2/7/22, 3:24 PM G.R. No.

173082

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Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 173082               August 6, 2014

PALM AVENUE HOLDING CO., INC., and PALM A VENUE REALTY AND DEVELOPMENT CORPORATION,
Petitioners,

vs.
SANDIGANBAYAN 5TH Division, REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL
COMMISSION ON GOOD GOVERNMENT (PCGG), Respondent.

x-----------------------x

G.R. No. 195795

REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD

GOVERNMENT, Petitioner,

vs.
HON. SANDIGANBAYAN, PALM A VENUE REALTY and DEVELOPMENT CORPORATION and PALM AVENUE
HOLDING COMPANY, INC., Respondents.

DECISION

PERALTA, J.:

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 Realtyand Development Corporation (the Palm
Companies), through a Petition for Certiorari under Rule 65 of the Rules of Court, seek to annul the Resolutionsof
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
preliminaryinjunction, 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:

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 PalmCompanies.
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 subsequentlyaffirmed
this order to implead in G.R. No. 906675 on November 5, 1991. Pursuantto 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:

WHEREFORE, in view of the foregoing:

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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 issuedby 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 TOLIFT 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.

SO ORDERED.6

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
withcertainty 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:

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.

SO ORDERED.8

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:

[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:

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.10 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:

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xxxx

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 liftedif no judicial action or proceeding iscommenced 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,12 which remains good law, reiterates the necessity of the Republic to
actuallyimplead 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 distinctand 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.15 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 illgotten. The effect of the
lifting ofthe sequestration will merely be the termination of the government’s role asconservator. 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.16

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 ofthe writ of sequestration against the assets of the Palm
Companies.

Since the Republic did not originallyinclude 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 ownersof the remaining disputed shares. That
Romualdez is consideredas their true or real owner is just a claim that still needs to be proved in court.17 Section 2,
Rule 3 of the Rules of Court states:

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 beprosecuted 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 toclarify certain matters in its
amended complaint. Upon submission of the bill of particulars, the Palm Companies filed a motion to dismiss the

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Republic’s complaint. Later, the Sandiganbayan,sustained by the Court in G.R. No. 189771, granted said motion to
dismiss. The Sandiganbayan thus pronounced:

xxxx

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.

xxxx

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 abovequoted 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,19 petitioner Virata filed a motion for a bill of
1âwphi1

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 allegationstherein 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 proceduralrules. 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:

Sec. 3. Failure to prosecute. — If plaintiff failsto 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 atbar 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 ofparticulars 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 tothem. By the dismissal of the case as against the Palm Companies, there is ipso facto no
more writ of sequestration to speak of.

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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 tum a blind eye to the demands of the law, justice,
and faimess.23

WHEREFORE, 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 A venue
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.

DIOSDADO M. PERALTA
Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson

MARTIN S. VILLARAMA, JR.* JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARVIC MARIO VICTOR F. LEONEN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes
*
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 memberof 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.

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5
Republic v. Sandiganbayan, Palm Avenue Realty Development Corporation and Palm Avenue Holding
Company.
6
Rollo (G.R. No. 173082), pp. 40-41.
7
Rollo (G.R. 195795), pp. 180-181.
8
Id. at 43. (Emphasis in the original)
9
Rollo (G.R. No. 173082), p. 7.
10
Rollo (G.R. No. 195795), p. 19.
11
Emphasis ours.
12
353 Phil. 80, 92 (1998).
13
PCGG v. H.E. Heacock, G.R. No. 165878, March 30, 2010, 617 SCRA 150, 159-160.
14
PCGG v. Sandiganbayan, 418 Phil. 8, 19 (2001).
15
PCGG v. Sandiganbayan, 393 Phil. 683, 691-692.
16
PCGG v. Sandiganbayan, supranote 14, at 20.
17
Rollo (G.R. No. 195795), pp. 75-76.
18
Id. at 173-175. (Emphasis ours)
19
339 Phil. 47 (1997).
20
Virata v. Sandiganbayan, supra, at 61-62.
21
Emphasis ours.
22
Republic v. Sandiganbayan, G.R. No. 154560, July 13, 2010.
23
Virata v. Sandiganbayan, supra note 19, at 74.

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