G.R. No. 106244 , January 22, 1997
Republic of the Philippines, petitioner, vs. Honorable Sandiganbayan, Victor Africa, et al., respondents.

FACTS

The Presidential Commission on Good Government (PCGG) sequestered shares of stock in Traders Royal Bank registered in the names of respondents, the Africa family and others, alleging they were part of the ill-gotten wealth of Eduardo Cojuangco, Jr. The PCGG filed a case for reversion, reconveyance, restitution, and damages against Cojuangco and others before the Sandiganbayan. However, the registered stockholders of the sequestered shares, the respondents herein, were not impleaded as defendants in that main case. They filed a motion to lift the sequestration on their shares, arguing the PCGG failed to institute a judicial action against them as the stockholders of record within the one-year period mandated by the Constitution.
The Sandiganbayan granted the motion and ordered the sequestration lifted. The Republic filed a petition for certiorari, arguing that the filing of the main case against Cojuangco, the alleged beneficial owner, satisfied the constitutional requirement and that impleading the registered stockholders was unnecessary. The Republic contended that the respondents were merely nominal stockholders holding the shares in trust for Cojuangco.

ISSUE

Whether the sequestration of the shares of stock registered in the names of the respondents was automatically lifted for failure of the PCGG to file a judicial action against them as the stockholders of record within the constitutional one-year period.

RULING

The Supreme Court dismissed the petition and affirmed the Sandiganbayan’s resolution. The Court held that the constitutional requirement under Section 26, Article XVIII is clear and mandatory. It requires the filing of a judicial action against the party against whom the sequestration is directed—the stockholder of record. The provision states that the sequestration shall be lifted automatically unless the corresponding judicial action is filed within one year from its issuance.
The legal logic is grounded in due process. The registered stockholders possess legal title to the shares, and any action affecting their property must name them as parties to afford them their day in court. Filing a case against a third party, even if alleged to be the beneficial owner, does not comply with this requirement as to the registered owners. The government’s theory that the respondents were mere dummies or nominees is a matter of evidence to be threshed out in a proper case filed against them. Since no such case was filed within the prescribed period, the constitutional mandate for automatic lift operates. The Court emphasized that the one-year period is not extendible and is intended to prevent the indefinite deprivation of property under sequestration without judicial recourse.