REPUBLIC OF THE PHILIPPINES, (REPRESENTED HEREIN BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), PETITIONERS, VS. THE HONORABLE SANDIGANBAYAN (SECOND DIVISION) AND PETER A. …

This petition seeks to annul and set
aside the resolution of respondent Sandiganbayan dated June 22, 1989, in Civil
Case No. 0024 entitled “Republic of the Philippines v. Peter Sabido, et
al.,” granting a writ of preliminary injunction enjoining the Presidential
Commission on Good Government (PCGG) from proceeding with the projected
turnover of Philippine Integrated Meat Corporation (PIMECO) to the GSIS/Meat
Packaging Corporation of the Philippines (MPCP) or to interfere with its
present management and as amended by its resolution dated July 31, 1989, also
enjoins the PCGG from dismissing or replacing, among others, its own management
team presently operating the PIMECO except for valid or serious grounds not
attributable to their opposition to the said turnover.

The antecedent facts which gave rise to the instant petition are
summarized by petitioner as follows:

“1.     On March 17, 1986,
PCGG, on the basis of prima facie evidence, issued an order sequestering
Philippine Integrated Meat Corporation (PIMECO) x x x [Annex ‘B’, Petition];

“2.     On July 29, 1987, the
Republic of the Philippines, through the PCGG, and pursuant to E.O. No.14 and
the Constitution, filed with respondent Sandiganbayan a Complaint, docketed as
Civil Case No. 0024 (PCGG No. 25) against Ferdinand E. Marcos, Imelda R.
Marcos, Peter Sabido, Roberto S. Benedicto, Luis D. Yulo, Nicolas Dehesa, Jose
R. Tengco, Jr., Rafael Sison, Cesar C. Zalamea and Don M. Ferry for
reconveyance, reversion, accounting, restitution and damages, involving, among
others, the subject matter of the petition at bar, namely PIMECO, together with
their assets, shares of stock, effects, evidence and records, which, based on
documents in PCGG possession, were illegally acquired by said defendants in
unlawful concert with one another and with gross abuse of power and authority x
x x (Annex ‘C’, Petition).

“3.     On May 6, 1988,
respondent Sabido filed his Answer to the above complaint denying that he was a
close business associate of Ferdinand E. Marcos and that he has not, directly
or indirectly, singly or collectively with his co-defendants, participated in
the plunder of the National Treasury and the other acts stated in the
complaint.

“4.     On April 28,
1989, Sabido filed with the Sandiganbayan an Urgent Manifestation and Motion
stating among others, that:

x x x

‘2. Defendant learned from newspaper reports,
among them the April 27, 1989 issue of the ‘The Journal’ that the plaintiff
through the PCGG intends to turnover the management, control and possession of
PIMECO to the Government Service Insurance System (GSIS) through its subsidiary
Meat Packing Corporation of the Philippines (MPCP) x x x;

‘3. Defendant learned from
reliable sources that a resolution has been passed by the PCGG to implement the
aforementioned turnover of PIMECO to MPCP.

‘4. PIMECO being a
sequestered asset, the approval of this Honorable Court of the projected
turnover is indispensable specially in the matter of transfer, control and
management of sequestered assets, the same being in custodia legis.

‘5. Defendant does not
know whether the foregoing are true or not and whether the PCGG intends to
secure court approval for such turnover.

x x x

and praying that the Republic be ordered to either affirm or deny:

‘a) whether or not the
turnover and control of the PCGG (should be PIMECO) to the MPCP is true.

‘b) whether or not a
resolution has been passed to implement the same and to furnish a copy of the
same to herein defendant x x x (Annex ‘D’, Petition).

“5.     In an Order dated May
4, 1989, respondent Sandiganbayan required the PCGG to submit its comment
specifically ‘as to the veracity of the alleged turnover of the management,
control and possession of PIMECO to the GSIS or Meat Packing Corporation of the
Philippines, and if true, to furnish movant a copy of the PCGG resolution or
order approving the same’ x x x (Annex ‘E’, Petition).

“6.     In a Manifestation
with Motion dated May 15, 1989, PCGG requested a period of fifteen (15) days
from date thereof within which to submit the required comment x x x (Annex ‘F’,
Petition).

“7.     Before PCGG could file
its required comment, Sabido filed an Urgent Manifestation and Motion,
informing respondent Sandiganbayan of a newspaper report ‘that the PCGG has
turned over the management and operation of PIMECO to the GSIS/MPCP and that
henceforth, all transactions involving PIMECO must have the written approval of
GSIS/MPCP.’

“In the same Urgent Manifestation and Motion; Sabido urged the
respondent Court to declare the alleged turnover of management, control and
possession of PIMECO by the Republic to the GSIS to be null and void ab initio for
having been done without the approval of the Court x x x (Annex ‘G’, Petition).

“8.     On May 24, 1989, PCGG,
in compliance with the respondent Court’s Order dated May 4, 1989, filed with
the Court a Motion to Strike Out in Lieu of Comment x x x (Annex ‘H’,
Petition).

“9.     Subsequently, the
officials and board members of PIMECO labor union filed with the respondent
Court on May 30, 1989 an undated formal communication wherein they appealed to
the Court ‘to issue certification or anything that could attest to the fact
that the status quo is maintained, to enable PIMECO to continue doing
business with its suppliers and distributors so that we could continue working
and operating the plant and attain security of tenure and peace of mind pending
resolution/decision of the above-stated case’ x x x (Annex ‘I’, Petition).

“Acting on the above communication, respondent Court issued a
Temporary Restraining Order on June 2, 1989 enjoining the PCGG ‘to cease and
desist from enforcing the contemplated turnover of the management, control and
possession of PIMECO to the Meat Packing Corporation of the Philippines until
further orders’ x x x (Annex ‘J’, Petition).

“10.   On June 13, 1989, PCGG
filed its Comment on Sabido’s Urgent Manifestation and Motion dated May 19,
1989. Therein, PCGG asserted that the
transfer of operation, management and control of PIMECO to the GSIS/MPCP
involves an exercise of PCGG’s pure administrative judgment, as conferred on it
by law, in respect of its mandated duty to preserve, conserve or otherwise
prevent dissipation of the value of PIMECO, which it has provisionally taken
over. Hence, there was nothing irregular
in the projected transfer of PIMECO’s management and operation to the GSIS/MPCP
x x x (Annex ‘K’, Petition).

“11.   At the scheduled
hearing of the above incident on June 16, 1989, Sabido presented as witness,
Mr. Ariston B. Gomez, Jr., the team leader of the PCGG management team at
PIMECO who strongly objected to the projected turnover as there was allegedly
no basis for such turnover.

“12.   During the subsequent
hearings that ensued, the undersigned Solicitor, upon instructions of the PCGG,
informed the respondent Court that PCGG was ‘exploring other alternatives short
of turning over the management and operation of PIMECO to the GSIS.’
Nevertheless, Sabido moved for the issuance of a writ of preliminary
injunction. However, the Court required
him to submit a formal motion to that effect.

“13.   Thus, in a motion dated
June 21, 1989, Sabido prayed for the issuance of a writ of preliminary
injunction that would enjoin the PCGG from transferring the management, control
and possession of PIMECO to the GSIS/MPCP x x x (Annex ‘L’. Petition).

“14.   On June 22, 1989, the
respondent Court issued a Resolution, the dispositive portion reading:

‘WHEREFORE, finding the verified application for issuance of a writ
of preliminary injunction to be sufficient in form and substance and that after
due hearing, it appears that great and irreparable injury will be caused not
only to defendant-applicant but also to PIMECO should the acts sought to be
enjoined will be allowed to be done or performed, accordingly, upon
defendant-applicant’s posting of a bond of P50,000.00, let the corresponding
writ of preliminary injunction issue commanding the Presidential Commission on
Good Government, its officers, representatives, nominees or agents from
proceeding or consummating the projected turnover of PIMECO to the GSIS/MPCP or
to interfere with its present management and operations, until further orders
of this Court.

‘SO ORDERED.’” (Annex ‘A’, Petition; Rollo, pp. 6-13).

On Motion for reconsideration, respondent Sandiganbayan issued
another resolution reconsidering its earlier resolution dated June 22, 1989,
the disposition of which reads:

“WHEREFORE, premises considered, plaintiffs Motion for
Reconsideration (Re: Resolution dated
June 22, 1989) dated July 3, 1989 is hereby GRANTED, and the dispositive
portion of Our Resolution of June 22, 1989, ordered amended to read as follows:

‘WHEREFORE, finding the verified application for issuance of a writ
of preliminary injunction to be sufficient in form and substance and that after
due hearing, it appears that great and irreparable injury will be caused not
only to defendant-applicant but also to PIMECO should the acts sought to be
enjoined will be allowed to be done or performed, accordingly, upon
defendant-applicant’s posting of a bond of P50,000.00, let the corresponding
writ of preliminary injunction issue commanding the Presidential Commission on
Good Government, its officers, representatives, nominees or agents from
proceeding or consummating the projected turnover of PIMECO to the GSIS/MPCP or
to interfere with its present management and operations, until further orders
of this Court and from replacing, dismissing, demoting, reassigning,
grounding, or otherwise prejudicing the present members of the PCGG management
team in PIMECO, except for valid and serious reasons not attributable to or arising from their objection or
opposition to or activities or
statements against the said turnover.’

“SO ORDERED.” (Rollo, pp. 44-45)

Hence, this petition.

Petitioner argues, among others, that PCGG’s, selection of the
men who should manage PIMECO involves the exercise of its purely administrative
functions or managerial prerogatives which may not be interfered with by the Court.

Petitioner further
assails the jurisdiction of respondent court in rendering the assailed
resolution since this is a clear violation of the time-honored constitutional
rule of separation of powers.

We do not agree that the
resolution issued by respondent court is tantamount to an encroachment of a
purely administrative or executive function. While the PCGG is ordinarily allowed a free hand in the exercise of its
administrative or executive function, respondent Sandiganbayan is empowered to
determine in an appropriate case, if in the exercise of such functions, the
PCGG has gravely abused its discretion or has overstepped the boundaries of the
power conferred upon it by law. Any act
or order transgressing the parameter of the objectives for which the PCGG was
created, if tainted with abuse of discretion, is subject to a remedial action
by the Sandiganbayan, the court vested with exclusive and original jurisdiction
over cases involving the PCGG (PCGG v. Peña, 159 SCRA 556 [1988]; PCGG v.
Securities and Exchange Commission, G.R. No. 82188, June 30, 1988) including
cases filed by those who challenge PCGG’s acts or orders (Holiday Inn [Phil.]
v. Sandiganbayan, 186 SCRA 447 [1990]). Settled is the rule that when a law confers jurisdiction upon a court,
it is deemed to have all the incidental powers necessary to render the exercise
of such jurisdiction effective (Zuñiga v. Court of Appeals, 95 SCRA 740
[1980]).

Coming now to the real
issue at hand, we find that the projected transfer of management of PIMECO to
MPCP is unwarranted and was effected or done by petitioner beyond the
scope of the powers vested upon it by law. Such turnover made by the PCGG is equivalent to the performance of an
act of ownership which PCGG cannot exercise. We have invariably ruled that the PCGG is merely a conservator or
caretaker which can exercise only powers of administration over property
sequestered, frozen or provisionally taken over (Bataan Shipyard and
Engineering Company Inc., v. Presidential Commission on Good Government, 150
SCRA 181 [1987]; Cojuangco, Jr., v. Roxas, 195 SCRA 797 [1991]). In the exercise of its functions, it must
consistently bear in mind that it can only do acts and things necessary to
fulfill its mission to conserve and preserve sequestered assets.

The extent of the powers conferred upon the PCGG as conservator
was extensively discussed and/or circumscribed in the case of BASECO (supra),
as follows:

“Now, in the special instance of a business enterprise shown
by evidence to have been ‘taken over by the government of the Marcos
administration or by entities or persons close to former President Marcos’, the
PCGG is given power and authority, as already adverted to, to ‘provisionally
take (it) over in the public interest or to prevent x x x (its) disposal or
dissipation;’ and since the term is obviously employed in reference to going
concerns, or business enterprise in operation, something more than mere
physical custody is connoted, the PCGG may in this case exercise some measure
of control in the operation, running, or management of the business
itself. But even in this special
situation, the intrusion into management should be restricted to the minimum
degree necessary to accomplish the legislative will, which is ‘to prevent the
disposal or dissipation’ of the business enterprise. There should be no hasty, indiscriminate, unreasoned replacement
or substitution of management officials or change of policies, particularly in
respect of viable establishments. In
fact, such a replacement or substitution should be avoided if at all possible,
and undertaken only when justified by demonstrably tenable grounds and in line
with the stated objectives of the PCGG. And it goes without saying that where replacement of management officers
may be called for, the greatest prudence, circumspection, care and attention
should accompany that undertaking to the end that truly competent, experienced
and honest managers may be recruited. There should be no role to be played in this area by rank amateurs, no
matter how well the meaning. The road
to hell, it has been said, is paved with good intentions. The business is not to be experimented or
played around with, not run into the ground, not driven to bankruptcy, not
fleeced, not ruined. Sight should never
be lost of the ultimate objective of the whole exercise, which is to turn over
to the Republic, once judicially established to be ‘ill-gotten wealth.’ Reason
dictates that it is only under these conditions and circumstances that the
supervision, administration and control of business enterprises provisionally
taken over may legitimately be exercised.”

Lastly, petitioner argues that its relationship with the
management team of PIMECO is that of a principal and agent. As such, it concludes, it has absolute
control over the latter.

On this score, PCGG should be reminded of its mandated task that
insofar as sequestered assets are concerned, the fact remains that it is merely
a conservator and not the owner who exercises power of dominion over the
sequestered property. Its power to
sequester ill-gotten wealth is akin to the provisional remedy of preliminary
attachment which is always subject to the control of the respondent
Sandiganbayan (BASECO, supra; Republic
v. Sandiganbayan, 192 SCRA 743 [1990]).

PCGG’s power to manage sequestered properties must be exercised
to prevent the dissipation or wastage of the corporate property and not to
diminish or lessen the value thereof.

In issuing the writ of preliminary injunction prayed for by
private respondent, the Sandiganbayan found that there is no proof showing that
the members of the management team at PIMECO have mismanaged the business or
exercised any act prejudicial to all the parties concerned. On the contrary, it found that from an
inoperative business concern prior to the takeover by the PCGG, PIMECO was
revived and emerged to become one of the top 1,000 corporations in the country
for the years 1987 and 1988 and was the recipient of an award for being the
best-managed PCGG sequestered firm in 1988 (Rollo, pp. 43-44). Indeed, the auspicious performance of
PIMECO’s management team deserves commendation and recognition and not
consigned to oblivion.

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., Cruz, Padilla,
Griño-Aquino, Regalado, Nocon, Bellosillo, Melo, Campos, Jr., and Quiason, JJ., concur.

Feliciano, J., join J. Davide, Jr., in his
dissenting opinion.

Romero, J., no part.

Gutierrez, Jr., J., retired.