G.R. Nos. 112708-09 March 29, 1996
Republic of the Philippines, represented by the Presidential Commission on Good Government, petitioner, vs. Sandiganbayan, Sipalay Trading Corporation and Allied Banking Corporation, respondents.

FACTS

The Presidential Commission on Good Government (PCGG) sequestered shares of stock in Maranaw Hotels and Resort Corporation held by Sipalay Trading Corporation, alleging they were part of the ill-gotten wealth of Lucio C. Tan. Separately, the PCGG served a “Search and Seizure Order” on Allied Banking Corporation’s Valenzuela branch. Both Sipalay and Allied challenged these orders before the Supreme Court, which referred the consolidated petitions to the Sandiganbayan. Sipalay argued the sequestration was baseless and violated due process, while Allied contended the order was an unconstitutional general search warrant.
During trial at the Sandiganbayan, the PCGG presented its evidence. However, after the presentation, and nearly seven years after the original petitions were filed, the PCGG filed a Motion to Dismiss, arguing that Sipalay and Allied failed to exhaust administrative remedies by not appealing the orders to the Office of the President first. The PCGG also moved to consolidate these cases with a separate civil case for reversion and damages it had filed against Lucio Tan and others.

ISSUE

Whether the Sandiganbayan correctly denied the PCGG’s Motion to Dismiss and Motion for Consolidation.

RULING

Yes. The Supreme Court affirmed the Sandiganbayan’s denial of both motions. On the Motion to Dismiss, the Court held the doctrine of exhaustion of administrative remedies was inapplicable. The PCGG’s sequestration and search orders were issued pursuant to the government’s exercise of sovereign power, not a quasi-judicial function. The rules requiring an appeal to the Office of the President apply to decisions rendered in the exercise of quasi-judicial power, not to preliminary, investigatory acts like sequestration. Furthermore, the constitutional mandate under Article XVIII, Section 26 requires the PCGG to file a corresponding judicial case within a specific period to maintain a sequestration; failure to do so results in its automatic lift. This provision implies a direct judicial recourse, bypassing administrative appeal.
Regarding the Motion for Consolidation, the Court upheld the Sandiganbayan’s discretion. Consolidation is not a matter of right but rests on the sound discretion of the court to avoid prejudice and ensure an orderly administration of justice. The Sandiganbayan found that consolidating the petitions (which challenged the validity of the PCGG’s orders) with the civil case for recovery of alleged ill-gotten wealth would be improper, as they involved different causes of action and issues. The petitions were special civil actions for certiorari and prohibition, while the civil case was an action for reversion and damages. The Sandiganbayan did not abuse its discretion in denying consolidation.