G.R. No. 113420 March 7, 1997
Republic of the Philippines, represented by the Presidential Commission on Good Government, petitioner, vs. Sandiganbayan (Third Division), Provident International Resources Corp., and Philippine Casino Operators Corporation, respondents.

FACTS

On March 19, 1986, the PCGG sequestered the assets of respondent corporations, Provident International Resources Corp. and Philippine Casino Operators Corporation. On July 29, 1987, the Republic, through the Solicitor General, filed Civil Case No. 0021 before the Sandiganbayan against individuals including Edward Marcelo for recovery of ill-gotten wealth. The complaint listed the respondent corporations as assets allegedly controlled by Marcelo but did not formally implead them as party-defendants. It was only on October 30, 1991, that the complaint was amended to include them as defendants.
Prior to this amendment, on September 11, 1991, the corporations filed a petition for mandamus seeking to lift the sequestration. They argued the PCGG failed to file a proper judicial action against them within the one-year period from the ratification of the 1987 Constitution, as required by its Section 26, Article XVIII. The Sandiganbayan granted the petition, declaring the sequestration automatically lifted as of August 2, 1987, and ordered the restoration of assets. It cited precedents ruling that merely listing a corporation in a complaint against individuals does not constitute the required judicial action against the corporation itself.

ISSUE

The principal issues were: (1) Whether a proper judicial action was filed against the respondent corporations within the constitutional period; and (2) Whether the sequestration order was valid despite being signed by only one PCGG Commissioner.

RULING

The Supreme Court ruled in favor of the Republic, reversing the Sandiganbayan. On the first issue, the Court abandoned its previous rulings in the Interco and Olivares cases, which had been relied upon by the Sandiganbayan. It held that the filing of a complaint for the recovery of ill-gotten wealth against the alleged beneficial owners, which identifies the corporations as the instruments or repositories of such wealth, constitutes the “corresponding judicial action” contemplated by the Constitution. The amendment to formally implead the corporations later was permissible, as the initial filing of the case against the individuals was sufficient to prevent the automatic lifting of sequestration. The constitutional provision aims to prevent indefinite sequestration without judicial recourse, a condition satisfied by the timely filing of Civil Case No. 0021.
On the second issue, the Court ruled the sequestration order was not void. While PCGG rules required the authority of at least two Commissioners, the order was issued under the authority of the Commission and ratified by its subsequent acts. The defect, if any, was merely formal and did not invalidate the order, especially since the corporations did not timely challenge it on this ground. The Sandiganbayan thus committed grave abuse of discretion in lifting the sequestration.