PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, PETITIONER, VS. SANDIGANBAYAN (SECOND DIVISION) AND RODOLFO ARAMBULO (DECEASED), SUBSTITUTED BY RONALD L. ARAMBULO, RESPONDENTS.

Presidential Commission on Good Government versus Sandiganbayan and Arambulo

The Case

This is a petition for review on certiorari brought by the Presidential Commission on Good Government, the PCGG, against the Second Division of the Sandiganbayan and Rodolfo Arambulo, later substituted by Ronald L. Arambulo. The PCGG asks the Supreme Court to reverse the Sandiganbayan's dismissal of its new complaint for recovery of ill-gotten wealth, which sought to recover one hundred forty-five million shares of stock in Piedras Petroleum Company, Incorporated registered in Arambulo's name. The case matters because it teaches the two faces of res judicata — bar by prior judgment and conclusiveness of judgment — and because it treats the repeated filing of suits already resolved as a contumacious form of forum shopping.

Procedural History

The long trail begins in the Sandiganbayan, in the case against Roberto Benedicto and the Marcoses, where the PCGG had sequestered the Piedras shares. When Arambulo moved to execute the compromise agreement in that earlier case, the Sandiganbayan ruled in his favor, declaring him the subscriber-owner of the shares free of any sequestration lien, and ordered the PCGG to release his dividends and to stop interfering with his ownership. The PCGG challenged that ruling before the Supreme Court, which dismissed the petition and effectively affirmed the Sandiganbayan.

Undaunted, the PCGG filed a new complaint for recovery of ill-gotten wealth against Arambulo, seeking the very same shares. Arambulo moved to dismiss, alleging that the ownership of the shares had already been settled and that the PCGG was engaged in forum shopping. The Sandiganbayan dismissed the new complaint on the ground of res judicata and declared two PCGG officials guilty of forum shopping and contempt, fining each of them. The PCGG's motion for reconsideration was denied, so the PCGG elevated the matter to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Piedras Petroleum Company, Incorporated was incorporated in 1976, with an authorized capital stock divided into two billion shares at one centavo each. Rodolfo Arambulo was among its incorporators and directors. In July 1987, the PCGG sequestered the stockholdings, rights, and interests of the seven directors and subscribers in Piedras. These shares became embroiled in the earlier case against Benedicto and the Marcoses, where the PCGG alleged that the incorporators, including Arambulo, were dummies of the principal defendants.

When Benedicto entered into a compromise agreement with the Republic, which the Sandiganbayan approved and which the Supreme Court upheld, all the Piedras stockholders except Arambulo assigned their shareholdings to the government. Arambulo then moved to execute the compromise agreement as to his own shares. The Sandiganbayan declared him the subscriber-owner of one-seventh of the Piedras shares, free of any sequestration lien, and the Supreme Court sustained that ruling, finding that the PCGG had failed to prove that Imelda Marcos had actually funded his subscription.

Despite this final adjudication, the PCGG filed a fresh complaint in 2002, again alleging that Arambulo was a nominee of Benedicto and that his shares were ill-gotten. The Sandiganbayan dismissed it, holding that the matter was barred by res judicata and that the PCGG had engaged in forum shopping. Hence this petition.

Issues

• Whether or not the Sandiganbayan erred in holding that the new complaint was barred by res judicata.
• Whether or not the Sandiganbayan erred in dismissing the complaint without receiving evidence from the PCGG.
• Whether or not the Sandiganbayan erred in holding that the PCGG officials had engaged in forum shopping and were guilty of contempt.

Applicable Provisions

Rule 129, Section 1 of the Rules of Court, on judicial notice, provides:

A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions.

This bears on the case because the Sandiganbayan was entitled to take judicial notice of the Supreme Court's earlier findings rather than reopen the same evidence.

Ruling

On the first issue, the Court held that the new complaint was indeed barred. The requisites of res judicata are a final judgment or order, rendered on the merits, by a court with jurisdiction over the subject matter and the parties, with identity of parties, subject matter, and causes of action. The Court found that the Piedras shares, including Arambulo's, were part of the subject matter of the earlier case, since they had been sequestered and were covered by the catch-all clause in the amended complaint. The Court also stressed that a judicially approved compromise agreement has the force of res judicata between the parties.

Even assuming the causes of action differed, the Court held that the second aspect of res judicata — conclusiveness of judgment — applied, because the issue of ownership of the shares had already been finally adjudicated. The Court explained:

Identity of cause of action is not required but merely identity of issues.

On the second issue, the Court held that the Sandiganbayan did not gravely abuse its discretion in dismissing the complaint without receiving evidence, since the new complaint merely attached the very same documents already found insufficient, and the court could take judicial notice of the prior findings.

On the third issue, the Court held that the PCGG officials were guilty of forum shopping. The test is whether the elements of litis pendentia are present, or whether a final judgment in one case would amount to res judicata in the other. The Court found the second test satisfied, and held that the officials, having full grasp of the origin of the case, knew they were engaging in deliberate forum shopping.

Doctrine

A Bar candidate should retain these rules. First, res judicata has two aspects: bar by prior judgment, which bars a second action on the same claim, and conclusiveness of judgment, which prevents issues actually and directly resolved in a former suit from being relitigated in a later case, even on a different cause of action. Second, a compromise agreement judicially approved has the force of res judicata between the parties. Third, forum shopping exists where a final judgment in one case would amount to res judicata in the other, and it may be committed even by officials who did not sign the verification, if they knew the prior case had been resolved.

Disposition

The Supreme Court denied the petition and affirmed the assailed resolutions of the Sandiganbayan, so the PCGG lost and the dismissal of its complaint, together with the contempt findings, stood.

Remember This

Memorize this line: identity of cause of action is not required, only identity of issues, for conclusiveness of judgment to apply. Examiners use this case to test the two aspects of res judicata and the doctrine that a final judgment may not be relitigated through a freshly dressed complaint.