REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT (PCGG) vs. COCOFED, ET AL. and BALLARES, ET AL., EDUARDO M. COJUANGCO
JR. and the SANDIGANBAYAN (First Division)
G.R. No. 147062-64 December 14, 2001

FACTS:
The PCGG issued and implemented numerous sequestrations, freeze orders and provisional
takeovers of allegedly ill-gotten companies, assets and properties, real or personal.

Among the properties sequestered by the Commission were shares of stock in the United
Coconut Planters Bank (UCPB) registered in the names of the alleged "one million coconut farmers,"
the so-called Coconut Industry Investment Fund companies (CIIF companies) and Private
Respondent Eduardo Cojuangco Jr.

The petitioners allege that the government should be allowed to continue voting the
sequestered UCPB shares inasmuch as they were purchased with coconut levy funds—funds that
are prima facie public in character or, at the very least, are clearly affected with public interest.

ISSUE:
Whether the government may continue to vote the sequestered UCPB shares while the main
case for their reversion to the State is still pending in the Sandiganbayan.

RULING:

YES. This Court holds that the government should be allowed to continue voting those
shares.

While the general rule is that the registered owner of the shares of a corporation exercises
the right and the privilege of voting, however, from the foregoing general principle, the Court in
Baseco v. PCGG (hereinafter “Baseco”) and Cojuangco, Jr. v. Roxas (“Cojuangco-Roxas”) has
provided two clear “public character” exceptions under which the government is granted the
authority to vote the shares: (1) Where government shares are taken over by private persons or
entities who/which registered them in their own names, and (2) Where the capitalization or shares
that were acquired with public funds somehow landed in private hands.

Furthermore, the right to vote the UCPB shares is not subject to the “two-tiered test” but to
the public character of their acquisition which per Antiporda v. Sandiganbayan must first be
determined. In the present case, the sequestered UCPB shares are confirmed to have been acquired
with coco levies, not with alleged ill-gotten wealth. Hence, by parity of reasoning, the right to vote
them is not subject to the “two-tiered test” but to the public character of their acquisition, which
per Antiporda v. Sandiganbayan cited earlier, must first be determined.

Thus, private respondents even if they are the registered shareholders cannot be accorded
voting rights, having conclusively shown that the sequestered UCPB shares were purchased with
coconut levies, making the funds and shares, at the very least, “affected with public interest.”