Republic of the Philippines (Presidential Commission on Good Government) v. Sandiganbayan and Rosario M.B. Olivares
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) sought the annulment of a resolution by the Sandiganbayan which enjoined the PCGG from voting common shares of Philippine Journalists, Inc. (PJI) belonging to eight stockholders (Manuel Salak, et al.) at an annual stockholders' meeting. Private respondent, Rosario M.B. Olivares, had filed a motion to enjoin the PCGG from voting these unsequestered shares, claiming the sequestration orders had automatically been lifted due to the PCGG's failure to file the corresponding judicial actions within the constitutional six-month period. Procedural History: The Sandiganbayan initially issued a temporary restraining order, later modified into a preliminary injunction upon the posting of a bond by private respondent, enjoining the PCGG from voting the shares. The PCGG opposed the motion, arguing that the listing of PJI shares in the complaint against Benjamin Romualdez constituted compliance with the constitutional requirement and that Romualdez was the beneficial owner of the shares. The Sandiganbayan, however, found that the sequestration orders had automatically been lifted and that private respondent was qualified to be elected as a director. The Petition: The PCGG filed a special civil action for certiorari and prohibition, assailing the Sandiganbayan's resolution for allegedly acting without or in excess of jurisdiction or with grave abuse of discretion in holding that private respondent had the right to be elected and that the sequestration of the shares had been automatically lifted.
Issue(s)
Whether the Sandiganbayan acted without or in excess of jurisdiction, or with grave abuse of discretion, in holding that private respondent has the right to be elected as a member of the board of directors of PJI. Whether the Sandiganbayan acted without or in excess of jurisdiction, or with grave abuse of discretion, in holding that the sequestration of the PJI shares of stock registered in the names of Manuel Salak, Araceli Linsangan, Domingo Flores, Luisa Linsangan, Alejandro Maramag, Caridad Orpiada, Lino Sison and Milagros Hizon has been automatically lifted.
Ruling
The petition is dismissed for lack of merit. The Sandiganbayan did not act with grave abuse of discretion in restraining the PCGG from voting the shares of the eight stockholders. The sequestration orders against these stockholders were automatically lifted due to the PCGG's failure to file the corresponding judicial actions within the constitutional period. Furthermore, private respondent is qualified to be a director as she owns shares in her own right.
Ratio Decidendi
On private respondent's qualification as director: The Court affirmed that private respondent owns 1,000 common shares in her own right. While 500 shares were assigned to secure a loan, the remaining 500 shares, though sequestered, did not affect her ownership. Mere sequestration does not divest title. Thus, she remained the owner of these shares and met the requirement under the Corporation Code that a director must own at least one share in his or her own right. On the lifting of sequestration orders: The Court reiterated the mandate of Section 26, Article XVIII of the 1987 Constitution, which states that a sequestration or freeze order is automatically lifted if no corresponding judicial action or proceeding is commenced within six months from its issuance. It was undisputed that the PCGG had not instituted any judicial action against the eight stockholders. Therefore, the writs of sequestration against them had ceased to be effective. The contention that listing PJI shares in the complaint against Benjamin Romualdez constituted compliance was deemed puerile, as a corporation has a legal personality distinct from its stockholders, and a suit against one is not ipso facto a suit against the other. The argument that Romualdez was the beneficial owner was also unsubstantiated and did not excuse the PCGG's failure to file actions against the registered owners. The Court emphasized that such compliance is demanded by due process requirements. Furthermore, the authority to vote sequestered shares is conceded only when there is evident necessity to prevent disposal or dissipation, a necessity not shown here since the sequestration order had already been lifted.
Main Doctrine
The failure to institute the corresponding judicial action or proceeding within six months from the issuance of a sequestration or freeze order, as mandated by Section 26, Article XVIII of the 1987 Constitution, results in the automatic lifting of such order. Consequently, the registered owners of the sequestered shares are then free to exercise their rights, including issuing proxies.