G.R. No. 129406; March 6, 2006
REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), Petitioner, vs. SANDIGANBAYAN (SECOND DIVISION) and ROBERTO S. BENEDICTO, Respondents.

FACTS

The case originated from Civil Case No. 0034, a complaint for reconveyance, reversion, accounting, reconstitution, and damages filed by the Republic, through the PCGG, against Roberto S. Benedicto and others to recover alleged ill-gotten wealth. Pursuant to its mandate, the PCGG sequestered various properties of Benedicto, including 227 shares of stock in the Negros Occidental Golf and Country Club, Inc. (NOGCCI), registered in his name or in the names of his corporations. PCGG representatives sat on the NOGCCI Board, which passed resolutions in October 1986 and March 1987 imposing and then increasing a monthly membership due on each share. As sequestrator, the PCGG failed to pay these dues on the 227 shares, resulting in accumulated arrears of P2,959,471.00. Consequently, the shares were declared delinquent and scheduled for auction. The PCGG filed an injunction suit (Civil Case No. 5348) in the Bacolod RTC to stop the sale, but it was dismissed, and the auction proceeded on August 5, 1989. On November 3, 1990, the Republic and Benedicto entered into a Compromise Agreement in Civil Case No. 0034, which included a general release clause wherein the Republic agreed to lift the sequestration on the 227 NOGCCI shares, acknowledging Benedicto’s capacity to acquire them from legitimate income. The Sandiganbayan approved this agreement in a decision dated October 2, 1992. During implementation, Benedicto filed a “Motion for Release from Sequestration and Return of Sequestered Shares/Dividends” on February 22, 1994. The Sandiganbayan granted this motion in a December 6, 1994 Resolution but placed the shares under the custody of its Clerk of Court. Subsequently, in a March 28, 1995 Resolution, the Sandiganbayan clarified its earlier order and directed the PCGG to deliver the 227 shares free from liens or, in default thereof, to pay their value at P150,000.00 per share. Due to PCGG’s non-compliance, Benedicto filed motions for compliance, leading to a February 23, 1996 Resolution giving the PCGG a final 15-day extension. The PCGG filed a Manifestation with Motion for Reconsideration, which the Sandiganbayan denied in its March 13, 1997 Resolution, also granting Benedicto’s Motion to Enforce Judgment Levy. The Republic, through the PCGG, filed the present petition for certiorari.

ISSUE

Whether the Sandiganbayan gravely abused its discretion in holding the PCGG at fault for not paying the membership dues on the 227 sequestered NOGCCI shares, which led to their foreclosure sale, and in ordering the PCGG to pay the value of said shares.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion by the Sandiganbayan. The Court ruled that the PCGG, as a sequestrator-receiver, had a duty to preserve the value of the sequestered properties, akin to that of a responsible father of a family. This duty included paying outstanding debts attached to the property to prevent its loss. The membership dues were obligations attached to the shares, and default in payment made the shares liable for delinquency sale. The PCGG’s failure to pay these dues, despite its representatives sitting on the NOGCCI Board that imposed them, constituted a breach of its duty. The Court found the PCGG’s act of filing an injunction suit only after the auction was announced to be “too little and too late” and not an exercise of due diligence. The PCGG’s contention that the owner bore the burden of paying the dues was untenable, as the obligation was attached to the shares under its administration. The Sandiganbayan correctly held the PCGG liable for the loss of the shares. The Compromise Agreement, which acknowledged Benedicto’s legitimate acquisition of the shares and obligated the Republic to lift the sequestration, further supported the Sandiganbayan’s orders for the PCGG to deliver the shares or pay their value. The assailed Resolutions were affirmed.