G.R. No. 167055-56 and G.R. No. 170673; March 25, 2010
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner, vs. SILANGAN INVESTORS AND MANAGERS, INC. and SANDIGANBAYAN, Respondents. (G.R. Nos. 167055-56) / PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Petitioner, vs. POLYGON INVESTORS AND MANAGERS, INCORPORATED and SANDIGANBAYAN, Respondents. (G.R. No. 170673)

FACTS

Silangan Investors and Managers, Inc. (Silangan) and Polygon Investors and Managers, Inc. (Polygon) owned 25,429 (39.999%) and 12,700 (19.977%) shares, respectively, in Oceanic Wireless Network, Inc. (Oceanic). The Presidential Commission on Good Government (PCGG) issued writs of sequestration in 1986 and 1988 against Roberto S. Benedicto, Jose L. Africa, Victor A. Africa, and Alfredo L. Africa, and later against Aerocom and Polygon, leading to the sequestration of majority of Oceanic’s shares. PCGG took over Oceanic’s management, voted the sequestered shares, reorganized the board, and declared cash dividends. Benedicto and PCGG entered into a compromise agreement on November 3, 1990, where Benedicto ceded, among other assets, 51% of the equity in Oceanic belonging to him and/or his companies to the government. PCGG filed Civil Case No. 0126 for injunction and damages, while the private respondents filed Civil Case No. 0127 for certiorari and prohibition. The Sandiganbayan, in its April 25, 1994 Decision, declared the writs of sequestration null and void for being issued beyond the constitutional period and for procedural defects, and declared PCGG’s acts in managing Oceanic void. This Decision was affirmed by the Supreme Court in Presidential Commission on Good Government v. Sandiganbayan (2001), which became final and executory on February 19, 2003. Following the finality of the judgment, Silangan and Polygon moved for the release of the cash dividends declared by Oceanic which had been placed in custodia legis. The Sandiganbayan granted their motions. PCGG filed the present petitions, arguing it was entitled to a portion of the dividends based on the compromise agreement with Benedicto.

ISSUE

Whether the Sandiganbayan committed grave abuse of discretion in ordering the release of the cash dividends to Silangan and Polygon, to the exclusion of PCGG, which claimed a share based on a compromise agreement with Roberto S. Benedicto.

RULING

The Supreme Court DISMISSED the petitions and AFFIRMED the assailed Sandiganbayan Resolutions. The Court held that the Sandiganbayan did not commit grave abuse of discretion. The compromise agreement between PCGG and Benedicto only pertained to the cession of Benedicto’s own shares and dividends in Oceanic to the government. It did not cover the shares independently owned by Silangan and Polygon, which were conclusively established by the final and executory judgment in Presidential Commission on Good Government v. Sandiganbayan as not being ill-gotten and no longer under sequestration. Consequently, the cash dividends derived from these lawfully owned shares rightfully belong to Silangan and Polygon. PCGG’s claim over these dividends, based on its management actions during the illegal sequestration period, was without merit. The Court also upheld the Sandiganbayan’s order for the payment of a 15% contingent attorney’s fee to Silangan’s counsel, as it was based on a valid retainer agreement.