G.R. No. 90667 and G.R. No. 91655, November 5, 1991
Republic of the Philippines, petitioner, vs. Sandiganbayan, Palm Avenue Realty Development Corporation and Palm Avenue Holding Company, respondents. ( G.R. No. 90667 ) / Republic of the Philippines, petitioner, vs. Sandiganbayan and Rosario M.B. Olivares, respondents. (G.R. No. 91655)

FACTS

In G.R. No. 90667 , the PCGG sequestered 16,237,339 Benguet Corporation shares registered in the names of the Palm Avenue companies, which were allegedly owned by Benjamin Romualdez. To prevent foreclosure due to unpaid loans secured by these shares, the PCGG approved a sale of 9.5 million shares to Benguet Management Corporation (BMC). A Memorandum of Agreement stipulated that BMC would pay for and receive the 9.5 million shares, while the remaining 6,737,339 shares would be held by the PCGG. The Sandiganbayan later ruled that all 16 million shares remained under sequestration and ordered the Palm Avenue companies impleaded in the main ill-gotten wealth case (Civil Case No. 0035). The Republic challenged this, arguing the 9.5 million shares were no longer sequestered due to the consummated sale.
In G.R. No. 91655, the PCGG sequestered assets of the Philippine Journalists, Inc. (PJI), where respondent Rosario Olivares was a stockholder. After the Republic filed a corresponding judicial action for reconveyance, Olivares filed a motion directly with the Sandiganbayan for an accounting of PJI’s assets through an auditor of her choice. The Sandiganbayan granted the motion. The Republic challenged this, arguing Olivares failed to exhaust administrative remedies by not first seeking relief from the PCGG.

ISSUE

The consolidated issues are: (1) Whether the Sandiganbayan correctly declared all 16 million Benguet shares as still under sequestration and correctly ordered the impleader of the Palm Avenue companies; and (2) Whether the Sandiganbayan properly granted Olivares’ motion for an accounting without prior exhaustion of administrative remedies.

RULING

In G.R. No. 90667 , the Court partially granted the petition. The legal logic is that the sale of the 9.5 million shares to BMC was a consummated transaction approved by the PCGG. The lifting of sequestration over those specific shares was an integral part of the agreement, as the shares were transferred to a third party (BMC) not implicated as an ill-gotten wealth holder. Therefore, the Sandiganbayan erred in declaring those 9.5 million shares as still under sequestration. However, the Court affirmed the order to implead the Palm Avenue companies. Since the Republic’s complaint alleged these companies were owned by Romualdez and held ill-gotten assets, they were indispensable parties to the litigation for a complete adjudication of the case.
In G.R. No. 91655, the Court dismissed the Republic’s petition and affirmed the Sandiganbayan. The legal logic hinges on the distinction between administrative and judicial phases of sequestration. The doctrines of primary administrative jurisdiction and exhaustion of administrative remedies apply only to challenges against the writ of sequestration itself before a judicial action is filed. Once the Republic filed the corresponding judicial action for reconveyance (Civil Case No. 0135), the Sandiganbayan assumed full jurisdiction over the case and all its incidents, including a stockholder’s motion for an accounting of the sequestered corporation’s assets. Olivares’ motion was a proper incident within the court’s jurisdiction, and requiring her to go back to the PCGG would cause an absurd abdication of judicial authority.