GR 85576; (June, 1990) (Digest)
G.R. No. 85576 June 8, 1990
HOLIDAY INN (PHILS.), INC., petitioner, vs. THE SANDIGANBAYAN (1st Division), REPUBLIC OF THE PHILIPPINES, represented by the PHILIPPINE COMMISSION ON GOOD GOVERNMENT (PCGG), ROBERTO S. BENEDICTO and NEW RIVIERA HOTEL DEVELOPMENT CO., INC., respondents.
FACTS
Petitioner Holiday Inn (Phils.), Inc. (HIP) had a management contract with respondent New Riviera Hotel Development Co., Inc. (NRHDC), which included a right of first refusal should NRHDC receive a bona fide offer for the hotel. NRHDC was subsequently sequestered by the PCGG as alleged ill-gotten wealth of Roberto S. Benedicto. Following the sequestration, the PCGG and Benedicto agreed to a board composition for NRHDC, with PCGG nominees constituting the majority. In 1986, HIP and the sequestered NRHDC entered into an addendum extending their management agreement indefinitely, terminable upon six months’ notice.
In 1988, the NRHDC board, controlled by PCGG nominees, served a termination notice on HIP, intending to replace it with a new manager. HIP contended this termination, effected without honoring its right of first refusal, breached their original agreement. HIP thus sought to intervene in the pending Sandiganbayan case (Civil Case No. 0034) for the recovery of alleged ill-gotten wealth, wherein NRHDC was a sequestered asset. HIP argued the termination was an act of the PCGG-controlled board and thus an incident of the sequestration.
ISSUE
Whether the Sandiganbayan has jurisdiction over HIP’s proposed complaint-in-intervention seeking to enforce its contractual right of first refusal against the sequestered NRHDC.
RULING
No, the Sandiganbayan correctly denied the motion for intervention for lack of jurisdiction. The Court held that the Sandiganbayan’s exclusive jurisdiction, as established in PCGG v. Peña, extends to cases for the recovery of ill-gotten wealth and incidents arising from, incidental to, or related to such cases. However, HIP’s claim is not an incident of the main sequestration case. The main case concerns the determination of whether NRHDC’s assets are ill-gotten. HIP’s cause of action is a contractual dispute—a breach of the right of first refusal and a claim for unpaid management fees—arising from its separate agreement with the corporation.
The Court emphasized the distinction between the corporation and its stockholders. The sequestration and the appointment of PCGG nominees to the board did not dissolve NRHDC’s corporate personality. The act of terminating the management contract was a corporate act undertaken by NRHDC’s board in the ordinary course of business. A dispute over such a corporate act, between the corporation and a third-party contractor, is a separate and distinct controversy. It does not involve the issue of ill-gotten wealth and is therefore outside the Sandiganbayan’s specialized jurisdiction. HIP’s proper recourse is to file an independent action in the appropriate civil court to litigate its contractual claims against the corporate entity, NRHDC.