G.R. No. 166355 - People vs. Morales

Case Summary (G.R. No. 166355)

Factual Background

The National Centennial Commission was created to prepare nationwide celebrations for the centennial of Philippine independence. The Commission originated in Administrative Order No. 223 and was reconstituted as the National Centennial Commission under Executive Order No. 128. The Commission, chaired by the late Vice-President Salvador H. Laurel, and the Bases Conversion Development Authority collaborated to organize the Philippine Centennial Expo ’98 Corporation or Expocorp to operate the Philippine Centennial International Exposition 1998.

Allegations and Information

The Philippine Centennial project drew allegations of anomalies, including absence of public biddings. Following legislative and citizen inquiries, the Ombudsman undertook an investigation. In 2001 the Ombudsman’s Fact-Finding and Investigation Bureau filed an Information charging Luis J. Morales, then acting president of Expocorp, with violation of Section 3(e) of R.A. No. 3019 for allegedly selling a Mercedes Benz, an official vehicle of Expocorp, to a private party without public bidding or board approval and failing to remit the proceeds to Expocorp.

Respondent’s Motion and Contentions

Morales moved to dismiss for lack of jurisdiction over his person and the offense. He contended that Expocorp was a private corporation incorporated under the Corporation Code and registered with the Securities and Exchange Commission. He averred that Expocorp was not created by a special law and did not possess an original charter. Morales further asserted that he was not a public officer because he received no government compensation and his appointment emanated from a private corporate office; consequently, the Sandiganbayan lacked jurisdiction.

People’s Opposition and Contentions

The Office of the Special Prosecutor, representing the People, opposed dismissal. The People relied on Expocorp’s Articles of Incorporation showing initial heavy stockholding by the Bases Conversion Development Authority and argued that Expocorp acted as an instrumentality of the National Centennial Commission. The People invoked the Court’s ruling in Salvador H. Laurel v. Aniano A. Desierto to assert that where an officer’s appointment and functions stem from a public commission, his acts may be viewed in the light of public office and the officer may be a public officer for purposes of jurisdiction.

Sandiganbayan’s Resolution

The Sandiganbayan held that the position of president of a government-owned or controlled corporation falls within its jurisdiction but concluded that the critical question was whether Expocorp was a government-owned or controlled corporation. The court found that Expocorp was incorporated under the Corporation Code, was not created by special law, and after issuance of unissued shares became majority-owned by Global Clark Assets Corporation which held 55.16 percent of its shares. The Sandiganbayan therefore ruled Expocorp a private corporation and dismissed the Information for lack of jurisdiction.

Issues Presented to the Supreme Court

The People presented two principal issues: whether Expocorp, although incorporated as a private corporation, was nevertheless a public office because it performed the sovereign and executive functions of the National Centennial Commission; and whether Morales, as Expocorp’s president, should be treated as a public officer subject to the Sandiganbayan’s jurisdiction under R.A. No. 3019 and the statutory amendments defining the Sandiganbayan’s exclusive original jurisdiction.

Supreme Court’s Disposition

The Supreme Court denied the petition for review on certiorari and affirmed the Sandiganbayan’s June 15, 2004 Resolution dismissing the Information for lack of merit. The Court ordered that no costs be imposed.

Legal Basis and Reasoning

The Court accepted the Sandiganbayan’s factual finding that Expocorp was incorporated under the Corporation Code and was not created by special law nor issued an original charter. The Court emphasized that corporate character and ownership determine whether a corporation is government-owned or controlled. The Court noted that while BCDA was an original incorporator and initially held the preponderant number of shares, the Board of Directors subsequently issued unissued and unsubscribed shares which were acquired by Global Clark Assets Corporation. As a result, BCDA became a minority shareholder and Global held a majority interest. The Court invoked the principle articulated in Dante V. Liban, et al. v. Richard J. Gordon that a government-owned or controlled corporation must be owned by the government and that for a stock corporation at least a majority of capital stock must be government-owned. Because Expocorp lacked majority government ownership, it could not be characterized as a government-owned or controlled corporation.

Jurisdictional Application

The Court examined the jurisdictional grant to the Sandiganbaya

Case Syllabus (G.R. No. 166355)

Parties and Procedural Posture

People of the Philippines filed a petition for review on certiorari from a Sandiganbayan Resolution dismissing Criminal Case No. 27431 against Luis J. Morales.
Luis J. Morales was charged by the Office of the Ombudsman by Information for violation of Section 3(e) of R.A. No. 3019 in relation to acts committed while he was acting president of Philippine Centennial Expo '98 Corporation (Expocorp).
The Sandiganbayan First Division dismissed the Information for lack of jurisdiction on the ground that Expocorp was a private corporation and therefore Morales was not a public officer within the Sandiganbayan's jurisdiction.
The Court of Appeals review was bypassed and the petition for review on certiorari was brought before the Supreme Court.

Key Factual Allegations

Expocorp was organized on March 10, 1996 by the National Centennial Commission (NCC) and the Bases Conversion Development Authority (BCDA) to operate the Philippine Centennial International Exposition 1998.
The Information alleged that on or about September 6, 1997, Morales sold a Mercedes-Benz Model 1997-C230 owned for official use by Expocorp to one Rodolfo M. Lejano through Newton Motors, Inc. for PHP 2,250,000 without public bidding or board approval and failed to deposit the proceeds to Expocorp.
Allegations of anomalies in the Philippine Centennial project prompted investigations by the Senate Blue Ribbon Committee and the Ad Hoc and Independent Citizen's Committee, which led to further Ombudsman proceedings and the filing of the Information in 2001.
At incorporation BCDA was an original subscriber and initially held nearly all of Expocorp's shares, but two months later the board opened unissued shares for subscription and Global Clark Assets Corporation acquired 1,229,998 shares making it the majority owner with 55.16 percent, leaving BCDA with 44.84 percent.

Contentions of the Parties

The People contended that Expocorp was effectively an instrumentality or extension of the NCC and therefore performed executive and sovereign functions such that its officers, including Morales, were public officers subject to the Sandiganbayan's jurisdiction.
The People further relied on the ruling in Salvador H. Laurel v. Aniano A. Desierto to argue that acts of an official who served as chairman of the NCC and chief executive of Expocorp established a public-office character for corporate positions related to Expocorp.
Morales maintained that Expocorp was a private corporation incorporated under the Corporation Code, that it was not created by special law, and that he was not a public officer because the majority of its capital stock had become privately owned and his compensation was paid from Expocorp funds.
Morales also argued that the Laurel decision applied exclusively to Salvador H. Laurel and did not categorically transform Expocorp into a government-owned or controlled corporation.

Statutory and Constitutional Framework

The criminal charge invoked Section 3(e) of R.A. No. 3019 which punishes giving unwarranted benefits to private parties through manifest partiality or evident bad faith by public officers.
The Sandiganbayan's jurisdict