EN BANC
[G.R. No. 92755. July 26, 1991.]
THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, petitioner, vs. INTERNATIONAL COPRA EXPORT CORPORATION, INTERCO MANUFACTURING CORPORATION AND SANDIGANBAYAN, respondents.
RESOLUTION
Gentlemen
Quoted hereunder, for your information, is a resolution of the Court En Banc, dated July 26, 1991.
"G.R. No. 92755 (The Presidential Commission on Good Government vs. International Copra Export Corporation, Interco Manufacturing Corporation and Sandiganbayan.) —
Before the Court is the motion for reconsideration filed by petitioner of the resolution of the Court of October 2, 1990 dismissing the petition for lack of merit as the Sandiganbayan did not act in grave abuse of discretion in holding that the writs of sequestration issued on June 10, 1987 against private respondents are deemed lifted.
The main thrust of the motion is that the requirement of a judicial action or proceeding under Section 26, Article XVIII of the 1987 Constitution is satisfied by the filing of
the complaint by the PCGG in Civil Case No. 0033 for the recovery of ill-gotten wealth against Eduardo Cojuangco, Jr. and the "cronies" or persons referred to in the PCGG charters, even without impleading as party-defendant respondent-corporations which are the res or subject matter. It is contended that the "nexus" specified in law as "former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos . . . their close relatives, subordinates, business associates, dummies, agents or nominees," (Marcos and his cronies for short) 1 should be deemed to include corporations whose corporate veils must be pierced when made an instrument in the acquisition of wealth illegally by Cojuangco. HcSCED
As outlined in the resolution of the Court of October 2, 1990, the antecedents of this case are as follows —
"On June 10, 1987, petitioner issued separate writs of sequestration over private respondents based on a prima facie finding that Eduardo Cojuangco, Jr. beneficially owns shares of stocks in these corporations through the employment of ostensible dummies or nominees, like Enrique Luy who is the majority stockholder of both corporations. Almost two years thereafter, the Central Bank of the Philippines issued a Memorandum dated February 16, 1989 addressed to all commercial banks and non-bank financial institutions performing quasi-banking functions, informing them of the designation of new PCGG signatories for the transmittal letters concerning disbursements of sequestered firms covered by a pre-audit system, including private respondents herein. It appears that the CB Memorandum was based on a letter dated January 25, 1989 sent by petitioner to the CB, furnishing the CB with a list of sequestered firms covered by a pre-audit system and advising it of the designation of Mauro J. Estrada and Teresita B. Ele as the authorized PCGG signatories for disbursement transactions pertaining to these sequestered firms.
Private respondents then filed a petition for certiorari with the Court, docketed as G.R. No. 86989. Private respondents challenged the authority of petitioner in continuing to implement the writs of sequestration it had earlier issued against them, on the principal ground that the writs have been rendered ineffective as a result of petitioner's failure to file the proper judicial action or proceedings against them within the time prescribed under Section 26 of Article XVIII of the Constitution. SacTCA
After the submission of the comment, reply, rejoinder and sur-rejoinder, the Court resolved to refer the case to the Sandiganbayan for proper disposition [Resolution dated September 5, 1989 in G.R. No. 86989.] The case was docketed before the Sandiganbayan as Civil Case No. 0086. After due hearing, the Sandiganbayan promulgated a decision dated March 29, 1990 declaring the writs of sequestration issued by petitioner against private respondents as lifted, and petitioner's letter to the CB dated January 25, 1989, and the CB Memorandum dated February 16, 1989, both issued in implementation of the above writs, as null and void. The Sandiganbayan further enjoined petitioner from implementing the above writs of sequestration. Hence the present petition." 2
In dismissing the petition, this Court held therein —
"After a careful study of the arguments adduced in the petition and comment, the Court finds that respondent Sandiganbayan did not act in grave abuse of discretion in holding that the writs of sequestration issued on June 10, 1987 against private respondents are deemed lifted.
"Section 26, Article XVIII of the Constitution provides:
SECTION 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by President, the Congress may extend said period. DCSETa
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, petitioner has not instituted the corresponding judicial action against private respondents herein. Perforce, the writs of sequestration issued against private respondents on June 10, 1987 have ceased to be effective.
Petitioners however contend that Civil Case No. 0033 filed before the Sandiganbayan on July 31, 1987 is substantial compliance with requirement under Section 26 of Article XVIII. It appears that this case was filed by petitioner against Eduardo Cojuangco, Jr. and sixty one (61) other defendants alleged to be his dummies or nominees, including Enrique Luy. And among the assets identified to have been acquired by Eduardo Cojuangco, Jr. with ill-gotten wealth are the share-holdings of Enrique Luy in private respondent corporations. Both corporations are principally owned by the Luy family. International Copra Export Corporation was created and registered in the Securities and Exchange Commission as far back as May 25, 1961; on the other hand, Interco Manufacturing Corporation was registered on April 27, 1976. To date, the original incorporators, save for two members who have passed away, have remained the stockholders of these corporations. But while Enrique Luy, a principal stockholder of private respondents, was impleaded party-defendant in Civil Case No. 0033, private respondent corporations were not. In this jurisdiction, a corporation has a legal personality distinct and separate from its stockholders. Thus, a suit against any of the stockholders is not ipso facto a suit against the corporation itself. Consequently, the above contention of petitioner must necessarily fail. IADCES
There is likewise no merit to petitioner's argument that the doctrine which justifies the 'piercing of the veil of corporate fiction' is applicable to the case at bar. The Sandiganbayan correctly found the record bereft of sufficient basis from which to conclude that private respondents' respective corporate identities have been used to defeat public convenience, protect fraudulent schemes, or evade obligations and liabilities under statutes. Whether or not Enrique Luy, a major stockholder of private respondents, acted as a dummy of Eduardo Cojuangco, Jr., and whether or not the shareholdings of Enrique Luy are beneficially owned by Eduardo Cojuangco, Jr., are matters still to be established in Civil Case No. 0033. But as far as private respondents are concerned, inclusion of their major stockholder in Civil Case No. 0033 does not detract from, nor excuse, petitioner's failure to file the proper judicial action against them in compliance with the constitutional requirement under Section 26 of Article XVIII." 3
From the foregoing, it is clear — cCDAHE
(1) That petitioner failed to file a judicial action against respondent corporations within six (6) months from the date of their sequestration on June 10, 1987, as required by Section 26, Article XVIII of the 1987 Constitution so that the sequestration should be deemed automatically lifted.
(2) When this Court remanded the case (G.R. No. 86989) to the Sandiganbayan for reception of evidence, the PCGG failed to present any evidence to justify the further sequestration of respondent corporations. No proof was adduced that any of the shares of respondent-corporations were actually owned by Cojuangco, Jr. through a dummy. CTAIDE
(3) On the contrary, respondent corporations established that respondent International Copra Export Corporation was established as early as 1961 and that Interco Manufacturing Corporation was established in 1976, and that they were and remained as a family corporations of the Luy family.
WHEREFORE, the motion for reconsideration is DENIED with finality there being no new matter of substance raised that have not been disposed of in the subject resolution of the Court."
Separate Opinions
SARMIENTO, J., dissenting:
"I hold that the suit against Enrique Luy is substantial compliance with the provisions of the Constitution. I therefore see no reason why the writs of sequestration against the corporations of which Luy is the majority stockholder should be considered lifted.
It is to be noted that Luy is specifically, alleged to have acted as front for Eduardo Cojuangco, Jr. or whoever is the true owner, through schemes and machinations designed to conceal the principal's identity. It would defeat, I respectfully submit, the mandate of the Presidential Commission on Good Government to recover cronies' ill-gotten wealth if the respondents were allowed to make use of devices, like the veil of corporate fiction precisely, to escape that mandate.
I believe that in this case, that veil may be reasonably pierced.
Indeed, should the Sandiganbayan find Enrique Luy to have acted as a dummy for Eduardo Cojuangco, Jr., he must account for the wealth accumulated by him for and on his behalf, and the respondent corporations can not escape liability simply because they are possessed of separate juridical personalities." HAIaEc
Very truly yours,
(SGD.) DANIEL T. MARTINEZClerk of Court
By:
LUZVIMINDA D. PUNOAssistant Clerk of Court
1. Executive Order Nos. 1 and 2.
2. Pages 1 to 3, October 2, 1990, Resolution.
3. Pages 3 to 5, supra.