Presidential Commission on Good Government v. The Honorable Sandiganbayan (Third Division)
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) issued a letter-order on March 14, 1986, sequestering shares of stock in Philippine Communications Satellite Corporation (PHILCOMSAT) and Philippine Overseas Telecommunications Corporation (POTC) owned by associates of former President Marcos. The PCGG also issued writs of sequestration over these corporations. Subsequently, POTC and PHILCOMSAT filed a case seeking to nullify these writs, arguing that the PCGG had failed to institute the required judicial action within the constitutional timeframe. Procedural History: POTC and PHILCOMSAT filed Civil Case No. 0114 before the Sandiganbayan seeking to nullify the sequestration writs due to the PCGG's alleged failure to file a corresponding judicial action within the six-month period after the ratification of the 1987 Constitution. The PCGG countered that Civil Case No. 0009, filed against Jose L. Africa, a stockholder, satisfied this requirement. The Sandiganbayan, however, ruled that a suit against a stockholder was not a suit against the corporation itself and, on December 4, 1991, declared the sequestration writs lifted. Subsequently, Aerocom Investors and Managers, Inc. (AEROCOM) and Polygon Investors and Managers, Inc. (POLYGON), owners of POTC shares, intervened, seeking to receive dividends. The Sandiganbayan granted their motion on December 10, 1991, and denied the PCGG's motion for reconsideration on January 27, 1992, reaffirming its earlier ruling. A further resolution on January 29, 1992, directed Traders Royal Bank to pay the dividends. The Petition: The PCGG filed a Petition for Certiorari with Urgent Prayer for Preliminary Mandatory Injunction, assailing the three Sandiganbayan Resolutions. The PCGG argued that the Sandiganbayan committed grave abuse of discretion, contending that the resolutions were conflicting and lacked basis. The PCGG asserted that the Sandiganbayan erred in lifting the sequestration and allowing the dividend payments, as this would dissipate ill-gotten wealth. The PCGG claimed it was deprived of its right to oppose the intervenors' motions and that Civil Case No. 0009, which sought to recover ill-gotten wealth, should have been considered compliance with the constitutional requirement, allowing the PCGG to pierce the corporate veil of AEROCOM and POLYGON.
Issue(s)
Whether the Sandiganbayan committed grave abuse of discretion in issuing the Resolutions dated December 10, 1991, January 27, 1992, and January 29, 1992, and whether the Sandiganbayan erred in lifting the writs of sequestration over POTC and PHILCOMSAT. Whether the filing of Civil Case No. 0009 against Jose L. Africa constituted sufficient compliance with the constitutional requirement for filing a judicial action against sequestered corporations. Whether the Sandiganbayan erred in allowing the intervention of Aerocom and Polygon and in directing the release of dividends to them. Whether the PCGG was deprived of its day in court and whether the doctrine of piercing the corporate veil was correctly applied.
Ruling
The petition is dismissed for lack of merit. The Supreme Court affirmed the Resolutions of the Sandiganbayan.
Ratio Decidendi
On the Sandiganbayan's Resolutions and the Lifting of Sequestration Writs: The Court found no grave abuse of discretion on the part of the Sandiganbayan. The Sandiganbayan correctly ruled that the PCGG failed to file the corresponding judicial action directly against POTC and PHILCOMSAT within the six-month period mandated by Section 26, Article XVIII of the 1987 Constitution after the ratification of the Constitution. The filing of Civil Case No. 0009 against Jose L. Africa, a stockholder, did not satisfy this requirement, as corporations possess a legal personality distinct and separate from their stockholders. Therefore, a suit against a stockholder is not ipso facto a suit against the corporation itself. The Sandiganbayan's conclusion that the sequestration writs were automatically lifted due to this failure was legally sound. The Court reiterated that the constitutional provision requires the judicial action to be commenced against the sequestered entity itself, not merely against individuals who may be associated with it. The third assailed Resolution, directing Traders Royal Bank to honor and pay the dividend checks, was a logical consequence of the prior rulings that the sequestration was lifted and the intervenors were entitled to the dividends. The Court found no error in this directive, as it merely implemented the earlier decisions of the Sandiganbayan, which were found to be proper and well-supported by facts and law. The delay in the deposit of the checks did not constitute grave abuse of discretion on the part of the Sandiganbayan. On the Filing of Civil Case No. 0009: The Sandiganbayan correctly ruled that the PCGG failed to file the corresponding judicial action directly against POTC and PHILCOMSAT within the six-month period mandated by Section 26, Article XVIII of the 1987 Constitution after the ratification of the Constitution. The filing of Civil Case No. 0009 against Jose L. Africa, a stockholder, did not satisfy this requirement, as corporations possess a legal personality distinct and separate from their stockholders. Therefore, a suit against a stockholder is not ipso facto a suit against the corporation itself. On the Intervention of Aerocom and Polygon and the Release of Dividends: The Court found no grave abuse of discretion in the Sandiganbayan's granting of the intervenors' motions. Aerocom and Polygon demonstrated a legal interest in the matter as registered owners of shares in POTC. Crucially, the writ of sequestration over POTC had already been lifted by the Sandiganbayan prior to the resolution of the intervention motions. Furthermore, the intervenors' shares themselves were never sequestered, and they had previously received dividends without objection from the PCGG. The PCGG's opposition to the release of the 1988 and 1989 dividends was deemed discriminatory and oppressive, especially since the PCGG had previously left the matter of 1989 dividends to the discretion of the Sandiganbayan. The PCGG's selective opposition was inconsistent with its prior actions and submissions. On the PCGG's Procedural Arguments and Piercing the Corporate Veil: The Court found that the PCGG was not deprived of its day in court. The Sandiganbayan had granted the PCGG an extension to file its opposition to the intervenors' motions, but the PCGG filed its opposition beyond the extended period. Despite this delay, the Sandiganbayan was lenient enough to admit the belated opposition. Therefore, the PCGG's claim of denial of due process was without merit. The Sandiganbayan's resolutions were issued after both parties had been given ample opportunity to be heard, negating any claim of grave abuse of discretion. The Sandiganbayan correctly held that the doctrine of piercing the veil of corporate fiction could only be applied once the court has acquired jurisdiction over the corporation. Since POTC was not impleaded as a party-defendant in Civil Case No. 0009, the Sandiganbayan had not acquired jurisdiction over it in that case, rendering the PCGG's argument for piercing the corporate veil inapplicable in that context. The issue of whether the named defendants in Civil Case No. 0009 were indeed the beneficial owners of POTC, Aerocom, and Polygon was a matter that the PCGG still had to prove in that case.
Main Doctrine
The Sandiganbayan did not commit grave abuse of discretion in lifting the writs of sequestration over PHILCOMSAT and POTC due to the PCGG's failure to file the corresponding judicial action within the period mandated by the 1987 Constitution. Furthermore, the Sandiganbayan correctly allowed intervenors Aerocom and Polygon to receive their declared dividends as their shares were not sequestered and the writ of sequestration over POTC had already been lifted.