630 Phil. 370
CARPIO, ACTING CJ.:
The Presidential Commission on Good Government by authority of the President of the Philippines, hereby orders the sequestration of the shares which belong to or are owned or controlled by ROBERTO S. BENEDICTO, JOSE L. AFRICA, VICTOR A. AFRICA AND ALFREDO L. AFRRICA in the following business entities, including whatever emoluments or benefits may be due the said shares in:1. Philippine Overseas Telecommunications Corp.
2. Philippine Communications Satellite Corp.
3. Eastern Telecommunications Phils.
4. Domestic Satellite Corporation
5. Oceanic Wireless Network, Inc.
6. Philippine Consultancy Systems, Inc.
7. Premiere Building Administration Corp.
8. All Subsidiaries Organizations emanating from the above-named Corporations
9. All other business enterprises or entities in which the above-named individuals directly or in directly [sic] own or hold any form of interest.[9] (Emphasis supplied)
NOW, THEREFORE, for and in consideration of the foregoing premises, parties hereunto agree as they hereby agree to execute the following reciprocal cessions and concessions:
I. Property Cessions by BENEDICTO To The Government:a) Cession to the Government by BENEDICTO and/or of his group-controlled corporations/businesses of their shareholdings/dividends/deposits Indicated In Annex "A" hereof.x x x xCESSION TO THE GOVERNMENT:
I. PHILIPPINE ASSETS:
x x x x
- Oceanic Wireless Network, Inc.
51% of the equity belonging to
Benedicto/and or [sic] his companies
P1,014.00/share book value . . . . . . . . . . 13,538,765.00 M.[14]
WHEREFORE, it is respectfully prayed that this Honorable Court:
1. Immediately issue a Temporary Restraining Order enjoining the defendants and all persons acting for them from interfering with the work and functions and business transactions of [Oceanic's] present PCGG-installed Board and Management; until proper proceedings are filed by defendants and finally decided, resolving the legitimacy of the present PCGG-installed Board and Management, the defendants and their agents should be restrained from representing themselves as supposed [Oceanic] Directors or officers, or from acting as such, likewise stopping defendants from further sending to [Oceanic's] clients, suppliers, depositary banks, and other entities, letters or demands.[16]
Acting on the motion of counsel for the plaintiff, the parties being cognizant of the fact that partial execution of the Compromise Agreement had already been implemented, it appearing that the judgment on a compromise in respect to defendant former Ambassador Roberto Benedicto has become final and executory, let a writ of execution issue as prayed for.[19]
WHEREFORE, judgment is hereby rendered as follows:
(1) Declaring as null and void the PCGG writs of sequestration, dated June 15, 1988 against Aerocom Investors & Managers, Inc., Polygon Investors & Managers, Inc., Silangan Investors & Managers, Inc. and Belgor Investments, Inc. for the reason that the said writs of sequestration were deemed automatically lifted for failure of the PCGG to commence the necessary judicial action against the said corporations within the required six-month period pursuant to Section 26 of Article XVIII of the 1987 Constitution.
(2) Declaring as null and void the order of sequestration, dated April 11, 1986, relative to the [Oceanic] shares owned by Jose L. Africa and Victor A. Africa on the ground that the said order of sequestration was signed only by PCGG Commissioner Mary Concepcion Bautista in violation of Section 3 of the Rules & Regulations of the PCGG requiring the signatures of at least two Commissioners on such order of sequestration.
(3) Declaring as null and void the acts and conduct of PCGG, its agents, nominees and representatives in reorganizing and taking over the Board of Directors and management of [Oceanic].[21]
We find the writ of sequestration issued against [Oceanic] not valid because the suit in Civil Case No. 0009 against Manuel H. Nieto and Jose L. Africa as shareholders in [Oceanic] is not a suit against [Oceanic]. This Court has held that "failure to implead these corporations as defendants and merely annexing a list of such corporations to the complaints is a violation of their right to due process for it would in effect be disregarding their distinct and separate personality without a hearing."
Furthermore, PCGG issued the writs of sequestration on August 3, 1988, which was beyond the period set by the Constitution.
x x x x
The sequestration orders issued against respondents shall be deemed automatically lifted due to the failure of PCGG to commence the proper judicial action or to implead the respondents therein within the period prescribed by Article XVIII, Section 26 of the 1987 Constitution.
x x x xThe Fallo
WHEREFORE, the petitions are hereby DENIED. The decision and resolution of the Sandiganbayan are hereby AFFIRMED.[25]
WHEREFORE, it is respectfully prayed of this Honorable Court that an order be issued as follows:
x x x x
2) DIRECTING the release in favor of, and payment to SILANGAN of the cash dividends declared by [Oceanic], including the interests thereof, and deposited/placed in escrow by authority of this Honorable Court with the PNB, Land Bank, Bureau of Treasury or any other banking institution, in the aggregate sum of P54,337,852.61, less the amount equivalent to FIFTEEN (15%) PERCENT thereof as contingent fee to be paid directly to the undersigned counsel, with the express conformity of SILANGAN.[28]
- While PCGG does not have any objections to the release of the dividends to the private individuals and corporations, as well as their payment of whatever attorney's fees may have been agreed upon between them and their lawyers, PCGG however would invite the attention of the Honorable Court to the fact that it is also entitled to its share of the dividends and interest due thereon;
- In the Compromise Agreement entered into by and between the REPUBLIC/PCGG and Roberto S. Benedicto on November 3, 1990, the latter ceded to the government "51% of the equity belonging to Benedicto and/or his companies" in [Oceanic]. x x x
- While Roberto S. Benedicto owns only 115 shares in [Oceanic], his companies which are identified as Belgor Investments, Inc. and Silangan Investors & Managers, Inc. own 12,600 and 25,429 shares respectively or a total equity of 38,134 shares of stock.
- Thus, by virtue of the compromise agreement, the REPUBLIC/PCGG is entitled to receive 51% of the cash dividends and interests due on the ceded shares of Roberto S. Benedicto and his two companies.
- Also, to the extent that FIFTY-ONE PERCENT (51%) of the dividends and interests due to Belgor and Silangan are owned by the REPUBLIC, to that same extent must they be excluded from any computation of attorney's fees due to any lawyer of the other parties, since said lawyers could not have represented the interests of the REPUBLIC.[30]
Since the PCGG interposed no objection to the release of 49% of the dividends and interest due to Silangan, hence, the instant motion.
When the motion at bar was called for hearing on June 4,2004 at 2:00 o'clock in the afternoon, Atty. Jose de Veyra for the PCGG maintained the same position of the PCGG that it has no objection to the release of the 49% cash dividends including the interest declared by [Oceanic] in favor of the movant Silangan Investors and Managers, Inc.
PREMISES CONSIDERED, the Court GRANTS the motion and orders the Land Bank, COA Branch, Commonwealth Avenue, Quezon City to release and pay to Silangan Investors and Managers, Inc. the amount equivalent to 49% of the cash dividends including interest thereon declared by [Oceanic] due to Silangan Investors and Managers, Inc. and deposited in the Escrow acoounts of Civil Case No. 0009, entitled "Republic versus Africa, et al.," with the said Bank, 15% of which shall be given directly to M.M. Lazaro and Associates thru Atty. Manuel M. Lazaro, as contingent attorney's fees, subject to the payment of Clerk's Commission for the care and custody of the said sum of money pursuant to the schedule of legal fees issued by the Supreme Court effective June 15, 2000, the same shall form part of the Judiciary Development Funds.[33]
I.
In releasing the cash dividends due Silangan Investors & Managers, Inc. even if only 49% thereof, the Honorable Court exceeded its jurisdiction considering that the whole equity of Silangan in [Oceanic] is being claimed by the government in Civil Case No. 0009;II.
It is not for the Honorable Court to rule on the issue of attorney's fees as there was no issue or claim in these cases raised by the parties.[35]
In the instant PCGG's Motion for Reconsideration, the PCGG claims that not only 51% but 100% of 25,249 shares of Silangan in [Oceanic] is being claimed by the Government. The same has no basis. It was the 51% equity of Roberto S. Benedicto in Silangan that was ceded by the latter to the Government.
The 51% equity of Roberto S. Benedicto is in Silangan and not in [Oceanic]. By virtue thereof, the Government took over from Roberto S. Benedicto and became one of the stockholders of Silangan owning 51% shares of stock. The government became a stockholder of [Oceanic] only to the extent of the 115 shares of stocks [sic] of Roberto S. Benedicto in [Oceanic].
Only the stockholders of [Oceanic] are entitled to the cash dividends declared by the said corporation. Silangan, being one of the stockholders of [Oceanic] is entitled to the cash dividends due to its [sic] equivalent to 40% of the total cash dividends or in the amount of P54,337,852.61.
Clearly, the Government's claim on the cash dividends declared by [Oceanic] in favor of Silangan is pre-mature. The government will only be entitled to cash dividends received by Silangan from [Oceanic] only if Silangan will declare cash dividends to its stockholders, the Government being just one of its stockholders.
It was Silangan, as a corporation with separate and distinct personality from its stockholders that engaged the services of M.M. Lazaro and Associates with attorney's fees on a contingent basis of 20%, which was reduced to 15% of whatever amount that maybe recovered or collected by Silangan.
It was the law firm M.M. Lazaro and Associates which filed Civil Case No. 0127, entitled "Jose L. Africa, et al. vs. PCGG, et al." for Certiorari and Prohibition with Preliminary Injunction and Restraining Order on August 1, 1991. It was by reason of this case that the writs of sequestration against [Oceanic], Silangan and other majority stockholders of [Oceanic] were lifted and set aside. The writs of sequestration having been lifted, [Oceanic] declared cash dividends to its stockholders. Considering that the Omnibus Motion praying for the payment of attorney's fees of M.M. Lazaro and Associates is with the conformity of Silangan thru [sic] its President Manuel H. Nieto, Jr., the Court may act on it and grants the same in the interest of justice.
The Motion for Reconsideration dated July 7, 2004 filed by the PCGG, which is intertwined with the instant Omnibus Motion is for the same reasons, denied.
PREMISES CONSIDERED,
1. The PCGG's Motion for Reconsideration is DENIED for lack of merit.
2. The Silangan's Omnibus Motion is hereby GRANTED.
The Land Bank of the Philippines, COA Branch, Commonwealth Avenue, Quezon City is ordered to release and pay to Silangan Investors and Managers, Inc. the entire cash dividends, including interest earned in the amount of P54,337,852.61, declared by [Oceanic] due to Silangan Investors and Managers, Inc. and deposited in the Escrow accounts of Civil Case No. 0009 entitled, "Republic of the Philippines vs. Jose L. Africa, et al.", with the said Bank. The 15% of which, with the conformity of the Silangan Investors and Managers, Inc. shall be given to M.M. Lazaro and Associates thru Atty. Manuel M. Lazaro, as his contingent attorney's fees.[36]
The sequestration of the [Oceanic] shares of Polygon Aerocom, Silangan, Belgor, Jose L. Africa and Victor A. Africa were [sic] declared null and void in the decision issued in this case dated April 25, 1994 x x x.
On September 21, 2001, the Supreme Court affirmed in toto the Sandiganbayan decision dated April 25, 1994 which lifted among others the sequestration against Polygon et al. On February 19, 2003, the Supreme Court issued the corresponding Entry of Judgment which states that as of February 21, 2002, the aforesaid decision has become final and executory. Thus, the Sandiganbayan issued a writ of execution dated September 30, 2003 to implement its decision dated April 25, 1994, as affirmed by the Supreme Court. The writ of execution was implemented and the records and documents and management of [Oceanic] were turned over to the new management of Africa-Nieto group.
Thus, the release of dividends including the interest earned declared by [Oceanic] and due to Polygon Investors and Managers, Inc. is in order.
PREMISES CONSIDERED, the Court grants the Motion and orders the Land Bank of the Philippines, COA Branch, Commonwealth Avenue, Quezon City to release and pay to Polygon Investors and Managers, Inc. the amount of P25,786,357.59 equivalent to 19.977% of the total dividends declared by [Oceanic] for Class "A" shares, together with accrued interest.[37]
Certiorari under Rule 65 is a remedy narrow in scope and inflexible in character. It is not a general utility tool in the legal workshop. It offers only a limited form of review. Its principal function is to keep an inferior tribunal within its jurisdiction. It can be invoked only for an error of jurisdiction, that is, one where the act complained of was issued by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or excess of jurisdiction.[43]
Grave abuse of discretion is defined as such capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.[45]
During the pendency of Civil Case No. 0044, Aerocom filed on July 5, 1995 a Manifestation and Motion praying that the Sandiganbayan direct the PCGG to release and distribute the dividends pertaining to the shares of Aerocom in all corporations where it owns shares of stock. x x x
The Sandiganbayan in its Resolution promulgated on January 31, 1996 acted favorably on Aerocom's Manifestation and Motion and thus ordered the PCGG to release the dividends pertaining to Aerocom except the dividends on the sequestered shares of stock registered in the names of Manuel Nieto and Jose Africa in POTC, ETPI and Aerocom x x x.
After a motion for reconsideration thereof was denied by the Sandiganbayan per Resolution promulgated on May 7, 1996, the PCGG filed the present petition for certiorari on August 16, 1996 assailing the Sandiganbayan order for the release of the dividends as having been issued with grave abuse of discretion. x x x
The petition must fail.
x x x x
x x x A writ of sequestration x x x runs the risk of being struck down as invalid if and when the twin requirements of issuance and service are not satisfied within the deadline.
Such is the fate of the subject writ of sequestration, unfortunately. Whether the 18-month period expired on July 26, 1988 (as claimed by Aerocom, in line with the computation of time under Article 13 of the Civil Code and the ruling in "National Marketing Corp. v. Tecson," 29 SCRA 70) or on August 2, 1988 (the PCGG's position), the fact remains that service of the writ on Aerocom on August 3, 1988 was made beyond these dates. x x x
x x x The PCGG cannot justify its failure, as found by the Sandiganbayan, to file the corresponding judicial action against Aerocom within the six (6)-month period as provided for under the same constitutional provision in focus (Section 26, Article XVIII, second paragraph) by the fact that Aerocom was mentioned in the complaint of the PCGG in Civil Case No. 0009 (the Nieto, Africa, et al. case) and in Annex "A" thereof notwithstanding that Aerocom was not impleaded as party-defendant, and on the argument that the filing of Civil Case No. 0009 against the "Nieto, Africa, et al. group" is enough compliance with the "judicial action" requirement. x x x
There is no existing sequestration to talk about in this case, as the writ issued against Aerocom, to repeat, is invalid for reasons hereinbefore stated. Ergo, the suit in Civil Case No. 0009 against Mr. Nieto and Mr. Africa as shareholders in Aerocom is not and cannot ipso facto be a suit against the unimpleaded Aerocom itself without violating the fundamental principle that a corporation has a legal personality distinct and separate from its stockholders. Such is the ruling laid down in PCGG v. Interco reiterated anew in a case of more recent vintage -- Republic v. Sandiganbayan, Sipalay Trading Corp. and Allied Banking Corp. where this Court, speaking through Mr. Justice Ricardo J. Francisco, hewed to the lone dissent of Mr. Justice Teodoro R. Padilla in the very same Republic v. Sandiganbayan case herein invoked by the PCGG, to wit:"x x x failure to implead these corporations as defendants and merely annexing a list of such corporations to the complaints is a violation of their right to due process for it would in effect be disregarding their distinct and separate personality without a hearing.
"In cases where stocks of a corporation were allegedly the fruits of ill-gotten wealth, it should be remembered that in most of these cases the stocks involved constitute a substantial if not controlling interest in the corporations. The basic tenets of fair play demand that these corporations be impleaded as defendants since a judgment in favor of the government will undoubtedly substantially and decisively affect the corporations as distinct entities. The judgment could strip them of everything without being previously heard as they are not parties to the action in which judgment is rendered.
"x x x. Holding that the `corresponding judicial action or proceeding' contemplated by the Constitution is any action concerning or involving the corporation under sequestration is oversimplifying the solution, the rsult of which is antagonistic to the principles of justice and fair play.
"x x x the actions contemplated by the Constitution should be those which include the corporation not as a mere annex to the complaint but as defendant. This is the minimum requirement of the due process guarantee. Short of being impleaded, the corporation has no standing in the judicial action. It cannot adequately defend itself. It may not even be heard.[47] (Emphasis supplied)
In PCGG, et al. v. Sandiganbayan, et al., 365 SCRA 538, 549 (2001), this Honorable Court affirmed respondent Court's declaration that all actions of the PCGG-constituted [Oceanic] Board are null and void. Such actions include the aforesaid declaration of dividends. Therefore, private [respondents have] no legal basis to claim the dividends.[48]
FINALLY, the question on the validity of the PCGG's voting the Class "A" shares to increase the authorized capital stock of ETPI.
In his petition in G.R. No. 147214, Africa faults the Sandiganbayan for failing to acknowledge, in its Resolution of February 16, 2001, the Decisions of this Court declaring that his shares in ETPI and those of AEROCOM and POLYGON (Polygon Investors & Managers, Inc.) were not sequestered. Hence, so he contends, they, and not the PCGG, should have been allowed to vote their respective shares during the meeting.
x x x [T]hat this Court rendered decisions holding that the shares of Africa, AEROCOM and POLYGON are not or no longer sequestered is of little consequence since the decisions were promulgated after the Sandiganbayan issued its resolution granting the PCGG authority to call and hold the stockholders meeting to increase the authorized capital stock. At that time, the shares were presumed to have been regularly sequestered.[50] (Emphasis supplied)