G.R. No. 172556 ; June 9, 2006
TRANS MIDDLE EAST (PHILS.) EQUITIES, INC., Petitioner, vs. SANDIGANBAYAN (5th Division), PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), The Board of Directors of Equitable PCI Bank, represented by its Chairman, CORAZON DELA PAZ and SABINO ACUT, JR., Respondents.

FACTS

Petitioner Trans Middle East (Phil.) Equities Inc. (TMEE) is the registered owner of 6,119,067 sequestered shares in Equitable-PCI Bank (EPCIB). The sequestration, initiated by the PCGG in 1986, was based on the allegation that the shares constituted ill-gotten wealth of Benjamin Romualdez. In 1991, the Sandiganbayan issued resolutions enjoining the PCGG from voting the shares and authorizing TMEE to vote them. The Supreme Court, in G.R. Nos. 105808 and 105809, issued a Temporary Restraining Order (TRO) against these resolutions. This TRO was later confirmed and maintained in the Court’s 1995 consolidated decision in Republic v. Sandiganbayan, but with the explicit proviso that it would continue “subject to the [Sandiganbayan’s] power to modify or terminate the same in the exercise of its sound discretion in light of such evidence as may subsequently be adduced.”
Subsequently, in a 1997 Resolution, the Supreme Court directed the Sandiganbayan to adjudicate the main issue of ownership with dispatch and, pending that, to resolve preliminary questions regarding the sequestration’s factual foundation. It also prohibited both PCGG and TMEE from voting the shares until the Sandiganbayan completed its determination of these preliminary questions. In 1998, the Sandiganbayan, exercising the discretion granted by the Supreme Court’s 1995 decision, recognized TMEE’s right to vote the shares. However, on May 22, 2006, on the eve of EPCIB’s annual stockholders’ meeting, the Sandiganbayan promulgated a Resolution declaring that the Supreme Court’s 1991 TRO remained in effect, thereby disqualifying TMEE from voting.

ISSUE

Whether the Sandiganbayan committed grave abuse of discretion in issuing its May 22, 2006 Resolution, which declared the 1991 Supreme Court TRO as still effective and barred TMEE from voting its shares.

RULING

Yes. The Supreme Court granted the petition for certiorari, finding that the Sandiganbayan committed grave abuse of discretion. Its ruling was founded on a blatantly erroneous legal premise. The 1991 TRO was a provisional measure issued in specific, now-terminated petitions (G.R. Nos. 105808 and 105809). The operative and controlling directives are the Supreme Court’s 1995 Decision and 1997 Resolution. The 1995 Decision explicitly empowered the Sandiganbayan to modify or terminate the TRO based on subsequently adduced evidence. The 1997 Resolution then laid down a specific procedural framework, prohibiting both parties from voting only until the Sandiganbayan resolved the preliminary questions regarding the sequestration. By 1998, the Sandiganbayan itself had exercised this discretionary power and allowed TMEE to vote. The 2006 Resolution, by reactivating a long-superseded TRO and ignoring the subsequent orders of the Supreme Court that granted the Sandiganbayan modifying authority, constituted a capricious and whimsical exercise of judgment. It effectively disregarded the final and executory nature of the High Court’s 1995 and 1997 rulings. The timing of the Resolution, promulgated a day before the stockholders’ meeting, further underscored its irregularity. Therefore, the Sandiganbayan acted with grave abuse of discretion