Case Summary (G.R. No. 173082)
Factual and Procedural Background
On October 27, 1986, the PCGG issued a writ of sequestration against the assets of the Palm Companies, including over 16 million shares of Benguet Corporation stock registered under their names. This writ was founded on a letter identifying Romualdez as the beneficial owner of these shares. Although the Republic initially filed a complaint against Romualdez without naming the Palm Companies as defendants, the Sandiganbayan ordered their impleadment on June 16, 1989, a decision affirmed by the Supreme Court in 1991. The Republic filed an amended complaint including the Palm Companies in 1997, which the Sandiganbayan admitted in 2001.
Movements to Lift Sequestration and Initial Court Rulings
The Palm Companies moved to lift the writ of sequestration in 1997; this was denied by the Sandiganbayan in 2003 and its motion for reconsideration was likewise denied in 2006. Despite these rulings, subsequent motions by the Palm Companies resulted in partial release and handling of sequestered funds, including authorization to purchase additional shares and appointment of a comptroller in 2007. However, the Palm Companies eventually secured a dismissal of the Republic’s complaint against them in 2008, which the Court affirmed in 2010, and later succeeded in obtaining an order to release their sequestered shares and funds in 2010.
Constitutional Mandate on Sequestration Filing Period
Central to the dispute is Section 26, Article XVIII of the 1987 Philippine Constitution, which requires that judicial action to support sequestration orders issued prior to the Constitution’s ratification must be commenced within six months from the ratification date; for those issued thereafter, such action must begin within six months from issuance. Failure to comply results in the automatic lift of the sequestration. The Palm Companies argue that they were not impleaded within this constitutionally mandated period, rendering the writ of sequestration invalid and mandating its lifting.
Court’s Ruling on Due Process and Impleadment of Palm Companies
The Supreme Court ruled that the writ of sequestration against the Palm Companies is invalid due to failure to implead these corporations as defendants within the six-month period prescribed by the Constitution. The Court emphasized that the complaint against Romualdez was not a suit against the Palm Companies, and merely listing them in the complaint without formally naming them as defendants violates due process by ignoring their distinct corporate personalities. The impleadment in 1997 occurred a decade late, and the allegation that Romualdez was the beneficial owner does not substitute for proper judicial action against the corporations themselves.
Effect of Lifting the Writ of Sequestration
While the writ of sequestration was deemed automatically lifted, the Court clarified that this does not equate to a declaration that the assets are not ill-gotten. Instead, lifting terminates the government’s conservatorship over those assets, prohibiting the PCGG from exercising administrative control or voting corporate shares. The substantive case on alleged illicit acquisition still remains pending.
Sufficiency of the Republic’s Judicial Action and Cause of Action
Though the Republic filed an amended complaint after the Sandiganbayan ordered the impleadment of the Palm Companies, the complaint failed to state a cause of action because it did not clearly identify the allegedly illegal acts or properties the Palm Companies acquired. The Palm Companies filed a motion for a bill of particulars, which the Republic inadequately complied with. Consequently, the Sandiganbayan dismissed the complaint against the Palm Companies. The Supreme Court upheld this dismissal, emphasizing the necessity for pleadings to set forth ultimate material facts to inform defendants of the charges and enable them to prepare their defense in conformity with fair trial rights and procedural rules.
Legal Principles on Real Party in Interest and Pleadings
The Cou
...continue readingCase Syllabus (G.R. No. 173082)
Background and Parties Involved
- The cases consolidated under G.R. Nos. 173082 and 195795 involve Palm Avenue Holding Co., Inc. and Palm Avenue Realty and Development Corporation (collectively “Palm Companies”) as petitioners.
- The Republic of the Philippines, represented by the Presidential Commission on Good Government (PCGG), is respondent in G.R. No. 173082 and petitioner in G.R. No. 195795.
- The Sandiganbayan Fifth Division rendered various resolutions central to these cases.
- The conflict revolves around the ownership, sequestration, and alleged ill-gotten nature of shares in Benguet Corporation registered under the Palm Companies.
Facts and Procedural History
- On October 27, 1986, the PCGG issued a writ of sequestration covering all assets of the Palm Companies, including over 16 million Benguet Corporation shares.
- The PCGG's basis included a letter identifying Benjamin "Kokoya" Romualdez, a crony of former President Marcos, as the beneficial owner of the shares held by the Palm Companies.
- The PCGG filed a complaint in the Sandiganbayan (Civil Case No. 0035) against Romualdez but initially did not implead the Palm Companies as defendants.
- The Sandiganbayan ordered the Palm Companies to be impleaded on June 16, 1989; this was affirmed by the Supreme Court in 1991 (G.R. No. 90667).
- The Republic filed an amended complaint in 1997 naming the Palm Companies as defendants, which was admitted by the Sandiganbayan in 2001.
- The Palm Companies sought lifting of the writ of sequestration in 1997, which was denied in resolutions dated January 10, 2003, and June 14, 2006.
- The Palm Companies also moved for release of sequestered funds in 2006; the Sandiganbayan granted the motion in 2007 allowing release for further share purchase.
- Following various procedural motions—including motions for bill of particulars by the Palm Companies and motions to dismiss by the Republic—the complaint against the Palm Companies was dismissed by the Sandiganbayan in 2008, affirmed by the Supreme Court in 2010 (G.R. No. 189771).
- In October 2010, the Sandiganbayan ordered the PCGG to release all Palm Companies’ shares and funds in its custody, a resolution affirmed by the Supreme Court in 2014.
Legal Issues Presented
- Whether the Sandiganbayan committed grave abuse of discretion amounting to lack of jurisdiction in denying the Palm Companies’ motion to lift the writ of sequestration despite the constitutional requirement for filing judicial proceedings within six months.
- Whether the Sandiganbayan erred in granting the Palm Companies’ motion to release shares and funds.
- Whether the failure to properly implead the Palm Companies within the constitutional six-month period automatically lifted the writ of sequestration under Section 26, Article XVIII of the 1987 Constitution.
Constitutional Provision and Jurisprudential Standards
- Section 26, Article XVIII, 1987 Constitution mandates that:
- A sequestration or freeze order must be supported by a prima facie case.
- An order and list of properties sequestered must be registered with the proper court.
- For sequestration orders issued before ratification, judicial action must be filed within six months from ratification; for orders issued after ratification, within six months from issuance.
- Failure to commence judicial action within t