REPUBLIC OF THE PHILIPPINES (PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT), petitioner, vs.
THE
HONORABLE SANDIGANBAYAN (THIRD DIVISION) and VICTOR AFRICA, respondents. AEROCOM INVESTORS AND
MANAGERS, INC., BENITO NIETO, CARLOS NIETO, MANUEL NIETO III, RAMON NIETO, ROSARIO ARELLANO,
VICTORIA LEGARDA, ANGELA LOBREGAT, MA. RITA DE LOS REYES, CARMEN TUAZON and RAFAEL VALDEZ,
intervenors.
G.R. No. 107789. April 30, 2003.
FACTS:
The Presidential Commission on Good Government (PCGG) conducted an Eastern
Telecommunications, Philippines, Inc. (ETPI) stockholders meeting during which a PCGG controlled board of
directors was elected. A special stockholders meeting was later convened by the registered ETPI stockholders
wherein another set of board of directors was elected, as a result of which two sets of such board and officers
were elected. Victor Africa, a stockholder of ETPI, alleging that the PCGG had been "illegally 'exercising' the
rights of stockholders of ETPI," especially in the election of the members of the board of directors, filed a motion
before the Sandiganbayan, prayed that said court order the "calling and holding of. ETPI annual stockholders
meeting under the court's control and supervision and prescribed guidelines." The PCGG did not object to
Africa's motion provided that "(1) An Order be issued upholding the right of PCGG to vote all the Class "A"
shares of ETPI; (2) In the alternative, in the remote event that PCGG's right to vote the sequestered shares be
not upheld, an Order be issued (a) disregarding the Stock and Transfer Book and Booklet of Stock Certificates of
ETPI in determining who can vote the shares in an Annual Stockholders Meeting of ETPI, (b) allowing PCGG to
vote 23.9% of the total subscription in ETPI, and (c) directing the amendment of the Articles of Incorporation and
By-laws of ETPI providing for the minimum safeguards for the conservation of assets prior to the calling of a
stockholders meeting. By the assailed Resolution of 13 November 1992, the Sandiganbayan resolved Africa's
motion, ordering the conduct of an annual stockholders meeting of ETPI, for 1992. Assailing the foregoing
resolution, the PCGG filed before the Supreme Court a petition (GR 107789) for Certiorari, Mandamus and
Prohibition.
ISSUES:
Whether or not the PCGG can vote the sequestered ETPI Class "A" shares in the stockholders meeting
for the election of the board of directors?
RULING:
The PCGG cannot thus vote sequestered shares, except when there are “demonstrably weighty and
defensible grounds” or “when essential to prevent disappearance or wastage of corporate property.” The principle
laid down in Baseco was further enhanced in the subsequent cases of Cojuangco v. Calpo and Presidential
Commission on Good Government v. Cojuangco, Jr., where this Court developed a “two-tiered” test in determining
whether the PCGG may vote sequestered shares: The issue of whether PCGG may vote the sequestered shares in
SMC necessitates a determination of at least two factual matters: 1. whether there is prima facie evidence showing
that the said shares are ill-gotten and thus belong to the state; and 2. whether there is an immediate danger of
dissipation thus necessitating their continued sequestration and voting by the PCGG while the main issue pends with
the Sandiganbayan.
WHEREFORE, this Court Resolved to REFER the petitions at bar to the Sandiganbayan for reception of
evidence to determine whether there is a prima facie evidence showing that the sequestered shares in question are
ill-gotten and there is an imminent danger of dissipation to entitle the PCGG to vote them in a stockholders meeting
to elect the ETPI Board of Directors and to amend the ETPI Articles of Incorporation for the sole purpose of
increasing the authorized capital stock of ETPI. The Sandiganbayan shall render a decision thereon within sixty (60)
days from receipt of this Resolution and in conformity herewith. The motion to cite the PCGG and its “accomplices”
and to nullify the ETPI Stockholders Meeting filed by Victor Africa is DENIED for lack of jurisdiction.
