G.R. No. 114135




Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 114135 October 7, 1994 LEON M. GARCIA, JR., petitioner, vs. THE SANDIGANBAYAN, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, as represented by Chairman MAGTANGGOL C. GUNIGUNDO, THE BOARD OF DIRECTORS OF UNITED COCONUT PLANTERS BANK, represented by Chairman TIRSO D. ANTIPORDA and CESAR SEVILLA, respondents. Albano, Garcia & Diaz Law Offices for petitioner. Ponce Enrile, Cayetano, Reyes & Manalastas for private respondents. DAVIDE, JR., J.: The chief issue raised in this case is whether the Sandiganbayan has jurisdiction over the special civil actions of prohibition, mandamus, and quo warranto. The antecedent facts as summarized by the Sandiganbayan in its challenged decision are as follows: 1. On June 26, 1990 petitioner Garcia was elected to the Board of Directors of the UCPB1 at a regular meeting thereof to fill a vacancy therein as a PCGG2 nominee; 2. Almost three (3) years later, petitioner Garcia received a letter from PCGG Chairman Gunigundo asking him to resign from the UCPB Board in order that a replacement might be made in his stead; 3. Garcia refused to resign and instead asserted in his reply letter dated May 21, 1993 his membership in the Davao City Chapter of the COCOFED and, therefore, his representation of the coconut planters of Davao City; 4. By a letter dated July 6, 1993, PCGG Chairman Gunigundo informed Garcia (and two other directors) that his membership in the Board of Directors of UCPB had been terminated upon instruction by the Office of the President, copy of which letter was furnished to the Chairman and the Corporate Secretary of the UCPB; 5. By a letter dated July 8, 1993, Garcia (together with two other directors whose services as directors had also been terminated) wrote PCGG Chairman Gunigundo reiterating their refusal to step down from the Board and announced that they would wait for the next regular stockholders' meeting since, according to Garcia, he had a fixed term as a director; 6. In the same letter, Garcia further stated that since he and his fellow directors were not mere agents of the PCGG, their removal would have to be done in the manner provided by the Corporation Code, citing the case of Baseco v. PCGG (150 SCRA 181) that, at all events, the PCGG cannot change the composition of the Board of Directors of sequestered corporations; 7. At a special meeting of the Board of Directors — which petitioner Garcia claims to have been held on July 22, 1993 without notice to him — petitioner and another director were deemed terminated as members of the UCPB Board and were duly replaced, petitioner Garcia in particular by respondent Cesar A. Sevilla; 8. While he may have been elected to the Board through the action of the Board, petitioner claims that he can be removed therefrom only by a vote of the stockholders representing 2/3 of the outstanding capital stock at a regular stockholders' meeting or at a special stockholders' meeting called for that purpose.3 The petitioner then filed with the Sandiganbayan on 20 August 1993 a petition for prohibition, mandamus, quo warranto, damages and attorney's fees with preliminary injunction and a prayer for the issuance of a temporary restraining order4 (docketed as SB No. 0154) against the PCGG, Cesar Sevilla, and others.5 The prayer of the petition reads: WHEREFORE, PREMISES CONSIDERED, it is most respectfully prayed that: Before hearing: A temporary restraining order be issued against respondent Cesar A. Sevilla from performing the duties of a member of the Board of Directors and against the PCGG and Board Members Cesar A. Sevilla, Tirso D. Antiporda, Jr., Juan J. Carlos, Gloria C. Carreon, Renato L. Cayetano, Ma. Corazon K. Imperial, Eduardo K. Litonjua, Sr., Jesus N. Manalastas, Jose V. Romero, Jr., Celso L. Samaniego, Daniel P. Santiago, Jr., and Oscar F. Santos from recognizing Cesar A. Sevilla as a member of the Board of Directors. After hearing: (1) a writ of prohibition be issued (a) to prohibit respondent PCGG chairman and the members of the Board of Directors from recognizing respondent Cesar A. Sevilla as a member of the Board of Directors of the Bank, and (b) Cesar A. Sevilla from performing the duties of a member of Board of Directors. (2) to compel respondents to recognize petitioner as a director of UCPB. (3) to declare respondent Cesar A. Sevilla not entitled to said office and ousting him therefrom. (4) to declare that the herein petitioner is entitled to said office and placing him in possession thereof. (5) to hold all the respondents solidarily liable to pay petitioner the costs of suit and expenses of litigation and attorney's fees in the amount of P50,000.00 because the acts or omissions of the respondents have compelled the petitioner to litigate and thus incur expenses to protect his rights and interests. (6) to hold all the respondents solidarily liable to pay nominal, temperate and exemplary damages, by way of example or correction for the public good and for unlawful and illegal acts committed and to be awarded at the discretion of this Honorable Court. (7) to grant such and other remedies as may be just and equitable in the premises.6 Perceiving that the issue raised was not just the propriety of the petitioner's separation or removal as director of the UCPB but the court's own jurisdiction over the subject matter, the Sandiganbayan set the petition "for hearing on 3 September 1993 on the issuance of a restraining order with the issue of jurisdiction indicated as primordial."7 At the hearing on the said date, it expressed its concern as to "its jurisdiction over the petition upon certain premises, namely, whether or not the acts complained of by petitioner Garcia, which do not appear to be factually disputed by the respondents herein, constitute merely acts of the Board, which would make the conflict an intra-corporate problem cognizable only by the Securities and Exchange Commission or, considering the peculiarity of the circumstances, particularly the alleged totality of the dominance by the PCGG over the United Coconut Planters Bank, the acts attributed to the Board of Directors by the petitioner are acts of the PCGG under the mantle of its special functions under Executive Orders No. 1, No. 2, No. 14 and No. 14-A." It then required the respondents to submit their "memoranda and/or oppositions and/or answers" to the petition and the petitioner to submit his memorandum of authorities herein, immediately after which the petition would be deemed submitted for decision.8 After the parties had complied with the above requirements, the Sandiganbayan (First Division) promulgated on 1 October 1993 its decision9 dismissing the petition because "both the allegations in the petition and the relevant supporting annexes demonstrate that the issues presented by the petitioner refer solely to the election or appointment of directors in a corporation and, therefore, within the original and exclusive jurisdiction of the Securities and Exchange Commission under Section 5(c) of P.D. 902-A, as amended." It found such issues as having "nothing to do, except very peripherally, with the PCGG's functions of preserving property under sequestration or of determining the ill-gotten character of propriety [sic] already under sequestration." In view of its relevance to the proper disposition of this petition, it is well to quote the Sandiganbayan's disquisition supporting its judgment: It is the view of this Court that the issue brought by the petitioner to the bar is one that concerns the acts of the Board of Directors of a corporation as such with respect to one of its members and, therefore, under the exclusive jurisdiction of the Securities and Exchange Commission. Pursuant to P.D. No. 902-A as amended, the Securities and Exchange Commission ". . . shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx (c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations." [Sec. 5(c)]. xxx xxx xxx The fact that this Court for its part has exclusive original jurisdiction over cases — whether civil or criminal — filed or prosecuted by the PCGG does not set it in conflict with the authority of the Securities and Exchange Commission under its own Charter. Undoubtedly, the Supreme Court has affirmed the exclusivity of this Court's jurisdiction over cases filed by PCGG as well over the very acts of the PCGG therein, thus: ". . . Necessarily, those who wish to question or challenge the Commission's acts or orders in such cases must seek recourse to the same court, the Sandiganbayan, which is vested with exclusive and original jurisdiction ." (PCGG v. Peña, 159 SCRA 556, 564, emphasis supplied). The point of this, of course, is the juridical abhorrence to split jurisdictions resulting in multiplicity of suits (id., p. 565). Indeed, even in proceedings on issues which appeared at first blush to have been peripheral to the PCGG's exercise of its authority, the Supreme Court has withdrawn cases from the Regional Trial courts and even from the Securities and Exchange Commission where it turned out that the conflict among the parties was one ". . . arising from, incidental to, or related to such cases . . ." i.e., the cases involving the recovery of alleged ill-gotten wealth ". . . such as the dispute over the sale of shares, the propriety of the issuance of ancillary writs of provisional remedies relative thereto, the sequestration thereof, which may not be made the subject of separate actions or proceedings in another forum . . ." (Soriano III v. Yuzon, 164 SCRA 226, 242). Having said all of the above, however, this Court itself has also drawn the limits of its authority to hear matters when the PCGG would somehow be involved. Thus, this Court was upheld by the Supreme Court in the case of Holiday Inn v. Sandiganbayan (186 SCRA 447) when it refused to look into the propriety of a contract entered into by the New Riviera Hotel and Development Co., Inc., which was sequestered by the PCGG and where two-thirds of the Board of Directors were PCGG nominees. In a ruling that was approved of by the Supreme Court, this Court said: ". . . . This court is of the view that its jurisdiction refers to acts of the PCGG acting as such whether alone or with other persons, natural or juridical, and not generally where PCGG representatives act as part of another juridical person or entity. A rule of thumb might be thus: if the PCGG can be properly impleaded on a cause of action asserted before this Court as a distinct entity, then this Court would generally exercise jurisdiction; otherwise, it would not, because, then the "PCGG character" of the act of omission in question may, at best, be only incidental. After all, the presence of PCGG representatives in sequestered companies does not automatically tear down the corporate veil that distinguishes the corporation from its officers, directors or stockholders. Corporate officers whether nominated by the PCGG or not act, insofar as third parties are concerned, are corporate officers. Contracts entered into by the San Miguel corporation, for example, in connection with its poultry operations and the cancellations thereof, are not PCGG activities which would justify the invocation of this Court's jurisdiction, even if the contract or the suit were unanimously approved by its board of directors where PCGG representatives sit. (Resolution, Annex "O", p. 143, Rollo). — Holiday Inn (Phils.), Inc. vs. Sandiganbayan, 186 SCRA 447, 452 Going farther, the Supreme Court in that case ruled that the Sandiganbayan would not have jurisdiction over issues which did not relate to the propriety of the sequestration nor to the "ill-gotten" or "crony related" character of the subject of the PCGG's acts. (id. p. 453). In the instant petition, petitioner Garcia protests the act of the Board of Directors of the UCPB on July 22, 1993 which resulted in his ouster from the UCPB Board. While it is not denied that the PCGG through its Chairman had asked petitioner Garcia to resign, Garcia had refused to do so; while PCGG Chairman Gunigundo had written petitioner Garcia on July 6, 1993 to tell him that his representation of the Government in the UCPB Board had been terminated, petitioner did not there and then cease to be a member of the UCPB Board of Directors. Instead, it was the Resolution (No. 66-93) of the Board of Directors at its meeting on July 22, 1993 which replaced petitioner Garcia with respondent Cesar A. Sevilla in the Board, albeit undoubtedly upon the request or, if petitioner pleases, upon instigation of the PCGG Chairman. Respondent members of the Board of Directors Tirso D. Antiporda, et al., have well pointed out that while PCGG Chairman Gunigundo had also terminated the representation of Director Manuel Concordia, as Gunigundo indeed had in his letter of July 6, 1993 (Annex "C", Petition), the UCPB Board declined to follow that lead resulting thus in the termination only of petitioner Garcia and Wencelito T. Andanar (Annex "F", Petition). We then have a situation, both as a matter of law and as a matter of fact, where an entity other than the PCGG — the UCPB Board of Directors — acting independently although in acquiescence to or accommodation of the behest of the PCGG. We, therefore, have clearly a simple case of a Board of Directors ousting two of its members for reasons which it had deemed proper. Whether the Board did act properly or not in this regard has nothing to do, except very peripherally, with the PCGG's functions of preserving property under sequestration or of determining the ill-gotten character of propriety [sic] already under sequestration. In fact, both the allegations in the petition and the relevant supporting annexes demonstrate that the issues presented by the petitioner refer solely to the election or appointment of directors in a corporation and, therefor[e], within the original and exclusive jurisdiction of the Securities and Exchange Commission under Sec. 5(c) of P.D. 902-A, as amended. His motion for the reconsideration 10 of the decision having been denied in the resolution of the Sandiganbayan of 9 February 1994,11 the petitioner then filed the instant petition. He asks this Court to give due course to the petition and to order the Sandiganbayan "to exercise jurisdiction over the petition for prohibition, mandamus, quo warranto, etc. in the case of Leon M. Garcia, Jr. vs. PCGG, et al. in S.B. No. 0154." 12 He imputes upon the Sandiganbayan the commission of the following errors: (1) . . . IN RULING THAT IT DOES NOT HAVE JURISDICTION OVER THE PETITION FOR PROHIBITION, MANDAMUS, QUO WARRANTO ENTITLED LEON M. GARCIA, JR. VS. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) PARTICULARLY IN RESOLVING THE PROPRIETY OF PETITIONER'S SEPARATION OR REMOVAL FROM HIS POSITION. (2) . . . IN NOT RULING THAT THE ACTS COMPLAINED OF ARE DIRECT AND OVERT ACTS OF THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) IN RELATION TO ITS POWERS AND FUNCTIONS OF SEQUESTRATION HENCE WITHIN THE JURISDICTION OF THE SANDIGANBAYAN. (3) . . . IN RULING THAT THE REMOVAL OF PETITIONER AS MEMBER OF THE BOARD OF DIRECTORS BY THE PCGG AND HIS REPLACEMENT BY THE UCPB BOARD OF DIRECTORS IS WITHIN THE ORIGINAL AND EXCLUSIVE JURISDICTION OF THE SECURITIES AND EXCHANGE COMMISSION. It is the contention of the petitioner that the Sandiganbayan has jurisdiction over his petition because (1) "the acts complained of are direct and overt acts of the respondent PCGG in relation to its powers and functions of sequestration," (2) the petitioner's cause of action against the PCGG "arose from its act of removing and directing the Board to elect his replacement," and (3) the PCGG as the conservator of sequestered UCPB shares of stock, directly exercised its power of sequestration of the UCPB shares of stock." Accordingly, citing "PCGG vs. Securities and Exchange Commission, G.R. No. 82188, January [should be June] 30, 1988, p. 15," and "Holiday Inn vs. The Sandiganbayan, 186 SCRA 447," the petitioner posits the view that the Sandiganbayan has jurisdiction over the case. He further contends that since the PCGG is the "real party in interest" and it was its "act . . . in abruptly removing the petitioner from his position and its urgent importunings that prompted UCPB Board of Directors to elect Cesar Sevilla in his place," then, following "PCGG vs. SEC," the SEC would have no jurisdiction over his petition since the PCGG, "as co-equal body, is a co-equal entity over which actions the SEC has no power of control." This Court required the parties to Comment on the petition. In their Comment filed on 14 June 1994, the private respondents maintain that the controversy falls within the exclusive and original jurisdiction of the SEC since it involves a protest against a corporate act to replace a member of the Board of Directors. 13 In its Comment filed by the Office of the Solicitor General, respondent PCGG submits that: THE SOLE ISSUE POSED FOR RESOLUTION IS WHETHER OR NOT RESPONDENT SANDIGANBAYAN HAS JURISDICTION OVER THE PETITION FOR PROHIBITION, MANDAMUS, QUO WARRANTO, ETC. FILED BY PETITIONER. 14 Its arguments to support the negative of the proposition are actually anchored not on the Sandiganbayan's lack of jurisdiction to issue the extraordinary writs but on the fact that the petition in SB No. 0154 "essentially assails the validity of Resolution No. 66-93 of the UCPB Board which removed petitioner as a director thereat" and "the allegations therein have nary a bearing on the question of whether or not the sequestered shares in UCPB are ill-gotten by the specified defendants in Civil Case No. 0033 (Republic vs. Eduardo Cojuangco, et al.) pending before respondent Sandiganbayan"; "it is thus evident that the subject matter of the petition below refers to the corporate act of the UCPB Board and not that of PCGG's as a public or government entity." Otherwise stated, "the petition below is not thus per se a PCGG case," and in light of Holiday Inn (Phils.), Inc. vs. Sandiganbayan, 15 the Sandiganbayan has no jurisdiction over it. This Court resolved to give due course to this petition and decide it on the basis of the pleadings already submitted which sufficiently expound the parties' respective views and positions. As this Court sees it, the larger and more crucial issue in this case is not just the separation or removal of the petitioner as a director of the UCPB representing the PCGG, but, as stated in the exordium of this ponencia, the jurisdiction of the Sandiganbayan over the special civil actions of prohibition, mandamus, and quo warranto. Jurisdiction, which is the authority to hear and the right to act in a case, 16 is conferred by the Constitution and by law. 17 Although the Sandiganbayan, a constitutionally-mandated court, 18 is a regular court, 19 it has, nevertheless, only a special or limited jurisdiction. As the Sandiganbayan puts it in the challenged decision: its jurisdiction encompasses only those enumerated under Section 4 of P.D. No. 1606 as amended and those provided in special laws such as R.A. No. 7080 on "Plunder" and the enabling enactments of Presidential Commission on Good Government (PCGG) particularly Executive Order No. 14 as amended (May 7, 1986), especially Secs. 1 and 2 thereof which read: Sec. 1. Any provision of the law to the contrary notwithstanding, the Presidential Commission on Good Government, with the assistance of the Office of the Solicitor General and other government agencies, is hereby empowered to file and prosecute all cases investigated by it under Executive Order No. 1, dated February 12, 1986, and Executive Order No. 2, dated March 12, 1986, as may be warranted by its findings. Sec. 2. The Presidential Commission on Good Government shall file all such cases, whether civil or criminal, with the Sandiganbayan, which shall have exclusive and original jurisdiction thereof. Section 4 of P.D. No. 1606, as amended by P.D. Nos. 1860 and 1861, provides as follows: Sec. 4. Jurisdiction. — The Sandiganbayan shall exercise: (a) Exclusive original jurisdiction in all cases involving: (1) Violations of Republic Act No. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, Republic Act No. 1379, and Chapter II, Section 2, Title VII of the Revised Penal Code; (2) Other offenses or felonies committed by public officers and employees in relation to their office, including those employed in government-owned or controlled corporations, whether simple or complexed with other crimes, where the penalty prescribed by law is higher than prision correccional or imprisonment for six (6) years, or a fine of P6,000.00; PROVIDED, HOWEVER, that offenses or felonies mentioned in this paragraph where the penalty prescribed by law does not exceed prision correccional or imprisonment for six (6) years or a fine of P6,000.00 shall be tried by the proper Regional Trial Court, Metropolitan Trial Court, Municipal Trial Court and Municipal Circuit Trial Court. (b) Exclusive appellate jurisdiction: (1) On appeal, from the final judgments, resolutions or orders of the Regional Trial courts in cases originally decided by them in their respective territorial jurisdiction. (2) By petition for review, from the final judgments, resolutions or orders of the Regional Trial Courts in the exercise of their appellate jurisdiction over cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction. It is settled that the authority to issue writs of certiorari, prohibition, and mandamus involves the exercise of original jurisdiction which must be expressly conferred by the Constitution or by law. In Garcia vs. De Jesus, 20 this Court stated: In the Philippine setting, the authority to issue Writs of Certiorari, Prohibition and Mandamus involves the exercise of original jurisdiction. Thus, such authority has always been expressly conferred, either by the Constitution or by law. As a matter of fact, the well-settled rule is that jurisdiction is conferred only by the Constitution or by law (Orosa, Jr. v. Court of Appeals, G.R. Nos. 76828-32, 28 January 1991; Bacalso v. Ramolete, G.R. No. L-22488, 26 October 1967, 21 SCRA 519). It is never derived by implication. Indeed, "(w)hile the power to issue the writ of certiorari is in some instance conferred on all courts by constitutional or statutory provisions, ordinarily, the particular courts which have such power are expressly designated" (J. Aquino's Concurring Opinion in Pimentel, supra, citing 14 C.J.S. 202; Emphasis ours). Thus, our Courts exercise the power to issue Writs of Certiorari, Prohibition and Mandamus by virtue of express constitutional grant or legislative enactments. To enumerate: (1) Section 5[1], Article VIII of the 1987 Constitution conferred upon this Court such jurisdiction; (2) Section 9[1] of Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980, to the Court of Appeals (then Intermediate Appellate Court); (3) Section 21[1] of the said Act, to Regional Trial Courts; (4) Section 5[1] of Republic Act No. 6734, or the Organic Act for the Autonomous Region in Muslim Mindanao, to the newly created Shari'ah Appellate Court; and (5) Article 143[e], Chapter I, Title I, Book IV of Presidential Decree No. 1083, or the Code of Muslim Personal Law, to Shari'ah District Courts. With respect to petitions for quo warranto and habeas corpus, original jurisdiction over them is expressly conferred to this Court by Section 5(1), Article VIII of the Constitution and to the Court of Appeals and the Regional Trial Courts by Section 9(1) and Section 21(1), respectively, of B.P. Blg. 129. In the absence then of a specific statutory grant of jurisdiction to issue the said extraordinary writs, the Sandiganbayan, as a court with only special and limited jurisdiction, cannot exercise jurisdiction over the petition for prohibition, mandamus and quo warranto filed by petitioner. Having reached the foregoing conclusion, discussions on the other issues raised would no longer be necessary. WHEREFORE, the instant petition is DISMISSED. No pronouncements as to costs. SO ORDERED. Cruz, Bellosillo, Quiason and Kapunan, JJ., concur. #Footnotes 1 United Coconut Planters Bank. 2 Presidential Commission on Good Government. 3 Rollo, 146-148. 4 Annex "G" of Petition; Rollo, 39-54. 5 Tirso Antiporda, Jr., Juan Carlos, Gloria Carreon, Renato Cayetano, Corazon Imperial, Eduardo Litonjua, Sr., Jesus Manalastas, Jose Romero, Jr., Celso Samaniego, Daniel P. Santiago, Jr., and Oscar Santos, who are Directors and Officers of the UCPB. 6 Rollo, 47-48. 7 Id., 148. 8 Order of 3 September 1993, Annex "I-1" of Petition; Rollo, 69-70. 9 Annex "M-1" of Petition; Id., 146-155. Per Presiding Justice Francis E. Garchitorena, with the Concurrence of Associate Justices Jose S. Balajadia and Sabino R. de Leon, Jr. 10 Annex "N" of Petition; Rollo, 156-166. 11 Annex "Q" of Petition; Id., 181. 12 Id., 24. 13 Rollo, 192. 14 Id., 232. 15 186 SCRA 447 [1990]. 16 FLORENZ D. REGALADO, Remedial Law Compendium, vol. I, Fifth Revised ed., 5; CAMILO D. QUIASON, Philippine Courts and Their Jurisdictions, 1986 ed., 5, citing several cases. 17 U.S. vs. Pagdayuman, 5 Phil. 265 [1905]; U.S. vs. Arceo, 6 Phil. 29 [1906]; People vs. Casiano, 1 SCRA 478 [1961]; People vs. Mariano, 71 SCRA 600 [1976]; People vs. Estrebella, 164 SCRA 114 [1988]; People vs. Tañada, 166 SCRA 360 [1988]; People vs. Bugtong, 169 SCRA 797 [1989]; Salas vs. Castro, 216 SCRA 198 [1992]. 18 REGALADO, op. cit., 2. 19 Republic of the Philippines vs. Asuncion, G.R. No. 108208, 11 March 1994. 20 206 SCRA 779, 786-787 [1992]. The Lawphil Project - Arellano Law Foundation