Case Summary (G.R. No. 121039-45)
Factual Background
• On November 3, 1975, MPCP leased its Pasig City meat‐packing complex to PIMECO under a 28-year lease‐purchase agreement at annual rentals then totaling ₱38.5 million.
• Supplementary agreement of same date increased total consideration to ₱93.7 million, payable starting January 1, 1981, at ₱3.346 million per year, in view of additional rehabilitation costs.
• The contract provided for automatic rescission upon PIMECO’s failure to pay three cumulative annual installments, with forfeiture of all paid sums as rentals.
Sequestration and Rescission Attempts
• On March 17, 1986, PCGG sequestered PIMECO’s assets—including the lease agreement and plant—pending recovery of alleged ill-gotten wealth of Peter Sabido and other “crony” defendants.
• On November 17, 1986, MPCP notified PIMECO of rescission based on nonpayment of over ₱2 million in 1986 rentals. PCGG refused GSIS’s request to exclude the plant from sequestration.
• PCGG resolved on January 24, 1989 to turn over the complex to GSIS/MPCP, subject to conditions including Sandiganbayan approval and execution of a memorandum of agreement.
Sandiganbayan Proceedings
• July 29, 1987: PCGG filed Civil Case No. 0024 for reconveyance, restitution, accounting and damages against Peter Sabido et al.
• May–June 1989: Peter Sabido moved to enjoin PCGG’s turnover to GSIS/MPCP, invoking Sandiganbayan’s approval requirement. The Sandiganbayan issued a temporary restraining order (June 2, 1989) and, upon bond posting, a writ of preliminary injunction (July 10, 1989) restraining the turnover and interference with PIMECO’s operations.
• November 29, 1989: The Sandiganbayan declared PCGG’s resolutions and memorandum of April 28, 1989 null and void for grave abuse of discretion, permanently enjoining their implementation.
Related Declaratory Petition
• August 30, 1990: PIMECO filed Civil Case No. 0108 seeking declaratory relief that paragraph 5 (rescission clause) no longer bound it, given partial rental payments and PCGG’s irregular payments after sequestration.
• PCGG tendered ₱5 million on January 30, 1991 for accrued rentals; MPCP refused, insisting on prior rescission.
Sandiganbayan Resolutions on Tender and Consignation
• July 2, 1991: The Sandiganbayan ordered MPCP to accept PCGG’s consignation of ₱5 million, declaring the tender valid and extinguishing that portion of the arrears.
• November 29, 1991: On reconsideration, the Sandiganbayan reaffirmed its July 2 order, holding PCGG had a continuing duty to preserve sequestered assets, and that MPCP’s refusal was unjustified.
Issues Presented
- Whether the Sandiganbayan had jurisdiction over MPCP, a non-party in Civil Case No. 0024, to order acceptance of PCGG’s ₱5 million tender.
- Whether PCGG’s tender and consignation, despite MPCP’s claimed rescission, effectively prevented cancellation of the lease-purchase agreement.
Applicable Law (1987 Constitution and Other Rules)
• 1987 Constitution, Article XI, Section 1(1): Establishes Sandiganbayan’s original jurisdiction over civil cases involving recovery of ill-gotten wealth.
• Rule 65, Rules of Court: Writ of certiorari for grave abuse of discretion.
• Civil Code Articles 1256–1260: Rules on tender and consignation—tender as antecedent, consignation as judicial deposit extinguishing obligation when creditor unjustly refuses payment.
• Jurisprudential Standard: Grave abuse of discretion must be patent, gross and amount to a lack of jurisdiction.
Court’s Analysis
• Tender and Consignation Validity: PCGG’s prior tender of ₱5 million, followed by consignation, extinguished that portion of arrears and reduced unpaid rentals below three annual installments required for automatic rescission (₱10.038 million).
• Acceptance of Subsequent Payments: MPCP’s acceptance of various payments from 1986 to 1990 (totaling ₱15.9 million) negated any prior rescission.
• M
Case Syllabus (G.R. No. 121039-45)
Background Facts
- Meat Packing Corporation of the Philippines (MPCP) is wholly owned by the Government Service Insurance System (GSIS).
- MPCP owns three parcels of land in Barrio Ugong, Pasig City, with an adjoining meat processing and packing plant.
- On November 3, 1975, MPCP and Philippine Integrated Meat Corporation (PIMECO) entered into a lease-purchase agreement:
• Annual rental of ₱1,375,563.92 over 28 years (total ₱38,515,789.87).
• Automatic cancellation clause upon default of three cumulative annual installments.
• Forfeiture of all payments as rentals, waiver of reimbursement rights.
• Separate rescission right upon any breach, with 180-day written notice and automatic vesting of improvements in MPCP.
Supplementary and Loan Agreement
- Also on November 3, 1975, MPCP and PIMECO signed a Supplementary and Loan Agreement to cover rehabilitation costs.
- Total contract price increased to ₱93,695,552.59.
- New annual rental fixed at ₱3,346,269.70 over 28 years starting January 1, 1981.
Sequestration by the PCGG
- March 17, 1986: Presidential Commission on Good Government (PCGG) sequestered PIMECO’s assets, including the meat plant and lease-purchase agreement.
- November 17, 1986: MPCP gave written notice rescinding the lease-purchase agreement for non-payment of over ₱2,000,000 in 1986.
- GSIS requested exclusion of the plant from sequestration; PCGG denied the request.
- January 24, 1989: PCGG en banc resolution ordered turnover of the plant to GSIS upon:
• Joint PCGG-COA audit.
• Approval by the Sandiganbayan.
• Execution of a Memorandum of Agreement (MOA) with covenants on title annotation, PCGG consent for disposition, and subjecting PIMECO shares to pending Sandiganbayan cases.
Proceedings in Sandiganbayan (Civil Case No. 0024)
- July 29, 1987: PCGG filed complaint for reconveyance, reversion, accounting, restitution and damages against Peter Sabido and others.
- Defendant Sabido denied PCGG’s allegations, attributing transactions to his late father Roberto M. Sabido and asserting lawfulness and good faith.
- May 4, 1989: Sandiganbayan ordered PCGG to confirm or deny the alleged turnover of PIMECO’s management and to furnish the resolution if true.
- June 2, 1989: Temporary restraining order enjoining PCGG from effecting any turnover of management, control, or possession of PI