G.R. No. 95197 September 30, 1991
FIRST PHILIPPINE HOLDINGS CORPORATION, petitioner, vs. SANDIGANBAYAN, Second Division, respondent.

FACTS

The case involves 13.9 million Manila Electric Company (MERALCO) shares originally owned by Meralco Securities Corporation (MSC), later First Philippine Holdings Corporation (FPHC). In 1977, these shares were sold to Meralco Foundation, Inc. (MFI), an entity linked to Benjamin Romualdez, under an installment agreement. MFI defaulted on its payments. Following the 1986 EDSA Revolution, the Presidential Commission on Good Government (PCGG) sequestered the shares as alleged ill-gotten wealth. Meanwhile, MFI and FPHC negotiated a settlement with the Asset Privatization Trust (APT), which held the loans secured by the shares, and private financiers. This agreement involved paying off the loans and widely dispersing the shares, with profits to be shared.
The PCGG initially issued a resolution on May 10, 1989, lifting the sequestration based on this settlement plan, which required Sandiganbayan approval. However, the Sandiganbayan refused to approve the lifting, citing a pending ill-gotten wealth case (Civil Case No. 0035) against Romualdez and others involving the shares. FPHC thus filed this petition to compel the Sandiganbayan to consent to the lifting of the sequestration order.

ISSUE

Whether the Sandiganbayan can validly refuse to approve the PCGG’s resolution lifting the sequestration of the subject MERALCO shares based on the compromise agreement among the parties.

RULING

The Supreme Court granted the petition and ordered the Sandiganbayan to approve the PCGG resolution. The Court ruled that the Sandiganbayan cannot rightfully use the pendency of Civil Case No. 0035 to block the agreement. The compromise agreement is essentially a waiver by the Government of its civil claim, implying the assets are not ill-gotten or that the Government is returning them to the rightful owner. This civil compromise does not absolve any individual from criminal liability but is within the Government’s right to execute. The Court found the PCGG resolution, which was the product of renegotiation and provided for a profit-sharing scheme benefiting the Comprehensive Agrarian Reform Program, to be not contrary to law, morals, or public policy. Following Article 2029 of the Civil Code, which encourages fair compromise, and Article 2037, which requires judicial approval for execution, the Sandiganbayan’s duty was to grant approval as the agreement was lawful. Its refusal was therefore unjustified.