REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), PETITIONER, VS. SANDIGANBAYAN AND ROSARIO M.B. OLIVARES, RESPONDENTS.

This special civil action for certiorari and prohibition,
with application for temporary restraining order and preliminary injunction,
seeks:

(1) the annulment
of the resolution of respondent court dated February 23, 1990 in Civil Case No.
0035, entitled “Republic of the Philippines vs. Benjamin (Kokoy) Romualdez, et al.,”
granting herein private respondent’s motion and enjoining the Presidential
Commission on Good Government (PCGG), its officers, representatives, agents,
nominees and other persons acting for and in their behalf, from voting the
common shares of stock of stockholders Manuel Salak, Araceli Linsangan, Domingo
Flores, Luisa Linsangan, Alejandro Maramag, Caridad Orpiada, Lino Sison
and Milagros Hizon at or during the annual
stockholders’ meeting to elect the members of the board of directors of the
Philippine Journalists, Inc. (PJI, for
brevity) pending the termination of this proceeding and/or until further orders
from this Court;

(2) the issuance of
a writ of prohibition commanding respondent court to desist absolutely and permanently
from further proceedings in said motion; and

(3) the issuance of
a restraining order or writ of preliminary injunction pending the consideration
of the merits of the present petition, enjoining respondent court from carrying
out or enforcing its aforesaid resolution.

It appears from the records that on January 30, 1990, private respondent filed with respondent
court an urgent motion to enjoin petitioner from voting the unsequestered
common shares of PJI, belonging to the aforesaid eight (8) stockholders, at the
annual stockholders’ meeting scheduled on February 6, 1990.

At the hearing of said motion on February 2, 1990, petitioner
verbally opposed the same, but respondent court issued an order directing
private respondent to file an amended motion on the same day and the petitioner
to file its opposition not later than February 5, 1990, after which the
incident shall be deemed submitted for resolution.  In the afternoon of February 2, 1990, private
respondent filed her manifestation together with her amended motion to enjoin
PCGG from voting the unsequestered shares of PJI at the aforesaid annual
stockholders’ meeting of February 6, 1990.

On its part, petitioner filed its opposition to the amended
motion on February 5, 1990.  On the same
date, respondent court issued a resolution with the following dispositive portion:

“WHEREFORE, finding the issuance of a Temporary Restraining
Order to be justified and in order, accordingly, respondent PCGG, its officers,
agents, representatives, nominees and all other persons acting in their behalf
are hereby ordered to cease, refrain and desist, effective upon receipt hereof,
from voting the 815 (sic, 840) shares of PJI stock of stockholders Manuel Salak (85 shares); Araceli Linsangan (85 shares); Domingo Flores (150 shares); Luisa Linsangan (85 shares); Alejandro Maramag
(85 shares); Caridad Orpiada
(100 shares); Lino Sison
(125 shares) and Milagros Hizon (125 shares) during
the Annual Stockholders’ Meeting on February 6, 1990 for the purpose of
electing one (1) seat to the Board of Directors, until further orders from this
Court.  Without giving due course to the
said motion, respondent is hereby ordered to file its Answer thereto within
five (5) days from receipt hereof and after which, let the hearing and consideration
of the main incident for the issuance of a preliminary injunction be set on
Monday, February 15, 1990, at 8:30 o’clock a.m.”^[1]

On February 9, 1990, petitioner filed a manifestation praying
that the aforesaid opposition, dated February 5, 1990, be considered as its
answer to private respondent’s amended urgent motion.  Thereafter, on the scheduled date of hearing,
both parties appeared with their respective counsel.  Private respondent and her witness, Araceli Linsangan, took the
witness stand and, after the termination of their testimonies and submission of
the documentary evidence, she rested her case. 
By agreement of the parties, the incident in question was then deemed
submitted for resolution without further oral arguments or memoranda.

On February 26, 1990, respondent court promulgated the questioned
resolution, the decretal portion whereof reads:

“WHEREFORE, defendant-movant having
clearly and positively established her right to the relief prayed for in her
‘Amended Urgent Motion to Enjoin PCGG from Voting The Unsequestered
Shares of PJI At The Annual Stockholders’ Meeting on February 6, 1990,
accordingly, finding said verified motion to be sufficient in form and
substance and that the continuance of the act complained of during the present
litigation would not only work injustice but also cause great or irreparable
injury to defendant Rosario M. B. Olivares, as established during the hearings
conducted thereon, and after a bond in the amount of P20,000.00 had been duly
filed by said defendant, hereby orders the PCGG, its officers, representatives,
agents, nominees and other persons acting for or in their behalf, to cease,
desist and refrain from voting the common shares of stock of the following
stockholders, namely, Manuel Salak, Araceli Linsangan, Domingo
Flores, Luisa Linsangan, Alejandro Maramag, Caridad Orpiada, Luis (sic, Lino) Sison and Milagros Hizon at or
during the Annual Stockholders’ meeting which may be held on any date hereafter
to elect the members of the Board of Directors of Philippine Journalists, Inc.,
pending the termination of this proceeding and/or further orders from this
Court.”^[2]

As the ratio decidendi therefor, respondent court gave this explication:

“The basic issue, therefore, revolves on the legal effect of
the sequestration of the shares of stock of defendant Romualdez
in PJI, vis-a-vis, the posture of defendant-movant that, even admitting for the sake of argument that
such sequestration includes the shares of stock of the above-named stockholders
however, the failure of the plaintiff and/or the PCGG to institute the
corresponding judicial action or proceeding within six (6) months from the date
of sequestration as mandated under Article XVIII, Section 26 of the 1987
Constitution resulted in the automatic lifting of such writ of sequestration
against said stockholders.  Defendant-movant does not claim such situation to exist in so far as
she herself and the other defendants named in the Expanded Complaint are
concerned, but justifies her right to be elected as a Director in PJI under the
authority of the proxies given to her by stockholders owning sufficient shares
of common stock to elect her as such and who are, admittedly, not co-defendants
in the instant case, nor have any other judicial action or proceeding been
instituted against them within the mandated constitutional period.  In the case of Philippine International
Corporation versus PCGG, We have affirmatively ruled for the petitioner therein
to the effect that the failure or omission to comply with the mandate of Article
XVIII, Section 26 of the Constitution automatically results in the lifting of
the writ of sequestration.

“The end result of a similar application of Our ruling therein
to the instant proceeding is that since no judicial action or proceeding having
been instituted up to the present against the above-named stockholders, then
the Writs of Sequestration issued against them have been automatically
lifted.”^[3]

Private respondent having posted the required bond, the writ of
preliminary injunction was issued and served by respondent court.  The scheduled stockholders’ meeting was
postponed to April 3, 1990.  Petitioner’s
motion for reconsideration having been denied, the said meeting was postponed
indefinitely.

Petitioner has now come to this Court contending that:  (a) respondent court has acted without or in
excess of its jurisdiction, or with grave abuse of discretion, in holding that
private respondent has the right to be elected as a member of the board of directors of PJI; and (b)
respondent court has acted without or in excess of its jurisdiction, or with
grave abuse of discretion, in holding that the sequestration of the PJI shares
of stock registered in the names of Manuel Salak, Araceli Linsangan, Domingo
Flores, Luisa Linsangan, Alejandro Maramag, Caridad Orpiada, Lino Sison
and Milagros Hizon has been automatically lifted.

In amplification of its plaint, petitioner argues that private
respondent has no right to be elected as director of the PJI since her own
shares of stock have been sequestered and, therefore, it is the PCGG nominee
who has the right to be elected as director pursuant to Presidential Memorandum
dated June 26, 1986.  Further, petitioner
insists that the proxies executed in private respondent’s favor do not in any way grant her the right to be elected
as director, considering that since the sequestration of the shares of stock
subject of the proxies was not appealed by the owners thereof to the Office of
the President pursuant to PCGG’s internal rules, said
sequestration allegedly has not been automatically lifted.

Petitioner also theorizes that the inclusion of PJI shares as
item No. 49 in the list of sequestered shares of Benjamin Romualdez
is sufficient compliance with the requirement for the “corresponding
judicial action or proceeding to be filed within six (6) months from the
ratification of the Constitution,” contemplated by Section 26, Article
XVIII of the Constitution, supposedly because Romualdez
is the real and beneficial owner of all of said shares of stock. 
Further, petitioner contends that the proxies executed by the aforesaid
eight (8) stockholders conferred on private respondent only the right to vote,
but not the right to be voted for as a director of PJI.

Private respondent, on her part, counters that even if her own
shares cannot be utilized for her election as director, the sequestration of
the shares of stock of the aforenamed stockholders
has been automatically lifted for failure of petitioner to commence any
judicial action or proceeding against them within the mandatory constitutional
period.  The said stockholders,
therefore, have the right to execute and issue, as they did, the questioned
proxies and affidavits expressly authorizing her to vote their shares “in
the manner she deems proper” and “to use the same votes corresponding
to the shares for the purpose of electing her as a member of the board of
directors.”^[4]

It is private respondent’s submission, and this is not disputed,
that since the corporate by-laws only require the votes of stockholders owning
626 shares of common stock to elect her, she can qualify as a director with the
votes corresponding to the aforesaid 840 shares, with full voting rights, for
which she holds duly executed proxies.

The fundamental issue, therefore, boils down to whether or not
the respective shares of stock of the aforementioned eight (8) stockholders,
should still be considered as sequestered and, further, whether or not the PCGG
is authorized to vote the same in the stockholders’ meeting.

From a careful consideration of the arguments adduced, we find
that respondent Sandiganbayan did not act in grave
abuse of discretion in restraining PCGG from voting the shares of Manuel Salak, Araceli
Linsangan, Domingo Flores, Luisa Linsangan,
Alejandro Maramag, Caridad Orpiada, Lino Sison
and Milagros Hizon on the scheduled stockholders’
meeting.

Section 26, Article XVIII of the Constitution provides:

x x
x

“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 proceedings shall be filed within six months from its ratification.  For those issued after
such ratification, the judicial action
or proceedings shall be commenced within six months from the
issuance thereof.

“The sequestration
or freeze order is deemed automatically
lifted if no judicial action or proceeding
is commenced as herein provided.” (Emphasis
supplied).

To date, it is undisputed that petitioner has not instituted the
corresponding judicial action against the above-named eight (8)
stockholders.  Perforce, the writs of
sequestration theretofore issued against them have long ceased to be effective.

Petitioner’s contention that the listing of PJI shares as item
No. 49 in the complaint filed against Benjamin Romualdez
constitutes sufficient compliance with the aforequoted
legal requirement is puerile.  In this
jurisdiction, a corporation has a legal personality distinct and separate from
its stockholders.  Thus, a suit against
the corporation cannot be considered ipso facto a suit against
its stockholders, and vice-versa. 
Consequently, the said contention of petitioner must fail.^[5]

Neither will petitioner’s claim that Romualdez
is the real and beneficial owner of all of said shares of stock, and that the
registered owners are only Romualdez’s dummies,
gratuitously support a finding that said stockholders were properly impleaded.  Nor may a
judgment that may be rendered upon and on the basis of the allegations of said
complaint be binding upon the latter. 
Whether or not the stockholders acted as dummies of Benjamin Romualdez, and whether or not their respective
shareholdings are beneficially owned by Romualdez,
are matters which petitioner merely assumes and obviously still has to prove
and establish in Civil Case No. 0035.

As, far as said stockholders are concerned, however, the
inclusion of the supposed major stockholder, Benjamin Romualdez,
in said case does not detract from nor excuse petitioner’s failure to file the
corresponding judicial action against them in compliance with the
constitutional requirement.  It is also
to be noted that this observation is but in keeping with and demanded by the
due process requirement.

Besides, we have long held that petitioner’s authority to vote
sequestered shares must be conceded only where there is evident necessity for
such voting in order to prevent the disposal and dissipation of the sequestered
assets.^[6]
In the case at bar, no such necessity or urgency has been shown to exist since,
to repeat, the sequestration order has already been automatically lifted.

The matter of the lifting of the sequestration order being thus
settled, we find no other legal obstacle to the aforenamed
stockholders’ issuance of their questioned proxies authorizing private
respondent to vote their respective shares, in the same manner that they can
vote the same if they personally decide to do so, and which they specifically
declared           in their proxies and
affidavits as earlier mentioned.

On private respondent’s qualification to be a director, the
Corporation Code specifies, apart from the requirement that a majority of the
directors must be residents of the Philippines,
that he/she must own in his/her own right at least one share of stock.  In the case at bar, private respondent owns
1,000 common shares in her own right, 500 of which are assigned to the
Development Bank of the Philippines
to secure the payment of a loan obligation of PJI.^[7]
Although the other 500 shares are sequestered, such fact does not affect her
ownership thereof as mere sequestration does not import or cause a divestment
of title over the property.  Hence,
private respondent remains as the owner of said shares of stock and is
accordingly qualified to be a director of PJI.

ON THE FOREGOING PREMISES, the petition at bar is hereby
DISMISSED for lack of merit.

SO ORDERED.

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

^[1]
Rollo, 68.

^[2]
Ibid., 74.

^[3]
Ibid., 73-74.

^[4]
Ibid., 107A-122.

^[5]
Presidential Commission on Good Government vs. Internatio­nal Copra Export
Corporation, et al., G.R. No. 92755, Resolution En Banc, October 2, 1990.

^[6]
Bataan Shipyard & Engineering Co., Inc. vs.
Presidential Commission on Good Government, et al., 150 SCRA 181 (1987); Sabido vs. Sandiganbayan,
et al., G.R. No. 92321, Resolution En Banc, July 19, 1990.

^[7]
Rollo, 83-84.