G.R. No. L-76296 August 31, 1987
PALM AVENUE REALTY DEVELOPMENT CORPORATION and PALM AVENUE HOLDINGS COMPANY, INC., vs. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, et al.

FACTS

Petitioners Palm Avenue corporations, whose shares were sequestered by the PCGG as allegedly owned by a Marcos crony, negotiated to sell a portion of their pledged Benguet Corporation shares to respondent Benguet Management Corporation (BMC) to settle loans. They executed a Contract to Purchase and Sell on September 1, 1986, conditioned upon PCGG approval. The PCGG initially disapproved the contract on September 23, 1986, deeming the P29.00 per share price too low. Following BMC’s representations, the PCGG reversed itself and approved the contract on October 14, 1986. Petitioners protested, claiming the contract was already rescinded due to the initial disapproval and alleged abandonment by BMC, and because market prices had risen significantly. The PCGG and BMC subsequently executed a Memorandum of Agreement on October 24, 1986, detailing implementation, including having BMC hold 6.5 million shares in trust for the PCGG. The PCGG then directed the pledgee banks to deliver the stock certificates to BMC.

ISSUE

Whether the PCGG acted without or in excess of its authority or with grave abuse of discretion in approving the sale of the sequestered shares and directing their transfer to BMC.

RULING

The Supreme Court dismissed the petition, upholding the PCGG’s actions. The legal logic is anchored on the PCGG’s broad mandate under the law to recover ill-gotten wealth and preserve sequestered assets. The Court found the PCGG’s approval of the renegotiated contract, which yielded a better financial outcome for the government than an imminent auction sale, to be a valid exercise of its conservatory powers. The contract’s condition—PCGG approval—was fulfilled within the stipulated period when the Commission granted it on October 14, 1986. The petitioners’ unilateral claim of rescission was invalid as the contract remained binding. The Court emphasized that the PCGG’s role was not merely passive; it actively negotiated terms that secured a substantial potential profit for the government through the trust arrangement for 6.5 million shares, demonstrating prudent asset management. The rise in market price after contract execution was a risk inherent to the parties’ agreement and did not constitute a badge of grave abuse by the PCGG. The actions were within the PCGG’s discretionary authority to prevent asset dissipation.