G.R. No.

184622

July 3, 2013

PHILIPPINE
OVERSEAS
TELECOMMUNICATIONS
CORPORATION (POTC) AND PHILIPPINE COMMUNICATIONS
SATELLITE
CORPORATION
(PHILCOMSAT), Petitioners,
vs.
VICTOR AFRICA, ERLINDA I. BILDNER, SYLVIA K.
ILUSORIO, HONORIO POBLADOR III, VICTORIA C. DELOS
REYES, JOHN BENEDICT SIOSON, AND JOHN/JANE
DOES. Respondents.
x-----------------------x
G.R. Nos. 184712-14
PHILIPPINE
OVERSEAS
TELECOMMUNICATIONS
CORPORATION (POTC) AND PHILIPPINE COMMUNICATIONS
SATELLITE
CORPORATION
(PHILCOMSAT), Petitioners,
vs.
HON. JENNY LIN ALDECOA-DELORINO, PAIRING JUDGE OF
THE REGIONAL TRIAL COURT OF MAKATI CITY-BRANCH 138,
VICTOR AFRICA, purportedly representing PHILCOMSAT,
AND JOHN/JANE DOES.Respondents.
x-----------------------x
G.R. No. 186066
PHILCOMSAT HOLDINGS CORPORATION, represented by
CONCEPCION
POBLADOR, Petitioner,
vs.
PHILIPPINE COMMUNlCATIONS SATELLITE CORPORATION
(PHILCOMSAT), represented by VICTOR AFRICA, Respondent.
x-----------------------x

PHILCOMSAT HOLDINGS CORPORATION, represented by

ENRIQUE L. LOCSIN, Respondent.
DECISION
BERSAMIN, J.:
An intra-corporate dispute involving a corporation under
sequestration of the Presidential Commission on Good Government
(PCGG) falls under the jurisdiction of the Regional Trial Court
(RTC), not the Sandiganbayan.
The Cases
These consolidated appeals via petitions for review on certiorari
include the following:
(a) G.R. No.184622 - the appeal from the dismissal by the
Sandiganbayan of the petitioners complaint for injunction
docketed as Civil Case No. 0198 on the ground that the
Sandiganbayan had no jurisdiction over the issue due to its
being an intra-corporate dispute;
(b) G.R. No.184712-14 and G.R. No. 186066 - the appeals
of the Locsin Group (in representation of Philippine
Overseas
Telecommunications
Corporation
(POTC),
Philippine
Communications
Satellite
Corporation
(PHILCOMSAT), and Philcomsat Holdings Corporation (PHC)
from the consolidated decision the Court of Appeals (CA)
promulgated on September 30, 2008 in C.A.-G.R. SP No.
101225, C.A.-G.R. SP No. 98097 and C.A.-G.R. SP No.
98399; and
(c) G.R. No. 186590 - the appeal of the Ilusorio Group
seeking the reversal of the decision promulgated by the CA
on July 16, 2008 in C.A.-G.R. SP No. 102437.

G.R. No. 186590

Common Antecedents
PHILCOMSAT HOLDINGS CORPORATION, represented by
ERLINDA
I.
BILDNER, Petitioner,
vs.

POTC is a domestic corporation organized for the purpose of,

among others, constructing, installing, maintaining, and operating

communications satellite systems, satellite terminal stations and

associated equipments and facilities in the Philippines.1
PHILCOMSAT is also a domestic corporation. Its purposes include
providing telecommunications services through space relay and
repeater stations throughout the Philippines.
PHC is likewise a domestic corporation, previously known as Liberty
Mines, Inc., and is engaged in the discovery, exploitation,
development and exploration of oil. In 1997, Liberty Mines, Inc.
changed its name to PHC, declassified its shares, and amended its
primary purpose to become a holding company.2
The ownership structure of these corporations implies that whoever
had control of POTC necessarily held 100% control of PHILCOMSAT,
and in turn whoever controlled PHILCOMSAT wielded 81% majority
control of PHC. Records reveal that POTC has been owned by seven
families through their individual members or their corporations,
namely: (a) the Ilusorio Family; (b) the Nieto Family; (c) the
Poblador Family; (d) the Africa Family; (e) the Benedicto Family;
(f) the Ponce Enrile Family; and (g) the Elizalde Family.3
Atty. Potenciano Ilusorio, the patriarch of the Ilusorio Family,
owned shares of stock in POTC. A block consisting of 5,400 POTC
shares of stock has become the bone of contention in a prolonged
controversy among the parties. Atty. Ilusorio claimed that he had
incurred the ire of Imelda Marcos during the regime of President
Marcos, leading to the Marcos spouses grabbing from him the
POTC shares of stock through threats and intimidation and without
any valuable consideration, and placing such shares under the
names of their alter egos, namely: 3,644 shares in the name of
Independent Realty Corporation (IRC); 1,755 shares in the name of
MidPasig Land Development (Mid-Pasig); and one share in the
name of Ferdinand Marcos, Jr.4
On February 25, 1986, the EDSA People Power Revolution deposed
President Marcos from power and forced him and his family to flee
the country. On February 28, 1986, newly-installed President
Corazon C. Aquino issued Executive Order No. 1 to create the
PCGG whose task was to assist the President in the recovery of all
ill-gotten wealth amassed by President Marcos, his immediate
family, relatives, subordinates and close associates, whether
located in the Philippines or abroad, through the takeover or

sequestration of all business enterprises and entities owned or

controlled by them during President Marcos administration, directly
or through nominees, by taking undue advantage of their public
office and/or using their powers, authority, influence, connections
or relationships.5
Subsequently, Jose Y. Campos, a self-confessed crony of President
Marcos, voluntarily surrendered to the PCGG the properties, assets,
and corporations he had held in trust for the deposed President.
Among the corporations surrendered were IRC (which, in the books
of POTC, held 3,644 POTC shares) and Mid-Pasig (which, in the
books of POTC, owned 1,755 POTC shares). Also turned over was
one POTC share in the name of Ferdinand Marcos, Jr.6
With Campos surrender of IRC and Mid-Pasig to the PCGG, the
ownership structure of POTC became as follows:

Owner

% of Shareholdings

Ilusorio, Africa, Poblador,

Benedicto and Ponce Enrile

46.39%

Families
PCGG (IRC and Mid-Pasig)

39.92%

Nieto Family

13.12%

Elizalde Family

0.57%

Total

100.00%

With 39.92% of the POTC shareholdings under its control, the

PCGG obtained three out of the seven seats in the POTC Board of
Directors. At the time, Manuel Nieto, Jr. was the President of both
POTC and PHILCOMSAT. However, Nieto, Jr. had a falling out with

other stockholders. To keep control of the POTC and PHILCOMSAT,

Nieto, Jr. aligned with the PCGG nominees to enable him to wrest
four out of seven seats in the POTC Board of Directors and five out
of the nine seats in the PHILCOMSAT Board of Directors. Thus,
Nieto, Jr. remained as the President of POTC and PHILCOMSAT.7
On July 22, 1987, the Government, represented by the PCGG, filed
in the Sandiganbayan a Complaint for reconveyance, reversion,
accounting, restitution and damages against Jose L. Africa, Manuel
H. Nieto, Jr., President Marcos, Imelda R. Marcos, Ferdinand R.
Marcos, Jr., Roberto S. Benedicto, Juan Ponce Enrile and Atty.
Potenciano Ilusorio.8 The Complaint, docketed as SB Civil Case No.
009, alleged that the defendants "acted in collaboration with each
other as dummies, nominees and/or agents of defendants
Ferdinand E. Marcos, Imelda R. Marcos and Ferdinand R. Marcos,
Jr. in several corporations, such as the Mid-Pasig Land
Development Corporation and the Independent Realty Corporation
which, through manipulations by said defendants, appropriated a
substantial portion of the shareholdings in Philippine Overseas
Telecommunications Corporation and Philippine Communications
Satellite Corporation held by the late Honorio Poblador, Jr., Jose
Valdez and Francisco Reyes, thereby further advancing defendants
scheme to monopolize the telecommunications industry;" that
through their illegal acts, they acquired ill-gotten wealth; that their
acts constituted "breach of public trust and the law, abuse of rights
and power, and unjust enrichment;" and that their illgotten wealth,
real and personal, "are deemed to have been acquired (by them)
for the benefit of the plaintiff (Republic) and are, therefore,
impressed with constructive trust in favor of (the latter) and the
Filipino people."9
The Complaint prayed that all the funds, properties and assets
illegally acquired by the defendants, or their equivalent value, be
reconveyed or reverted to the Government; and that the
defendants be ordered to render an accounting and to pay
damages.10
In his Amended Answer with Cross-Claim (against the Marcoses)
and Third-Party Complaint against Mid-Pasig and IRC, Atty. Ilusorio
denied having acquired ill-gotten wealth and having unjustly
enriched himself by conspiring with any of the defendants in
committing a breach of public trust or abuse of right or of power,
stating that "he has never held any public office nor has he been a

government employee;" and that he was never a dummy or agent

of the Marcoses. He interposed the affirmative defense that he
owned 5,400 POTC shares of stock, having acquired them through
his honest toil, but the Marcoses had taken the shares from him
through
threats
and
intimidation
and
without
valuable
consideration and then placed the shares in the names of their
alter egos; and that he thus became "the hapless victim of
injustice," with the right to recover the shares and their
corresponding dividends.11
On June 28, 1996, after a decade of litigation, the Republic, IRC
and Mid-Pasig, and the PCGG (acting through PCGG Commissioner
Hermilo Rosal) entered into a compromise agreement with Atty.
Ilusorio, whereby Atty. Ilusorio recognized the ownership of the
Republic over 4,727 of the POTC shares of stock in the names of
IRC and Mid-Pasig, and, in turn, the Republic acknowledged his
ownership of 673 of the POTC shares of stock and undertook to
dismiss Civil Case No. 009 as against him.
The compromise agreement relevantly stated:
WHEREAS, this Compromise Agreement covers the full,
comprehensive and final settlement of the claims of the
GOVERNMENT against ILUSORIO in Civil Case No. SB-009, pending
before the Third Division of the Sandiganbayan; the Cross-Claim
involving several properties located in Paraaque, Metro Manila;
and the Third-Party Complaint filed by ILUSORIO, in the same
case, involving the Five Thousand Four Hundred (5,400) shares of
stocks registered in the names of Mid-Pasig Land Development
Corporation (MLDC) and Independent Realty Corporation (IRC),
respectively, in the Philippine Overseas Telecommunications
Corporation (POTC);
xxxx
President Ramos approved the compromise agreement, and
directed its submission to the Sandiganbayan for approval through
his marginal note dated October 5, 1996.12
It was not until June 8, 1998, or nearly two years from its
execution, however, that the Sandiganbayan approved the
compromise agreement, the resolution for which reads:

WHEREFORE, and as prayed for in the Motion dated June 3, 1998,

which is hereby granted.
1. The foregoing Compromise Agreement dated June 28,
1996 executed by and between the plaintiff and defendant
Potenciano T. Ilusorio is hereby approved, the same not
being contrary to law, good morals and public policy. The
parties thereto are hereby enjoined to strictly abide by and
comply with the terms and conditions of the said
Compromise Agreement.
2. The complaint as against defendant Potenciano T. Ilusorio
only in the above-entitled case No. 0009 is hereby
dismissed.
3. The Motions for Injunction and Contempt, respectively,
filed by defendant Potenciano T. Ilusorio against the
Government/PCGG, its officers and agents, in Civil Case No.
0009 are hereby withdrawn;
4. The Third-Party Complaint and the Cross-Claim of
defendant Potenciano T. Ilusorio are hereby dismissed; and
5. The Board of Directors, President and Corporate
Secretary of the Philippine Overseas Telecommunications
Corporation are hereby ordered to issue the corresponding
stock certificates to, and in the names of Potenciano T.
Ilusorio, Mid-Pasig Land Development Corporation, and
Independent Realty Corporation, respectively.13
The result was the redistribution of the POTC shareholdings as
follows:
1wphi1
Owner
Ilusorio,
Benedicto
Families

% of Shareholdings
Africa,
Poblador,
and
Ponce
Enrile 51.37%

PCGG (IRC and Mid-Pasig)

34.94%

Nieto Family

13.12%

Elizalde Family

0.57%

Total

100.00%

The Ilusorio Familys shareholding became 18.12%, while that of

the PCGG (through IRC and Mid-Pasig) was reduced to 34.94%.
With its reduced shareholdings, the PCGGs number of seats in the
POTC Board settled at only two. The Ilusorio Family continued its
alliance with the Africa, Poblador, Benedicto and Ponce Enrile
Families. In effect, the compromise agreement tilted the control in
POTC, PHILCOMSAT and PHC, such that the alliance between the
Nieto Family and the PCGG, theretofore dominant, became the
minority.14
After assuming the Presidency in mid-1998, President Estrada
nominated through the PCGG Ronaldo Salonga and Benito Araneta,
the latter a nephew of Nieto, Jr., to the POTC Board of Directors to
represent the IRC and Mid-Pasig shareholdings.15
As to the PHILCOMSAT Board of Directors, however, President
Estrada through the PCGG nominated four nominees, namely:
Salonga, Araneta, Carmelo Africa and Edgardo Villanueva. The
nomination of the four ignored the reduction of the IRC and MidPasig shareholdings in POTC that should have correspondingly
reduced the board seats in PHILCOMSAT that the PCGG was
entitled to from four to only three.16
On August 16, 1998, Mid-Pasig, represented by Salonga, filed in
the Sandiganbayan in Civil Case No. 009 a Motion to Vacate the
order dated June 8, 1998 approving the compromise agreement.
On October 2, 1998, IRC, also represented by Salonga, filed a
similar motion. Both motions insisted that the compromise
agreement did not bind Mid-Pasig and IRC for not being parties
thereto, although they held substantial interests in the POTC
shareholdings subject of the compromise agreement; and that the
compromise agreement was void because its terms were contrary
to law, good morals and public policy for being grossly and
manifestly disadvantageous to the Government.17
Aside from supporting the position taken by Mid-Pasig and IRC,
PCGG added that the compromise agreement was fatally defective
for lack of any PCGG resolution authorizing Commissioner Rosal to

enter into the

Government.18

compromise

agreement

in

behalf

of

the

On his part, Atty. Ilusorio vigorously opposed the motions.19

On August 28, 1998, PHILCOMSAT stockholders held an informal
gathering at the Manila Golf Club for the apparent purpose of
introducing the new PCGG nominees to the stockholders. During
the proceedings, however, Atty. Luis Lokin, Jr. announced that the
gathering was being considered as a Special PHILCOMSAT
Stockholders Meeting. Those in attendance then proceeded to elect
as Directors and Officers of PHILCOMSAT Nieto, Jr., Lourdes Africa,
Honorio Poblador III, Salvador Hizon, Salonga, Araneta, Carmelo
Africa, and Edgardo Villanueva (Nieto Group-PCGG).20
As a consequence, other PHILCOMSAT stockholders (namely,
Ilusorio, Katrina Ponce Enrile, Fidelity Farms, Inc., Great Asia
Enterprises and JAKA Investments Corporation) instituted a
Complaint with application for the issuance of temporary
restraining order (TRO) and writ of preliminary injunction (WPI) in
the Securities and Exchange Commission (SEC) assailing the
election of the Directors and Officers on several grounds, such as
the lack of sufficient notice of the meeting, the lack of quorum, and
the lack of qualifying shares of those who were elected. They
maintained that by reason of POTCs 100% beneficial ownership of
PHILCOMSAT, there should have been a notice to POTC, which,
upon a proper board meeting, should have appointed proxies to
attend the PHILCOMSAT Stockholders Meeting. The case was
docketed as SEC Case No. 09-98-6086.21
The SEC issued a TRO, and, later on, a WPI enjoining the Nieto
Group-PCGG from acting as Directors and Officers of PHILCOMSAT
and from representing themselves as such.22
Salonga, Araneta, Africa and Villanueva commenced in the CA a
special civil action for certiorari to nullify the WPI issued by the SEC
(C.A.-G.R. SP NO. 49205). On October 15, 1998, however, the CA
dismissed the petition for certiorari because of the petitioners
failure to furnish a copy of the petition to the SEC. The dismissal
became final and executory.23
Still, Salonga, Araneta, Africa and Villanueva brought in the CA
another petition assailing the WPI issued by the SEC (C.A.-G.R. SP

No. 49328). The CA also dismissed their petition on October 26,

1999.24
For their part, Nieto, Jr. and Lourdes Africa likewise went to the CA
to assail the WPI issued by the SEC (C.A.-G.R. SP No. 49770), but
on April 19, 2001, the CA dismissed the petition. Nieto, Jr. initially
intended to appeal the dismissal, but the Court denied his motion
for extension of time to file petition for review on certiorari.25
Following the enactment of Republic Act No. 8799 (Securities
Regulation Code),26 SEC Case No. 09-98-6086 was transferred to
the RTC in Makati City, which re-docketed it as Civil Case No. 01840 and raffled it to Branch 138.27
Meanwhile, on January 18, 1999, POTC held a Special
Stockholders Meeting, at which the following were elected as
Directors of POTC, namely: Roberto S. Benedicto, Atty. Victor
Africa, Sylvia Ilusorio, Honorio Poblador III, Cristina Agcaoili,
Katrina Ponce Enrile, and Nieto, Jr. The elected Directors, except
Nieto, Jr., eventually formed the Africa-Ilusorio Group. Thereafter,
the Board of Directors held an organizational meeting during which
they elected the following as the Officers of POTC, namely: Roberto
S. Benedicto (Chairman); Atty. Victor Africa (Vice-Chairman);
Sylvia Ilusorio (President); Katrina Ponce Enrile (Vice President);
Rafael Poblador (Treasurer); Kitchie Benedicto (Assistant
Treasurer); and Atty. Victoria de los Reyes (Corporate Secretary).28
On December 20, 1999, the Sandiganbayan promulgated a
resolution in SB Civil Case No. 009 denying IRC and Mid-Pasigs
motions to vacate the order approving the compromise agreement,
viz:
WHEREFORE, premises considered, third-party defendant MidPasigs Motion to Vacate Resolution Approving Compromise
Agreement dated August 16, 1998 and third party defendant
Independent Realty Corporation's Manifestation and Motion dated
October 2, 1998 and the redundant and inappropriate concurrence
of the PCGG and the OSG are hereby denied for lack of merit.
The Court also declares all POTC shares in the name of Mid-Pasig
and IRC as null and void. Accordingly, out of the 5,400 POTC
shares, six hundred seventy three (673) is hereby directed to be
issued in the name of Potenciano Ilusorio and four thousand seven

hundred twenty seven (4,727) in the name of the Republic of the

Philippines. The Board of Directors, President and Corporate
Secretary of the POTC are hereby ordered to comply with this
requirement within ten (10) days from receipt of this Resolution. 29
In compliance with the resolution, POTC Corporate Secretary
Victoria de los Reyes effected the cancellation of the shares
registered in the names of IRC and Mid-Pasig and issued Certificate
of Stocks No. 131 covering the 4,727 POTC shares in the name of
the Republic. Thereafter, Certificate of Stocks No. 131 was
transmitted to then Chief Presidential Legal Counsel and PCGG
Chairman Magdangal Elma, who acknowledged receipt. Through its
resolution dated January 12, 2000, the Sandiganbayan noted the
POTC Corporate Secretarys compliance.30
As earlier mentioned, the implementation of the Sandiganbayans
resolution dated December 20, 1999 resulted in the re-distribution
of the shareholdings in POTC in the manner earlier shown.
On March 16, 2000, the PCGG filed in this Court its petition
assailing the resolution of the Sandiganbayan dated December 20,
1999 (G.R. No. 141796 entitled Republic of the Philippines,
represented by the Presidential Commission on Good Government
v. Sandiganbayan and Potenciano T. Ilusorio, substituted by Ma.
Erlinda Ilusorio Bildner).
IRC and Mid-Pasig also filed in this Court their own petition to
assail the resolution dated December 20, 1999 (G.R. No. 141804
entitled Independent Realty Corporation and Mid-Pasig Land
Development Corporation v. Sandiganbayan and Potenciano T.
Ilusorio, substituted by Ma. Erlinda Ilusorio Bildner).
On March 29, 2000, this Court issued a TRO to enjoin the
Sandiganbayan from executing its assailed resolution.31
On September 6, 2000, President Estrada nominated another set to
the PHILCOMSAT Board of Directors, namely: Carmelo Africa,
Federico Agcaoili, Pacifico Marcelo and Edgardo Villanueva.
Thereby, Africa and Villanueva were retained as PHILCOMSAT
Directors, while Agcaoili and Marcelo replaced Araneta and
Salonga.32

Subsequently, POTC, through the Africa-Bildner Group, decided to

hold a Special Stockholders Meeting on September 22, 2000. POTC
Corporate Secretary de los Reyes issued a Notice of Meeting.
Attempting to stop the Stockholders Meeting, Nieto, Jr., Araneta
and Salonga filed in this Court in G.R. No. 141796 and G.R.
No.141804 a Motion for Leave to Intervene with urgent
manifestation for contempt of court, praying, among others, that
POTC Corporate Secretary de los Reyes be cited in contempt and/or
disbarred for issuing the Notice of Meeting.33
The Special Stockholders Meeting on September 22, 2000 was
attended by stockholders representing 81.32% of the outstanding
capital stock of POTC (including PCGG). During the meeting, a new
set of POTC Board of Directors were elected, namely: Nieto, Jr.,
Katrina Ponce Enrile, Victor V. Africa, Sylvia K. Ilusorio, Honorio A.
Poblador III, Carmelo Africa and PCGG Commissioner Jorge
Sarmiento (the latter two being nominated by PCGG).34
POTC then convened a Special Stockholders Meeting of
PHILCOMSAT, at which the following were elected as Directors:
Nieto, Jr., Francisca Benedicto, Katrina Ponce Enrile, Sylvia Ilusorio,
Honorio Poblador III, and government representatives Africa,
Marcelo, Villanueva and Agcaoili (the latter four being nominated
by PCGG).35
In line with existing corporate policy requiring the elected Directors
to accept their election before assuming their positions, all the
elected Directors (including Nieto, Jr.) were requested to sign
acceptance letters to be submitted to POTC Corporate Secretary de
los Reyes. A few days later, however, Nieto, Jr. refused to accept
and instead opted to assail the validity of the September 22, 2000
POTC Special Stockholders Meeting.36
By virtue of the September 22, 2000 elections, the Africa-Bildner
Group, together with the PCGG nominees, took control of the
management and operations of POTC and PHILCOMSAT.37
In March 2002, President Gloria Macapagal-Arroyo named Enrique
L. Locsin and Manuel D. Andal as new PCGG nominees to sit in the
POTC and PHILCOMSAT Boards of Directors. Julio Jalandoni was
named as the third new PCGG nominee to the PHILCOMSAT Board
of Directors.38

On April 29, 2002, POTC, through the Africa-Ilusorio Group,

decided to hold a stockholders meeting. Notices for the meeting
were dispatched to all stockholders of record, including the
Republic. However, the meeting was adjourned for failure to obtain
a quorum because of the absence of several stockholders, including
the proxy for the Republic.39
On December 3, 2003, Atty. Jose Ma. Ozamiz, a stockholder of
PHC, sent a letter-complaint informing the SEC that PHC had not
conducted its annual stockholders meetings since 2001. His lettercomplaint was docketed as SEC Case No. 12-03-03.40
On December 29, 2003, the SEC issued the following Order in SEC
Case No. 12-03-03, to wit:
PREMISES CONSIDERED, the Commission in the exercise of its
regulatory authority over corporations and associations registered
with it hereby issues the following directives:
1. The board of directors, responsible officers of Philcomsat
Holdings, Inc (PHI) (sic) shall organize a COMELEC composed of
three members within ten (10) days from date of actual receipt of
this Order. One member to be nominated by the group of Atty. Jose
Ma. Ozamiz, the second member to be nominated by the group of
either Mr. Manuel H. Nieto or Mr. Carmelo P. Africa, Jr. and the third
member a neutral party, to be jointly nominated by both groups.
Failure on the part of the contending parties to designate their
common nominee, the SEC shall be constrained to designate the
neutral party.
x x x x.41
By letter dated January 8, 2004, Philip Brodett and Locsin
communicated to the SEC that:
1. PHC and its directors and officers are not averse to the holding
of meetings of its stockholders annually. PHC's inability to hold its
annual stockholders meeting in the past years can be attributed to
the following: previous attempts of the group of Mesdames Cristina
Ilusorio and Sylvia Ilusorio and Mr. Carmelo Africa (for brevity the
"Ilusorio Group") to control PHC without legal basis; delay in the
completion of PHC's audited financial statements for the years
2001, 2002 and 2003 was caused by the Ilusorio Group and the

pending dispute as to who between the Ilusorio Group, on one

hand, and the group of Ambassador Manuel Nieto, Jr. Philippine
Government, on the other, properly constitutes the governing
board of directors and officers of the parent companies of PHC's,
namely the Philcomsat and POTC;
Considering the aforesaid pending dispute as to who really controls
the mother companies of PHC, it would be advisable and
practicable that the annual meetings of the stockholders and the
election of the directors and officers of Philcomsat and POTC should
precede those of PHC. In view thereof, and for practical reasons
and good order's sake, it was suggested that perhaps the
Commission should direct the holding of the annual stockholders'
meetings and election of directors and officers of both Philcomsat
and POTC at a date or dates prior to those of PHC.
xxxx
4. x x x. Considering the foregoing, it is believed and humbly
submitted that the 'COMELEC' directed to be organized under the
Order is unnecessary considering that its would-be functions (we
note that the Order did not state what are the functions of said
COMELEC) can and will be performed by the Nomination
Committee and the special committee of inspectors.
Considering the foregoing, it is respectfully requested and prayed
that the said Order dated 5 January 2004 of the Commission be
reconsidered and set aside. To enable PHC to hold an orderly and
controversy-free meeting of its stockholders and election of
directors this year, it is likewise requested that the Commission
first direct and cause PHC's parent companies, namely Philcomsat
and POTC, to hold their respective stockholders' meeting and
election and directors and officers prior to those of PHC.42
On May 6, 2004, the SEC ruled as follows:
Based on the foregoing premises, the Commission, in the exercise
of its regulatory authority as well as supervision corporations and
pursuant to its power under Section 5 (k) of the Securities
Regulation Code (SRC) which states: "Compel the officers of any
registered corporation or association to call meetings of
stockholders or members thereof under its supervision," hereby
orders the following:

1. The board of directors, responsible officers of Philcomsat

Holdings, Corporation ("PHC") shall immediately convene
the COMELEC to consider the proposed election and annual
meeting of subject corporation.
2. The board of directors and other responsible PHC officers
are also enjoined to prepare proper notices of the intended
annual meeting and all the necessary documents required
by Section 20 of the SRC rules within the stated period
provided thereunder in time for the scheduled annual
meeting set by the Commission.
3. For the purpose of the meeting, Attys. Myla Gloria C.
Amboy and Nicanor Patricio are hereby designated as the
SEC representatives to observe the PHC meeting.
4. The PHC and all its responsible directors or officers are
hereby directed to hold a meeting for the purpose of
conducting the election of the board of directors of the PHC
on 28 May 2004 at 10:00 a.m. To be held at the principal
office of the corporation.
5. Failure on the part of the authorized person to set/call
the meeting within five (5) days from date hereof, Atty.
Ozamiz shall be authorized to call the meeting and to
provide other stockholders with notice required under the
Corporation Code, the Securities Regulation Code and Bylaws of the corporation. In such event, Atty. Ozamiz shall
preside in said meeting until at least a majority of the PHC
stockholders present shall have chosen one of their
members as the presiding officer in the meeting.
6. The board of directors and authorized officers of PHC are
hereby directed for the last time to submit the calendar of
activities for the forthcoming meeting within five (5) days
from date of this Order. The petitioning stockholder, Atty.
Ozamiz, is likewise directed to submit his proposed calendar
of activities which shall be used in case of failure on the part
of PHC to submit the aforesaid calendar.43
On June 7, 2004, the SEC received PCGGs comment through
Commissioner Victoria A. Avena, to wit:

1. For the sake of accuracy, we respectfully draw attention

to the fact that Messrs. Enrique L. Locsin and Manuel Andal
are nominee-directors representing the Republic of the
Philippines, through the PCGG, in the board of directors of
the Philippine Overseas Telecommunications Corporation
("POTC") and the board of directors of Philippine
Communications Satellite Corporation ("Philcomsat"), but
not of Philcomsat Holdings Corporation ("PHC"). The third
government nominee-director in Philcomsat is Mr. Julio
Jalandoni. In February of 2004, Mr. Guy de Leon was
nominated by President Gloria Macapagal-Arroyo as a third
director for POTC in the event elections.
2. Based on the records of PCGG, it is true and correct that
POTC has not held an uncontested annual meeting since its
last uncontested stockholders' meeting in the year 1999.
3. Based on records of PCGG, it is true and correct that
Philcomsat has not had an uncontested annual meeting
since its special stockholders' meeting in the year 2000.
4. The Republic owns forty percent (40%) of the
outstanding capital stock of POTC; Philcomsat is a whollyowned subsidiary of POTC; and Philcomsat owns
approximately eighty-five percent (85%) of the outstanding
capital stock of PHC.
5. Because of the non-holding of elections for the board of
directors of POTC, Philcomsat and PHC, the incumbent
respective boards thereof have been holding office as "holdover" directors, and opposing stockholders have contested
their legitimacy.
6. The incumbent board of directors having actual corporate
control of POTC and Philcomsat have invited government
nominee-directors Messrs. Locsin and Andal, and Mr. Julio
Jalandoni in respect of Philcomsat, to respectively occupy
seats in said boards rendered vacant by resignations.
7. However, Messrs. Locsin, Andal and Jalandoni have not
physically and actually assumed said positions, because of
their request for assumption thereof on the basis of election

for the board of directors through stockholders' meetings for

the purpose.
8. In view of the ownership structure of POTC, Philcomsat
and PHC and the rump boards that have resulted over the
years, the more judicious mode towards a truly fair election
of directors based on an accurate identification of
stockholder representation in PHC (including in respect of
government shares) would be to determine issues of
representation in Philcomsat and POTC.
9. Accordingly, annual stockholders' meetings and election
of directors of the board must first be held for POTC, and
then for Philcomsat, then for PHC.44
On July 8, 2004, the SEC directed thuswise:
On the bases of the mandatory provision of Sec. 50 of the
Corporation Code on calling of annual meeting and the PCGG's
comment/manifestation which should be given weight, the
following are hereby directed to:
1. POTC and Philcomsat, their respective board of directors
or their duly authorized representatives are hereby directed
to constitute, within ten (10) days from the date of actual
receipt hereof, their COMELEC to be composed of the PCGG
nominee/director to act as the neutral party, a
representative from the Africa Group and one representative
from Nieto Group to perform any and all acts necessary for
the determination of the legitimate stockholders of the
corporation qualified to vote or be represented in the
corporate meetings and ensure a clean, orderly, and
credible election of POTC and Philcomsat.
2. POTC is likewise directed to conduct its annual
stockholders' meeting not later than 5 August 2004 while
Philcomsat shall hold its annual stockholders' meeting on or
before 12 August 2004. Thereafter, PHC shall call its annual
stockholders' meeting not later than August 31, 2004.
3. PHC, on the other hand, its board of directors or duly
authorized representative are ordered to submit a revised
calendar of activities for the forthcoming 31 August 2004

annual stockholders' meeting within five (5) days from

actual receipt of this Order. The said date for the Annual
Stockholders' Meeting shall not be postponed unless with
prior Order of the Commission. A nomination's (sic)
Committee (NOMELEC) shall be constituted pursuant to the
corporation's Manual on Corporate Governance submitted to
this Commission. This Committee shall be composed of
three (3) voting members and one (1) non-voting member
in the person of the HR Director/Manager pursuant to x x x
section 2.2.2.1 of the said Manual. One representative each
from the Africa Group and the Nieto Group and a
nominee/representative of the PCGG (to act as an
independent member) shall comprise three (3) voting
members. The committee shall perform the functions
outlined in Sections 2.2.2.1.1, 2.2.2.1.2, 2.2.2.1.3 and
2.2.2.1.4 of the Manual in connection with the forthcoming
election. Failure to submit the names of the representative
of each group within ten (10) days from receipt of this
Order shall authorize the Commission to appoint persons to
represent each group. Failure or refusal on the part of the
corporation to hold the stockholders' meeting on the
scheduled date shall authorize the petitioning shareholder to
call and preside in the said meeting pursuant to Section 50
of the Corporation Code. All previous orders inconsistent
herewith are hereby revoked.1wphi1
4. Let the Corporate Finance Department (CFD) of this
Commission be furnished with a copy of this Order for its
appropriate action on the matter.
5. To ensure protection of the interest of all outstanding
capital stocks, including minority shareholders, Attys.
Nicanor P. Patricio Jr. and Myla Gloria A. Amboy are hereby
designated as SEC representatives to attend and supervise
the said Annual Stockholders' Meeting.45
On July 26, 2004, the SEC clarified its immediately preceding order,
as follows:
Pending consideration by the Commission is the letter dated 22
July 2004 of Mr. Enrique Locsin, Nominees/Director of the
Presidential Commission on Good Government To POTC and
Philcomsat, seeking to enjoin the holding of any and all meetings of

POTC, Philcomsat and/or PHC, contrary to the 8 July 2004 SEC

Order and requesting the correction of the date of the Order cited
in the 22 July 2004 Stay Order.
In order to clarify the Order issued by the Commission on July 8,
2004 and 22 July 2004, the following explications are hereby
made:
First. The SEC Order of 8 July 2004 which states in part:
POTC is likewise directed to conduct its annual stockholders'
meeting not later than 5 August 2004 while Philcomsat shall hold
its annual stockholders' meeting on or before 12 August 2004.
Thereafter, PHC shall call its annual stockholders' meeting not later
than August 31, 2004, should be interpreted to mean that the
stockholders' meeting of POTC, Philcomsat and PHC should be held
successively, in the order mentioned, that is, POTC first, then
Philcomsat, and lastly, PHC. This was the intention of the
Commission in issuing the said Order (July 8, 2004).
To further clarify and ensure that the meetings shall be conducted
on specific dates, the Order of July 8, 2004 is hereby modified and
the dates of the meetings are hereby scheduled as follows:
1. For POTC July 28, 2004
2. For Philcomsat August 12, 2004
3. For PHC August 31, 2004
Second. One of the relevant orders was inadvertently referred to in
the Stay Order of 22 July 2004 as "June 8, 2004," which should
have been actually written as "July 8, 2004." Hence, the same
should be properly corrected.
Accordingly, POTC, Philcomsat and Philcomsat Holdings Corporation
(PHC) are hereby reminded to strictly adhere to the schedule dates
of meetings of the said corporations set forth in this Order. POTC,
Philcomsat and PHC are further reminded to also comply with the
manner of the conduct of their respective meetings as provided in
the Order of the Commission dated July 8, 2004.

As requested, let the 22 July 2004 Stay Order, particularly

paragraphs 1, 2, and 3 thereof, be corrected to reflect the correct
date of the Order cited therein as "July 8, 2004" not "June 8,
2004."46
On July 28, 2004, the Africa-Bildner Group held successive
stockholders meetings for POTC and PHILCOMSAT. Elected as
Directors during the POTC stockholders meeting were Katrina
Ponce Enrile, Victor Africa, Erlinda Bildner and Honorio Poblador III,
all from the Africa-Bilder Group. Although absent from the meeting,
Nieto, Jr., Locsin and Andal of the NietoPCGG Group were also
elected as Directors. Resultantly, the groups were represented on a
4:3 ratio. Victor Africa was designated as the POTC proxy to the
PHILCOMSAT stockholders meeting.
Locsin and Andal were also elected as PHILCOMSAT Directors.
However, Nieto, Jr., Locsin and Andal did not accept their election
as POTC and PHILCOMSAT Directors.47
On August 5, 2004, the Nieto-PCGG Group conducted the annual
stockholders meeting for POTC at the Manila Golf Club. Elected
were Nieto, Jr. as President and Guy de Leon, a government
nominee to POTC, as Chairman. At the same meeting, the NietoPCGG Group, through its elected Board of Directors, issued a proxy
in favor of Nieto, Jr. and/or Locsin authorizing them to represent
POTC and vote the POTC shares in the PHILCOMSAT stockholders
meeting scheduled on August 9, 2004.48
On August 9, 2004, the Nieto-PCGG Group held the stockholders
meeting for PHILCOMSAT at the Manila Golf Club. Immediately
after the stockholders meeting, an organizational meeting was
held, and Nieto, Jr. and Locsin were respectively elected as
Chairman and President of PHILCOMSAT. At the same meeting,
PHILCOMSAT (Nieto-PCGG Group) issued a proxy in favor of Nieto,
Jr. and/or Locsin authorizing them to represent PHILCOMSAT and
vote the PHILCOMSAT shares in the stockholders meeting of PHC
scheduled on August 31, 2004.49
On August 11, 2004, POTC (Africa-Bildner Group), Victor Africa,
Honorio Poblador III and Katrina Ponce Enrile filed a Complaint for
injunction with prayer for TRO and WPI in the RTC in Makati City
(Branch 133) against Nieto, Jr., Luis Lokin, Jr., and Alma Kristina O.

Alobba seeking to enjoin the latter from acting as Directors and

Officers of POTC (Civil Case No. 04-935).

Non-voting member:
1. Philip G. Brodett

On August 27, 2004, the RTC (Branch 133) dismissed Civil Case
No. 04-935 for lack of jurisdiction over the subject matter,
explaining its action thusly:
xxxx

The said Nomination Committee which shall act upon the

affirmative vote of at least two (2) of its voting members, shall
have the following powers, duties and functions:
(1) To pre-screen and shortlist all candidates nominated to
become members of the board of directors in accordance
with the qualifications and disqualifications and the
procedures prescribed in the Corporation's Manual on
Corporate Governance and the Securities Regulation Code
(SRC) and its Implementing Rules and Regulations (SRC
Rules);

After a perusal of the complaint and of the memoranda filed, with

particular attention on the authorities cited, the Court is of the
opinion that it has no jurisdiction over the case but the
Sandiganbayan.50
xxxx
Thereafter, the
reconsideration.

Africa-Bildner

Group

filed

motion

(2) To submit to the Securities and Exchange Commission

and the Philippine Stock Exchange the Final List of
candidates for Independent Directors as required under the
SEC Rules;

for

Earlier, on August 18, 2004, PHC (Nieto-PCGG Group) submitted to

the SEC a final list of candidates for Independent Directors of PHC
for the 2004-2005 term, to wit:
Please be informed that in connection with the annual stockholders'
meeting of PHILCOMSAT HOLDINGS CORPORATION (PHC) to be
held on August 31, 2004, and in compliance with the Order dated 8
July 2004 of the Securities and Exchange Commission in SEC Case
No. 12-03-03 entitled "In the matter of Philcomsat Holdings
Corporation, For: Calling of Meeting," the Board of Directors of
PHC, at its meeting today constituted the Nomination Committee
with the following persons as its members:
Voting Members:
1. Luis K. Lokin, Jr. (representative of the Nieto Group)
2. Enrique L. Locsin (representative of the PCGG)
3. Vacant (to be designated by the Securities and Exchange
Commission in default of the designation of representative
by the Africa group)

(3) To act as the committee of inspectors with powers to

pass upon the validity of proxies, to canvass and tally the
votes for the election of directors and to certify the winning
directors based on the votes garnered;
(4) To do such acts or things as may from time to time be
directed or delegated by the Board.51
On August 20, 2004, the SEC issued an order, pertinently stating:
On separate dates, the group of Atty. Victor Africa ("Africa Group)
and the group of Ambassador Nieto ("Nieto group") conducted their
respective annual stockholders meetings. The Africa group held
successive meetings for POTC and Philcomsat on July 28, 2004,
while the Nieto group held similar meetings for POTC and
Philcomsat on August 5 and August 9, respectively. On all these
meetings, where the SEC representative was present (except the
Philcomsat meeting of the Africa group), the Commission noted the
following observations:
xxxx

In light of the foregoing, the Commission hereby upholds the

validity of the stockholders' meetings conducted by the Nieto Group
in view of the clear compliance by the said group with the condition
set forth by the Commission in its Orders of July 8 and 26, 2004.
Meanwhile, the PHC meeting shall proceed as scheduled on August
31, 2004. The Officers and Directors of PHC are hereby reminded
to strictly conform to the conditions stated in the July 8 and 26
Orders.

the NOMELEC recognized and validated the proxy submitted by

Locsin.
On August 27, 2004, the Nieto Group submitted to the SEC the
final list of candidates for Independent Directors of PHC for the
term 2004-2005. The list contained the names of Benito Araneta
and Roberto Abad, both nominated by Brodett. The list was
submitted by NOMELEC members Lokin, Jr., Locsin and Brodett.

The President and the Corporate Secretary of PHC and its Stock
and Transfer Agent are hereby ordered to submit to the
Commission the certified list of stockholders and the stock and
transfer book of PHC on or before August 25, 2004.

On the same date, POTC and PHILCOMSAT (Africa Group), through

Atty. Victor Africa, filed in the CA a petition for certiorari and
prohibition (with prayer for TRO and WPI) seeking to annul and set
aside the orders issued on July 8, 2004, July 26, 2004 and August
20, 2004 issued in SEC Case No. 12-03-03 (C.A.-G.R. SP No.
85959).54

Due to the failure of the Africa group to nominate their

representative to the PHC NOMELEC, Atty. Victoria De Los Reyes is
hereby designated as the representative of the Africa group in the
forthcoming August 31, 2004 PHC meeting.

On August 31, 2004, the CA promulgated in C.A.-G.R. SP No.

85959 a resolution granting a TRO, pertinently stating:

The Corporation Finance Department is hereby directed to monitor

PHC's compliance with the laws, rules and regulations relative to
the calling of the stockholders' meeting and to make the necessary
action to ensure such compliance.
The Orders of 8 July 2004 and 26 July 2004 insofar as not
inconsistent with this Order shall remain in full force and effect.52
On August 23, 2004, the Africa Group commenced Civil Case No.
01-555 in the RTC in Makati City (Branch 61), praying for the
issuance of a TRO or WPI to "enjoin Philcomsat Holdings
Corporation from recognizing defendants Nieto, Jr. and Lokin as the
representatives of PHILCOMSAT," and to prevent Nieto, Jr. and
Lokin from acting as Directors and Officers for and on behalf of
POTC and PHILCOMSAT.
On August 30, 2004, the RTC denied the motion for the issuance of
TRO and WPI.53
On August 26, 2004, the Nomination Committee (NOMELEC) of
PHC (Nieto Group) met to conduct the validation of the proxies and
the evaluation and prequalification of the nominees for election as
Independent Directors. After a majority vote of its voting members,

In the meantime, since the petition questions the jurisdiction of

public respondents in issuing the assailed Orders dated July 8,
2004, July 26, 2004 and August 20, 2004, and the implementation
of the same will render moot and academic any and all orders,
resolutions and decisions of this Court, this Court hereby
TEMPORARILY RESTRAINS respondents, their officers, agents and
other persons acting for and in their behalf, from enforcing,
implementing and executing the aforesaid assailed Orders within a
period of sixty (60) days or until sooner revoked.55
The CA later granted the application for WPI, and enjoined the
respondents therein, their agents, officers, representatives and
other persons acting for and in their behalf from executing,
enforcing and implementing the assailed SEC orders issued on July
8, 2004, July 26, 2004 and August 20, 2004 pending final
resolution of the petition, or unless the WPI was sooner lifted. 56
Also on August 31, 2004, the PHC (Nieto Group) conducted its
annual stockholders meeting. The Officers elected were Locsin as
Director and Acting Chairman; Oliverio Laperal as Director and Vice
Chairman; Nieto, Jr. as Director, President and Chief Executive
Officer; Brodett as Director and Vice President; Manuel D. Andal as
Director, Treasurer and Chief Financial Officer; Roberto San Jose as
Director and Corporate Secretary; Julio Jalandoni, Lokin, Jr.,

Prudencio Somera,
Directors.57

Roberto

Abad,

and

Benito

Araneta

as

On September 10, 2004, PHILCOMSAT (Africa Group), represented

by Victor Africa, filed in the RTC in Makati City (Branch 138) a
complaint against PHC, Lokin, Jr., Locsin and Brodett (Civil Case
No. 04-1049) seeking the following reliefs, to wit:
1. The proceedings of the Nomination Committee be
invalidated for having been in violation of the Manual of
Corporate Governance of defendant PHC;
2. The act of the Nomination Committee in validating the
proxy issued in favor of Manuel Nieto and/or defendant
Enrique Locsin and in invalidating the proxy issued in favor
of Victor Africa be annulled;
3. The elections held and the proclamation of winners
during the Annual Stockholders' Meeting of defendant PHC
held on 31 August 2004 be annulled;
4. Defendant PHC be directed to recognize Atty. Victor Africa
as the proxy of plaintiff and that he be allowed to vote the
shares standing in the name of plaintiff at subsequent
elections for the members of the board of directors of
defendant PHC.58
On October 21, 2004, PHILCOMSAT (Nieto Group) and
Lokin, Jr. filed their Answer with Grounds for Dismissal and
Compulsory Counterclaims, averring therein, among others,
as follows:
37. The instant complaint must be DISMISSED for lack of
capacity and/or authority of the alleged representative,
Victor V. Africa, to file the same and sue the defendants on
behalf of Philcomsat.
38. While the Complaint names Philcomsat as the plaintiff,
allegedly represented by Victor Africa, at no time did
[P]hilcomsat, through its duly constituted Board of
Directors, authorize him to file the same.

39. Victor Africa bases his authority upon the Secretary

Certificate, alleging that the Philcomsat Board of Directors,
during its meeting held on 28 July 2004, authorized him to
file legal actions on behalf of the corporation.
40. It is respectfully averred, however, that Philcomsat,
through its duly constituted Board of Directors DID NOT
HOLD any meeting on 28 July 2004, and DID NOT
AUTHORIZE Africa to file any action or to do any act or deed
on its behalf. The Secretary's Certificate he represented is
not signed by Atty. Luis K. Lokin, Jr., the duly-elected
Corporate Secretary of Philcomsat.
xxxx
50. There was no Philcomsat Board meeting held or
authorized to be held on 28 July 2004. Neither was there
any authority vested upon Victor Africa to file this nuisance
suit, which is only aimed at needlessly harassing defendants
and the other lawful stockholders of Philcomsat and PHC
and the public at large.
51. For lack of any factual and legal basis of the alleged
authority of the person instituting and verifying the instant
complaint, it must be declared as a NUISANCE SUIT and
immediately DISMISSED by the Honorable Court, pursuant
to Section 1 (b) of the Interim Rules.
52. Furthermore, not only does Africa lack any authority to
file the instant action, the complaint itself is devoid of any
meritorious legal basis.
53. The relevant facts are as follows: In 2003, a stockholder
of PHC filed a letter-complaint (later docketed as SEC Case
No. 12-03-03) with the SEC, alleging the non-holding of the
annual stockholders' meeting since 2002. Hearings were
conducted wherein the officers and directors of POTC and
Philcomsat were required to be present and to file their
comments. Victor Africa actively participated in the
proceedings before the SEC, in his alleged capacity as
officer of POTC, Philcomsat and PHC.

54. In view of the government interest in POTC which is the

sole beneficial owner of Philcomsat, which in turn, is the
80% stockholder of PHC, and the fact that POTC and
Philcomsat are under sequestration, the PCGG was likewise
directed to file their comments on the matters raised by the
parties. PCGG, through then Commissioner Victoria Avena,
asserted that the government holds 40% interest in POTC. x
x x.

133). The suit, docketed as C.A.-G.R. SP NO. 88664, was dismissed

by the CA on July 5, 2005, the decision pertinently stating:

55. Thereafter, the SEC issued the aforestated Order on 08

July 2004, directing the officers of POTC and Philcomsat to
conduct their respective stockholders' meetings. Before the
rendition of the 08 July 2004 Order, the Africa group did not
conduct any stockholders' meeting of POTC or Philcomsat,
but they would later claim that they had agreed, as early as
02 July 2004, to hold the meetings on 08 July 2004. Given
the timing of the meeting, however, which was held after
the 08 July 2004 SEC Order, no credence could be given to
such self-serving claim. The timing and dates are more than
mere convenient coincidences.

It must be stressed that the petitioners' complaint essentially

questions the legality by which the private respondents are
exercising control over the assets and operations of a sequestered
corporation. They posit that the private respondents are usurpers
and have no right to sit in the board of directors or act as corporate
officers of the POTC. Evidently, these issues are "arising from,
incidental to, or related to" the sequestration case against POTC
which, under the law, should be addressed by the Sandiganbayan.

56. After POTC and Philcomsat duly held their respective

stockholders' meetings on 05 August 2004 and 09 August
2004, the SEC upheld the validity of their meetings in its
Order dated 20 August 2004.
57. Thereafter, Africa initiated a series of actions in different
tribunals in an attempt to basically prevent the POTC and
Philcomsat Directors and Officers from acting in their
capacity as such.59
On November 18, 2004, PCGG expressly adopted the Answer of
PHILCOMSAT (Nieto Group) as its own Answer in Civil Case No. 041049.60
On December 7, 2004, the RTC denied the Africa Groups Motion
for Reconsideration assailing the order issued on August 27, 2004
in Civil Case No. 04-935.
Whereupon, POTC (Africa Group) went to the CA on certiorari to
annul and set aside the orders issued on August 27, 2004 and
December 7, 2004 in Civil Case No. 04-935 by the RTC (Branch

x x x We thus have to address one crucial issue: Was the lower

court correct in ruling that the Sandiganbayan had jurisdiction over
the instant case?
It was.

xxxx
All told, the lower court did not commit grave abuse of discretion
amounting to lack of or in excess of jurisdiction in dismissing the
instant complaint for lack of jurisdiction, the same being vested in
the Sandiganbayan.61
On June 15, 2005, this Court rendered its decision in G.R. No.
141796 and G.R. No. 141804 by affirming the validity of the
compromise agreement dated June 28, 1996 between the PCGG
and Atty. Ilusorio, holding:
With the imprimatur of no less than the former President Fidel V.
Ramos and the approval of the Sandiganbayan, the Compromise
Agreement must be accorded utmost respect. Such amicable
settlement is not only allowed but even encouraged. x x x.
Having been sealed with court approval, the Compromise
Agreement has the force of res judicata between the parties and
should be complied with in accordance with its terms. Pursuant
thereto, Victoria C. de los Reyes, Corporate Secretary of the POTC,
transmitted to Mr. Magdangal B. Elma, then Chief Presidential Legal
Counsel and Chairman of PCGG, Stock Certificate No. 131 dated
January 10, 2000, issued in the name of the Republic of the

Philippines, for 4,727 POTC shares.

Agreement was partly implemented.62

Thus,

the

Compromise

On July 5, 2005, the Africa Group, citing the decision in G.R.

No.141796 and G.R. No. 141804, filed a Manifestation with ExParte Motion to Resolve in Civil Case No. 04-1049.63
Also on July 5, 2005, the CA promulgated its decision in C.A.-G.R.
SP No. 88664, dismissing the petition for certiorari (brought to
assail the dismissal by the RTC (Branch 133) of the complaint in
Civil Case No. 04-935).64
On August 18, 2005, PHILCOMSAT (Nieto Group), through Locsin,
submitted a Counter-Manifestation, contending that the decision in
G.R. No. 141796 and G.R. No. 141804 did not operate to
automatically nullify the proceedings during the stockholders
meeting of PHC on August 31, 2004.65
On August 19, 2005, the RTC (Branch 138), apprised of the
pendency of motions for reconsideration in G.R. No. 141796 and
G.R. No. 141804, held in abeyance its action upon the parties
respective manifestations until after the resolution of the pending
motions for reconsideration.66
On September 7, 2005, the Court denied the motions for
reconsideration in G.R. No. 141796 and G.R. No. 141804, stating:
Obviously, petitioners motions for reconsideration are devoid of
merit. The matters they raise are mere reiterations of the previous
arguments in their petitions already considered and exhaustively
passed upon in our July 27, 2005 (sic) Decision. Indeed, we find no
cogent reason to deviate from our Decision.
As regards the second incident, respondent Bildner seeks a
clarification on the effect of the TRO, issued by this Court on March
29, 2000, restraining the implementation of the challenged
Sandiganbayan Resolution dated December 20, 1999 in Civil Case
No. 0009.
It may be recalled that in our June 15, 2005 Decision, we
dismissed these consolidated petitions assailing the Sandiganbayan
Resolution of December 20, 1999. This Resolution (1) denied
petitioners' separate motions to vacate the Sandiganbayan Order

dated June 8, 1998 approving the Compromise Agreement; (2)

declared the 5,400 POTC shares registered in the names of
petitioners IRC and MLDC null and void as they categorically
admitted that such shares are ill-gotten wealth of deposed
President Marcos and his Family, and that the same were
surrendered to the Government which now owns the same; and (3)
ordered the Corporate Secretary of POTC, within 10 days from
receipt of the Resolution, to issue 4,727 POTC shares in the name
of the Republic, and 673 POTC shares in the name of Potenciano
Ilusorio, pursuant to the approved Compromise Agreement. In
compliance with the Sandiganbayan Resolution, Atty. Victoria C. de
los Reyes, Corporate Secretary of the POTC, on January 10, 2000,
transmitted to Mr. Justice Magdangal B. Elma, then Chief
Presidential Legal Counsel and Chairman of Philippine Commission
on Good Government (PCGG), Stock Certificate No. 131 (of even
date) issued in the name of the Republic of the Philippines, for
4,727 POTC shares. Thus, the Compromise Agreement was partly
implemented.
In her present motion for clarification, respondent Bildner alleges
inter alia that, on March 29, 2000 or more than two (2) months
after the Compromise Agreement had been implemented on
January 10, 2000, this Court issued a TRO restraining its
implementation.
There is no need for us to make a clarification being sought by
respondent Bildner in her motion. Suffice it to say that when the
TRO was issued on March 29, 2000, the Sandiganbayan Resolution
of December 20, 1999 directing the issuance of POTC shares in the
names of the Republic and Potenciano Ilusorio in accordance with
the Compromise Agreement had been partially implemented on
January 10, 2000 or more than two (2) months earlier by POTC
Corporate Secretary Victoria C. de los Reyes. She already
transmitted to then PCGG Chairman Magdangal B. Elma Stock
Certificate No. 131 issued in the name of the Republic of the
Philippines, for 4,727 POTC shares. This was never mentioned by
petitioners in their petitions. In fact, even before the petitions in
these cases were filed, the implementation of the Compromise
Judgment had been partially effected. We were thus misled in
issuing the TRO. In any case, the TRO has become moot and
academic, the same having no more legal force as the act sought
to be restrained had been partially implemented and considering
our Decision in this case.

WHEREFORE, petitioners instant motions for reconsideration are

DENIED with FINALITY. On respondent Bildner's motion for
clarification, the same is considered moot and academic.67
In the meantime, the RTC (Branch 138) required the parties to
submit their respective memoranda in Civil Case No. 04-1049. Both
parties complied.68
On September 14, 2005, the Africa Group brought a special civil
action for certiorari and prohibition in this Court assailing the
decision promulgated on July 5, 2005 in C.A.-G.R. SP No. 88664
(G.R. No. 171799).69
On September 22, 2005, POTC and PHILCOMSAT (Africa-Ilusorio
Group) elected a new set of Directors and Officers. Ma. Erlinda I.
Bildner was elected as the Chairman of the Boards of Directors of
both POTC and PHILCOMSAT.70
On September 26, 2005, POTC and PHILCOMSAT (Nieto Group)
initiated a Complaint for injunction and damages with prayer for
TRO and WPI in the Sandiganbayan (SB Civil Case No. 0198).71
The Sandiganbayan issued a TRO in SB Civil Case No. 0198,
enjoining the Africa-Ilusorio Group from acting as Officers and
Directors of POTC and PHILCOMSAT.72
On June 5, 2006, the Court dismissed G.R. No. 171799, viz:
Considering the allegations, issues and arguments adduced in the
petition for certiorari and prohibition with prayer for writ of
preliminary injunction and/or temporary restraining order dated 14
September 2005, the Court Resolves to DISMISS the petition for
failure to sufficiently show that the questioned judgment of the
Court of Appeals is tainted with grave abuse of discretion.73
On October 14, 2006, the RTC (Branch 138) rendered its decision
in Civil Case No. 04-1049, thus:
In the case at bar, the Nieto Group did not specifically deny
plaintiff's allegation that their votes during the 2004 annual
stockholders' meeting for POTC and Philcomsat mainly relied on the
IRC and Mid-Pasig shares. Upon the promulgation of the abovecited Supreme Court Decision dated 15 June 2005, even as early

as 1986, both IRC and Mid-Pasig corporations have no more right

or interest over the subject POTC shares which was already
surrendered by Jose Y. Campos to the Government. Mid-Pasig and
IRC themselves were sequestered, and then voluntarily
surrendered as part of the res covered by the Campos Compromise
Agreement. Insofar as Mid-Pasig and IRC are concerned, they have
already relinquished all rights or interest over all POTC shares
registered in their names in favor of the Republic represented by
PCGG, even as early as 1986. Hence, the Supreme Court Decision,
in effect, invalidates the elections held by the Nieto Group in the
annual stockholders' meeting of POTC and Philcomsat on 5 August
2004 and 9 August 2004, for not having the majority control of the
said corporation. In turn, the defendant Nieto Group could not
have, therefore, issued a valid proxy nor could they have appointed
defendant Locsin as Philcomsats representative to the PHC annual
stockholders meeting.
WHEREFORE, judgment is hereby rendered invalidating the proxy
issued in favor Manuel Nieto and/or defendant Locsin for purposes
of the Annual Stockholders' Meeting for the year 2004 and
declaring the proxy issued in favor of Victor V. Africa for the said
purpose, valid. Corollarily, the elections held and the proclamation
of winners during the annual stockholders' meeting of defendant
PHC held on 31 August 2004 is hereby annulled.74
On October 23, 2006, the RTC (Branch 138) dismissed Civil Case
No. 01-840 for lack of jurisdiction. Subsequently, the RTC (Branch
138) denied the petitioners Motion for Reconsideration, and
treated it instead as a notice of appeal.75
On March 1, 2007, PHC (Nieto Group) and Brodett appealed the
decision dated October 14, 2006 rendered in Civil Case No. 041049 to the CA via a petition for review (CA-G.R. SP NO. 98097).
On March 27, 2007, the Africa-Ilusorio Groups submitted their
comment (with opposition to the application for TRO and WPI).76
On March 21, 2007, POTC and PHILCOMSAT (Nieto Group) brought
to the CA a petition for certiorari (with prayer for TRO and WPI),
similarly assailing the decision rendered on October 14, 2006 in
Civil Case No. 04-1049 (C.A.-G.R. SP No. 98399).77
On March 27, 2007, PHILCOMSAT (Africa Group) sought the
execution of the decision rendered on October 14, 2006 in Civil

Case No. 04-1049 by the RTC (Branch 138). Although on April 4,

2007, PHC (Nieto Group), Locsin and Brodett opposed the motion
for execution, the RTC (Branch 138) granted the motion on April
12, 2007, to wit:
WHEREFORE, premises considered, the Court hereby grants the
plaintiff's Motion. Let a writ of execution be issued directing the
implementation of the following orders:
1) the individuals elected by defendant Locsin in the 2004
PHC ASM, and so proclaimed to be PHCs board of directors,
namely: Enrique Locsin, Julio Jalandoni, Manuel Andal, Luis
Lokin, Jr., Prudencio Somera, Jr., Manuel H. Nieto, Jr.,
Roberto V. San Jose, Philip Brodett, Oliverio Laperal, Benito
Araneta and Roberto Abad and all their representatives or
agents are enjoined from continuing to act as PHC board of
directors;

On April 24, 2007, the PHC (Africa Group) held an organizational

meeting of its Board of Directors pursuant to the decision dated
October 14, 2006 as well as the order dated April 12, 2007 and the
writ of execution dated April 20, 2007, all issued in Civil Case No.
04-1049. At that organizational meeting, Victor V. Africa, Federico
R. Agcaoili, Erlinda I. Bildner, Katrina C. Ponce Enrile, Sylvia K.
Ilusorio, Honorio Poblador III, Jose Ozamiz, Prudencio Somera,
Pablo Lobregat and Oliverio Laperal were elected as Directors. On
the same occasion, the following were elected as Officers of PHC,
namely: Honorio Poblador III as Chairman; Oliverio Laperal as
Vice-Chairman; Erlinda I. Bildner as President; Lorna P. Kapunan as
Vice President; Pablo Lobregat as Vice-President; Katrina Ponce
Enrile as Treasurer; Rafael Poblador as Assistant Treasurer; John
Benedict Sioson as Corporate Secretary; and Dennis R. Manzanal
as Assistant Corporate Secretary.81
On April 30, 2007, PHILCOMSAT (Africa Group) filed an Urgent
Motion to Lift the TRO in C.A.-G.R. SP No. 98399.82

2) the proxy of plaintiff issued to Victor V. Africa is declared

valid and thus, the individuals elected by plaintiff's proxy in
the 2004 PHC ASM namely: Victor V. Africa, Erlinda I.
Bildner, Katrina Ponce Enrile, Honorio Poblador III, Federico
Agcaoili, Sylvia K. Ilusorio and Jose Ma. Ozamiz are declared
as the valid board of directors of PHC; and

On May 2, 2007, PHC (Nieto Group) presented a Manifestation in

C.A.-G.R. SP NO. 98097, alleging that they were informed that
POTC and PHILCOMSAT had filed a petition dated March 14, 2007
in this Court which involved substantially the same issues raised in
C.A.-G.R. SP No. 98097.83

3) the defendants are directed to render an accounting of

funds of PHC since 2004 up to the present within 15 days
from the finality of this Order.78

On May 10, 2007, the CA directed POTC and PHILCOMSAT (Nieto

Group) to comment on the Urgent Motion to Lift the TRO filed in
C.A.-G.R. SP NO. 98399.84

On April 18, 2007, PHC (Nieto Group) and Brodett filed their Reply
with Reiteration of the Urgent Application for Temporary Restraining
Order and Preliminary Injunction in C.A.-G.R. SP NO. 98097. On
April 20, 2007, they filed a Supplemental Petition with Urgent
Application for Temporary Restraining Order and Preliminary
Injunction, alleging that, upon motion of respondent (Africa
Group), the RTC had issued an order dated April 12, 2007 directing
the issuance of a writ of execution to implement the decision dated
October 14, 2006.79

On May 17, 2007, the CA issued a resolution in C.A.-G.R. SP No.

98097, to wit:

On April 18, 2007, the RTC (Branch 138) issued a writ of execution
of the decision dated October 14, 2006.80

WHEREFORE, petitioners application for a temporary restraining

order/writ of preliminary injunction to enjoin the execution of the
Decision dated October 14, 2006 of the court a quo in Civil Case
No. 04-1049 is merely NOTED as the same has been rendered
moot and academic.
The issues having been joined with the filing of the comment and
reply, the petition for review is considered submitted for decision.85
On June 8, 2007, the CA dismissed the petition in C.A.-G.R. CV NO.
88360 for being an improper mode of appeal.86

On June 12, 2007, POTC and PHILCOMSAT (Nieto Group) filed their
Reply with Urgent Motion to Resolve the Application for Preliminary
Injunction in CA-G.R. SP No. 98399. The CA granted the Urgent
Motion to Resolve on June 25, 2007, and issued the WPI on the
same date.87
On August 17, 2007, POTC and PHILCOMSAT (Africa-Ilusorio
Group) brought a petition for certiorari to annul and set aside the
CAs resolution dated June 25, 2007 in C.A.-G.R. SP No. 98399. 88
Earlier, on August 15, 2007, the Sandiganbayan issued its
resolution dismissing the Complaint of POTC and PHILCOMSAT
(Nieto Group) in SB Civil Case No. 0198, to wit:
WHEREFORE, in view of the foregoing, the Court hereby resolves
as follows:
1) The Urgent Motion to Dismiss dated September 29, 2005
of the defendant is hereby GRANTED. Accordingly, the
plaintiffs' Complaint dated September 20, 2005 is hereby
ordered DISMISSED.
2) The following motions and pleadings are considered
MOOT AND ACADEMIC in view of the dismissal of the case.
a. Motion to Consider and Declare Defendants in
Default dated October 21, 2005 of the plaintiffs;
b. Motion for Consolidation with SB Civil Case No.
0009 dated September 24, 2006 of the plaintiffs;
c. Petition to Show Cause dated April 25, 2007 filed
by the plaintiffs; and
d. Motion for Leave to Intervene and to Admit
Complaint-In-Intervention dated May 16, 2007 filed
by the PCGG.
3) The Court hereby REPRIMANDS Enrique L. Locsin and
Atty. Sikini C. Labastilla for omitting material facts in their
Complaint and Urgent Motion for Special Raffle and WARNS

that a repetition of the same or similar acts in the future

shall be dealt with more severely.89
POTC and PHILCOMSAT (Nieto Group) moved for reconsideration on
September 5, 2007, and later supplemented the motion.90
On November 5, 2007, Atty. Sikini C. Labastilla filed in the CA a
petition to cite Erlinda I. Bildner and her lawyer Atty. Dennis R.
Manzanal for indirect contempt of court (C.A.-G.R. SP No. 101225),
and prayed that the petition be consolidated with C.A.-G.R. SP No.
98399. The consolidation was allowed on December 12, 2007. 91
On November 13, 2007, President Arroyo named new nominees to
the POTC Board of Directors, namely: Daniel C. Gutierrez, Allan S.
Montao, and Retired Justice Santiago J. Ranada; and to the
PHILCOMSAT Board of Directors, namely: Ramon P. Jacinto,
Abraham R. Abesamis, and Rodolfo G. Serrano, Jr.92
On November 19, 2007, POTC held its Annual Stockholders
Meeting and Organizational Meeting of the Board of Directors.
Elected were Daniel C. Gutierrez as Director and Chairman; Erlinda
I. Bildner as Director and Vice Chairman; Katrina Ponce Enrile as
Director and President/CEO;
Marietta K. Ilusorio as Director and Treasurer; Francisca Benedicto
Paulino, Pablo L. Lobregat, Allan Montao, Honario A. Poblador III
and Justice Ranada as Directors; Rafael A. Poblador as Assistant
Treasurer; and Victoria C. de los Reyes as Corporate Secretary.93
On the same date, PHILCOMSAT held its Annual Stockholders
Meeting and Organizational Meeting of the Board of Directors.
Elected were: Abraham R. Abesamis as Director and Chairman;
Pablo L. Lobregat as Director and Vice-Chairman; Ramon Jacinto as
Director and Chairman of the Executive Committee; Erlinda I.
Bildner as Director and President/CEO; Marietta K. Ilusorio as
Director and Vice President; Katrina Ponce Enrile as Director and
Treasurer; Lorna P. Kapunan, Honorio A. Poblador III and Rodolfo
G. Serrano, Jr. as Directors; Rafael A. Poblador as Assistant
Treasurer; and John Benedict L. Sioson as Corporate Secretary.94
Thereafter, Concepcion A. Poblador of the Nieto Group filed a
Complaint for injunction and declaration of nullity (with prayer for
TRO and WPI) with the Sandiganbayan, seeking to enjoin the PCGG

from recognizing the stockholders meeting held on November 19,

2007 (Civil Case No. 07-0001).

Regional Trial Court (RTC) of Makati Branch 138 in Civil Case

No. 04-1049 x x x.

Meanwhile, PHC (Africa Group), through Erlinda I. Bildner, filed a

Complaint for injunction against the Bank of the Philippine Islands
(BPI) with the RTC (Branch 62) in Makati City, seeking to enjoin
BPI from allowing further disbursements of PHC funds to
unauthorized persons comprising those who were no longer
members of the PHC Board of Directors due to the nullification of
their election.

xxxx

On the basis of the Complaint, the RTC (Branch 62) issued an order
on December 13, 2007, as follows:
FOREGOING CONSIDERED, pending final adjudication on the
principal action raised herein and subject to the posting of the
indemnity bond in the sum of Three Million Pesos (Php
3,000,000.00) issued in favor of the defendant Bank of the
Philippine Islands and defendant intervener PHC represented by
Enrique M. Locsin, let a writ of preliminary injunction issue,
enjoining the said defendant bank, its employees, officers, and
representatives from allowing the defendant intervener, Locsin
Group, their officers, employees, agents, and/or representatives to
inquire, withdraw, and/or in any manner transact relative to any
and all Philcomsat Holdings Corporation accounts maintained with
Bank of the Philippine Islands until further orders from this Court.
Finally, the defendant bank is hereby ordered to submit to this
Court the latest (as of receipt of this Order) bank statements
and/or certificates of all PHC accounts deposited with its bank
within ten (10) days from notice thereof.95
On December 14, 2007, POTC and PHILCOMSAT (Africa Group)
filed in C.A.-G.R. SP NO. 98399 a Manifestation and Urgent Motion
to Withdraw Petition, praying that the petition be considered
withdrawn, and that the WPI issued on June 25, 2007 be
immediately lifted. In support of the motion, POTC and
PHILCOMSAT (Africa Group) averred:
(1) On 21 March 2007, Mr. Enrique Locsin (Locsin)
purportedly representing POTC and PHILCOMSAT filed the
instant petition, assailing the decision issued by the

(3) What Mr. Locsin has deliberately failed and/or refused to

divulge to this Honorable Court upon filing the instant
petition are the following facts: (1) Mr. Locsin and his group
are exactly the same set of individuals who comprise the
respondents in Civil Case No. 04-1049, the decision which is
now herein assailed; and that (2) Mr. Locsin and his group,
purportedly, representing earlier or two weeks prior to the
filing of the instant petition, already filed an appeal also
with this Honorable Court, albeit pending in a different
division, docketed as CA-G.R. SP No. 98097, raising exactly
the same issues and seeking identical reliefs as they are
now pending in the case at bar.
xxxx
(5) The difficulty in resolving the present controversy lodged
before this Honorable Court stems from the fact that even
the legitimate POTC and PHILCOMSAT representatives
become apparently undeterminable.
xxxx
(9) Nonetheless, the conflicting claims over POTC and
PHILCOMSAT have finally come to resolution with the recent
developments.
(10) On 13 November 2007, the government appointed its
new nominees to POTC and PHILCOMSAT. For POTC, the
government, through Undersecretary Enrique D. Perez with
the directive of President Gloria Macapagal Arroyo,
appointed Atty. Daniel C. Gutierrez, Atty. Allan S. Montao
and Justice Santiago J. Ranada (Ret.) to the POTC board
and represent the government's 34.9% shareholdings in the
board of directors of POTC. In the same manner and for an
akin purpose, the government appointed Mr. Ramon P.
Jacinto, Mr. Rodolfo G. Serrano, Jr. and Radm. Abraham R.
Abesamis (Ret.) to represent the government's 34.9%
shareholdings on the board of directors of PHILCOMSAT.

Although this Honorable Court may take judicial notice of

these appointments, to evidence such new appointments,
copies of the proxy issued by the Republic of the Philippines
to Undersecretary Perez and the "I desire" letter of the
Office of the President for the government's nominees to
PHILCOMSAT, both dated 13 November 2007, and the list of
nominees of Undersecretary Perez for POTC and his letter to
PCGG Chairman Camilo Sabio, both dated 19 November
2007, are attached and made integral parts hereof as
Annexes "B", "B", "C" and "D", respectively.
(11) Needless to state, with the designation and their
selection of the new government nominees to POTC and
PHILCOMSAT, the old nominees, namely: Mr. Locsin, Mr.
Manuel Andal, Mr. Julio Jalandoni and Mr. Guy de Leon are
automatically replaced. This is an undeniable fact and had
always been the procedure in the appointment and
replacement of government nominees to the board of
companies where the government has a substantial interest.
(12) Following the said appointment of new nominees,
necessarily, annual stockholders meetings of both POTC and
PHILCOMSAT were conducted and held on 19 November
2007 in order to elect the new directors of the respective
boards of the two companies. During the said meetings,
where over 90% of the shareholders were present and/or
duly represented, the stockholders elected the new board of
directors of POTC and PHILCOMSAT. These elections are
evidenced by the Secretary's Certificates duly executed by
the Corporate Secretaries of POTC and PHILCOMSAT, copies
of which are attached and made integral parts hereof as
Annexes "E" and "F", respectively.
(13) Thus, the new government nominees, together with
the private shareholders of POTC and Philcomsat are joined
together in a unified board of directors for the two
companies. In fact, after the new sets of directors had been
elected, both companies conducted their respective
organizational and board meetings.
(14) At the board meetings of POTC and Philcomsat held on
4 December 2007, POTC and PHILCOMSAT have decided, as
the new, unassailably legitimate and only board of directors

of POTC and PHILCOMSAT, to authorize the withdrawal of

the instant petition filed in the name of POTC and
PHILCOMSAT. The boards likewise in their resolutions,
disallowed other persons to represent their companies.
Copies of these resolutions issued by POTC and
PHILCOMSAT are attached and made integral parts hereof
as Annexes "G" and "H", respectively.
(15) Thus, based on the foregoing, POTC and PHILCOMSAT,
who are supposedly the petitioners in this case, move for
the immediate withdrawal of the petition dated 14 March
2007 and the immediate lifting of the Writ of Preliminary
Injunction dated 25 June 2007.96
The Urgent Motion to Withdraw Petition was opposed in a Comment
and Opposition filed on February 13, 2008 that averred as follows:
xxxx
4. Through the malicious motion to withdraw, there is a
veiled attempt, to have this Honorable Court uphold and
recognize the validity of the supposed meetings held by
rump boards on November 19, 2007.This is a matter that is
properly cognizable only by the Sandiganbayan.
5. In fact, there is already a pending complaint before the
Sandiganbayan that assails the supposed November 19,
2007 meetings stated in the motion to withdraw.
6. The Sandiganbayan, acting through the Fifth Division,
granted the issuance of a Temporary Restraining Order on
December 21, 2007, to prevent and prohibit any recognition
of these November 19, 2007 meetings. x x x.
12. Petitioners, however, are compelled to address the
misleading allegations and conclusions in the motion to
withdraw. It is respectfully manifested that these alleged
November 19, 2007 meetings were not called by the
legitimate boards of petitioners POTC and Philcomsat. Only
the legitimate boards, here represented by Mr. Locsin, can
properly act upon any change in the government nominees,
and it is only the legitimate boards that can install them. As
manifested by petitioners to this Honorable Court, since

there are no more legal challenges to the respective Boards

of Directors of petitioners originally led by Ronaldo Salonga
and Manuel Nieto, Jr., since 1998, only the successors of
these boards, here represented by Mr. Locsin, can properly
represent petitioners POTC and PHILCOMSAT.
12.1. The issue was settled with the dismissal of the
appeal in CA G.R. CV No. 88360, which stemmed
from the original petition filed in 1998 by Potenciano
Ilusorio, Katrina Ponce-Enrile, and their family owned
corporations, to question the election of the NietoSalonga board. The appeal was dismissed by the
Honorable Court of Appeals in its Resolution dated
June 8, 2007, a copy of which is hereto attached as
Annex B.
13. It is significant that the manifestation and motion to
withdraw made admissions that recognize the validity of the
boards represented by Mr. Locsin. While petitioners do not
admit to the genuineness or due execution of the
Secretary's Certificates which were not signed by the dulyelected Corporate Secretary x x x, it must be noted that the
authority of Mr. Locsin to file the instant petition was
recognized and admitted therein. It was only claimed that
such authority "was lost" when he was allegedly replaced,
which replacement, as discussed above, is still disputed.
Thus, even the rump boards admit that the filing of this
petition by Mr. Locsin was duly authorized by POTC and
PHILCOMSAT.97
xxxx
On December 21, 2007, the Sandiganbayan (Fifth Division) issued
an order in Civil Case No. 07-0001, to wit:
xxxx
Wherefore, finding the complaint to be sufficient in form and
substance and considering the necessity to maintain the status quo
lest grave and irreparable injury would result to plaintiff pending
the hearing of the main incident (Injunction and Declaration of
Nullity), let a TEMPORARY RESTRAINING ORDER issue ordering the
defendants, their agents, executives and other persons acting upon

their instructions, from recognizing or acting pursuant to the 19

November 2007 stockholders meetings of POTC and PHILCOMSAT.
The restraining order is good for twenty (20) days from notice to
defendants or any of their representatives.98
xxxx
On May 7, 2008, the PCGG passed Resolution No. 2008-009, viz:
NOW, THEREFORE, be it RESOLVED, as it is hereby RESOLVED,
that:
1. The PCGG recognize the validity of the 19 November
2007 POTC/Philcomsat stockholders' meeting and confirm as
valid the election of the following government nominees:
Atty. Daniel C. Gutierrez, Justice Santiago J. Ranada and
Atty. Allan S. Montano to the Board of Directors of POTC and
Radm. Abraham R. Abesamis, Mr. Ramon P. Jacinto and Mr.
Rodolfo G. Serrano, Jr. to the Board of Directors of
Philcomsat;
2. The PCGG recognize the validity of the 11 December
2007 and 18 January 2008 special stockholders' meetings of
Philcomsat subsidiaries, PHC and TCI, at which the new
government nominees were also elected as members of
their respective Board of Directors subject to the "I Desire"
letter of the President requiring the nomination and
installation of Mr. Enrique Locsin in PHC vice Mr. Rodolfo
Serrano;
3. The PCGG direct the old government nominees and their
appointed Corporate Secretaries under pain of contempt to
submit to the Commission within ten (10) days from their
receipt of the Resolution:
a. A complete set of Minutes of the Meetings of the
Boards of Directors, Executive Committee, Legal
Committee, Audit Committee and all other
committees with a Certification under oath of the
completeness thereof from 1998 up to the present;
b. A complete and updated list of stockholders of the
corporations with their last known addresses and

number of shares duly certified by the Corporate

Secretary and/or Stock Transfer Agent;
c. Copies of all audited and interim
statements of these corporations; and

financial

d. The stock transfer book and stock certificate

booklet of PHC and TCI.

authority to decide Civil Case No. 04-1049; that the decision of the
RTC was valid and correct; and that the petition for contempt filed
against Atty. Sikini C. Labastilla was without basis. The CA lifted
and dissolved the WPI issued on June 25, 2007.103
On December 23,
reconsideration.104

2008,

the

CA

denied

the

motion

for

Issues
4. The PCGG request the Securities and Exchange
Commission ("SEC") and the Philippine Stock Exchange
("PSE") to regulate and monitor POTC, Philcomsat, PHC and
TCI, to cooperate with the new government nominees and
assist them in complying with the reportorial requirements
of these corporations, including, but not limited to,
compelling the old government nominees and their
appointed officers to submit copies of the documents
referred to above;
RESOLVED, FURTHER, that the Commission Secretary be directed
to furnish copies of this Resolution to the old government
nominees/directors of POTC, Philcomsat, PHC and TCI namely
Enrique Locsin, Manuel Andal, Julio Jalandoni, Guy De Leon, Benito
Araneta and Ronaldo Salonga, to the new government nominees
Daniel Gutierrez, Santiago Ranada, Allan Montano, Abraham
Abesamis, Ramon Jacinto, Rodolfo Serrano, Jr. Enrique Locsin and
to the SEC, PSE and BSP for their guidance, observation and
compliance.99
On July 16, 2008, the CA rendered its assailed decision in C.A.-G.R.
SP No. 102437, annulling and setting aside the order dated
December 13, 2007 and the WPI issued on December 17, 2007 by
the RTC (Branch 62).100
On February 13,
reconsideration.101

2009,

the

CA

denied

the

motion

for

On September 30, 2008, the CA promulgated its assailed

consolidated decision in C.A.-G.R. SP No. 98097, C.A.-G.R. SP No.
98399 and C.A.-G.R. SP No. 101225, dismissing the
petitions.102 The CA held that the RTC acted within its jurisdiction in
resolving the intra-corporate dispute; that the conduct of pre-trial
was not required in corporate election cases; that the RTC had the

G.R. No. 184622

WHETHER
THE
SANDIGANBAYANS
REFUSAL
TO
TAKE
COGNIZANCE OF THE CONTROVERSY ON THE GROUND THAT THE
SAME IS AN INTRA-CORPORATE CONTROVERSY IS IMPROPER AND
AGAINST JURISPRUDENCE.105
G.R. No. 184712-14
WHETHER THE SANDIGANBAYAN HAS ORIGINAL AND EXCLUSIVE
JURISDICTION
OVER
SEQUESTERED
CORPORATIONS,
SEQUESTRATION-RELATED CASES, AND ANY AND OVER ALL
INCIDENTS ARISING FROM, INCIDENTAL TO, OR RELATED TO
SUCH CASES.106
WHETHER THE SEQUESTRATION OVER POTC AND PHILCOMSAT
REMAINS DESPITE THE APPROVAL OF THE PCGG-ILUSORIO
COMPROMISE AGREEMENT IN G.R. NOS. 141796 AND 141804.107
WHETHER THE MAKATI RTC MAY RENDER JUDGMENT ON THE
COMPLAINT PURSUANT TO THE INTERIM RULES WHEN THE SAID
COURT HAS NOT BEEN DESIGNATED AS A SPECIAL COMMERCIAL
COURT BY THE SUPREME COURT.108
WHETHER THE ORDER TO CONDUCT PRE-TRIAL AND THE
SUBMISSION OF THE PRE-TRIAL BRIEFS IS MANDATORYUNDER
ALL CASES FILED UNDER THE INTERIM RULES.109
G.R. No. 186590

WHETHER THE COURT OF APPEALS ERRED WHEN IT NULLIFIED

THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL
COURT.110
G.R. No. 186066
WHETHER OR NOT THE CA ERRED IN RULING THAT THE REGIONAL
TRIAL COURT OF MAKATI HAD JURISDICTION OVER CIVIL CASE
NO. 04-1049;
WHETHER OR NOT THE CA ERRED IN RULING THAT THE DECISION
IN G.R. NOS. 141796 AND 141804 FINALLY SETTLED THE ISSUES
IN CIVIL CASE NO. 04-1049 AND CONSEQUENTLY ANNULLED THE
POTC PROXY IN FAVOR OF MESSRS. NIETO AND LOCSIN;
WHETHER OR NOT THE CA ERRED IN RULING THAT BRANCH 138
COULD STILL ACT ON AND DECIDE CIVIL CASE NO. 04-1049
DESPITE THIS HONORABLE COURTS REVOCATION OF ITS
DESIGNATION AS SPECIAL COMMERCIAL COURT OF RTC MAKATI
CITY;
WHETHER OR NOT THE CA ERRED IN RULING THAT PRE-TRIAL AND
TRIAL CAN BE DISPENSED WITH IN CIVIL CASE NO. 01-1049;
WHETHER OR NOT THE CA ERRED IN AFFIRMING THE DECISION
OF THE TRIAL COURT WHICH WAS CONTRARY TO THE FACTS AND
EXISTING JURISPRUDENCE.111
The Court reduces the issues for resolution to two main ones,
namely:
(a) Did RTC (Branch 138) have jurisdiction over the intracorporate controversy (election contest)?
(b)Who among the contending parties or groups held the
controlling interest in POTC and, consequently, in
PHILCOMSAT and PHC?
In G.R. No. 184712-14, the petitioners postulate that the
Sandiganbayan had original and exclusive jurisdiction over
sequestered corporations, sequestration-related cases, and any
and over all incidents arising from, or incidental or related to such

cases;112 that it was error on the part of the CA to conclude that

the Sandiganbayan was automatically ousted of jurisdiction over
the sequestered assets once the complaint alleged an intracorporate dispute due to the sequestered assets being in custodia
legis of the Sandiganbayan;113 that the sequestration of POTC and
PHILCOMSAT remained despite the approval of the compromise
agreement in G.R. No. 141796 and G.R. No. 141804; that because
the proceedings involving the shares of the Nieto, Africa and Ponce
Enrile Families were still pending and had not yet been finally
resolved,114 the RTC could not render a valid judgment on the
dispute because it had not been designated as a Commercial
Court;115 and that the conduct of a pre-trial and the submission of
a pre-trial brief were mandatory under all cases filed under the
Interim Rules.116
In its Comment, PHILCOMSAT counters that the rulings in Olaguer
and Del Moral were not applicable because such cases arose from
different factual settings;117 that the RTC had ample authority to
rule upon the intra-corporate dispute;118 and that the conduct of
pre-trial was not mandatory in corporate election cases.119
In G.R. No. 184622, the petitioners claim that the Sandiganbayan
committed an error in refusing to take cognizance of the injunction
suit they had filed on the ground that it was an intra-corporate
dispute; that the Sandiganbayan thereby went against the spirit
and intent of the Courts rulings stressing the importance of
protecting
sequestered
assets
and
recovering
ill-gotten
wealth;120 and that the Courts pronouncement in G.R. No. 171799
affirming the status of POTC shares as sequestered shares was
more than enough reason for the Sandiganbayan to take
cognizance of the injunction suit.121
In its Comment,122 respondent Ilusorio-Africa Group counter that
the injunction suit was not within the jurisdiction of the
Sandiganbayan; and that Locsin had no authority to institute the
injunction suit due to his election being a patent nullity considering
that the proxies issued by IRC and Mid-Pasig could not be given
effect after the Court had affirmed the ruling of the Sandiganbayan
on IRC and Mid-Pasigs shareholdings in POTC.123
In G.R. No. 186590, PHILCOMSAT posits that the trial court
properly issued the injunction against PHC after receiving evidence
of massive looting of corporate funds that led to PHCs external

auditor being suspended as found by Senate Committees and the

SEC.124
In its Comment, PHC states that PHILCOMSAT failed to establish its
right in esse or the existence of a right to be protected so as to
warrant the issuance of the injunctive writ in its favor.125
In G.R. No. 186066, PHC argues that the CA erred in ruling that
the RTC (Branch 138) was clothed with authority to decide Civil
Case No. 04-1049 because POTC and PHILCOMSAT were under
sequestration of the PCGG; that, accordingly, all issues and
controversies arising or related or incidental to the sequestration
fell under the sole and exclusive original jurisdiction of the
Sandiganbayan;126 that the CA erred in appreciating the nature of
Civil Case No. 04-1049; that the controversy, albeit involving an
intra-corporate dispute, was still cognizable by the Sandiganbayan
because
POTC
and
PHILCOMSAT
shares
were
under
sequestration;127 that the ruling in G.R. Nos. 141796 and 141804
does not constitute res judicata; that even assuming that the RTC
(Branch 138) had jurisdiction, its authority was revoked prior to
the issuance of its assailed judgment;128 and that PHC was denied
due process due to the RTCs open violation of the Interim Rules.129
In its Comment, PHILCOMSAT counters that the insistence of PHC
that the sequestration of PHILCOMSAT automatically took away the
jurisdiction of the RTC and conferred it to the Sandiganbayan was
misplaced;130 that the rulings in Olaguer and Del Moral are not on
all fours with this case;131 that the issue of the shares being illgotten was already settled in G.R. Nos. 141796 and
141804;132 that the RTC (Branch 138) had ample authority to
decide the intra-corporate controversy because the case, being
already submitted for decision, remained cognizable by the same
branch;133 and that the conduct of the pre-trial was not required in
election cases.134
Ruling of the Court
We DENY the petitions in G.R. No. 184622, G.R. Nos.184712-14,
and G.R. No.186066; but GRANT the petition in G.R. No. 186590.
1.

RTC
(Branch
138)
had
jurisdiction
over
the
election
contest
between
the
Ilusorio-Africa Groups and Nieto-Locsin Groups
Both Civil Case No. 04-1049 of the RTC (Branch 138) in Makati City
and SB Civil Case No. 0198 of the Sandiganbayan involved intracorporate controversies among the stockholders and officers of the
corporations. It is settled that there is an intra-corporate
controversy when the dispute involves any of the following
relationships, to wit: (a) between the corporation, partnership or
association and the public; (b) between the corporation,
partnership or association and the State in so far as its franchise,
permit or license to operate is concerned; (c) between the
corporation, partnership or association and its stockholders,
partners, members or officers; and (d) among the stockholders,
partners or associates themselves.135
Consequently, we agree with the CAs consolidated decision
promulgated on September 30, 2008 that the RTC (Branch 138),
not the Sandiganbayan, had jurisdiction because Civil Case No. 041049 did not involve a sequestration-related incident but an intracorporate controversy.
Originally, Section 5 of Presidential Decree (P.D.) No. 902-A vested
the original and exclusive jurisdiction over cases involving the
following in the SEC, to wit:
xxxx
(a) Devices or schemes employed by, or any acts of the
board of directors, business associates, its officers or
partners, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of
the stockholder, partners, members of associations or
organization registered with the Commission;
(b) Controversies arising out of intra-corporate or
partnership relations, between and among stockholders,
members or associates; between any or all of them and the
corporation, partnership or association of which they are
stockholders, members or associates, respectively; and
between such corporation, partnership or association and

the State insofar as it concerns their individual franchise or

right as such entity;
(c) Controversies in the election or appointment of
directors, trustees, officers or managers of such
corporations, partnership or associations;
(d) Petitions of corporations, partnerships or associations to
be declared in the state of suspension of payment in cases
where the corporation, partnership or association possesses
sufficient property to cover all its debts but foresees the
impossibility of meeting them when they respective fall due
or in cases where the corporation, partnership or association
has no sufficient assets to cover its liabilities but is under
the management of a Rehabilitation Receiver or
Management Committee created pursuant to this Decree.136
Upon the enactment of Republic Act No. 8799 (The Securities
Regulation Code), effective on August 8, 2000, the jurisdiction of
the SEC over intra-corporate controversies and the other cases
enumerated in Section 5 of P.D. No. 902-A was transferred to the
Regional Trial Court pursuant to Section 5.2 of the law, which
provides:
5.2. The Commissions jurisdiction over all cases enumerated in
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial
Court; Provided, That the Supreme Court in the exercise of its
authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over these cases. The Commission shall
retain jurisdiction over pending cases involving intra-corporate
disputes submitted for final resolution which should be resolved
within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally
disposed.
To implement Republic Act No. 8799, the Court promulgated its
resolution of November 21, 2000 in A.M. No. 00-11-03-SC
designating certain branches of the RTC to try and decide the cases
enumerated in Section 5 of P.D. No. 902-A. Among the RTCs
designated as special commercial courts was the RTC (Branch 138)
in Makati City, the trial court for Civil Case No. 04-1049.

On March 13, 2001, the Court adopted and approved the Interim
Rules of Procedure for Intra-Corporate Controversies under
Republic Act No. 8799 in A.M. No. 01-2-04-SC, effective on April 1,
2001, whose Section 1 and Section 2, Rule 6 state:
Section 1. Cases covered. The provisions of this rule shall apply
to election contests in stock and non-stock corporations.
Section 2. Definition. An election contest refers to any
controversy or dispute involving title or claim to any elective office
in a stock or non-stock corporation, the validation of proxies, the
manner and validity of elections, and the qualifications of
candidates, including the proclamation of winners, to the office of
director, trustee or other officer directly elected by the stockholders
in a close corporation or by members of a non-stock corporation
where the articles of incorporation or by-laws so provide. (bold
underscoring supplied)
Conformably with Republic Act No. 8799, and with the ensuing
resolutions of the Court on the implementation of the transfer of
jurisdiction to the Regional Trial Court, the RTC (Branch 138) in
Makati had the authority to hear and decide the election contest
between the parties herein. There should be no disagreement that
jurisdiction over the subject matter of an action, being conferred by
law, could neither be altered nor conveniently set aside by the
courts and the parties.137
To buttress its position, however, the Nieto-Locsin Group relied on
Section 2 of Executive Order No. 14,138 which expressly mandated
that the PCGG "shall file all such cases, whether civil or criminal,
with the Sandiganbayan, which shall have exclusive and original
jurisdiction thereof."
The reliance was unwarranted.
Section 2 of Executive Order No. 14 had no application herein
simply because the subject matter involved was an intra-corporate
controversy, not any incidents arising from, incidental to, or related
to any case involving assets whose nature as ill-gotten wealth was
yet to be determined. In San Miguel Corporation v. Kahn, 139 the
Court held that:

The subject matter of his complaint in the SEC does not therefore
fall within the ambit of this Courts Resolution of August 10, 1988
on the cases just mentioned, to the effect that, citing PCGG v.
Pena, et al., all cases of the Commission regarding the funds,
moneys,
assets,
and
properties
illegally
acquired
or
misappropriated by former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their close relatives, Subordinates,
Business Associates, Dummies, Agents, or Nominees, whether civil
or criminal, are lodged within the exclusive and original jurisdiction
of the Sandiganbayan, and all incidents arising from, incidental to,
or related to, such cases necessarily fall likewise under the
Sandiganbayan's exclusive and original jurisdiction, subject to
review on certiorari exclusively by the Supreme Court." His
complaint does not involve any property illegally acquired or
misappropriated by Marcos, et al., or "any incidents arising from,
incidental to, or related to" any case involving such property, but
assets indisputably belonging to San Miguel Corporation which
were, in his (de los Angeles') view, being illicitly committed by a
majority of its board of directors to answer for loans assumed by a
sister corporation, Neptunia Co., Ltd.
De los Angeles complaint, in fine, is confined to the issue of the
validity of the assumption by the corporation of the indebtedness of
Neptunia Co., Ltd., allegedly for the benefit of certain of its officers
and stockholders, an issue evidently distinct from, and not even
remotely requiring inquiry into the matter of whether or not the
33,133,266 SMC shares sequestered by the PCGG belong to Marcos
and his cronies or dummies (on which, issue, as already pointed
out, de los Angeles, in common with the PCGG, had in fact
espoused the affirmative). De los Angeles dispute, as stockholder
and director of SMC, with other SMC directors, an intra-corporate
one, to be sure, is of no concern to the Sandiganbayan, having no
relevance whatever to the ownership of the sequestered stock. The
contention, therefore, that in view of this Court's ruling as regards
the sequestered SMC stock above adverted to, the SEC has no
jurisdiction over the de los Angeles complaint, cannot be sustained
and must be rejected. The dispute concerns acts of the board of
directors claimed to amount to fraud and misrepresentation which
may be detrimental to the interest of the stockholders, or is one
arising out of intra-corporate relations between and among
stockholders, or between any or all of them and the corporation of
which they are stockholders.140

Moreover, the jurisdiction of the Sandiganbayan has been held not

to extend even to a case involving a sequestered company
notwithstanding that the majority of the members of the board of
directors were PCGG nominees. The Court marked this distinction
clearly in Holiday Inn (Phils.), Inc. v. Sandiganbayan,141 holding
thusly:
The
subject-matter
of
petitioners
proposed
complaintinintervention involves basically, an interpretation of contract, i.e.,
whether or not the right of first refusal could and/or should have
been observed, based on the Addendum/Agreement of July 14,
1988, which extended the terms and conditions of the original
agreement of January 1, 1976. The question of whether or not the
sequestered property was lawfully acquired by Roberto S.
Benedicto has no bearing on the legality of the termination of the
management contract by NRHDCs Board of Directors. The two are
independent and unrelated issues and resolution of either may
proceed independently of each other. Upholding the legality of
Benedictos acquisition of the sequestered property is not a
guarantee that HIP's management contract would be upheld, for
only the Board of Directors of NRHDC is qualified to make such a
determination.
Likewise, the Sandiganbayan correctly denied jurisdiction over the
proposed complaint-in-intervention. The original and exclusive
jurisdiction given to the Sandiganbayan over PCGG cases pertains
to (a) cases filed by the PCGG, pursuant to the exercise of its
powers under Executive Order Nos. 1, 2 and 14. as amended by
the Office of the President, and Article XVIII, Section 26 of the
Constitution, i.e., where the principal cause of action is the
recovery of ill-gotten wealth, as well as all incidents arising from,
incidental to, or related to such cases and (b) cases filed by those
who wish to question or challenge the commissions acts or orders
in such cases.
Evidently, petitioners proposed complaint-in-intervention is an
ordinary civil case that does not pertain to the Sandiganbayan. As
the Solicitor General stated, the complaint is not directed against
PCGG as an entity, but against a private corporation, in which case
it is not per se, a PCGG case.
In the cases now before the Court, what are sought to be
determined are the propriety of the election of a party as a

Director, and his authority to act in that capacity. Such issues

should be exclusively determined only by the RTC pursuant to the
pertinent law on jurisdiction because they did not concern the
recovery of ill-gotten wealth.
2.
Lack
of
pre-trial
in intra-corporate election contests

commercial court, through the resolution in A.M. No. 03-3-03-SC,

the RTC (Branch 138) did not thereafter become bereft of the
jurisdiction to decide the controversy because of the exception
expressly stated in the resolution in A.M. No. 03-3-03-SC itself, to
wit:
xxxx

was

not

fatal

Under Section 4 of Rule 6 (Election Contests) of the Interim Rules

of Procedure for Intra-Corporate Controversies, which took effect
on April 1, 2001 (A.M. No. 01-2-04-SC), issued pursuant to
Republic Act No. 8799, the trial court, within two days from the
filing of the complaint, may outrightly dismiss the complaint upon a
consideration of the allegations thereof if the complaint is not
sufficient in form and substance, or, if the complaint is sufficient,
may order the issuance of summons which shall be served,
together with a copy of the complaint, on the defendant within two
days from its issuance. Should it find the need to hold a hearing to
clarify specific factual matters, the trial court shall set the case for
hearing, and the hearing shall be completed not later than 15 days
from the date of the first hearing. The trial court is mandated to
render a decision within 15 days from receipt of the last pleading,
or from the date of the last hearing, as the case may be.
The CA correctly pointed out that Rule 6 nowhere required that the
RTC acting as a special commercial court should first conduct a
pre-trial conference before it could render its judgment in a
corporate election contest. Hence, the RTC (Branch 138) in Makati
properly heard the case of annulment of the election with dispatch
in accordance with the guidelines set in the resolution in A.M. No.
01-2-04-SC. With the requirements of due process having been
served, no defect infirmed the RTCs ruling to set aside the
election, and to oust those illegally elected.

Upon the effectivity of this designation, all commercial cases

pending before Branches 138 and 61 shall be transferred to RTC,
Branch 149, Makati City, except those which are already submitted
for decision, which cases shall be decided by the acting presiding
judges thereat. x x x.
Contrary to the assertion of the Nieto-PCGG group, the foregoing
provision did not require the issuance of any special order stating
that the case was already submitted for decision. It was sufficient,
given the summary nature of intra-corporate controversies,
especially election contests, that the trial court was done collating
all the evidence from the pleadings (i.e., pleadings, affidavits,
documentary and other evidence attached thereto, and the
answers of the witnesses to the clarificatory questions of the court
given during the hearings), if deemed sufficient, or from the
clarificatory hearings, if conducted. The purpose of the exception is
to obviate the repetition of the gathering of evidence. It is clear
from Section 9 of Rule 6 that after the collation of evidence, the
only thing that remains is for the RTC to render its decision without
issuing a special order declaring the case submitted for decision,
viz:
Section 9. Decision. The Court shall render a decision within
fifteen (15) days from receipt of the last pleading, or from the date
of the last hearing, as the case may be. The decision shall be based
on the pleadings, affidavits, documentary and other evidence
attached thereto and the answers of the witnesses to the
clarificatory questions of the court given during the hearings.

3.
4.
RTC
(Branch
138)
retained
over the case that was ripe for adjudication

its

jurisdiction

While it is true that this Court meanwhile revoked on June 27,

2006 the designation of the RTC (Branch 138) to act as a special

Ruling
in
G.R.
G.R.
No.
141804
to Civil Case No. 04-1049

No.
was

141796
properly

and
applied

It was not the principle of res judicata, as claimed by the NietoPCGG Group, that justified the application to Civil Case No. 041049 of the Courts ruling in G.R. No. 141796 and G.R. No. 141804
invalidating the PHC elections conducted by the Nieto-PCGG Group,
but rather the doctrine of stare decisis et non quieta movere, which
means "to adhere to precedents, and not to unsettle things which
are established."142
Under the doctrine of stare decisis, when the Court has once laid
down a principle of law as applicable to a certain state of facts, the
courts will adhere to that principle, and apply it to all future cases
in which the facts are substantially similar, regardless of whether
the parties and property involved are the same. 143 The doctrine of
stare decisis is based upon the legal principle or rule involved, not
upon the judgment that results therefrom. It is in this particular
sense that stare decisis differs from res judicata, because res
judicata is based upon the judgment.144
The doctrine of stare decisis is grounded on the necessity for
securing certainty and stability in judicial decisions, thus:
Time and again, the Court has held that it is a very desirable and
necessary judicial practice that when a court has laid down a
principle of law as applicable to a certain state of facts, it will
adhere to that principle and apply it to all future cases in which the
facts are substantially the same. Stare decisis et non quieta
movere. Stand by the decisions and disturb not what is settled.
Stare decisis simply means that for the sake of certainty, a
conclusion reached in one case should be applied to those that
follow if the facts are substantially the same, even though the
parties may be different. It proceeds from the first principle of
justice that, absent any powerful countervailing considerations, like
cases ought to be decided alike. Thus, where the same questions
relating to the same event have been put forward by the parties
similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to
relitigate the same issue.145
The question of who held the majority shareholdings in POTC and
PHILCOMSAT was definitively laid to rest in G.R. No. 141796 and
G.R. No. 141804, whereby the Court upheld the validity of the
compromise agreement the Government had concluded with Atty.
Ilusorio. Said the Court:

With the imprimatur of no less than the former President Fidel V.

Ramos and the approval of the Sandiganbayan, the Compromise
Agreement must be accorded utmost respect. Such amicable
settlement is not only allowed but even encouraged. Thus, in
Republic vs. Sandiganbayan, we held:
It is advocated by the PCGG that respondent Benedicto retaining a
portion of the assets is anathema to, and incongruous with, the
zero-retention policy of the government in the pursuit for the
recovery of all ill-gotten wealth pursuant to Section 2(a) of
Executive Order No. 1. While full recovery is ideal, the PCGG is not
precluded from entering into a Compromise Agreement which
entails reciprocal concessions if only to expedite recovery so that
the remaining funds, assets and other properties may be used to
hasten national economic recovery (3rd WHEREAS clause,
Executive Order No. 14-A). To be sure, the so-called zero retention
mentioned in Section 2(a) of Executive Order No. 1 had been
modified to read:
WHEREAS, the Presidential Commission on Good Government was
created on February 28, 1986 by Executive Order No. 1 to assist
the President in the recovery of ill-gotten wealth accumulated by
former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates;
which undoubtedly suggests a departure from the former goal of
total restitution.
xxxx
The authority of the PCGG to enter into Compromise Agreements in
civil cases and to grant immunity, under certain circumstances, in
criminal cases is now settled and established. In Republic of the
Philippines and Jose O. Campos, Jr. vs. Sandiganbayan, et al. (173
SCRA 72 [1989]), this Court categorically stated that amicable
settlements and compromises are not only allowed but actually
encouraged in civil cases. A specific grant of immunity from
criminal prosecutions was also sustained. In Benedicto vs. Board of
Administrators of Television Stations RPN, BBC, and IBC (207 SCRA
659 [1992]), the Court ruled that the authority of the PCGG to
validly enter into Compromise Agreement for thepurpose of
avoiding litigation or putting an end to one already commenced
was indisputable. x x x (italics supplied)

Having been sealed with court approval, the Compromise

Agreement has the force of res judicata between the parties and
should be complied with in accordance with its terms. Pursuant
thereto, Victoria C. de los Reyes, Corporate Secretary of the POTC,
transmitted to Mr. Magdangal B. Elma, then Chief Presidential Legal
Counsel and Chairman of PCGG, Stock Certificate No. 131 dated
January 10, 2000, issued in the name of the Republic of the
Philippines, for 4,727 POTC shares. Thus, the Compromise
Agreement was partly implemented.146
As a result of the Government having expressly recognized that
673 POTC shares belonged to Atty. Ilusorio, Atty. Ilusorio and his
group gained the majority control of POTC.

Republic to the extent of 4,727 shares. In a manner of speaking,

the decision of the Court in G.R. No. 141796 and G.R. No. 141804
promulgated on June 15, 2005 declared the compromise
agreement valid, and such validation properly retroacted to the
date of the judicial approval of the compromise agreement on June
8, 1998.
Consequently, although the assailed elections were conducted by
the Nieto-PCGG group on August 31, 2004 but the ruling in G.R.
No. 141796 and G.R. No. 141804 was promulgated only on June
15, 2005, the ruling was the legal standard by which the issues
raised in Civil Case No. 04-1049 should be resolved.
5.

Applying the ruling in G.R. No. 141796 and G.R. No. 141804 to
Civil Case No. 04-1049, the RTC (Branch 138) correctly concluded
that the Nieto-PCGG Group, because it did not have the majority
control of POTC, could not have validly convened and held the
stockholders meeting and election of POTC officers on August 5,
2004 during which Nieto, Jr. and PCGG representative Guy De Leon
were respectively elected as President and Chairman; and that
there could not be a valid authority for Nieto, Jr. and/or Locsin to
vote the proxies of the group in the PHILCOMSAT meeting.
For the same reason, the POTC proxies used by Nieto, Jr. and
Locsin to elect themselves respectively as Chairman and President
of PHILCOMSAT; and the PHILCOMSAT proxies used by Nieto, Jr.
and Locsin in the August 31, 2004 PHC elections to elect
themselves respectively as President and Acting Chairman of PHC,
were all invalid for not having the support of the majority
shareholders of said corporations.
While it is true that judicial decisions should be given a prospective
effect, such prospectivity did not apply to the June 15, 2005 ruling
in G.R. No. 141796 and G.R. No. 141804 because the ruling did not
enunciate a new legal doctrine or change the interpretation of the
law as to prejudice the parties and undo their situations established
under an old doctrine or prior interpretation. Indeed, the ruling
only affirmed the compromise agreement consummated on June
28, 1996 and approved by the Sandiganbayan on June 8, 1998,
and accordingly implemented through the cancellation of the
shares in the names of IRC and MLDC and their registration in the
names of Atty. Ilusorio to the extent of 673 shares, and of the

Proper
mode
of
appeal
in
is by petition for review under Rule 43

intra-corporate

cases

In Dee Ping Wee v. Lee Hiong Wee,147 the Court has expounded
that the appropriate mode of appeal for an aggrieved party in an
intra-corporate dispute is a petition for review under Rule 43 of the
Rules of Court, to wit:
Verily, the first part of Section 4, Rule 1 of the Interim Rules is
categorical. Save for the exceptions clearly stated therein, the
provision enunciates that a decision and order issued under the
Interim Rules shall be enforceable immediately after the rendition
thereof. In order to assail the decision or order, however, the
second part of the provision speaks of an appeal or petition that
needs to be filed by the party concerned. In this appeal or petition,
a restraining order must be sought from the appellate court to
enjoin the enforcement or implementation of the decision or order.
Unless a restraining order is so issued, the decision or order
rendered under the Interim Rules shall remain to be immediately
executory.
On September 14, 2004, the Court issued a Resolution in A.M. No.
04-9-07-SC to rectify the situation wherein "lawyers and litigants
are in a quandary on how to prevent under appropriate
circumstances the execution of decisions and orders in cases
involving
corporate
rehabilitation
and
intra-corporate
controversies." To address the "need to clarify the proper mode of
appeal in [cases involving corporate rehabilitation and intra-

corporate controversies] in order to prevent cluttering the dockets

of the courts with appeals and/or petitions for certiorari," the Court
thereby resolved that:
1. All decisions and final orders in cases falling under the
Interim Rules of Corporate Rehabilitation and the Interim
Rules of Procedure Governing Intra-Corporate Controversies
under Republic Act No. 8799 shall be appealable to the
Court of Appeals through a petition for review under Rule 43
of the Rules of Court.
2. The petition for review shall be taken within fifteen (15)
days from notice of the decision or final order of the
Regional Trial Court. Upon proper motion and the payment
of the full amount of the legal fee prescribed in Rule 141 as
amended before the expiration of the reglementary period,
the Court of Appeals may grant an additional period of
fifteen (15) days within which to file the petition for review.
No further extension shall be granted except for the most
compelling reasons and in no case to exceed fifteen (15)
days. (Emphases ours.)
xxxx
The issue that needs to be resolved at this point is whether or not
petitioners pursued the correct remedy in questioning the RTC
Decisions in Civil Case Nos. Q-04-091, Q-04-092 and Q-04-093.
Corollary to this is whether or not the petitions for certiorari filed
by petitioners could have been treated as petitions for review
under Rule 43 of the Rules of Court, in accordance with the
provisions of the Resolution in A.M. No. 04-9-07-SC, such that
petitioners can be considered to have availed themselves of the
proper remedy in assailing the rulings of the RTC.
We answer in the negative.

xxxx
The RTC Decisions in Civil Case Nos. Q-04-091, Q-04-092 and Q04-093 are final orders that disposed of the whole subject matter
or terminated the particular proceedings or action, leaving nothing
to be done but to enforce by execution what has been determined.
As the RTC was unquestionably acting within its jurisdiction, all
errors that it might have committed in the exercise of such
jurisdiction are errors of judgment, which are reviewable by a
timely appeal.
xxxx
The Court of Appeals (12th Division) was, therefore, correct in
dismissing the petition for certiorari in CA-G.R. SP No. 85878,
which assailed the RTC Decision in Civil Case No. Q-04-091. x x x148
The rule providing that a petition for review under Rule 43 of the
Rules of Court is the proper mode of appeal in intra-corporate
controversies, as embodied in A. M. No. 04-9-07-SC, has been in
effect since October 15, 2004. Hence, the filing by POTC and PHC
(Nieto Group) of the petition for certiorari on March 21, 2007 (C.A.G.R. SP No. 98399) was inexcusably improper and ineffectual. By
virtue of its being an extraordinary remedy, certiorari could neither
replace nor substitute an adequate remedy in the ordinary course
of law, like appeal in due course.149Indeed, the appeal under Rule
43 of the Rules of Court would have been adequate to review and
correct even the grave abuse of discretion imputed to the RTC.150
As a consequence of the impropriety and ineffectuality of the
remedy chosen by POTC and PHC (Nieto Group), the TRO and the
WPI initially issued by the CA in C.A.-G.R. SP No. 98399 did not
prevent the immediately executory character of the decision in Civil
Case No. 04-1049.
6.

The term "petition" in the third and fourth paragraphs of A.M. No.
04-9-07-SC, cannot be construed as to include a petition for
certiorari under Rule 65 of the Rules of Court. The rationale for this
lies in the essential difference between a petition for review under
Rule 43 and a petition for certiorari under Rule 65 of the Rules of
Court.

Petition for contempt against Bildner had no basis

The filing by Bildner and her counsel Atty. Manzanal of the
complaint for perjury against Locsin and his counsel Atty. Labastilla
in the Office of the City Prosecutor of Manila did not amount to
unlawful interference with the processes of the CA. There is no

denying that Bildner was within her right as a party in interest in

the proceedings then pending in the CA to bring the perjury charge
against Locsin and his counsel for their failure to aver in the
certification against forum shopping attached to the petition for
certiorari in C.A.-G.R. SP No. 98399 of the pendency of another
petition in C.A.-G.R. SP No. 98087 despite their knowledge thereof.
Her complaint for perjury could really be dealt with by the Office of
the City Prosecutor of Manila independently from any action the CA
would take on the issue of forum shopping. As such, the filing of
the complaint did not interfere with the CAs authority over the
petition in C.A.-G.R. SP No. 98399.
In this regard, we deem to be appropriate to reiterate what the
Court said on the nature of contempt of court in Lorenzo Shipping
Corporation v. Distribution Management Association of the
Philippines,151 viz:
Misbehavior means something more than adverse comment or
disrespect. There is no question that in contempt the intent goes to
the gravamen of the offense. Thus, the good faith, or lack of it, of
the alleged contemnor should be considered. Where the act
complained of is ambiguous or does not clearly show on its face
that it is contempt, and is one which, if the party is acting in good
faith, is within his rights, the presence or absence of a
contumacious intent is, in some instances, held to be determinative
of its character. A person should not be condemned for contempt
where he contends for what he believes to be right and in good
faith institutes proceedings for the purpose, however erroneous
may be his conclusion as to his rights. To constitute contempt, the
act must be done willfully and for an illegitimate or improper
purpose.
Nonetheless, the Court states that the power to punish for
contempt is inherent in all courts, and is essential to the
preservation of order in judicial proceedings and to the
enforcement of judgments, orders, and mandates of the court, and
ultimately, to the due administration of justice. But such power
should be exercised on the preservative, not on the vindictive,
principle. Only in cases of clear and contumacious refusal to obey
should the power be exercised. Such power, being drastic and
extraordinary in its nature, should not be resorted to unless
necessary in the interest of justice.152

7.
Bildner Group entitled to injunctive relief
Concerning the propriety of the issuance of the WPI to enjoin BPI
from letting the Locsin Group withdraw funds or transact with BPI
on PHCs deposits, the Court finds that the Bildner Group as the
applicant had a right in esse to be protected by the injunctive
relief. A right that is in esse is a clear and unmistakable right to be
protected, and is one founded on or granted by law or is
enforceable as a matter of law.153 The Bildner Group, because of
the indubitability of its standing as a party in interest, showed a
clear and unmistakable right to be protected.
In granting the Bildner Groups application for the WPI, the RTC
(Branch 62) emphasized the peculiarities of the case. Apparently,
the Bildner Group relied on the fact that their election to the PHC
Board of Directors was implemented and executed even prior to
the WPI issued by the CA to stop the RTC (Branch 138) from
implementing its decision in Civil Case No. 04-1049. The right that
the Bildner Group relied on in seeking the execution of the decision
was enforceable as a matter of law, for it emanated from the
validly issued decision that was immediately executory under the
pertinent rule. On the other hand, the TRO and WPI the CA issued
in C.A.-G. R. SP No. 98399 could not and did not have any
restraining effect on the immediately executory nature of the
decision rendered in Civil Case No. 04-1049, because the matter
had been brought to the CA through the wrong remedy.
Considering that the Bildner Groups clear right to an injunctive
relief was established, coupled with the affirmance of the
consolidated decision of the CA upholding the validity of the July
28, 2004 election of the Bildner Group as Directors and Officers of
PHC, the decision promulgated in C.A.-G.R. SP No. 102437 to the
effect that Bildners standing as a party-ininterest was unclear, and
that she failed to show a clear and unmistakable right to be
protected by the writ of injunction, lost its ground.
Accordingly, the reversal of the decision promulgated in C.A.-G.R.
SP No. 102437, and the reinstatement of the WPI issued against
BPI by the RTC (Branch 62) in Civil Case No. 07-840 are in order.
8.

Supreme
Court,
not
being
will not reexamine the evidence

trier

of

facts,

The insistence by POTC and PHC (Nieto Group) that the RTCs
decision in Civil Case No. 04-1049 was contrary to the facts and
the evidence lacks merit.
The Court is not a trier of facts, and thus should not reexamine the
evidence in order to determine whether the facts were as POTC and
PHC (Nieto Group) now insist they were. The Court must respect
the findings of the CA sustaining the factual findings of the RTC in
Civil Case No. 04-1049. As a rule, the findings of fact by the CA are
not reviewed on appeal, but are binding and conclusive. 154 The
reason for this has been well stated in J.R. Blanco v. Quasha:155
To begin with, this Court is not a trier of facts. It is not its function
to examine and determine the weight of the evidence supporting
the assailed decision. In Philippine Airlines, Inc. vs. Court of
Appeals (275 SCRA 621 [1997]), the Court held that factual
findings of the Court of Appeals which are supported by substantial
evidence are binding, final and conclusive upon the Supreme Court.
So also, well-established is the rule that "factual findings of the
Court of Appeals are conclusive on the parties and carry even more
weight when the said court affirms the factual findings of the trial
court." Moreover, well entrenched is the prevailing jurisprudence
that only errors of law and not of facts are reviewable by this Court
in a petition for review on certiorari under Rule 45 of the Revised
Rules of Court, which applies with greater force to the Petition
under consideration because the factual findings by the Court of
Appeals are in full agreement with what the trial court
found.1wphi1

We affirm, therefore, the appealed consolidated decision

promulgated in C.A.-G.R. SP No. 101225, C.A.-G.R. SP No. 98097
and C.A.-G.R. SP No. 98399, and dismiss the petitions of the
Locsin/Nieto-PCGG Group filed in G.R. No. 184712-14 and G.R. No.
186066.
WHEREFORE, the Court DENIES the petitions for review on
certiorari in G.R. No. 184622, G.R. No. 184712-14, and G.R. No.
186066; AFFIRMS the resolution promulgated on August 15, 2007
by the Sandiganbayan in Civil Case No. 0198 and the consolidated
decision promulgated on September 30, 2008 in C.A.-G.R. SP No.
101225, C.A.-G.R. SP No. 98097 and C.A.-G.R. SP No. 98399;
GRANTS the petition for review on certiorari in G.R. No. 186590,
and, accordingly, ANNULS and SETS ASIDE the decision
promulgated on July 16, 2008 in C.A.-G.R. SP No. 102437;
AFFIRMS the order issued on December 13, 2007 by the Regional
Trial Court, Branch 62, in Makati City; and REINSTATES the writ of
injunction issued on December 17, 2007 against Bank of Philippine
Islands.
The Court DIRECTS the Locsin/Nieto-PCGG Group to render an
accounting of all the funds and other assets received from the
PHILIPPINE OVERSEAS TELECOMMUNICATIONS CORPORATION,
PHILIPPINE
HOLDINGS
CORPORATION
and
PHILIPPINE
COMMUNICATIONS SATELLITE CORPORATION since September 1,
2004, and to return such funds to the respective corporations
within thirty days from the finality of this decision.
Costs of suit to be paid by the Group of Enrique L. Locsin and
Manuel H. Nieto, Jr.
SO ORDERED.