PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), PETITIONER, VS. HON. WINLOVE M. DUMAYAS, PRESIDING JUDGE, REGIONAL TRIAL COURT, BRANCH 59, MAKATI CITY AND UNITED COCONUT PLAN…

Presidential Commission on Good Government versus Dumayas

The Case

This is a petition for certiorari brought by the Presidential Commission on Good Government, the PCGG, against Judge Winlove M. Dumayas, Presiding Judge of Branch 59 of the Regional Trial Court of Makati City, and against the United Coconut Planters Bank and the United Coconut Planters Life Assurance Corporation. The PCGG asks the Supreme Court to annul the trial court's orders refusing to dismiss two petitions for declaratory relief. In those petitions, the bank and the life assurance corporation claim proportionate ownership interests in the coconut levy companies and in the San Miguel Corporation shares acquired with coconut levy funds. The case matters because it tests whether a party that stood aside during a long, already final litigation over public funds may, through a fresh action for declaratory relief, reopen the fruits of that final judgment.

Procedural History

The bank filed its petition for declaratory relief before the Regional Trial Court of Makati City, and the life assurance corporation filed a similar petition there. The PCGG moved to dismiss both, raising lack of jurisdiction over the subject matter, the impropriety of using the final Supreme Court decision as the subject of declaratory relief, the prior breach of the claimed rights, estoppel, and the failure to implead the Republic of the Philippines as an indispensable party. Judge Dumayas denied the motions to dismiss and later denied the PCGG's motions for reconsideration. The PCGG then went directly to the Supreme Court on certiorari, and the Court consolidated the petitions.

Facts

In 1971, Republic Act Number 6260 created the Coconut Investment Company to administer the Coconut Investment Fund, sourced from a levy on the sale of copra. After martial law was declared in 1972, several presidential decrees expanded the coconut levy, and the Philippine Coconut Authority collected and administered the fund. Presidential Decree Number 755 authorized the Authority to use the levy collections to acquire a commercial bank and to distribute its shares, for free, to the coconut farmers. Through the years, the levy funds were used to acquire the First United Bank, later renamed the United Coconut Planters Bank, and, through the Coconut Industry Investment Fund companies, a large block of San Miguel Corporation shares.

After the 1986 EDSA event, President Corazon Aquino issued executive orders creating the PCGG and conferring on the Sandiganbayan original and exclusive jurisdiction over ill-gotten wealth cases. The PCGG sequestered the bank shares and the fund companies' San Miguel shares, and in 1987 it filed a recovery suit before the Sandiganbayan. That suit was subdivided, and the portions concerning the bank shares and the San Miguel shares were resolved by partial summary judgments in 2003 and 2004.

In its decision of January 24, 2012, the Supreme Court affirmed those partial summary judgments with modification. It held that the coconut levy funds are special public funds, declared the fund companies and the San Miguel shares owned by the Government, and ordered them reconveyed to the Government, to be used only for the benefit of all coconut farmers and for the development of the coconut industry. The Court denied the motion for reconsideration with finality in its resolution of September 4, 2012. Undeterred, the bank and the life assurance corporation then filed their petitions for declaratory relief in the Makati trial court, claiming proportionate ownership interests in those very companies and shares.

Issues

• Whether or not the trial court had jurisdiction over the petitions for declaratory relief, given that the subject matter had already been finally adjudicated by the Supreme Court.
• Whether or not a petition for declaratory relief may be availed of to reopen or relitigate a final and executory judgment of the Supreme Court.
• Whether or not the bank and the life assurance corporation are barred by estoppel and by the prior breach of their claimed rights from asserting those rights.
• Whether or not the petitions are defective for failure to implead the Republic of the Philippines as an indispensable party.

Applicable Provisions

Section 1 of Presidential Decree Number 755, as quoted in the decision, provides:

It is hereby declared that the policy of the State is to provide readily available credit facilities to the coconut farmers at a preferential rates; that this policy can be expeditiously and efficiently realized by the implementation of the Agreement for the Acquisition of a Commercial Bank for the benefit of Coconut Farmers executed by the Philippine Coconut Authority; and that the Philippine Coconut Authority is hereby authorized to distribute, for free, the shares of stock of the bank it acquired to the coconut farmers.

This provision was struck down as unconstitutional for allowing the use of the stabilization fund to benefit private interest through the outright grant of absolute ownership of the bank shares to undefined coconut farmers.

Section 5 of Presidential Decree Number 961, as quoted in the decision, provides:

The Coconut Consumers Stabilization Fund and the Coconut Industry Development Fund as well as all disbursements as herein authorized, shall not be construed as special and/or fiduciary funds, or as part of the general funds of the national government within the contemplation of Presidential Decree Number 711; the intention being that said Fund and the disbursements thereof as herein authorized for the benefit of the coconut farmers shall be owned by them in their private capacities.

This provision was likewise held unconstitutional, because the levy funds are in truth special public funds and cannot be converted into private ownership.

Ruling

The Court granted the petitions and reversed the trial court. On the first issue, the Court held that the trial court had no jurisdiction to entertain the petitions, because the ownership of the fund companies and the San Miguel shares had already been finally adjudicated by the Supreme Court. On the second issue, the Court held that declaratory relief cannot be used to reopen a final judgment. The Court opened with the governing principle:

It is an important fundamental principle in our judicial system that every litigation must come to an end.

The Court stressed that once a judgment has become final, the winning party must not, through a mere subterfuge, be deprived of the fruits of the verdict. On the third issue, the Court held that the claimed rights had long been breached, since the shares were sequestered and administered by the PCGG, and that the bank and the life assurance corporation could not now assert them after standing aside for years. On the fourth issue, the Court held that the Republic of the Philippines, the party in whose favor the properties were adjudicated, was an indispensable party whose absence rendered the petitions defective.

Doctrine

First, every litigation must come to an end, and once a judgment has become final, the winning party may not, through a mere subterfuge, be deprived of the fruits of the verdict. Second, a petition for declaratory relief cannot be used to relitigate or reopen a final and executory judgment, because the issue of ownership has already been conclusively settled. Third, the coconut levy funds are special public funds, and the properties acquired with them belong to the Government, to be used only for the benefit of all coconut farmers and for the development of the coconut industry. Fourth, a party that failed to assert its claimed rights during the long litigation over those properties is barred by estoppel, and the Republic is an indispensable party in any action affecting them.

Disposition

The Supreme Court granted the petitions, reversed the orders of the trial court, and dismissed the petitions for declaratory relief filed by the bank and the life assurance corporation.

Remember This

Memorize the line that every litigation must come to an end, and that a final judgment may not be undone through a mere subterfuge. Examiners use this case to test the finality of judgments, the proper scope of declaratory relief, and the public character of the coconut levy funds.