Saying it is disadvantageous to the public interest, former senator Jovito Salonga and several others have asked the Supreme Court (SC) to deny the government’s motion that it be allowed to convert its 24-percent stake in San Miguel Corp. (SMC) into Series 1 Preferred Shares.

In a 30-page opposition-in-intervention, Salonga, together with former Vice President Teofisto Guingona III, former senator Wigberto Tañada, Rep. Ana Theresia Hontiveros and taxpayer Oscar Santos, branded the government’s plan as “indefensible and shameless sellout” of the sequestered SMC shares.

The petitioners said converting the SMC shares would give its chairman, Eduardo Cojuangco, and president, Ramon Ang, an opportunity to oust the government nominees to the SMC board, then buy the sequestered shares with the use of SMC funds.

“The conversion of the shares and the lifting of sequestration over them take away these protections and make them vulnerable to corporate chicanery. These are condition-altering proposals that no reasonable sequestrator would ever do, as they loosen the sequestrator’s grip on the property, at a time when the government has already won the trial and has the privilege of waiting,” the petitioners stressed.

They noted that the government is still holding the SMC shares in the capacity of a sequestrator; as such, its function is to ensure that the shares are preserved and their value protected pending the determination of the true ownership of the contested property.

The petitioners added that the government’s authority over the subject shares is limited to the purpose of sequestration; thus, the conversion of sequestered shares from common to preferred is not an option.

Solicitor General Agnes Devanadera earlier claimed that a preferred share is equivalent to the common share because the shareholder is entitled to similar rights and privileges such as the right to receive dividends and the right to vote in certain matters provided by the Corporation Code, although preferred shares are given some priority on dividends and asset distribution and their right to vote is limited.

The Office of the Solicitor General (OSG) stressed that upon conversion of the SMC common shares to SMC Series Preferred Shares, its ownership remains with the registered owners, in this case, the Republic.

One feature of the SMC Series 1 Preferred Share, according to the OSG, is that it is redeemable in whole or in part.

While common shares have no fixed dividend rate, the preferred shares have a determined dividend rate of 8 percent per year, the OSG added.

The petitioners warned, however, that the conversion of the shares into preferred shares would result in the ouster of government nominees in the SMC board.