Corpo Case Digest

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT VS. SANDIGANBAYAN

G.R. Nos. 119609-10

FACTS OF THE CASE

The PCGG issued writs of sequestration against OWNI. Then, it sent Corporate Secretary Africa of Ocean Wireless Network, Inc. (OWNI) a letter directing him to send notices to all stockholders of record of OWNI for special stockholders’ meeting. He was required to issue one qualifying share each to PCGG Commissioners Maceren and Castro from the unissued shares and to record the transfer in the stock and transfer book of OWNI. Failure to comply within 5 days from receipt thereof, Assistant Solicitor General Desuasido would be designated as acting corporate secretary.During the special stockholders’ meeting of OWNI, PCGG voted all the Class A shares in the election of directors and elected to the board of directors Commissioners Maceren, Parlade and Gutierrez representing the Class A shares, and Brooker and Miller representing Class B and C shares. The new board of directors then elected Maceren as Chairman of the Board, Gutierrez as President, ASG Desuasido as Acting Corporate Secretary and Velasco as Acting Treasurer. None of the registered Class A shareholders of OWNI was present in that special stockholders meeting.Corporate Secretary Africa wrote the SEC questioning the election of the PCGG nominees as directors of the OWNI board on the ground that they were not stockholders of the OWNI. Then, a special stockholders’ meeting of OWNI took place, were another election of directors for Class “A” shares were held. Thus, the PCGG sought to enjoin the new directors from interfering with PCGG’s management of OWNI and/or representing themselves as directors. Sandiganbayan nullified the writs of sequestration, stressing the need to file a separate action against OWNI.

ISSUE

Whether or not the PCGG’s takeover of OWN is legal.

RULING

PCGG’s takeover of OWNI is not legal. It was previously ruled by the Court that “the PCGG cannot exercise acts of dominion over property sequestered, frozen or provisionally taken over.. the act of sequestration.. does not import or bring about a divestment of title over said property; does not make the PCGG the owner thereof.” Further, the writ of sequestration issued against OWNI is not valid because the civil suit filed against its stockholders is not a suit against OWNI. This Court has held that “failure to implead these corporations as defendants and merely annexing a list of such corporations to the complaints is a violation of their right to due process for it would in effect be disregarding their distinct and separate personality without a hearing.”