Holiday Inn v. Sandiganbayan
REITERATIONFacts
The Antecedents: Holiday Inn (Phils.), Inc. (HIP) entered into a management contract with New Riviera Hotel and Development Co., Inc. (NRHDC) on January 1, 1976, for a period of ten years, with Article 18 granting HIP a right of first refusal. Subsequently, NRHDC and HIP assigned their rights under this agreement to HIP. On April 22, 1986, NRHDC was sequestered by the Philippine Commission on Good Government (PCGG). An agreement was later reached whereby 2/3 of NRHDC's Board of Directors would be PCGG nominees and 1/3 would be nominees of Roberto S. Benedicto. On July 14, 1986, an addendum extended the management agreement indefinitely, with either party having the right to terminate upon six months' written notice. On May 10, 1988, NRHDC notified HIP of its decision to terminate the management agreement, intending to have New World Hotel Philippines manage the property instead. Procedural History: Contending a breach of Article 18 (right of first refusal), HIP filed a motion for intervention in Civil Case No. 0034/PCGG Case No. 34 before the Sandiganbayan, a sequestration case against Roberto S. Benedicto and others. HIP sought to question the termination of the management agreement and recover unpaid management fees. On November 11, 1988, the Sandiganbayan denied HIP's motion for intervention, citing lack of jurisdiction, stating that the presence of PCGG representatives on the board does not dissolve the corporate veil and that corporate officers, regardless of nomination, act as corporate officers concerning third parties. The Petition: HIP filed a petition for review on certiorari (treated as a special civil action for certiorari) with the Supreme Court, arguing that based on prior rulings, the Sandiganbayan has exclusive and original jurisdiction over all incidents arising from or related to sequestration cases.
Issue(s)
Whether petitioner Holiday Inn (Phils.), Inc. has a legal interest in Civil Case No. 0034 sufficient to justify its intervention therein. Whether the Sandiganbayan has jurisdiction over the subject matter of petitioner's proposed complaint-in-intervention.
Ruling
The Supreme Court dismissed the petition and upheld the Sandiganbayan's ruling denying the motion to intervene. The temporary restraining order issued on November 16, 1988, was lifted.
Ratio Decidendi
On the issue of legal interest for intervention: The Court affirmed the Sandiganbayan's finding that HIP failed to demonstrate a legal interest in the main case sufficient to justify intervention. The Sandiganbayan correctly noted that the principal case concerns the character of the properties as ill-gotten or 'crony' properties, and a determination of whether Roberto S. Benedicto lawfully acquired them does not directly affect the rights of third parties dealing with sequestered corporations. HIP's assertion of superior services or potential financial gains from its management contract does not constitute a legal interest in the main case concerning the ownership of the sequestered property. The decision on the management contract rests solely with the Board of Directors of NRHDC, not the court in the sequestration case. On the issue of Sandiganbayan's jurisdiction: The Court agreed with the Sandiganbayan that it lacked jurisdiction over HIP's proposed complaint-in-intervention. The Sandiganbayan's jurisdiction is limited to acts of the PCGG acting as such, or cases where the PCGG is impleaded as a distinct entity. The presence of PCGG nominees on the board of a sequestered corporation does not automatically mean that every action taken by that board is an act of the PCGG itself, thereby bringing it under the Sandiganbayan's exclusive jurisdiction. The proposed complaint-in-intervention was deemed an ordinary civil case concerning contract interpretation, not a case directly challenging the PCGG's acts or orders as a commission. The Solicitor General's argument that the complaint was not directed against the PCGG as an entity but against a private corporation was found persuasive.
Main Doctrine
The Sandiganbayan's exclusive and original jurisdiction over cases involving ill-gotten wealth and incidents arising therefrom does not extend to ordinary civil cases concerning the interpretation of contracts, even if one of the parties is a sequestered corporation, unless the PCGG itself is impleaded as a party or its acts as a distinct entity are directly challenged.