G.R. No. 173082, August 06, 2014 - PALM AVENUE HOLDING CO., INC., AND PALM AVENUE REALTY AND DEVELOPMENT CORPORATION, Petitioners, v. SANDIGANBAYAN 5TH DIVISION, REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), Respondent.; [G.R. No. 195795] - REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner, v. HON. SANDIGANBAYAN, PALM AVENUE REALTY AND DEVELOPMENT CORPORATION AND PALM AVENUE HOLDING COMPANY, INC., Respondents.
For resolution before the Court are the consolidated cases of G.R. No. 173082 and G.R. No. 195795. In G.R. No. 173082, Palm Avenue Holding Co., Inc. and Palm Avenue Realty and Development Corporation (the Palm Companies
), through a Petition for Certiorari
under Rule 65 of the Rules of Court, seek to annul the Resolutions of the Sandiganbayan (Fifth Division), promulgated on January 10, 20031
and June 14, 20062
in Civil Case No. 0035, entitled Republic of the Philippines v. Benjamin “Kokoy” Romualdez
[in which intervention by Trans Middle East (Phil.) Equities, Inc. was allowed]. On the other hand, the Republic of the Philippines (the Republic
), in G.R. No. 195795, via a Petition for Certiorari
and Prohibition, with application for temporary restraining order and/or writ of preliminary-injunction, prays for the nullification of the Sandiganbayan Resolutions dated October 21, 20103
and January 11, 20114
rendered in the same case.
The factual and procedural antecedents are as follows:cralawlawlibrary
Through a writ of sequestration dated October 27, 1986, the Presidential Commission on Good Government (PCGG
) sequestered all the assets, properties, records, and documents of the Palm Companies. Said sequestered assets included 16,237,339 Benguet Corporation shares of stock, registered in the name of the Palm Companies. The PCGG had relied on a letter from the Palm Companies’ Attorney-in-Fact, Jose S. Sandejas, specifically identifying Benjamin “Kokoy” Romualdez, a known crony of former President Ferdinand E. Marcos, as the beneficial owner of the Benguet Corporation shares in the Palm Companies’ name.
The Republic, represented by the PCGG, filed a complaint with the Sandiganbayan docketed as Civil Case No. 0035 but did not initially implead the Palm Companies as defendants. However, the Sandiganbayan issued a Resolution dated June 16, 1989 where it ordered said companies to be impleaded. The Court subsequently affirmed this order to implead in G.R. No. 906675
on November 5, 1991. Pursuant to said order, the Republic filed an amended complaint dated January 17, 1997 and named therein the Palm Companies as defendants. The graft court admitted the amended complaint on October 15, 2001.
In the meantime, on February 11, 1997, the Palm Companies filed an Urgent Motion to Lift the Writ of Sequestration, but was denied on January 10, 2003. The dispositive portion of the Sandiganbayan Resolution reads:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing:cralawlawlibrary
1) The “URGENT MOTION TO NULLIFY WRIT OF SEQUESTRATION” dated January 28, 1997 filed by movant Trans Middle East (Phils.) Equities, Inc., is hereby GRANTED. Accordingly, Sequestration Order No. 86-0056 dated April 15, 1986 is hereby declared null and void for having been issued by one PCGG Commissioner only in direct contravention of Section 3 of the PCGG’s own Rules and Regulations. Conformably, however, with the manifestation of the movant Trans Middle East (Phils.) Equities, Inc. itself, the Court will not order the return of its shares of stocks sequestered per Sequestration Order No. 86-0056 dated April 15, 1986, but orders that the same, including the interests earned thereon, to be deposited with the Land Bank of the Philippines in escrow for the persons, natural or juridical, who shall eventually be adjudged lawfully entitled thereto.
2) The “URGENT MOTION TO LIFT THE WRIT OF SEQUESTRATION” dated February 11, 1997 of Palm Avenue Realty and Development Corporation and Palm Avenue Holdings, Co., Inc. is hereby DENIED for lack of merit.
They filed a Motion for Reconsideration, but the same was likewise denied on June 14, 2006. Hence, the Palm Companies filed the petition in G.R. No. 173082.
On September 22, 2006, the Palm Companies filed a Motion to Release Sequestered Funds with the Sandiganbayan. In a Resolution dated January 18, 2007, the Sandiganbayan granted said motion and ordered the release of the sequestered funds for the purchase of additional shares in Benguet Corporation, and appointed a comptroller for this purpose. On May 29, 2007, the companies filed a Motion for Bill of Particulars to direct the Republic to submit a bill of particulars regarding matters in the amended complaint which were not alleged with certainty or particularity. On December 21, 2007, the Republic submitted its bill of particulars. Thereafter, the Palm Companies filed a motion to dismiss the Republic’s complaint. They argued that the bill of particulars did not satisfactorily comply with the requested details.
On August 5, 2008, the Palm Companies filed a Motion to Order Payment of Interest on Balance of the Sequestered Funds. Later, on September 29, 2008, the Sandiganbayan granted the Palm Companies’ motion to dismiss and dismissed the Republic’s complaint as to them. This was affirmed by the Court in a Resolution7
dated January 20, 2010 in G.R. No. 189771. The Sandiganbayan also granted the Palm Companies’ Motion to Order Payment of Interest on Balance of the Sequestered Funds on October 28, 2009.
Thereafter, the Palm Companies filed another motion dated May 14, 2010, this time, to order the PCGG to release all the companies’ shares of stock and funds in its custody. The Sandiganbayan then issued its October 21, 2010 Resolution, granting the companies’ foregoing motion. The graft court disposed of the case as follows:chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing, Palm Avenue Holding Company, Inc. and Palm Avenue Realty and Development Corporation’s Motion to Order the PCGG to Release to the Palm Companies all the shares of stocks and funds in their custody that pertain to the Palm Companies is hereby GRANTED.
Upon denial of the Republic’s motion for reconsideration, it filed the petition in G.R. No. 195795.
In G.R. No. 173082, the Palm Companies present this lone issue to be resolved by the Court:chanRoblesvirtualLawlibrary
[WHETHER OR NOT] RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DENYING PETITIONERS’ MOTION TO LIFT THE WRIT OF SEQUESTRATION NOTWITHSTANDING THE FACT [THAT] SAID WRIT SHOULD BE DEEMED AUTOMATICALLY LIFTED PURSUANT TO SECTION 26, ARTICLE XVIII OF THE 1987 CONSTITUTION FOR FAILURE TO IMPLEAD PETITIONERS WITHIN THE PERIOD OF SIX (6) MONTHS PRESCRIBED IN THE SAID CONSTITUTION.9
The Palm Companies pray for the lifting of the Writ of Sequestration against their assets, since they were not impleaded as parties-defendants in Civil Case No. 0035 within the period prescribed by the Constitution.
On the other hand, the Republic, through the PCGG, contends in G.R. No. 195795 that:chanRoblesvirtualLawlibrary
THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN GRANTING THE PALM COMPANIES’ MOTION TO RELEASE ALL SHARES OF STOCK AND FUNDS IN THE CUSTODY OF THE PCGG.10chanrobleslaw
The Republic argues that the dismissal of the complaint as to the Palm Companies is not tantamount to a declaration that their sequestered assets are no longer ill-gotten.
The issues presented being essentially interrelated, the Court shall make a simultaneous discussion.
Section 26, Article XVIII of the 1987 Constitution provides:chanRoblesvirtualLawlibrary
x x x x
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided.11
The aforesaid provision mandates the Republic to file the corresponding judicial action or proceedings within a six-month period (from its ratification on February 2, 1987) in order to maintain sequestration, non-compliance with which would result in the automatic lifting of the sequestration order. The Court’s ruling in Presidential Commission on Good Government v. Sandiganbayan
which remains good law, reiterates the necessity of the Republic to actually implead corporations as defendants in the complaint, out of recognition for their distinct and separate personalities, failure to do so would necessarily be denying such entities their right to due process.13
Here, the writ of sequestration issued against the assets of the Palm Companies is not valid because the suit in Civil Case No. 0035 against Benjamin Romualdez as shareholder in the Palm Companies is not a suit against the latter. The Court has held, contrary to the assailed Sandiganbayan Resolution in G.R. No. 173082, 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 be, in effect, disregarding their distinct and separate personality without a hearing.14
Here, the Palm Companies were merely mentioned as Item Nos. 47 and 48, Annex A of the Complaint, as among the corporations where defendant Romualdez owns shares of stocks. Furthermore, while the writ of sequestration was issued on October 27, 1986, the Palm Companies were impleaded in the case only in 1997, or already a decade from the ratification of the Constitution in 1987, way beyond the prescribed period.
The argument that the beneficial owner of these corporations was, anyway, impleaded as party-defendant can only be interpreted as a tacit admission of the failure to file the corresponding judicial action against said corporations pursuant to the constitutional mandate. Whether or not the impleaded defendant in Civil Case No. 0035 is indeed the beneficial owner of the Palm Companies is a matter which the PCGG merely assumes and still has to prove in said case.15cralawred
The sequestration order issued against the Palm Companies is therefore deemed automatically lifted due to the failure of the Republic to commence the proper judicial action or to implead them therein within the period under the Constitution. However, the lifting of the writ of sequestration will not necessarily be fatal to the main case since the same does not ipso facto
mean that the sequestered properties are, in fact, not ill-gotten. The effect of the lifting of the sequestration will merely be the termination of the government’s role as conservator. In other words, the PCGG may no longer exercise administrative or housekeeping powers, and its nominees may no longer vote the sequestered shares to enable them to sit in the corporate board of the subject company.16cralawred
The Republic, through the PCGG, may argue that it has substantially complied with the Constitutional requirements to support its sequestration order when it filed an amended complaint which impleaded the Palm Companies, and which was subsequently admitted by the Sandiganbayan. Even so, a careful perusal of the records reveals the existence of legal and factual grounds to warrant the lifting of the writ of sequestration against the assets of the Palm Companies.
Since the Republic did not originally include the Palm Companies in Civil Case No. 0035, the Sandiganbayan issued a Resolution ordering said companies to be impleaded, which was affirmed by the Court in G.R. No. 90667 on November 5, 1991. The Court declared in said case that the Palm Companies are real parties-in-interest in Civil Case No. 0035, because they still appear to be the registered owners of the remaining disputed shares. That Romualdez is considered as their true or real owner is just a claim that still needs to be proved in court.17cralawred
Section 2, Rule 3 of the Rules of Court states:chanRoblesvirtualLawlibrary
Sec. 2. Parties in interest. – A real party-in-interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party-in-interest.
This provision has two requirements: 1) to institute an action, the plaintiff must be the real party-in-interest; and 2) the action must be prosecuted in the name of the real party-in-interest. Interest within the meaning of the Rules of Court means material interest or an interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved. One having no material interest to protect cannot invoke the jurisdiction of the court as the plaintiff in an action. When the plaintiff is not the real party-in-interest, the case is dismissible on the ground of lack of cause of action.
Pursuant to said order, the Republic filed an amended complaint which named the Palm Companies as defendants. Thereafter, the companies filed a Motion for Bill of Particulars for the Republic to clarify certain matters in its amended complaint. Upon submission of the bill of particulars, the Palm Companies filed a motion to dismiss the Republic’s complaint. Later, the Sandiganbayan, sustained by the Court in G.R. No. 189771, granted said motion to dismiss. The Sandiganbayan thus pronounced:chanRoblesvirtualLawlibrary
x x x x
Clearly, as in the previously discussed paragraphs, the above answers set forth by the plaintiff in its Bill of Particulars are indefinite and deficient inasmuch as the question of what are the alleged illegally acquired funds or properties of the Palm Avenue Companies which they are liable to return, remains unanswered, a product of uncertainty.
In sum, the allegations contained in plaintiff Republic’s Bill of Particulars are incomplete and indefinite as they merely express conclusions of law and presumptions unsupported by factual premises.
Furthermore, the details desired by defendants Palm Avenue Companies in their motion for bill of particulars, such as the acts constituting their involvement in the Marcoses’ alleged scheme to pillage the nation’s wealth, the alleged properties which they supposedly acquired illegally and therefore should return to the government, and other relevant facts, are not evidentiary in nature. On the contrary, those particulars are material facts that should be clearly and definitely averred in the complaint in order that the defendants may, in fairness, be informed of the claims against them to the end that they may be prepared to meet the issues at trial.
x x x x
In view, therefore, of plaintiff Republic’s failure to file the proper bill of particulars which would completely amplify the charges against defendant Palm Avenue Companies, and applying the above-quoted ruling of the High Court in the Virata case, this Court deems it just and proper to order the dismissal of the Third Amended Complaint in so far as the charges against the Palm Avenue Companies are concerned.
Finally, we sustain defendant-movants’ argument that the failure of the plaintiff to sufficiently provide the ultimate and material facts they required in their motion for bill of particulars, makes the third amended complaint dismissible for failure to state a cause of action.18
Simple justice demands that the Palm Companies must know what the complaint against them is all about. The law requires no less. In the similar case of Virata v. Sandiganbayan
petitioner Virata filed a motion for a bill of particulars, asserting that the allegations against him are vague and are not averred with sufficient definiteness as to enable him to effectively prepare his responsive pleading. The Court held therein that a complaint must contain the ultimate facts constituting plaintiff's cause of action. A cause of action has the following elements: (1) a right in favor of the plaintiff; (2) an obligation on the part of the named defendant to respect such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. As long as the complaint contains these three elements, a cause of action exists. Although the allegations therein may be vague, dismissal of the action is not the proper remedy because the defendant may ask for more particulars. As such, a party may move for a more definite statement or for a bill of particulars of any matter which is not averred with sufficient definiteness or particularity. This is to enable him to properly prepare his responsive pleading or to prepare for trial.20
The Court in said case found that there were certain matters in the allegations which lacked in substantial particularity. They were broad and definitely vague which required specifications in order that Virata could properly define the issues and formulate his defenses. The two bills of particulars filed by the Republic were ruled to have failed in properly amplifying the charges leveled against Virata because, not only are they mere reiteration or repetition of the allegations set forth in the expanded Second Amended Complaint, but, to the large extent, they contain vague, immaterial and generalized assertions which are inadmissible under our procedural rules. As such, for failure of the Republic to obey the Court's directive and the Sandiganbayan's order to file the proper bill of particulars which would completely amplify the charges against Virata, the Court deemed it just and proper to order the dismissal of the expanded Second Amended Complaint, insofar as the charges against Virata are concerned. The Court relied on Section 3, Rule 17 of the Rules of Court, which provides that:chanRoblesvirtualLawlibrary
Sec. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by court.21
Similarly, the Republic in the case at bar failed to file a proper bill of particulars which would completely clarify and amplify the charges against the Palm Companies. For said failure to comply with the graft court's order to file the required bill of particulars that would completely and fully inform the Palm Companies of the charges against them, the amended complaint impleading said companies necessarily failed to state a cause of action, warranting the dismissal of the case as to them. By the dismissal of the case as against the Palm Companies, there is ipso facto
no more writ of sequestration to speak of.
The Republic cannot simply rely on the presumption that the PCGG has acted pursuant to law and based on prima facie
evidence, for the same will undermine the basic constitutional principle that public officers and employees must at all times be accountable to the people. Indeed, sequestration is an extraordinary and harsh remedy. As such, it should be confined to its lawful parameters and exercised with due regard to the requirements of fairness, due process, and justice.22
While the Court acknowledges the Government's admirable efforts to recover ill-gotten wealth allegedly taken by the corporations, it cannot, however, choose to turn a blind eye to the demands of the law, justice, and fairness.23cralawredWHEREFORE
, in view of the foregoing, the petition in G.R. No. 173082 is GRANTED. The Resolutions of the Sandiganbayan (Fifth Division) promulgated on January 10, 2003 and June 14, 2006 in Civil Case No. 0035 are REVERSED AND SET ASIDE
, and the writ of sequestration against the assets and properties of Palm Avenue Holding Co., Inc. and Palm Avenue Realty and Development Corporation is consequently LIFTED
. The petition in G.R. No. 195795 is DISMISSED
for lack of merit. The Sandiganbayan Resolutions dated October 21, 2010 and January 11, 2011 are hereby AFFIRMED
.SO ORDERED.Velasco, Jr., (Chairperson), Villarama, Jr.,*Mendoza
, and Leonen, JJ.,
* Designated Acting Member, per Special Order No. 1691 dated May 22, 2014, in view of the vacancy in the Third Division.
1 Penned by Associate Justice Minita V. Chico-Nazario (retired member of the Court), with Associate Justices Rodolfo G. Palattao and Ma. Cristina G. Cortez-Estrada, concurring; rollo (G.R. No. 173082), pp. 26-41.
2 Penned by Associate Justice Ma. Cristina G. Cortez-Estrada, with Associate Justices Roland B. Jurado and Teresita V. Diaz-Baldos, concurring; id. at 42-50.
3 Penned by Associate Justice Roland B. Jurado, with Associate Justices Teresita V. Diaz-Baldos and Napoleon E. Inoturan, concurring; rollo (G.R. No. 195795), pp. 38-43.
4 Id. at 45-46.
5Republic v. Sandiganbayan, Palm Avenue Realty Development Corporation and Palm Avenue Holding Company.
6Rollo (G.R. No. 173082), pp. 40-41.
7Rollo (G.R. 195795), pp. 180-181.
8 Id. at 43. (Emphasis in the original)
9Rollo (G.R. No. 173082), p. 7.
10Rollo (G.R. No. 195795), p. 19.
12 353 Phil. 80, 92 (1998).
13PCGG v. H.E. Heacock, G.R. No. 165878, March 30, 2010, 617 SCRA 150, 159-160.
14PCGG v. Sandiganbayan, 418 Phil. 8, 19 (2001).
15PCGG v. Sandiganbayan, 393 Phil. 683, 691-692.
16PCGG v. Sandiganbayan, supra note 14, at 20.
17Rollo (G.R. No. 195795), pp. 75-76.
18 Id. at 173-175. (Emphasis ours)
19 339 Phil. 47 (1997).
20Virata v. Sandiganbayan, supra, at 61-62.
22Republic v. Sandiganbayan, G.R. No. 154560, July 13, 2010.
23Virata v. Sandiganbayan, supra note 19, at 74.