REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. SANDIGANBAYAN, PALM AVENUE REALTY DEVELOPMENT CORPORATION AND PALM AVENUE HOLDING COMPANY, RESPONDENTS. REPUBLIC OF THE PHILIPPINES,…

G.R. No. 90667 is a
petition for certiorari filed by the Republic of the Philippines, which
seeks to partially nullify 1) the
resolution* dated June 16, 1989 of the Sandiganbayan which: (a) ordered all the 16,237,339 Benguet
Consolidated shares, and not merely 6,737,339 thereof, as still under
sequestration and in dispute, and (b) directed the impleading of Palm
Avenue Realty Development Corporation and Palm Avenue Holding Company as
defendants in Civil Case No. 0035 entitled “Republic of the Philippines,
plaintiff, vs. Benjamin (Kokoy) Romualdez, et al., defendants” and 2) the resolution dated September 18,
1989 of the said court denying petitioner’s motion for reconsideration.

G.R. No. 91655 is a petition for certiorari with prayer
for a temporary restraining order and preliminary injunction which seeks to
annul and set aside 1) the resolution** dated
October 13, 1989 of the Sandiganbayan granting Rosario M.B. Olivares’ motion
for an accounting of the sequestered Philippine Journalists, Inc.’s assets and
liabilities through an auditing firm of her choice, and 2) the resolution dated
December 22, 1989 of the said court denying petitioner’s motion for
reconsideration.

In the resolution of February 20, 1990, the Court En Banc
resolved to consolidate these cases.

In G.R.
No. 90667 –

The antecedent facts of this case originated from the case of
Palm Avenue Realty Development Corporation vs. Presidential Commission on Good
Government (Palm Avenue case, for brevity) [153 SCRA 579 (1987)]. Said facts, as set forth by this Court in
the aforementioned case, appear to be
undisputed. They are quoted a follows:

“The res involved consists of 16,237,339 shares of
stock of Benguet Corporation (Common Class A), of which the registered owners
are the petitioners, Palm Avenue Realty Development Corporation and Palm Avenue Holding Co., Inc. The shares had been pledged by the
petitioners with three (3) institutions
as security for loans obtained from the latter, namely: Philippine Commercial and International Bank
(PCIB), Philippine Commercial Capital
(PCC), and Equitable Bank.

The PCGG sequestered these shares on or about April 5, 1986. It did so, apparently on the strength of
evidence that the ostensible owners, herein petitioner corporations, were owned
and controlled by a known ‘crony’ of former President Marcos, Benjamin Kokoy
Romualdez. At that time, the loans were all past due and auction sale of
the pledged stock was imminent.

Now, Benguet Management
Corporation (hereafter, simply BENGUET) wished to acquire these shares of stock
from the petitioners, intending to distribute them chiefly to the employees of
Benguet Corporation and its subsidiaries pursuant to a plan named Employees’
Stock Ownership and Incentive Plan, or ESOIP. BENGUET opened negotiations with the petitioners for the purchase of the
stock. It found the petitioners to be
willing sellers, but only of so much of the stock as was needed to be sold to
pay the past due loans secured, as aforesaid, by the pledge of all said stock.

The negotiation culminated
in the execution by the parties of a Contract to Purchase and Sell dated
September 1, 1986, its principal stipulations were the following:

1.     
BENGUET would buy as much of the petitioners’ stock as was
needed to pay the latter’s loans, estimated to be 9.5 million shares.

2.     
The price was fixed at P29.00 per share, expected to be
realized at a ‘cross sale’ thru Papa Securities at the Manila or Makati Stock
Exchange.

3.     
Additionally, (a) the written approval of the PCGG had to be
obtained; (2) the purchasers were to procure the release of all stock from the
pledgee banks; and (3) if this was not done within 60 days, BENGUET had the
option either to withdraw from the contract, by notice in writing, or pay
interest as provided in the agreement.

Approval by the PCGG was not immediately given. In a communication dated September 23, 1986
it opined that the price was too low, P43.00 per share being in its view the
more adequate, and set down other conditions at variance with the stipulations in the contract of purchase and sale. Both parties found the PCGG’s terms quite
unacceptable.

Eventually, however, due mainly to the efforts and representations
of BENGUET, PCGG gave its approval. By
letter dated October 14, 1986, signed by Commissioner Ramon Diaz, PCGG advised
BENGUET that at its meeting on that same day it had approved the Contract of
Purchase and Sell dated September 1, 1986.

xxx                            xxx                               xxx

On October 24, 1986, the PCGG and BENGUET drew up and signed a
Memorandum of Agreement specifying the terms and conditions under which the
Contract to Purchase and Sell of September 1, 1986 would be implemented. Briefly, those terms and conditions are as
follows:

1.     
BENGUET would fund the acquisition cost of 9.5 million
of the 16,237,339 sequestered shares at P29.00 per share (the bulk of which
would be paid to PCIB, PCC and Equitable Bank to extinguish their credits and
bring about the release of all said 16,237,339 pledged shares).

2.     
3 million out of the 9.5 million shares would be sold
to the employees of BENGUET and its subsidiaries in accordance with the
Employees’ Ownership & Incentive Plan already referred to, supra, at
P29.00 per share plus transaction costs. The rest of the purchased stock, numbering 6.5 million shares, would be
warehoused, or held in trust for PCGG
by BENGUET, to be sold when and as directed by the former. When sold, the proceeds of the ‘sale of
these 6.5 million shares would be’ delivered to the PCGG minus their
acquisition cost (to BENGUET) of P29.00 per share (or
P188,500,000). The rest of the
16,237,339 shares released from the pledges thereon, numbering 6,737,339 would
be held in custodia legis by the PCGG free from liens and
encumbrances.

3.     
The sequestration would be lifted as to the 9.5 million
shares subject of the sale, upon their release and transfer to BENGUET by the
pledgee banks.

4.     
Restoration of
the status quo ante would take place in the event of a final judgment by a
competent court invalidating the sale.

Carrying out this agreement, the PCGG –

1.     
directed the pledgees (PCIB, PCC and Equitable Bank), to
deliver to Benguet Management Corporation the certificates of stock covering
the said shares respectively held by x x (them) upon x x receipt from Benguet
Management Corporation of the payment of x x (their) respective loans.

2.     
sequestered ‘all assets, properties, records and documents’ of
both petitioner corporations, and commanded them to ‘desist from doing any act,
directly or indirectly, which may lead to dissipation, concealment and transfer
of the sequestered assets, properties, records and documents, and to disburse
funds only to support the routine or day-to-day operations x x and make
available all records and documents x x which may be required to achieve the
purpose’ of the sequestration writ; and

3.     
supervised, through
Commissioner Diaz, the payment by BENGUET to the pledgees of the amounts
of their credits and the release and surrender by the latter of all the pledged
stock, and received the amount of P11,781,124.84.”

Alleging that the PCGG had acted without or in excess of its
authority or jurisdiction, or with grave abuse of discretion, when it approved
and directed the carrying out of the Contract to Purchase and Sell of September
1, 1986, despite their objection thereto, and despite the fact that the stock
could have been sold for a much higher price, Palm Avenue Realty Development
Corporation and Palm Avenue Holding Company (PALM AVENUE COMPANIES, for
brevity) filed with this Court on November 3, 1986 the Palm Avenue
case, praying that the implementation of the Contract to Purchase and
Sell of September 1, 1986 approved by the PCGG on October 14, 1986 be adjudged
void ab initio.

Pending the resolution of the Palm Avenue case,
or on July 31, 1987, the Solicitor General on behalf of the PCGG representing
petitioner Republic of the Philippines (PCGG, for brevity) brought an action
with the Sandiganbayan against Benjamin Romualdez, among others, for forfeiture
of alleged ill-gotten wealth, including the Benguet Corporation (Common Class A) shares (Rollo, p. 112). Said case was docketed as Civil Case No.
0035. PALM AVENUE COMPANIES, however,
were not made party defendants in said case.

This Court, in a decision dated August 31, 1987, dismissed the Palm
Avenue case, and upheld the validity of the Contract to Purchase
and Sell, along with its implementing Memorandum of Agreement.

On February 8, 1989, PALM AVENUE COMPANIES filed with the
respondent court a “Motion to Require PCGG to Account for Cash Assets and to Enjoin Unnecessary Sale of
Benguet Shares of Stock” (Rollo, G.R. No. 90667, p. 36).

On June 20, 1989, respondent court promulgated its resolution dated June 16, 1989,
the dispositive portion of which reads as follows:

“WHEREFORE, premises considered, the ‘Motion to Require PCGG
to Account for Cash Assets and to Enjoin Unnecessary Sale of Benguet Shares of
Stocks’ dated February 7, 1989, and
filed by Palm Avenue Realty Development Corporation and Palm Avenue Holding
Company, Inc., is hereby DENIED for lack of merit.

The plaintiff is hereby
ordered to implead the said movants as defendants in the present case within 15
days from receipt hereof.” (Ibid., pp. 127-128).

In the same resolution, respondent court declared that all the 16,237,339
shares of stock of Benguet Corporation are still under sequestration (Ibid.,
pp. 118 and 121).

On July 10, 1989, the PCGG moved for the reconsideration of the
aforesaid resolution. It argued that
the ownership of 9.5 million shares is no longer in dispute. Hence, only 6,737,339 shares of stock remain
under sequestration (Ibid., pp. 129 and 136). PALM AVENUE COMPANIES likewise moved for its partial
reconsideration (Ibid., p. 139).

On September 21, 1989, respondent court promulgated its
resolution dated September 18, 1989, the dispositive portion of which reads as
follows:

“WHEREFORE, the plaintiff’s Motion for Reconsideration dated
July 6, 1989, and the Palm Avenue Companies’ Motion for Partial Reconsideration
dated July 7, 1989, are hereby DENIED for lack of merit.

The order in the Resolution of June 16, 1989, is reiterated that
the plaintiff implead the Palm Avenue Realty Development Corporation and Palm
Avenue Holding Company, Inc. as defendants in this case within fifteen (15) days from receipt hereof.” (Ibid., p.
175).

Hence, the instant petition for certiorari.

In G.R.
No. 91655 –

The facts, as gathered from the records, are as follows:

On July 8, 1988, Rosario M.B. Olivares (Olivares, for brevity),
one of the defendants in Civil Case No. 0035 pending before the respondent
court, filed with the latter an “Urgent Motion to Require PCGG to Render
Report and Accounting of Management of Philippine Journalists, Inc.”
(Rollo, G.R. No. 91655, p. 28), to which the Solicitor General on behalf of the
PCGG representing the Republic of the Philippines filed a verified opposition (Ibid.,
p. 66).

On October 24, 1988, respondent court promulgated its resolution
dated October 21, 1988, the dispositive portion of which reads as follows:

“WHEREFORE, the motion is hereby granted in so far as its
prayer for an accounting and/or financial report on the fiscal management of
the PJI to be made by the PCGG is concerned.

The PCGG is hereby ordered
to submit an accounting and/or financial report on the Phil. Journalists Inc.
to this Court, furnishing a copy thereof to defendant movant and to all the
stockholders of the same within thirty (30) days from receipt hereof.”
(G.R. No. 91655, pp. 87-88).

On December 1, 1988, in compliance with the foregoing resolution,
the PCGG submitted to the respondent court copies of the audited financial
statements of Philippine Journalists, Inc. (PJI, for brevity) as of September
30 and December 31, 1986 as well as the audited financial statements of PJI as
of December 31, 1987, both of which were prepared by Guzman, Bocaling & Co.
(Ibid., pp. 89-90).

On December 6, 1988, Olivares filed a manifestation and motion
with the respondent court where she alleged that the submission of the said
financial statements does not constitute substantial compliance with the
resolution dated October 21, 1988, which granted her motion for an accounting
and/or financial report on the fiscal management of PJI (Ibid., p.
118). Accordingly, she prayed, among
others, that PCGG be ordered to make a more detailed accounting and/or
financial report on the inventory of the physical assets of the corporation,
the increase in the administrative expenses of the corporation, detailing the
expenses incurred, and emoluments given, the PCGG “fiscal agents” (Ibid.,
p. 126).

On December 14, 1988, the PCGG filed its opposition to the said
manifestation and motion. It argued
that the granting of Olivares’ prayers would be tantamount to reconsideration,
settings aside and modification of the final and executory resolution dated October
21, 1988 of the respondent court, which had already been complied with by the
PCGG (Ibid., p.129).

On February 7, 1989, respondent court promulgated its resolution,
the dispositive portion of which reads:

“Considering the foregoing premises, taken in the light of
defendant-movant’s admission that she is not moving for a reconsideration of
the Resolution of October 21, 1988 but is only interested in plaintiff’s full compliance with the spirit
and intent of the dispositive portion of said Resolution, and inasmuch as the
allegations in the instant ‘Manifestation and Motion’ are couched in general terms and specific details are
missing on the bases of which the Court may take appropriate action on
clear-cut and unequivocal issues, consequently, defendant-movant is hereby
given thirty (30) days from receipt hereof within which to file the proper
pleading specifying the nature of her objections and setting such incident for
hearing and consideration to enable the parties concerned to present their
refutation.” (Ibid., p. 139).

On March 30, 1989, Olivares filed her compliance and motion (Ibid.,
p. 160), to which the PCGG filed its opposition on April 14, 1989 (Ibid.,
p. 192).

On October 16, 1989, respondent court promulgated its resolution
dated October 13, 1989, the dispositive portion of which reads:

“WHEREFORE, premises considered, and finding merit in
defendant Olivares’ instant motion, accordingly, this Court grants the prayer
for an accounting of PJI’s assets and liabilities. Within ten (10) days from receipt
hereof, the respondent PCGG, its officers, representatives and agents in PJI
are hereby ordered to allow defendant Olivares, through a reputable auditing
firm of her choice, to inspect, examine and audit PJI’s records and the report
thereon, duly certified by such firm, to be submitted to this Court within
sixty (60) days from date hereof.” (Ibid., p. 208).

On November 3, 1989, the PCGG filed its motion for
reconsideration of the foregoing resolution (Ibid., p. 209), to which
Olivares filed her opposition on November 28, 1989 (Ibid., p. 218).

On November 6, 1989, Olivares filed a manifestation to the effect
that she had already designated Carlos J.
Valdez and Company, an
auditing firm, to inspect, examine and audit PJI records (Ibid., p.
216).

On December 26, 1989, respondent court promulgated its resolution
dated December 11, 1989, denying PCGG’s motion for reconsideration (Ibid.,
p. 231).

Hence, this petition for certiorari and prohibition with
prayer for temporary restraining order and preliminary injunction.

In G.R.
No. 90667 –

PALM AVENUE COMPANIES filed their comment on December 26, 1989
(Rollo, G.R. No. 90667, p. 179), which was considered by this Court En Banc,
in a resolution dated March 15, 1990, as answer to the petition (Rollo, G.R.
No. 90667, p. 198). In the same
resolution, this Court En Banc gave due course to the
petition. On March 8, 1990, the PCGG
filed its reply. On March 22, 1990,
PALM AVENUE COMPANIES filed their memorandum (Ibid., p. 212). The PCGG, on the other hand, adopted its
petition dated October 16, 1989 and the reply to comment dated February 26,
1990 as its memorandum (Ibid., p.
199).

In G.R.
No. 91655 –

Olivares filed her comment to the petition on March 7, 1990 (Rollo, G.R. No. 91665, p. 242), to which the PCGG filed its reply on May
18, 1990 (Ibid., p. 296). In a
resolution dated June 28, 1990, this Court En Banc gave due course to the petition, and calendared this case for deliberation (Ibid., p. 307). Both parties did not file their respective
memoranda. Olivares manifested that the
filing of the same is unnecessary under the circumstances (Ibid., p.
304). The PCGG, on the other hand,
adopted its petition dated January 12, 1990 as its memorandum.

Parenthetically, in a resolution dated January 17, 1991, this
Court En Banc allowed the withdrawal of appearance of the
Solicitor General as counsel for the
PCGG in G.R. No. 90667 and G.R. No. 91665, among others (Rollo, G.R. No. 91655, p. 311). The PCGG manifested that
it will handle said cases under the charge of Commissioner Maximo A. Maceren
and/or any of the following attorneys: Eliseo B. Alampay, Jr., Mario E. Ongkiko, Mario Jalandoni and such other attorneys as it may later
authorize (Rollo, G.R. No.
91655, p. 317).

In G.R.
No. 90667 –

The main issues in this
case are:

1.     
Whether or not respondent court committed grave abuse
of discretion in declaring all the 16,237,339 and not merely 6,737,339, Benguet
Corporation shares of stock as still under sequestration and in dispute; and

2.     
Whether or not
respondent court committed grave abuse of discretion in ordering the PCGG to implead PALM AVENUE COMPANIES as defendants in Civil Case No. 0035.

In G.R.
No. 91655 –

The main issue to be resolved in this case is whether or not
respondent court has jurisdiction over Olivares’ motion for an accounting of
the sequestered PJI’s assets and liabilities through an auditing firm of her
choice.

In G.R.
No. 90667 –

The main thrust of the PCGG’s petition is that when it approved
the contract to purchase and sell, executed the implementing memorandum of
agreement, and acted pursuant thereto, the PCGG acted both as agent to buy the
shares for the petitioner Republic of the Philippines and as sequestrator to
preserve the sequestered 16,237,339 Benguet Corporation shares of stock by
forestalling the imminent auction sale thereof in satisfaction of the past due
obligations secured by their pledge. It
acted as sequestrator by maintaining the sequestration of the remaining
6,737,339 Benguet Corporation shares released from the pledge and on the
balance of the consideration received by PALM AVENUE COMPANIES for the sale in
the amount of P11,781,124.84. It acted
as agent to buy the shares for the Republic by borrowing from Benguet
Management Corporation (BMC, for brevity) the sum of P275,500,000.00 and
purchasing the 9.5 million Benguet Corporation shares at P29.00 a share from
PALM AVENUE COMPANIES. Hence, it argued
that with the sale, PALM AVENUE COMPANIES voluntarily divested themselves of
ownership over the 9.5 million Benguet Corporation shares of stock sold (Rollo,
G.R. No. 90667, pp. 23-25).

On the other hand, PALM AVENUE COMPANIES insist that the Supreme
Court in Palm Avenue case allowed the disposition of the
9.5 million Benguet shares under the Memorandum of Agreement executed between
PCGG and BMC within the context of the power of PCGG as ‘conservator’ but never
decreed that the ownership of the remaining 6.5 million shares after deducting
the 3 million shares, was transferred to the government, as now government
property (Ibid., p. 228).

As earlier stated, the Contract to Purchase and Sell dated
September 1, 1986 between PALM AVENUE COMPANIES and BMC and the Memorandum of
Agreement dated October 24, 1986 between the Republic of the Philippines,
acting through the PCGG, and BMC were upheld by this Court in the Palm Avenue
case as valid and binding. This
Court held in said case that: “The
Memorandum of Agreement of October 23 (sic), 1986 did nothing more than to
recognize and provide for the carrying out of the Contract to Purchase and Sell
of September 1, 1986 which the petitioners had voluntarily entered into. Implementation of the Memorandum was in
truth substantial implementation of the contract.” With this
pronouncement, the Contract to Purchase and Sell, together with its
implementing Memorandum of Agreement, becomes the law between the parties, and
it is well-settled that when the words of a contract are plain and readily
understandable, there is no room for construction. As the parties’ agreement has been reduced to writing, the rule
applies that their agreement is to be considered as containing all such terms
and there can be between the parties and their successors-in-interest no
evidence of the terms of the agreement other than the contents of the writing
(Bagadiong v. Vda. de Abundo, 165 SCRA 459 [1988]; Dihiansan v. Court of
Appeals, 153 SCRA 712 [1987]).

The Contract to Purchase and Sell paved the way for BMC to
purchase the 9.5 million shares in question from PALM AVENUE COMPANIES, subject
to the terms and conditions of the said implementing Memorandum of
Agreement. The PCGG, in turn, in order
to insure the effectivity of the sale to BMC, lifted in the Memorandum of
Agreement the sequestration order over the shares in question (Rollo, G.R. No.
90667, p. 63). The legal effect of the
lifting was to allow the disposition of the shares by PALM AVENUE COMPANIES in accordance with the Memorandum of
Agreement and thereby removed any legal impediment to the sale or transfer of
title thereto which would have otherwise resulted from the sequestration. Thus, the plain fact is that PALM AVENUE
COMPANIES, having sold the shares in question and received valuable consideration
therefor consisting of the full payment of their indebtedness to the creditor
banks and the P11,781,124.84 turned over to the PCGG, voluntarily divested
themselves of ownership over the 9.5 million shares sold.

Moreover, paragraph 3 of the Memorandum of Agreement commands BMC
to hold 6.5 million of the shares in question in trust for the benefit of the
Republic and shall dispose of the same only in the manner and at such price as
PCGG may direct from time to time (Ibid., p. 62). If indeed the shares were considered
sequestered, there would be a doubt as to whether the PCGG could, upon its own
determination, order the sale of the shares. As stressed by this Court in the case of Bataan Shipyard &
Engineering Co., Inc. v. Presidential Commission on Good Government (150 SCRA
181 [1987]), “the PCGG cannot exercise acts of dominion over property
sequestered, frozen or provisionally taken over, x x x the act of
sequestration, freezing or provisional takeover of property does not import or
bring about a divestment of title over said property, does not make the PCGG
the owner thereof. In relation to the
property sequestered, frozen or provisionally taken over, the PCGG is a
conservator, not an owner. Therefore,
it cannot perform acts of strict ownership, and this is specially true in the
situations contemplated by the sequestration rules where, unlike cases of
receivership, for example, no court exercises effective supervision or can,
upon due application and hearing, grant authority for the performance of acts
of dominion.” In the Palm Avenue case, however, this
Court upheld the authority of the PCGG to order the sale of the 6.5 million
Benguet shares of stock in accordance with the provisions of the Memorandum of
Agreement. Undoubtedly, this can only
be done if the shares are not sequestered assets.

In the same paragraph, the Republic is made answerable to BMC for
losses or claims which may arise from BMC’s sale of the shares upon instruction
of the PCGG. That the risk of loss with
respect to the shares is to be borne by the PCGG is again inconsistent with the
proposition that the shares are still under sequestration.

Under the foregoing circumstances, there is no question that, in declaring all the 16,237,339 Benguet
shares of stock as still under sequestration and in dispute, respondent court
committed grave abuse of discretion.

Anent the second issue, it is the contention of the PCGG that
while PALM AVENUE COMPANIES are still parties-in-interest insofar as the
ownership over the remaining 6,737,339
Benguet shares is concerned, PCGG’s complaint in Civil Case No. 0035 has
pierced their corporate veil and has considered Benjamin (Kokoy) Romualdez and
his co-defendants as their true or real owners (Rollo, No. 90667, pp. 28-29).

PALM AVENUE COMPANIES’ thesis, however, is that they cannot be
deprived of their legal personality in the aforementioned case inasmuch as they
appear on record as the registered owners of the shares of stock involved in
the case at bar (Ibid., pp. 238-239).

Section 2, Rule 3 of the Revised Rules of Court mandates that
“every action must be prosecuted and defended in the name of the real
party in interest.”

In the case of Samahan ng mga Mangungupahan sa Azcarraga Textile
Market, Inc., et al. vs. Court of Appeals (165 SCRA 598 [1988]), this Court
defined the real party-in-interest as “the party who stands to be
benefited or injured by the judgment or the party entitled to the avails of the
suit. ‘Interest’ within the meaning of
the rule means material interest, an interest in issue and to be affected by
the decree, as distinguished from mere interest in the question involved, or a
mere incidental interest.”

In the case at bar, while it is true that PALM AVENUE COMPANIES
have already voluntarily divested themselves of the ownership over the 9.5
million shares, the fact remains, as admitted by the PCGG itself, that dispute
still subsists on the P11,781,124.84 balance of the consideration for the sale
of the 9.5 million shares and on the remaining 6,737,339 Benguet shares redeemed
from the pledge, both of which are in custodia legis by the PCGG. Thus, PALM AVENUE COMPANIES are real
parties-in-interest in Civil Case No. 0035 pending before the respondent court
because they still appear to be the registered owners of the said remaining
shares. That Benjamin (Kokoy) Romualdez
is considered as their true or real owner is just a claim that still has to be
proved in court. Accordingly,
respondent court did not commit grave abuse of discretion in ordering PCGG to
implead PALM AVENUE COMPANIES as
defendants in Civil Case No. 0035.

In G.R.
No. 91655 –

It is the contention of the PCGG that the accounting of the
sequestered PJI’s assets and liabilities through an auditing firm of Olivares’
choice is not an incident of Civil Case No. 0035 pending before the respondent
court. Since the purpose of the
accounting and/or auditing is to verify whether “there had been
mismanagement and wanton dissipation of assets of PJI” by the PCGG Fiscal
Agents assigned to it, this matter is obviously incidental to the
administrative power of supervision and control of the PCGG over its fiscal
agents and nominees in the PJI (Rollo, G.R. No. 91655, p. 160). Hence, PCGG argues that respondent court is
bereft of jurisdiction over Olivares’ motion for an accounting of the
sequestered PJI’s assets and liabilities through an auditing firm of her
choice.

On the other hand, Olivares argued that as respondent court is
the agency tasked with the determination of who the actual owner of sequestered
assets is, it has the obligation and responsibility to see to it that such
sequestered assets are conserved and not dissipated (Ibid., p. 267), and
the accounting and auditing prayed for by Olivares and granted by respondent
court are aimed at preserving assets thus sequestered and at seeing to it that
they are in their original condition when
respondent court eventually determines the ownership over these assets (Ibid.,
p. 268). Olivares, therefore, insisted
that the questioned motion lies within the exclusive jurisdiction of the
respondent court as an incident to the principal action, i.e., Civil Case No.
0035.

The rule laid down in PCGG v. Pena (159 SCRA 556 [1988] and
reiterated in the very recent case of
Republic v. Sandiganbayan, G.R. No. 88809, July 10, 1991, and its accompanying
case, cannot be any clearer, thus:

“Under Section 2 of the President’s Executive Order No. 14
issued on May 7, 1987, all cases of the Commission regarding ‘the Funds,
Moneys, Assets, and Properties Illegally Acquired or Misappropriated by Former
President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, their close Relatives, Subordinates, Business Associates,
Dummies, Agents, or Nominees,’ whether civil or criminal, are lodged within the
exclusive and original jurisdiction of the Sandiganbayan and all incidents arising from, incidental to, or related to, such cases necessarily fall likewise under the Sandiganbayan’s exclusive and original jurisdiction subject to review on certiorari
exclusively by the Supreme Court.” (Underscoring supplied)

Evidently, the exclusive jurisdiction conferred on the
Sandiganbayan extends not only to the principal causes of action but also to
all incidents arising from, incidental to, or related to, such cases, which may
not be made the subject of separate action or proceeding in another forum (Soriano III v. Yuzon, 164 SCRA
226 [1988]).

In the case at bar, respondent court ordered the accounting and
auditing of the sequestered assets of PJI “to insure that no hanky-panky
or dubious financial deals have been entered into which might have resulted in
dissipation of corporate assets” (Rollo, G.R. No. 91655, p. 208). This is borne by the fact that Olivares’
allegations with respect to mismanagement of PJI and wanton dissipation of its
assets have not been frontally met, much less denied, by the PCGG (Ibid.,
p. 206). As the assets of PJI are
merely under sequestration and have not as yet been judicially declared as
‘ill-gotten wealth’, sufficient safeguards should be adopted to prevent them
from being unduly dissipated, especially when facts and circumstances are
brought out, as in the case at bar, which reflect a prima facie
showing of wanton or reckless dissipation thereof (Ibid., p. 207). Inasmuch as these assets are now the object
of an action before the Sandiganbayan, hence in custodia legis,
it logically follows that the matter of preserving them for the benefit of the
party that may finally be adjudged to be the owner thereof is the prerogative
of the said court as an incident to its primary responsibility of determining
whether or not these assets fall under the category of “ill-gotten
wealth.” Accordingly, when it ordered that an accounting and audit be
conducted on the assets and liabilities of PJI as prayed for by Olivares,
respondent court was merely exercising said prerogative, which in no way can be
considered as tantamount to grave abuse of discretion.

Anent the allegation of the PCGG that Olivares’ failure to submit
her motion first to the PCGG and then to the President of the Philippines, if still not satisfied,
signifies her lack of cause of action (Ibid., p. 22), respondent court
correctly observed:

“Finally, plaintiff appears to have failed to comprehend the
true nature of the doctrines of the primary administrative jurisdiction and
exhaustion of administrative
remedies as explained in PCGG vs. Pena, supra. Therefrom, it can quite readily be seen that said doctrines refer
to that particular stage of sequestration proceedings where a writ of
sequestration has been issued against a particular individual or firm but
before the proper judicial action have (sic) been filed in Court, in accordance
with Section 26 of the Transitory Provisions of the 1987 Constitution. In the instant case, it cannot be denied
that the issues raised in the basic motion of defendant Olivares are not
addressed to the lifting of the writ of sequestration nor does it question the
nature or existence of prima facie evidence to justify the
issuance of such writ but are based on the admitted fact that since the proper
judicial action has already been filed and pending before this Court, any and
all incidents relating thereto and over which this Court has, admittedly,
jurisdiction to inquire into, should be threshed out before it and not thru any
administrative proceeding. Otherwise,
after the proper judicial action had been filed, this Court would find itself
to have abdicated its prerogatives and jurisdiction in favor of the respondent
Commission.” (Ibid., pp. 233-234).

PREMISES CONSIDERED, (1) In G.R. No. 90667: (a) the resolutions of June 16, 1989 and of
September 18, 1989 of respondent court, declaring all the 16,237,339 and not
merely 6,737,339 Benguet Corporation shares of stock as still under
sequestration are partially NULLIFIED and (b) the order of respondent court
directing the impleading of PALM AVENUE COMPANIES as defendants Civil Case No.
0035 is AFFIRMED; and (2) in G.R. No. 91655, the petition is DISMISSED and the
resolutions of respondent court dated October 13, 1989 and December 22, 1989
are AFFIRMED.

SO ORDERED.

Narvasa, Gutierrez, Jr., Cruz, Feliciano, Padilla, Bidin,
Griño-Aquino, Medialdea, Regalado, and
Davide, Jr., JJ., concur.

Fernan, C.J., concurring in
part and dissenting in part in the light of his dissent in GR No. 97255.

Melencio-Herrera, J., on leave.

Sarmiento, J., retired.

* Penned by Justice Jose S. Balajadia with Justices Romeo M. Escareal and
Cipriano A. Del Rosario concurring.

** Penned by Justice Romeo M. Escareal with Justices Jose S. Balajadia and
Cipriano A. Del Rosario concurring.