Africa vs. PCGG

The Sandiganbayan has exclusive and original jurisdiction over all incidents arising from, incidental to, or related to cases involving the recovery of ill-gotten wealth, including special civil actions for injunction filed by private parties questioning the acts or orders of the PCGG in the exercise of its powers and functions. The State's immunity from suit does not divest the Sandiganbayan of jurisdiction where the complaints do not seek money judgments from nor demand affirmative performance by the State in its political capacity.

The Presidential Commission on Good Government (PCGG) was created pursuant to Executive Orders Nos. 1, 2, and 14 to recover the ill-gotten wealth of former President Ferdinand Marcos, his family, and associates. Under Section 2 of Executive Order No. 14, all cases of the Commission regarding such ill-gotten wealth, whether civil or criminal, are lodged within the exclusive and original jurisdiction of the Sandiganbayan, and all incidents arising from, incidental to, or related to such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court. The Sandiganbayan's jurisdiction was defined by Section 4 of Presidential Decree No. 1606, as amended by Presidential Decree No. 1891, and enlarged by Executive Order No. 14.

The Presidential Commission on Good Government (PCGG) sequestered Eastern Telecommunications Philippines, Inc. (ETPI) on March 14, 1986. The sequestration order was partially lifted in May 1986 when 40% of the shares of stock (Class "B") owned by Cable and Wireless, Ltd. were freed from sequestration, while the remaining 60% of the shares (Class "A") remained under sequestration. On July 22, 1987, the PCGG filed with the Sandiganbayan Civil Case No. 0009 for reconveyance, reversion, accounting and restitution of the alleged ill-gotten ETPI shares and damages.

During the annual stockholders meeting convened on January 29, 1988 pursuant to a PCGG Resolution dated January 28, 1988, Eduardo M. Villanueva, as PCGG nominee, Roman Mabanta, Jr. and Eduardo de los Angeles as nominees of the foreign investors Cable and Wireless Ltd., and Jose L. Africa (who was absent) were elected as members of the board of directors. An organizational meeting was later held where Villanueva was elected as president and general manager, while Ramon Desuasido, Almario Velasco and Ranulfo Payos were elected as acting corporate secretary, acting treasurer, and acting assistant corporate secretary, respectively.

Victor Africa, who claimed to be an employee of ETPI holding the positions of vice-president, general counsel (on official leave without pay), corporate secretary and special assistant to the chairman (and president), filed directly with this Court on June 30, 1988 a petition for injunction docketed as G.R. No. 83831, seeking to enjoin the PCGG and its nominees from implementing their alleged illegal, invalid and immoral act of ousting him from his offices and positions at ETPI. He contended that the reasons advanced by the PCGG-sponsored board of directors for ousting him (redundancy, need to conserve company funds and loss of confidence) were flimsy, whimsical and arbitrary. On July 15, 1988, petitioner was allegedly forcibly taken out of his office on the basis of a PCGG order, and he sought to have then Commissioner Laureta declared in contempt of court.

Jose L. Africa, Manuel Nieto and Rafael Valdez, allegedly the registered stockholders of ETPI, instituted on September 6, 1988 before the Sandiganbayan Civil Case No. 0048, a complaint for injunction and damages with prayer for a temporary restraining order seeking to enjoin Villanueva from acting as "Director, President and/or General Manager" of ETPI and to stop the PCGG from directly or indirectly interfering with the management of ETPI. They contended that Villanueva's assumption to said positions was effected without due process of law through the PCGG using and voting the sequestered shares without legal justification. Villanueva filed a motion to dismiss on the grounds of lack of jurisdiction, lack of real parties in interest, prematurity for failure to exhaust administrative remedies, and that the issues had already been passed upon by the Supreme Court in G.R. No. 82188.

The same plaintiffs, now in their capacity as erstwhile members of the Board of Directors of ETPI, instituted before the Sandiganbayan on September 23, 1988 Civil Case No. 0050, another action for injunction and damages. In their complaint, plaintiffs questioned the acts and orders of the PCGG leading to the election of Melquiades Gutierrez, Mark Javier, Ranulfo P. Payos, Jose P. Roxas and Almario Velasco, and Cable and Wireless representatives Roman Mabanta, Jr. and Eduardo de los Angeles to the ETPI Board of Directors. The PCGG and its nominees filed motions to dismiss invoking substantially the same grounds as in Civil Case No. 0048, including lack of jurisdiction because plaintiffs may not sue the State without its consent, improper filing because the action is in the nature of quo warranto, and bar by lis pendens.

On October 21, 1988, the Clerk of Court of the Sandiganbayan issued, upon request of the counsel for Jose L. Africa, et al., a subpoena duces tecum and ad testificandum ordering the PCGG or its representatives to appear and testify and to produce the stock and transfer book and all stubs of the outstanding stock certificates of ETPI. Three days thereafter, another subpoena was issued ordering Assistant Solicitor General Ramon Desuasido to produce the minutes of all meetings of the Board of Directors and Stockholders of ETPI held from January 29, 1988 to date. The PCGG and Desuasido moved to quash both subpoenae, but the motion was denied by the Sandiganbayan in an order dated November 3, 1988.

The Sandiganbayan, in the meantime, proceeded with the main case and, on December 13, 1988, promulgated a resolution denying the motions to dismiss separately filed by the PCGG and the individual defendants. On February 23, 1989, the Sandiganbayan denied the motion for reconsideration filed by the representatives of Cable and Wireless, Ltd. The PCGG and its nominees opted not to file a motion for reconsideration.

• Lack of Jurisdiction over Suits Against the State: The PCGG and Villanueva argued that the injunction suits filed by Jose L. Africa, et al. are in effect suits against the State without its consent, and since there is no waiver of immunity by the State, the Sandiganbayan cannot acquire jurisdiction over the same.
• Limited Jurisdiction of the Sandiganbayan: The PCGG contended that the Sandiganbayan has no jurisdiction to entertain an independent suit against the Republic of the Philippines (PCGG) because only the Republic, without consenting to be sued or countersued, is allowed to file civil or criminal cases with said court pursuant to Executive Order No. 14, and because the cause of action, if any, is not within the limited or special jurisdiction of the Sandiganbayan as defined by Section 4, Presidential Decree No. 1606, as amended.
• Res Judicata: The PCGG argued that the injunction suits are barred by res judicata by virtue of the decision in G.R. No. 82188, which resolved the same subject matter and issues raised by Africa, et al. in SEC Case No. 3297 and in their motion for injunction in Civil Case No. 0009.
• Grave Abuse of Discretion in Deferring Resolution of Motion to Dismiss: Villanueva imputed grave abuse of discretion to the Sandiganbayan in proceeding with the hearing of Civil Case No. 0048 without first resolving his motion to dismiss, contending that since the action is for injunction and damages, the reception of evidence on the application for preliminary injunction was tantamount to a hearing on the merits.
• Invalidity of Subpoenae: The PCGG and its nominee/designee, Ramon Desuasido, moved to quash the subpoenae duces tecum and ad testificandum issued by the Sandiganbayan, contending that the Sandiganbayan has no jurisdiction over the main action for damages since Civil Case No. 0050 is in truth a suit against the State without its consent.
• Ouster from Office: Victor Africa contended that the reasons advanced by the PCGG-sponsored board of directors for ousting him from his offices (redundancy, need to conserve company funds and loss of confidence) are flimsy, whimsical and arbitrary, evidencing discriminatory and oppressive attitude and clear intent to harass him into refraining from questioning the invalid, illegal and immoral acts of said board.

• Jurisdiction of the Sandiganbayan: Jose L. Africa, et al. contended that the assumption of Villanueva to the positions of Director, President and/or General Manager of ETPI was effected without due process of law through the PCGG using and voting the sequestered shares without legal justification, and sought to enjoin the PCGG from directly or indirectly interfering with the management of ETPI.
• Preservation of Status Quo: Plaintiffs in Civil Cases Nos. 0048 and 0050 claimed that the acts or orders of the PCGG which led to the election of the new members of the board of directors and officers of ETPI were illegal, and they sought to preserve the status quo, that is, the last actual, peaceable, uncontested status which preceded the pending controversy, which to them was their election to the Board of Directors during the special stockholders meeting on January 4, 1988.

• Jurisdiction over Incidents Arising from Sequestration: Whether the Sandiganbayan has exclusive and original jurisdiction over the injunction suits filed by Jose L. Africa, et al. in Civil Cases Nos. 0048 and 0050, which arose from incidents related to the sequestration of ETPI by the PCGG.
• Immunity from Suit: Whether the State's immunity from suit divests the Sandiganbayan of jurisdiction over the complaints for injunction in Civil Cases Nos. 0048 and 0050.
• Res Judicata: Whether the injunction suits are barred by res judicata by virtue of the prior judgment in G.R. No. 82188.
• Deferment of Motion to Dismiss: Whether the Sandiganbayan committed grave abuse of discretion in deferring the resolution of the motions to dismiss in Civil Case No. 0048 and proceeding with the hearing on the application for preliminary injunction.
• Validity of Subpoenae: Whether the Sandiganbayan gravely abused its discretion in denying the motion to quash the subpoenae duces tecum and ad testificandum issued against the PCGG and its representatives.
• Referral of Factual Issues: Whether the factual issues raised in G.R. No. 83831 should be ventilated before the Sandiganbayan rather than this Court.

• Jurisdiction over Incidents Arising from Sequestration: Yes. The Sandiganbayan has exclusive and original jurisdiction over the injunction suits, as they stemmed from incidents arising from, incidental and related to the partial sequestration of ETPI, pursuant to Section 2 of Executive Order No. 14 and the ruling in PCGG vs. Peña.
• Immunity from Suit: No. The State's immunity from suit does not divest the Sandiganbayan of its jurisdiction, because the complaints for injunction do not seek money judgments from nor do they demand any affirmative performance by the State in its political capacity; the claims for damages are directed against the individual defendants in their personal capacities.
• Res Judicata: No. The doctrine of res judicata does not apply because one fundamental requisite is absent — the prior judgment in G.R. No. 82188 was not a judgment on the merits of the case.
• Deferment of Motion to Dismiss: Yes, but moot. The deferment of the resolution of the motions to dismiss Civil Case No. 0048 was tainted with grave abuse of discretion, since the ground of lack of jurisdiction can be resolved without waiting for trial on the merits; however, this finding was rendered moot and academic by the ruling on the merits of the grounds raised in the motion to dismiss.
• Validity of Subpoenae: Yes. The issuance of the subpoenae was proper, as the right of a stockholder of a sequestered company to inspect and/or examine the records of a corporation pursuant to Section 74 of the Corporation Code was upheld, with nothing in Executive Orders Nos. 1, 2 and 14 indicating an implied amendment of the Corporation Code.
• Referral of Factual Issues: Yes. The issues raised in G.R. No. 83831 are factual in nature and are best ventilated before the Sandiganbayan, as this Court is not a trier of facts.

• Jurisdiction over Incidents Arising from Sequestration: The Court applied the settled doctrine in PCGG vs. Peña that under Section 2 of Executive Order No. 14, all cases of the Commission regarding ill-gotten wealth, whether civil or criminal, are lodged within the exclusive and original jurisdiction of the Sandiganbayan, and all incidents arising from, incidental to, or related to such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction. The Court reiterated the pronouncement in the six subsequent cases jointly decided on August 10, 1988 that the exclusive jurisdiction conferred on the Sandiganbayan extends not only to the principal causes of action but also to all incidents arising from, incidental to, or related to such cases. Since the injunctive suits filed by Jose L. Africa, et al. stemmed from incidents arising from, incidental and related to the partial sequestration of ETPI, the directive in Peña that those who wish to question or challenge the Commission's acts or orders in such cases must seek recourse in the Sandiganbayan applies.

• Immunity from Suit: The Court held that while there were claims for damages alleged in the complaints in both cases, the same are directed against the individual defendants in their personal capacities for having allegedly acted without legal authority and in a manner adverse to the interests of ETPI. Incorporating a monetary claim in the complaint will not convert the special civil action for injunction into a mere claim for damages which would otherwise call for the application of the rule on non-suability of the State. The doctrine of state immunity from suit applies only in actions resulting in adverse consequences on the public treasury, whether in the disbursement of funds or loss of property. The plaintiffs sought the intervention of the Sandiganbayan to obtain redress for what they perceived to be an arbitrary and illegal deprivation of their proprietary rights in the ETPI by the individual defendants, and they do not seek to impose pecuniary liabilities against the PCGG as a government entity.

• Res Judicata: The Court found that the prior judgment in G.R. No. 82188 did not finally resolve the merits of the factual issues raised therein, which included the alleged illegal manner by which the meeting to elect the new board of directors was called and held on January 29, 1988; the qualification, experience and probity of those elected to the board; and the alleged mismanagement of the operations of ETPI. The Court merely ruled on the parameters of the jurisdiction of the Sandiganbayan to issue injunctive writs in cases involving the PCGG. For a prior judgment to constitute a bar to a subsequent case, it must be: (1) a final judgment or order; (2) the court rendering the same must have jurisdiction over the subject matter and over the parties; (3) it must be a judgment or order on the merits; and (4) there must be between the two cases identity of parties, subject matter, and causes of action. The third requisite was absent.

• Deferment of Motion to Dismiss: The Court held that while the court has the discretion to defer the hearing and determination of a motion to dismiss if the ground therefor is not indubitable, such deferment is in excess of jurisdiction if the ground for the motion to dismiss is lack of jurisdiction or lack of cause of action, since the allegations of the complaint are deemed admitted and the motion to dismiss can be resolved without waiting for trial on the merits. However, this finding merely constituted a technical victory for petitioner Villanueva, as it was rendered moot and academic by the ruling on the merits of the grounds raised in his motion to dismiss.

• Validity of Subpoenae: The Court applied the joint resolution in Republic vs. Sandiganbayan and Eduardo Cojuangco, Jr. which upheld the right of a stockholder of a sequestered company to inspect and/or examine the records of a corporation pursuant to Section 74 of the Corporation Code. The Court found nothing in Executive Orders Nos. 1, 2 and 14, as well as in BASECO, to indicate an implied amendment of the Corporation Code, much less an implied modification of a stockholder's right of inspection. The only express limitations on the right of inspection are: (1) the right should be exercised at reasonable hours on business days; (2) the person demanding the right has not improperly used any information secured through any previous examination of the records; and (3) the demand is made in good faith or for a legitimate purpose.

• Referral of Factual Issues: The Court held that the issues raised in G.R. No. 83831, including the motion for contempt filed by Eduardo M. Villanueva against Jose L. Africa, Manuel Nieto and Victor Africa, are factual in nature and are best ventilated before the Sandiganbayan, the proper forum where both parties can substantiate their respective claims. The Court is not a trier of facts. Considering that Civil Cases Nos. 0048 and 0050 arose from the partial sequestration of ETPI, all the factual matters alleged in these cases are best threshed out in the main case, Civil Case No. 0009, as incidents therein, to save time and efforts in the presentation of evidence and to avoid multiplicity of suits.

• Exclusive and Original Jurisdiction of the Sandiganbayan over Ill-Gotten Wealth Cases — Under Section 2 of Executive Order No. 14, all cases of the PCGG regarding funds, moneys, assets, and properties illegally acquired or misappropriated by former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents, or nominees, whether civil or criminal, are lodged within the exclusive and original jurisdiction of the Sandiganbayan. All incidents arising from, incidental to, or related to such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court. The Court applied this doctrine to hold that injunction suits filed by private parties questioning PCGG acts in sequestered corporations must be brought before the Sandiganbayan.

• Non-Suability of the State — The doctrine of state immunity from suit applies only in actions resulting in adverse consequences on the public treasury, whether in the disbursement of funds or loss of property. The Court held that the PCGG cannot hide behind this doctrine to bar plaintiffs from seeking affirmative reliefs where the complaints do not seek money judgments from nor demand affirmative performance by the State in its political capacity, and where claims for damages are directed against individual defendants in their personal capacities.

• Res Judicata / Bar by Prior Judgment — For a prior judgment to constitute a bar to a subsequent case, the following requisites must concur: (1) it must be a final judgment or order; (2) the court rendering the same must have jurisdiction over the subject matter and over the parties; (3) it must be a judgment or order on the merits; and (4) there must be between the two cases identity of parties, subject matter, and causes of action. The Court held that the doctrine did not apply because the prior judgment in G.R. No. 82188 was not a judgment on the merits.

• Right of Inspection of Corporate Records — Pursuant to Section 74 of the Corporation Code, a stockholder of a sequestered company has the right to inspect and/or examine the records of a corporation. The only express limitations are: (1) the right of inspection should be exercised at reasonable hours on business days; (2) the person demanding the right to examine and copy excerpts from the corporate records and minutes has not improperly used any information secured through any previous examination of the records of such corporation; and (3) the demand is made in good faith or for a legitimate purpose. Nothing in Executive Orders Nos. 1, 2 and 14 indicates an implied amendment of the Corporation Code.

• "Under Section 2 of the President's Executive Order No. 14 issued on May 7, 1986, all cases of the Commission regarding 'the Funds, Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees' whether civil or criminal, are lodged within the 'exclusive and original jurisdiction of the Sandiganbayan' and all incidents arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan's exclusive and original jurisdiction, subject to review on certiorari exclusively by the Supreme Court." — This is the canonical formulation of the Sandiganbayan's exclusive and original jurisdiction over ill-gotten wealth cases and all related incidents, quoted from PCGG vs. Peña and applied as the controlling doctrine in this case.

• "The doctrine of state immunity from suit applies only in actions resulting in adverse consequences on the public treasury, whether in the disbursement of funds or loss of property." — This passage defines the scope of the State's immunity from suit, which the Court applied to hold that the PCGG cannot invoke immunity to bar the injunction suits since they do not seek money judgments against the State.

• "Incorporating a monetary claim in the complaint will not convert the special civil action for injunction into a mere claim for damages which would otherwise call for the application of the rule on non-suability of the State." — This passage establishes that the inclusion of a damages claim against individual defendants does not transform an injunction suit into a suit against the State, preserving the Sandiganbayan's jurisdiction.

• "This Court is not a trier of facts." — This passage articulates the Court's refusal to resolve factual issues raised in the original petition for injunction, referring the matter to the Sandiganbayan where both parties can substantiate their respective claims.

• PCGG vs. Hon. Emmanuel G. Peña, etc., et al., 159 SCRA 556 (1986) — Controlling precedent establishing the exclusive and original jurisdiction of the Sandiganbayan over cases involving ill-gotten wealth and all incidents arising from, incidental to, or related to such cases.
• PCGG vs. Hon. Aquino, Jr., etc., et al. and Marcelo Fiberglass Corporation vs. PCGG, G.R. Nos. 77916 and 78753, 163 SCRA 363 (1988) — Followed; rejected the contention that Section 2 of Executive Order No. 14 vested the Sandiganbayan with jurisdiction only over civil and criminal cases filed by the PCGG but not over special civil actions filed by private parties.
• Soriano III, et al. vs. Hon. Yuzon, et al.; Cojuangco, Jr., et al. vs. SEC, et al.; Ganay vs. PCGG; Board of Directors of San Miguel Corporation, et al. vs. SEC, et al.; Cojuangco, Jr., et al. vs. Hon. Laggui, etc., et al.; Neptunia Corporation, Ltd., et al. vs. PCGG, et al., 164 SCRA 226 (1988) — Followed; reiterated that exclusive jurisdiction conferred on the Sandiganbayan extends to all incidents arising from, incidental to, or related to cases involving ill-gotten wealth.
• BASECO vs. PCGG, et al., 150 SCRA 181 (1987) — Cited for the ruling on the scope and extent of the authority of the Sandiganbayan to issue injunctive writs on matters involving the exercise and performance of the powers and functions of the PCGG as conservator.
• Republic vs. Sandiganbayan and Eduardo Cojuangco, Jr., G.R. Nos. 88809 and 88858, July 10, 1991 — Applied squarely; upheld the right of a stockholder of a sequestered company to inspect and/or examine the records of a corporation pursuant to Section 74 of the Corporation Code.
• Foster Parents Plan International/Bicol, et al. vs. Hon. Demetriou, et al., 142 SCRA 505 (1986); Edward J. Nell Co. vs. Cubacub, et al., 14 SCRA 419 (1965); Abo vs. Philame (KG) Employees, et al., 13 SCRA 120 (1965); Campos Rueda Corporation vs. Hon. Bautista, et al., 6 SCRA 240 (1962) — Cited for the rule that deferment of a motion to dismiss is in excess of jurisdiction if the ground is lack of jurisdiction or lack of cause of action.
• Pacific Banking Corp. vs. Mendoza, et al., 168 SCRA 709 (1988); Republic vs. Hon. Sebastian, etc., et al., 166 SCRA 140 (1988); Eternal Gardens Memorial Parks Corporation vs. Intermediate Appellate Court, et al., 165 SCRA 439 (1988) — Cited for the requisites of the doctrine of res judicata.
• Republic vs. Sandiganbayan, et al., 184 SCRA 382 (1990); Moreno, et al. vs. Hon. Macadaeg, et al., 7 SCRA 700 (1963); Ruiz, et al. vs. Cabahug, 102 Phil. 110 (1957) — Cited for the rule that incorporating a monetary claim in the complaint will not convert a special civil action for injunction into a mere claim for damages.
• Begosa vs. Chairman, Philippine Veterans Administration, et al., 32 SCRA 466 (1970); Johnson vs. Turner, 94 Phil. 807 (1954); Marvel Building Corporation vs. Philippine War Damage Commission, 85 Phil. 27 (1949) — Cited for the rule that the doctrine of state immunity from suit applies only in actions resulting in adverse consequences on the public treasury.

• Section 2, Executive Order No. 14 — Vests the Sandiganbayan with exclusive and original jurisdiction over all cases of the PCGG regarding ill-gotten wealth, whether civil or criminal, and all incidents arising from, incidental to, or related to such cases. Applied to hold that the injunction suits fall within the Sandiganbayan's jurisdiction.
• Section 4, Presidential Decree No. 1606, as amended by Presidential Decree No. 1891 — Defines the limited or special jurisdiction of the Sandiganbayan, which was enlarged by Executive Order No. 14. Cited by the PCGG to challenge jurisdiction, but the Court held that the Sandiganbayan's jurisdiction extends to incidents related to ill-gotten wealth cases.
• Section 74, Corporation Code — Guarantees the right of a stockholder to inspect and/or examine the records of a corporation. Applied to uphold the validity of the subpoenae duces tecum and ad testificandum issued by the Sandiganbayan against the PCGG.
• Section 3, Rule 16, Rules of Court — Provides that the court has the discretion to defer the hearing and determination of a motion to dismiss if the ground therefor is not indubitable. Cited to explain the general rule, from which the Court carved out the exception for motions based on lack of jurisdiction or lack of cause of action.
• Section 4, Rule 39, Rules of Court and Act 26, Civil Code — Cited as authority for original actions for injunction brought specifically to restrain or command the performance of an act, which the complaints in Civil Cases Nos. 0048 and 0050 were found to be.

Narvasa, C.J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Padilla, Bidin, Griño-Aquino, Medialdea and Davide, Jr., JJ., concurred.

Romero and Nocon, JJ., took no part. No dissenting opinions were recorded in the text.