummy corporation are covered by a Deed of Assignment endorsed to an unnamed beneficiary, then Atty. De Guzman's above admissions are fatal to the Republic's case. His categorical declaration is that the blank Deeds of Assignment and Deeds of Trust covering PHI shares were not delivered to Marcos, but to Ramon U. Cojuangco.
A: Yes, sir.
Q: And who would hold custody or possession of those/ bank endorsed stock certificates?
A: In the case of many of the corporations I think including Prime Holdings, Inc. these are not fully paid shares and therefore, I knew that no stock certificates have been issued, sir.
Q: So, specifically in the case of Prime Holdings, Inc. there were no stock certificates issued because the subscriptions were not fully paid?
A: Yes, sir.
Q: Do you know if the stockholders of Prime Holdings, Inc., this is prior to 1981, had executed Deed of Assignment in blank for their subscription to PHI shares?
A: Yes, sir, the standard operating procedure in the companies of Mr. Campos is that all the subscribers would have either a Deed of Assignment signed or a Deed of Trust, sir.
Q: And you are referring to these holding companies that Mr. Campos, a number of holding companies that Mr. Campos have caused to be incorporated, these are the companies?
A: Yes, sir.
Q: You said Deed of Trust, would there be a designated trustee?
A: No, sir.
Q: So, these are Deeds of Assignment or Deeds of Trust, the beneficiary of which would be left blank?
A: Yes, sir.
Q: But the assignors or the trustees or grantors would all sign, would all execute these Deeds?
A: Yes, sir.
Q: Who would have possession, you mentioned standard operating procedure or SOP, under the SOP who would hold the blank deeds?
A: A copy of which usually two (2) copies are made, sir.
Q: Two (2) originals?
Q: Xerox copies?
A: No. One original and one Xerox copy and the original will be included in the records, sir.
Q: The records of that particular company?
A: Yes, sir, and the other one we give it to the Treasurer.
Q: Of that particular company?
A: No, to Mr. Gaviola, sir.
Q: Mr. Gaviola was the Treasurer of Prime Holdings, Inc. wasn't he?
A: I think he is because he is always, was the Treasurer of many of the companies of Mr. Campos, sir.
Q: So, there is the SOP also, MR. Gervacio Gaviola is the Treasurer of Prime Holdings, Inc.?
A: Yes, sir.xxx xxx xxx
Q: Now, who would hold the records of these companies which would include those blank Deeds of Assignment or Deeds of Trust?
A: Well, the actual custodian of that will be the Legal Department who has all the legal files, sir.
Q: Was it not or would you consider it risky that the blank Deeds of Assignment or blank Deeds of Trust of all the shares in this companies he right there in the records, be among the corporate records, that somebody could take them and put their names?
A: Maybe there is some risk there but you see, sir, the people in the Legal Department are well trusted by all of us. They have been with the company for many years and considering the competence that they have established with us, nobody would even get those records without, let's say order of Mr. Campos or me or the Corporate Secretary, sir.
Q: And who were these trusted people of the Legal Department?
A: The lawyers, sir.
Q: Could you give us the names?
A; Yes, two of them died and one of them retired. Mr. Urbano Francisco was the only survivor, sir.
Q: Can I have the names of those who died?
A: Ed Halagao, I cannot remember the other one, sir.
Q: These are the trusted lawyers of the Legal Department of UNILAB?
A: Yes, sir.xxx
Q: Do you know what happened to those blank deeds of Assignment of Deeds of Trust of Prime Holdings, Inc. that were entrusted with the trusted lawyers of UNILAB?
A: When Prime Holdings, Inc.'s records were delivered, all those records, all those papers are with the records, sir.
Q: So, you are referring to the 1982 delivery to the representative of Mr. Ramon U. Cojuangco?
A: Yes, sir, except two (2) Deeds of Assignment which were I think made directly afterwards when Mr. Gapud and Mr. Jose Campos, Jr. made the direct assignments to persons actually designated in the Deeds of Assignment, sir.
Q: Who were those?
A: The shares of Mr. Gapud was (sic) given to Mr. Ramon U. Cojuangco, Mr. Campos, Jr. I can't remember to whom he made the assignment, sir.
Now, delivery of the blank deeds of Assignment and Deeds of Trust was a crucial element of the modus operandi. Considering that Marcos was not in possession of the Deeds over PHI shares, he could not have controlled or managed PHI. To be sure, there was no point organizing PHI as a dummy corporation for Marcos since he could not perform these functions.
Witness Gapud testified that he assigned his PHI shares to Ramon U. Cojuangco - not Marcos, thus:In fact, while he could have easily identified Marcos as the beneficial owner of PHI, witness Gapud - who succeeded Campos as President of PHI - refused under oath to do so. Instead:
"CONSUL AGUILUCHO: Is it really true that you assigned your 400 shares [in Prime Holdings] to Ramon U. Cojuangco?
MR. GAPUD: Yes.
CONSUL AGUILUCHO: How much did you receive as consideration for assigning your shares to him?
MR. GAPUD: The consideration for this assignment was that upon my assignment, first, my fiduciary responsibilities as nominee were extinguished, and secondly, I had transferred and extinguished any and all liabilities under the subscription payable.
CONSUL AGUILUCHO: Do you know if Ramon Cojuangco received the said shares for himself or for anybody else?
MR. GAPUD: I don't know."
"CONSUL AGUILUCHO: The heirs of Ramon U. Cojuango, namely Imelda O. Cojuangco and her children... claim that they own eighty (80) percent of the outstanding capital stock of Prime Holding, while the Estate of Ramon U. Cojuangco allegedly owns the remaining twenty (20) percent? Question: Based on your personal knowledge, do you affirm or deny the said allegation?The majority of my colleagues hold that "Gapud's statement relating to subsequent execution of deeds of assignment to Cojuangco and his kin does not detract from the prior delivery of blank deeds to the former President, especially so in this case where, by Gapud's own recounting, he and his co-incorporators executed the 1981 and 1983 Deeds of Assignment with the knowledge and authorization of the same person to whom the earlier deeds were delivered - President Marcos."
MR. GAPUD: I do not know. I can neither affirm nor deny."
But the ponencia conveniently sidesteps the reality that there is no evidence of such prior delivery to Marcos. Witness de Guzman declared that the blank Deeds of Assignment over PHI shares were placed in the custody of the Legal Department, and thereafter delivered to Ramon Cojuangco, together with all the records of PHI.
The majority also hold that the alleged execution by the incorporators, as "nominees" of Marcos, of the Deeds of Assignment/Deeds of Trust is consistent with Gapud's statement that he received virtually nothing in return for PHI shares. But to my mind, this is fallacious - a conjecture made to fit an insignificant fact. A straightforward explanation is simply that when the PHI shares were assigned to Ramon U. Cojuangco- the true beneficial owner -Gapud's role as a nominee became untenable. Obviously, a nominee's role ends when the principal's exercise of his right begins.
Nor is it accurate to say that there was an absence of consideration for the transfer of the PHI shares. Gapud himself admitted that the consideration for the assignment of his shares to Cojuangco was the termination of his fiduciary responsibilities as nominee and the extinguishment of his liabilities under the subscription.
The ponencia does not explain why Marcos allowed the execution of the Deeds of Assignment in favor of respondent Cojuangcos. If PHI was indeed a dummy corporation, then it would be contrary to human experience for President Marcos to deprive himself of the legal mechanism to assert his alleged beneficial ownership.
Indeed, if the transfer of PHI shares to the Cojuangco family was with the "blessings" of President Marcos, then it can only mean the he was never interested in those shares - a fact consistent with Campos' statement that he "never discussed" the PHI shares with Marcos. Therefore, the plausible reason for this is that Marcos never owned the shares in the first place.
The realistic scenario, therefore, is that these shares actually pertained to Ramon U. Cojuangco from the beginning and the assignments to him and members of his family merely confirmed what already existed in fact. In other words, Cojuangco - not Marcos - has been the beneficial owner of the shares from the start. This explains why no blank Deeds of Trust or Assignment were executed and delivered by the stockholders of PHI, and the reason why they executed and delivered Deeds of Assignment specifically naming Ramon U. Cojuangco and the members of his family as the assignees of the PHI shares. This also explains why PHI's capitalization was not increased despite its acquisition of PTIC shares. An increase was unnecessary because Ramon U. Cojuangco actually did not part with the ownership of the PTIC shares transferred to PHI, since after all, he, not Marcos, owned the PHI. That he is the owner thereof is shown by the following circumstances:
(a) respondent Cojuangco took over as Chairman and President of PHI after the assignment; and (b) the books and records of PHI were turned over to him, as testified to by de Guzman, the Republic's witness. Certainly, these assignments are effective:
"When a formal deed of assignment is executed by the transferor in favor of a transferee, for the purpose of assigning shares of stock, endorsement and delivery requirements stated in Section 63 of the Corporation Code are deemed substantially complied with. This mode of transfer covers a situation where no certificate of stock has been issued or where the stock certificate is not in the possession of the transferor-stockholder so that the shares of stock may be transferred by means of a deed of assignment."3Additionally, the Republic failed to prove that Marcos had a subsisting interest in PHI. There had been no intervention on his part in the affairs of PLDT, PTIC, or PHI. Nor did he issue instructions that "hugely and inexplicably benefited" these companies indicating he had any actual interest therein.
Another source of debate in this case has been the evidentiary standard applicable to this and other ill-gotten wealth cases, given the Sandiganbayan's reliance on Baseco vs. PCGG4 and related jurisprudence. The ponencia stresses that this Court never intended to lay down evidentiary standards in Baseco and, therefore, the Sandiganbayan's reference to such standards is nothing more than its "inference from its reading of the Decision."
I disagree. To my mind, Baseco is applicable.
Baseco is a landmark ruling that confirms the modus operandi described by the Republic's witnesses here. In that case, "street certificates" (i.e. stock certificates endorsed in blank) and Deeds of Assignment to various corporations including Baseco, also assigned in blank, were among the documents found to have been in Marcos' possession in MalacaĆ±ang. We were convinced that based on such proof, Marcos 'actually owns well nigh one hundred percent of its outstanding stock."5
But unlike Baseco, here there is no such documentary evidence. Neither PHI stock certificates nor PHI Deeds of Assignment have turned up in Marcos' hands. Witness de Guzman testified that assignments of PHI shares were delivered to Cojuangco, not Marcos. Documentary evidence (Exhibits"1" to "5", for instance) clearly identify Ramon U. Cojuangco and the members of his family as the assignees of PHI shares - certainly removing any idea that these were assigned in blank to an "unnamed beneficiary."
Because this is a civil forfeiture case, then the Republic must establish, by a "preponderance of evidence," that the PHI shares were "ill-gotten wealth." Its burden is explained by this Court, thus:
"Equiponderance of evidence rule states:
When the scales shall stand upon an equipoise and there is nothing in the evidence which shall incline it to one side or the other, the court will find for the defendant.So must it be in this case. On the assumption that the Republic has presented a persuasive case, it may not be said that the defendants do not have in their favor an equally persuasive one. Even were we to find the balance of evidence to be just about at equipoise, the Republic's instant claim - as a matter of law - must fall.
Under said principle, the plaintiff must rely on the strength of his evidence and not on the weaknesses of defendant's claim. Even if the evidence of the plaintiff may be stronger than that of the defendant, there is no preponderance of evidence on his side if such evidence is insufficient in itself to establish his cause of action."6
"We are at a loss to determine which position is correct. Under the circumstances, we are constrained to decide the issues under the rule of burden of proof.
Where the evidence on an issue of fact is in equipoise or there is any doubt on which the evidence preponderates the party having the burden of proof falls upon that issue, that is to say, if the evidence touching on disputed facts is equally balanced, or if it does not produce a just, rational belief of its existence, or it leaves the mind in a state of perplexity the party holding the affirmative as to such fact must fail. (23 C.J. 11-12)"7
Some might argue that the evidentiary requirement in civil forfeiture cases has an even higher standard, that is, proof beyond reasonable doubt. In Cabal vs. Kapunan,8 we ruled that proceedings for forfeiture of property in favor of the State (under the Anti-Graft Law) is criminal and penal in nature because such actions are primarily to punish for violation of a duty or a public wrong and to deter others from offending in the like manner. Forfeiture of property is in substance a criminal proceeding, and such forfeiture has been held to partake of the nature of a penalty.
WHEREFORE, I vote to DENY the petition in G. R. No. 153459 and AFFIRM respondent Sandiganbayan's Partial Decision.
1 First Whereas Clause, Executive Order No. 2 (1986).
2 Deposition of 18 December 1995, Transcript, Exhibit ZZZ to ZZZ-1-N.
3Id. at 807.
4 No. L-75885, May 27, 1987, 150 SCRA 181.
5Ibid, at 228.
6Sapu-an, et al. vs. CA, G.R. No. 91869, October 19, 1992, 214 SCRA 701, 705-706.
7Pilar Development Corp. vs. IAC, No. L-72283, December 12, 1986, 146 SCRA 215.
8 6 SCRA 1059, citing Katigbak vs. Solicitor General, et al., G.R. No. 19328, December 22, 1989.