LEON M. GARCIA, JR., PETITIONER, VS. THE SANDIGANBAYAN, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, AS REPRESENTED BY CHAIRMAN MAGTANGGOL C. GUNIGUNDO, THE BOARD OF DIRECTORS OF…

The chief issue raised in this case is whether the Sandiganbayan
has jurisdiction over the special civil actions of prohibition, mandamus, and
quo warranto.

The antecedent facts as summarized by the Sandiganbayan in its
challenged decision are as follows:

“1. On June 26, 1990 petitioner Garcia was
elected to the Board of Directors of the UCPB^[1]
at a regular meeting thereof to fill a vacancy therein as a PCGG ^[2]
nominee;

2.     
Almost three (3) years
later, petitioner Garcia received a letter from PCGG Chairman Gunigundo asking
him to resign from the UCPB Board in order that a replacement might be made in
his stead;

3. Garcia refused to resign and instead
asserted in his reply letter dated May 21, 1993 his membership in the Davao
City Chapter of the COCOFED and, therefore, his representation of the coconut
planters of Davao City;

4.     
By a letter dated July 6, 1993, PCGG Chairman Gunigundo
informed Garcia (and two other directors) that his membership in the Board of
Directors of UCPB had been terminated upon instruction by the Office of the
President, copy of which letter was furnished to the Chairman and the Corporate
Secretary of the UCPB;

5.     
By a letter dated July 8, 1993, Garcia (together with two
other directors whose services as directors had also been terminated) wrote
PCGG Chairman Gunigundo reiterating their refusal to step down from the Board
and announced that they would wait for the next regular stockholders’ meeting
since, according to Garcia, he had a fixed term as a director;

6.     
In the same letter, Garcia further stated that since he and
his fellow directors were not mere agents of the PCGG, their removal would have
to be done in the manner provided by the Corporation Code, citing the case of
Baseco v. PCGG (150 SCRA 181) that, at all events, the PCGG cannot change the
composition of the Board of Directors of sequestered corporations;

7.     
At a special meeting of the Board of Directors — which
petitioner Garcia claims to have been held on July 22, 1993 without notice to
him — petitioner and another director were deemed terminated as members of the
UCPB Board and were duly replaced, petitioner Garcia in particular by
respondent Cesar A. Sevilla;

8.     
While he may have been elected to the Board through the action
of the Board, petitioner claims that he can be removed therefrom only by a vote
of the stockholders representing 2/3 of the outstanding capital stock at a
regular stockholders’ meeting or at a special stockholders’ meeting called for
that purpose.”^[3]

The petitioner then filed with the Sandiganbayan on 20 August
1993 a petition for prohibition, mandamus, quo warranto, damages and
attorney’s fees with preliminary injunction and a prayer for the issuance of a
temporary restraining order^[4]
(docketed as SB No. 0154) against the PCGG, Cesar Sevilla, and others.^[5]
The prayer of the petition reads:

“WHEREFORE, PREMISES CONSIDERED, it is most respectfully
prayed that:

Before hearing:

A temporary restraining order be issued against respondent Cesar A.
Sevilla from performing the duties of a member of the Board of Directors and
against the PCGG and Board Members Cesar A. Sevilla, Tirso D. Antiporda, Jr.,
Juan J. Carlos, Gloria C. Carreon, Renato L. Cayetano, Ma. Corazon K. Imperial,
Eduardo K. Litonjua, Sr., Jesus N. Manalastas, Jose V. Romero, Jr., Celso L.
Samaniego, Daniel P. Santiago, Jr., and Oscar F. Santos from recognizing Cesar
A. Sevilla as a member of the Board of Directors.

After hearing:

(1)     
a writ of prohibition be issued (a) to prohibit respondent
PCGG chairman and the members of the Board of Directors from recognizing
respondent Cesar A. Sevilla as a member of the Board of Directors of the Bank,
and (b) Cesar A. Sevilla from performing the duties of a member of Board of
Directors.

(2)     
to compel respondents to recognize petitioner as a director of
UCPB.

(3)     
to declare respondent Cesar A. Sevilla not entitled to said
office and ousting him therefrom.

(4) to declare that the herein petitioner is entitled
to said office and placing him in possession thereof.

(5)     
to hold all the respondents solidarily liable to pay
petitioner the costs of suit and expenses of litigation and attorney’s fees in
the amount of P50,000.00 because the acts or omissions of the respondents have
compelled the petitioner to litigate and thus incur expenses to protect his
rights and interests.

(6)     
to hold all the respondents solidarily liable to pay nominal,
temperate and exemplary damages, by way of example or correction for the public
good and for unlawful and illegal acts committed and to be awarded at the
discretion of this Honorable Court.

(7)     
to grant such and other remedies as may be just and equitable
in the premises.”^[6]

Perceiving that the issue raised was not just the propriety of the
petitioner’s separation or removal as director of the UCPB but the court’s own
jurisdiction over the subject matter, the Sandiganbayan set the petition
“for hearing on 3 September 1993 on the issuance of a restraining order
with the issue of jurisdiction indicated as primordial.”^[7]
At the hearing on the said date, it expressed its concern as to “its
jurisdiction over the petition upon certain premises, namely, whether or not
the acts complained of by petitioner Garcia, which do not appear to be
factually disputed by the respondents herein, constitute merely acts of the
Board, which would make the conflict an intra­corporate problem cognizable only
by the Securities and Exchange Commission or, considering the peculiarity of
the circumstances, particularly the alleged totality of the dominance by the
PCGG over the United Coconut Planters Bank, the acts attributed to the Board of
Directors by the petitioner are acts of the PCGG under the mantle of its
special functions under Executive Orders No. 1, No. 2, No. 14 and No.
14-A.” It then required the respondents to submit their “memoranda
and/or oppositions and/or answers” to the petition and the petitioner to
submit his memorandum of authorities herein, immediately after which the
petition would be deemed submitted for decision.^[8]

After the parties had complied with the above requirements, the
Sandiganbayan (First Division) promulgated on 1 October 1993 its decision^[9]
dismissing the petition because “both the allegations in the petition and
the relevant supporting annexes demonstrate that the issues presented by the
petitioner refer solely to the election or appointment of directors in a
corporation and, therefore, within the original and exclusive jurisdiction of
the Securities and Exchange Commission under Section 5(c) of P.D. 902-A, as
amended.” It found such issues as having “nothing to do, except very
peripherally, with the PCGG’s functions of preserving property under
sequestration or of determining the ill-gotten character of propriety [sic]
already under sequestration.”

In view of its relevance to the proper disposition of this
petition, it is well to quote the Sandiganbayan’s disquisition supporting its
judgment:

“It is the view of this Court that the issue brought by the
petitioner to the bar is one that concerns the acts of the Board of Directors
of a corporation as such with respect to one of its members and, therefore,
under the exclusive jurisdiction of the Securities and Exchange
Commission. Pursuant to P.D. No. 902-A
as amended, the Securities and Exchange Commission ‘… shall have original
and exclusive jurisdiction to hear and decide cases involving:

x x x

(c)     Controversies in the election or
appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.’ [Sec. 5(c)].

x x x

The fact that this Court for its part has exclusive original
jurisdiction over cases — whether civil or criminal — filed or prosecuted by
the PCGG does not set it in conflict with the authority of the Securities and
Exchange Commission under its own Charter.

Undoubtedly, the Supreme Court has affirmed the exclusivity of this
Court’s jurisdiction over cases filed by PCGG as well over the very acts of the
PCGG therein, thus:

‘… Necessarily, those who wish to question or challenge the Commission’s
acts or orders in such cases must seek recourse to the same
court, the Sandiganbayan, which is vested with exclusive and original
jurisdiction …’ (PCGG v. Pena, 159 SCRA 556, 564, underscoring supplied).

The point of this, of course, is the juridical
abhorrence to split jurisdictions resulting in multiplicity of suits (id., p.
565).

Indeed, even in proceedings on issues which appeared at first blush
to have been peripheral to the PCGG’s exercise of its authority, the Supreme
Court has withdrawn cases from the Regional Trial courts and even from the
Securities and Exchange Commission where it turned out that the conflict among
the parties was one ‘… arising from, incidental to, or related to such cases
…’ i.e., the cases involving the recovery of alleged ill-gotten wealth ‘…
such as the dispute over the sale of shares, the propriety of the issuance of
ancillary writs of provisional remedies relative thereto, the sequestration
thereof, which may not be made the subject of separate actions or proceedings
in another forum …’ (Soriano III v. Yuzon, 164 SCRA 226, 242).

Having said all of the above, however, this Court itself has also
drawn the limits of its authority to hear matters when the PCGG would somehow
be involved.

Thus, this Court was upheld by the Supreme Court in the case of
Holiday Inn v. Sandiganbayan (186 SCRA 447) when it refused to look into the
propriety of a contract entered into by the New Riviera Hotel and Development
Co., Inc., which was sequestered by the PCGG and where two-thirds of the Board
of Directors were PCGG nominees. In a
ruling that was approved of by the Supreme Court, this Court said:

‘ “x x x. This court
is of the view that its jurisdiction refers to acts of the PCGG acting as such whether
alone or with other persons, natural or juridical, and not generally where PCGG
representatives act as part of another juridical person or entity. A rule of thumb might be thus: if the PCGG can be properly impleaded on a
cause of action asserted before this Court as a distinct entity, then this
Court would generally exercise jurisdiction; otherwise, it would not, because,
then the ‘PCGG character’ of the act of omission in question may, at best, be
only incidental.

“After all, the presence of PCGG representatives in
sequestered companies does not automatically tear down the corporate veil that
distinguishes the corporation from its officers, directors or
stockholders. Corporate officers
whether nominated by the PCGG or not act, insofar as third parties are
concerned, are corporate officers. Contracts entered into by the San Miguel corporation, for example, in
connection with its poultry operations and the cancellations thereof, are not
PCGG activities which would justify the invocation of this Court’s
jurisdiction, even if the contract or the suit were unanimously approved by its
board of directors where PCGG representatives sit.” (Resolution, Annex
‘O’, p. 143, Rollo).

– Holiday Inn (Phils.),

Inc. vs. Sandiganbayan,

186 SCRA 447, 452’

Going farther, the Supreme Court in that case ruled that the
Sandiganbayan would not have jurisdiction over issues which did not relate to
the propriety of the sequestration nor to the ‘ill-gotten’ or ‘crony related’
character of the subject of the PCGG’s acts. (id. p. 453).

In the instant petition, petitioner Garcia protests the act of the
Board of Directors of the UCPB on July 22, 1993 which resulted in his ouster
from the UCPB Board.

While it is not denied that the PCGG through its Chairman had asked
petitioner Garcia to resign, Garcia had refused to do so; while PCGG Chairman
Gunigundo had written petitioner Garcia on July 6, 1993 to tell him that his
representation of the Government in the UCPB Board had been terminated,
petitioner did not there and then cease to be a member of the UCPB Board of
Directors. Instead, it was the
Resolution (No. 66-93) of the Board of Directors at its meeting on July 22,
1993 which replaced petitioner Garcia with respondent Cesar A. Sevilla in the
Board, albeit undoubtedly upon the request or, if petitioner pleases, upon
instigation of the PCGG Chairman.

Respondent members of the Board of Directors Tirso D. Antiporda, et
al., have well pointed out that while PCGG Chairman Gunigundo had also
terminated the representation of Director Manuel Concordia, as Gunigundo indeed
had in his letter of July 6, 1993 (Annex ‘C’, Petition), the UCPB Board
declined to follow that lead resulting thus in the termination only of
petitioner Garcia and Wencelito T. Andanar (Annex ‘F’, Petition).

We then have a situation, both as a matter of law and as a matter
of fact, where an entity other than the PCGG — the UCPB Board of Directors —
acting independently although in acquiescence to or accommodation of the behest
of the PCGG. We, therefore, have clearly
a simple case of a Board of Directors ousting two of its members for reasons
which it had deemed proper.

Whether the Board did act properly or not in this regard has
nothing to do, except very peripherally, with the PCGG’s functions of
preserving property under sequestration or of determining the ill-gotten
character of propriety [sic] already under sequestration. In fact, both the allegations in the
petition and the relevant supporting annexes demonstrate that the issues
presented by the petitioner refer solely to the election or appointment of
directors in a corporation and, therefor[e], within the original and exclusive
jurisdiction of the Securities and Exchange Commission under Sec. 5(c) of P.D.
902-A, as amended.”

His motion for the reconsideration^[10]
of the decision having been denied in the resolution of the Sandiganbayan of 9
February 1994,^[11]
the petitioner then filed the instant petition. He asks this Court to give due course to the petition and to
order the Sandiganbayan “to exercise jurisdiction over the petition for
prohibition, mandamus, quo warranto, etc. in the case of Leon M.
Garcia, Jr. vs. PCGG, et al. in S.B. No. 0154.”^[12]

He imputes upon the Sandiganbayan the commission of the following
errors:

“(1)  X X X IN RULING THAT IT DOES NOT HAVE JURISDICTION
OVER THE PETITION FOR PROHIBITION, MANDAMUS, QUO WARRANTO ENTITLED LEON
M. GARCIA, JR. VS. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG)
PARTICULARLY IN RESOLVING THE PROPRIETY OF PETITIONER’S SEPARATION OR REMOVAL
FROM HIS POSITION.

(2)    X X X IN NOT RULING THAT THE ACTS COMPLAINED
OF ARE DIRECT AND OVERT ACTS OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT
(PCGG) IN RELATION TO ITS POWERS AND FUNCTIONS OF SEQUESTRATION HENCE WITHIN
THE JURISDICTION OF THE SANDIGANBAYAN.

(3)    X X X IN RULING THAT THE REMOVAL OF
PETITIONER AS MEMBER OF THE BOARD OF DIRECTORS BY THE PCGG AND HIS REPLACEMENT
BY THE UCPB BOARD OF DIRECTORS IS WITHIN THE ORIGINAL AND EXCLUSIVE
JURISDICTION OF THE SECURITIES AND EXCHANGE COMMISSION.”

It is the contention of the petitioner that the Sandiganbayan has
jurisdiction over his petition because (1) “the acts complained of are
direct and overt acts of the respondent PCGG in relation to its powers and
functions of sequestration,” (2) the petitioner’s cause of action against
the PCGG “arose from its act of removing and directing the Board to elect
his replacement,” and (3) the PCGG as the conservator of sequestered UCPB
shares of stock, directly exercised its power of sequestration of the UCPB
shares of stock.” Accordingly, citing “PCGG vs. Securities and
Exchange Commission, G.R. No. 82188, January [should be June] 30, 1988, p.
15,” and “Holiday Inn vs. The Sandiganbayan, 186 SCRA
447,” the petitioner posits the view that the Sandiganbayan has
jurisdiction over the case. He further
contends that since the PCGG is the “real party in interest” and it
was its “act… in abruptly removing the petitioner from his position and
its urgent importunings that prompted UCPB Board of Directors to elect Cesar
Sevilla in his place,” then, following “PCGG vs. SEC,” the
SEC would have no jurisdiction over his petition since the PCGG, “as
co-equal body, is a co-equal entity over which actions the SEC has no power of
control.”

This Court required the parties to Comment on the petition.

In their Comment filed on 14 June 1994, the private respondents
maintain that the controversy falls within the exclusive and original
jurisdiction of the SEC since it involves a protest against a corporate act to
replace a member of the Board of Directors.^[13]

In its Comment filed by the Office of the Solicitor General,
respondent PCGG submits that:

“THE SOLE ISSUE POSED FOR RESOLUTION IS WHETHER OR NOT
RESPONDENT SANDIGANBAYAN HAS JURISDICTION OVER THE PETITION FOR PROHIBITION, MANDAMUS,
QUO WARRANTO, ETC. FILED BY PETITIONER.”^[14]

Its arguments to support the negative of the proposition are
actually anchored not on the Sandiganbayan’s lack of jurisdiction to issue the
extraordinary writs but on the fact that the petition in SB No. 0154
“essentially assails the validity of Resolution No. 66-93 of the UCPB
Board which removed petitioner as a director thereat” and “the
allegations therein have nary a bearing on the question of whether or not the
sequestered shares in UCPB are ill-gotten by the specified defendants in Civil
Case No. 0033 (Republic vs. Eduardo Cojuangco, et al.) pending before
respondent Sandiganbayan”; “it is thus evident that the subject
matter of the petition below refers to the corporate act of the UCPB Board and
not that of PCGG’s as a public or government entity.” Otherwise stated,
“the petition below is not thus per se a PCGG case,”
and in light of Holiday Inn (Phils.), Inc. vs. Sandiganbayan,^[15]
the Sandiganbayan has no jurisdiction over it.

This Court resolved to give due course to this petition and decide
it on the basis of the pleadings already submitted which sufficiently expound
the parties’ respective views and positions.

As this Court sees it, the larger and more crucial issue in this
case is not just the separation or removal of the petitioner as a director of
the UCPB representing the PCGG, but, as stated in the exordium of this ponencia,
the jurisdiction of the Sandiganbayan over the special civil actions of
prohibition, mandamus, and quo warranto.

Jurisdiction, which is the authority to hear and the right to act
in a case,^[16]
is conferred by the Constitution and by law.^[17]
Although the Sandiganbayan, a constitutionally-mandated court,^[18]
is a regular court,^[19]
it has, nevertheless, only a special or limited jurisdiction. As the Sandiganbayan puts it in the
challenged decision:

“its jurisdiction encompasses only
those enumerated under Section 4 of P.D. No. 1606 as amended and those provided
in special laws such as R.A. No. 7080 on ‘Plunder’ and the enabling enactments
of Presidential Commission on Good Government (PCGG) particularly Executive
Order No. 14 as amended (May 7, 1986), especially Secs. 1 and 2 thereof which
read:

‘SECTION 1. Any provision
of the law to the contrary notwithstanding, the Presidential Commission on Good
Government, with the assistance of the Office of the Solicitor General and
other government agencies, is hereby empowered to file and prosecute all cases
investigated by it under Executive Order No. 1, dated February 12, 1986, and
Executive Order No. 2, dated March 12, 1986, as may be warranted by its
findings.

SECTION 2. The Presidential
Commission on Good Government shall file all such cases, whether civil or
criminal, with the Sandiganbayan, which shall have exclusive and original
jurisdiction thereof.’ “

Section 4 of P.D. No. 1606, as amended by
P.D. Nos. 1860 and 1861, provides as follows:

“SEC. 4. Jurisdiction. — The Sandiganbayan shall
exercise:

(a) Exclusive original jurisdiction in all cases involving:

(1)     Violations of Republic Act No. 3019, as
amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic
Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code;

(2)     Other offenses or felonies committed by
public officers and employees in relation to their office, including those employed
in government-owned or controlled corporations, whether simple or complexed
with other crimes, where the penalty prescribed by law is higher than prision
correccional or imprisonment for six (6) years, or

a fine of P6,000.00;
PROVIDED, HOWEVER, that offenses or felonies mentioned in this paragraph where
the penalty prescribed by law does not exceed prision correccional or
imprisonment for six (6) years or a fine of P6,000.00 shall be tried by the
proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court
and Municipal Circuit Trial Court.

(b) Exclusive appellate jurisdiction:

(1)     On appeal, from the final judgments,
resolutions or orders of the Regional Trial courts in cases originally decided
by them in their respective territorial jurisdiction.”

(2)     By petition for review, from the final judgments, resolutions or orders of the
Regional Trial Courts in the exercise of their appellate jurisdiction over
cases originally decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.

It is settled that the authority to issue writs of certiorari,
prohibition, and mandamus involves the exercise of original
jurisdiction which must be expressly conferred by the Constitution or by
law. In Garcia vs. De Jesus,^[20]
this Court stated:

“In the Philippine setting, the authority to issue Writs of Certiorari,
Prohibition and Mandamus involves the exercise of original
jurisdiction. Thus, such authority has
always been expressly conferred, either by the Constitution or by law. As a matter of fact, the well-settled rule
is that jurisdiction is conferred only by the Constitution or by law (Orosa,
Jr. v. Court of Appeals, G.R. Nos. 76828-32, 28 January 1991; Bacalso v.
Ramolete, G.R. No. L-22488, 26 October 1967, 21 SCRA 519). It is never derived by implication. Indeed, ‘(w)hile the power to issue the writ
of certiorari is in some instance conferred on all courts by
constitutional or statutory provisions, ordinarily, the particular courts which
have such power are expressly designated’ (J. Aquino’s Concurring
Opinion in Pimentel, supra, citing 14 C.J.S. 202; Italics ours).

Thus, our Courts exercise the power to issue Writs of Certiorari,
Prohibition and Mandamus by virtue of express constitutional grant or
legislative enactments. To enumerate:

(1)     Section 5[1], Article VIII of the 1987
Constitution conferred upon this Court such jurisdiction;

(2) Section
9[1] of Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980,
to the Court of Appeals (then Intermediate Appellate Court);

(3)     Section 21[1] of the said Act, to Regional
Trial Courts;

(4)     Section 5[1] of Republic Act No. 6734, or
the Organic Act for the Autonomous Region in Muslim Mindanao, to the newly
created Shari’ah Appellate Court; and

(5)     Article
143[e], Chapter I, Title I, Book IV of Presidential Decree No. 1083, or the
Code of Muslim Personal Law, to Shari’ah District Courts.”

With respect to petitions for quo warranto and habeas
corpus, original jurisdiction over them is expressly conferred to this
Court by Section 5(1), Article VIII of the Constitution and to the Court of
Appeals and the Regional Trial Courts by Section 9(1) and Section 21(1),
respectively, of B.P. Blg. 129.

In the absence then of a specific statutory grant of jurisdiction
to issue the said extraordinary writs, the Sandiganbayan, as a court with only
special and limited jurisdiction, cannot exercise jurisdiction over the
petition for prohibition, mandamus and quo warranto filed by
petitioner.

Having reached the foregoing conclusion, discussions on the other
issues raised would no longer be necessary.

WHEREFORE, the instant petition is DISMISSED. No pronouncements as to costs.

SO ORDERED.

Cruz, (Chairman), Bellosillo, Quiason, and Kapunan, JJ., concur.

^[1]
United Coconut Planters Bank.

^[2]
Presidential Commission on Good Government.

^[3]
Rollo, 146-148.

^[4]
Annex “G” of Petition; Rollo, 39-54.

^[5]
Tirso Antiporda, Jr., Juan Carlos, Gloria Carreon, Renato Cayetano, Corazon Imperial,
Eduardo Litonjua, Sr., Jesus Manalastas, Jose Romero, Jr., Celso Samaniego,
Daniel P. Santiago, Jr., and Oscar Santos, who are Directors and Officers of
the UCPB.

^[6]
Rollo, 47-48.

^[7]
Id.,148.

^[8]
Order of 3 September 1993, Annex “I-1” of Petition; Rollo,
69-70.

^[9]
Annex “M-1” of Petition; Id., 146-155. Per Presiding Justice Francis E. Garchitorena, with the
concurrence of Associate Justices Jose S. Balajadia and Sabino R. de Leon, Jr.

^[10]
Annex “N” of Petition; Rollo, 156-166.

^[11]
Annex “Q” of Petition; Id., 181.

^[12]
Id., 24.

^[13]
Rollo, 192.

^[14]
Id., 232.

^[15]
186 SCRA 447 [1990].

^[16]
FLORENZ D. REGALADO, Remedial Law
Compendium, vol. I, Fifth Revised ed., 5; CAMILO D. QUIASON, Philippine
Courts and Their Jurisdictions, 1986 ed., 5, citing
several cases.

^[17]
U.S. vs. Pagdayuman, 5 Phil. 265
[1905]; U.S. vs. Arceo, 6 Phil. 29 [1906]; People vs. Casiano, 1
SCRA 478 [1961]; People vs. Mariano, 71 SCRA 600 [1976]; People vs.
Estrebella, 164 SCRA 114 [1988]; People vs. Tañada, 166 SCRA 360 [1988];
People vs. Bugtong, 169 SCRA 797 [1989]; Salas vs. Castro, 216
SCRA 198 [1992].

^[18]
REGALADO, op. cit., 2.

^[19]
Republic of the Philippines vs.
Asuncion, G.R. No. 108208, 11 March 1994.

^[20]
206 SCRA 779, 786-787 [1992].