9  March 1, 2005: Pending the PSE's final approval of PHC's application for listing

PHILCOMSAT and PHILCOMSAT HOLDINGS CORP. vs. SANDIANBAYAN and of the shares, the Presidential Commission on Good Government (PCGG)
PCGG through its then Chairman Camilo L. Sabio, made a written request:
TOPIC | June 17, 2015 | Carpio, J.  To suspend the listing of the increase in PHC's capital stock
 Citing as reason the need to settle the conflicting claims of the two sets
SUMMARY: PHILCOMSAT gained controlling interest in PHC through an increase of board of directors of the Philippine Overseas Telecommunication
in the latter’s authorized capital stock. PCGG then filed a request to suspend he Corporation (POTC) and PHILCOMSAT
listing of the increase in PHC's capital stock citing as reason the need to settle the  March 22, 2005: In a letter, the PSE informed the PCGG that the PSE Listing
conflicting claims of the two sets of board of directors of the POTC and Committee:
PHILCOMSAT. Eventually, POTC and PHILCOMSAT elected new directors and  Deferred action on the PHC's listing application and
officers which was recognized as valid by the PCGG through an en banc resolution.  Instead referred the matter to the PSE General Counsel to ascertain the
The president of POTC then requested PCGG to rescind its objection to the listing applicability of the provisions on disqualifications for listing
but no action was taken by PCGG. PHILCOMSAT then filed a complaint with the o As provided under the PSE Revised Listing Rules
Sandiganbayan which the latter dismissed for lack of jurisdiction and ruled that the  June 7, 2005: PCGG sent another letter to the PSE reiterating its request to
case should be filed with the RTC. defer the listing of PHC shares
 November 2007: Then President Gloria Macapagal-Arroyo appointed new
DOCTRINE: government nominees to the POTC and PHILCOMSAT boards
A combined application of the relationship test and the nature of the controversy
 POTC owns 100% of PHILCOMSAT
test has become the norm in determining whether a case is an intra-corporate
 November 19, 2007: In a special stockholders' meeting attended by POTC's
controversy, to be "heard and decided by the branches of the RTC specifically
private stockholders and Presidential Management Staff Undersecretary
designated by the Court to try and decide such cases."
Enrique D. Perez, as representative and proxy of the Republic of the Philippines,
and observed by Securities and Exchange Commission (SEC) representatives,
FACTS:
16 were elected directors
 PHILCOMSAT Holdings Corporation (PHC) is a domestic corporation listed in the
 On the same day, PHILCOMSAT held a special stockholders' meeting
Philippine Stock Exchange (PSE)
attended by Erlinda I. Bildner as proxy for POTC
 It was previously known as Liberty Mines, Inc. (LMI)
 At the request of the Republic of the Philippines, the three government
 It had been previously engaged in the discovery, exploitation, development representatives were nominated to the PHILCOMSAT Board of
and exploration of oils Directors
 September 13, 1995: Oliverio G. Laperal, then Chairman of the Board and
President of LMI, and Honorio Poblador III, then President of Philippine  May 7, 2008: The PCGG issued En Banc Resolution
 recognizing the
Communications Satellite Corporation (PHILCOMSAT), signed a Memorandum validity of the POTC's and PHILCOMSAT's respective stockholders'
of Agreement meetings and elections
 For the latter to gain controlling interest in LMI through an increase in its  Both held on 19 November 2007
authorized capital stock  July 25, 2011: In a letter, Katrina C. Ponce-Enrile, then President of POTC, wrote
 June 24, 1996: Laperal and PHILCOMSAT executed a Supplemental to then PCGG Chairman Andres D. Bautista
Memorandum of Agreement  She demanded that the PCGG rescind its objection to the listing of the
 Reiterated the increase in capital stock of LMI from 6 billion shares to 100 increase in PHC's capital stock
billion shares with par value of P0.01 per share equivalent to P1 billion  When PCGG failed to reply, PHILCOMSAT sent a final demand letter
 PHILCOMSAT subscribed to 79,050,000,000 shares of LMI.  Reiterating its demand for PCGG to withdraw its objection to the listing of the
 1997: LMI changed its name to PHC increase in PHC's capital stock.
 PHC declassified its shares and amended its primary purpose to become a  January 11, 2012: Ponce-Enrile received a letter from Chairman Bautista,
holding company1 informing her that:
 PHC then filed its application with the PSE for listing the shares representing  PCGG was discussing the matter with the Department of Finance
the increase in its capital stock  The two would give a joint recommendation thereafter
o Included in this application were the PHC shares owned by o However, the PCGG never communicated said recommendation to
PHILCOMSAT PHILCOMSAT.

SANDIGANBAYAN COMPLAINT

1
A company that owns other companies' outstanding stock
 February 1, 2012: PHILCOMSAT filed a complaint before the Sandiganbayan o Since PCGG is not a stockholder, director, officer, member or even
against PCGG associate of the plaintiff corporation
 To compel the latter to withdraw its opposition to the listing of the increase in  Second, the subject matter of the case a quo, to have respondent PCGG
PHC's capital stock withdraw its objections to the listing of PHILCOMSAT's shares in PHC, does
 PHILCOMSAT argued that PCGG had already recognized the validity of the not fall in any of the cases that may be considered intra-corporate
stockholders' meetings in the two corporations, which "practically erased" controversy, as enumerated in Section 5 of PD 902-A
the alleged conflict between the two sets of directors o The issue in this case does not even involve POTC and/or the shares
 The PCGG filed a motion to dismiss the complaint that the Republic owns therein, to the extent of 35%
 May 3, 2012: The Sandiganbayan granted the PCGG’s motion to dismiss for lack o The issue specifically pertains to PHILCOMSAT's shares in PHC where
of jurisdiction over the subject matter the respondent PCGG, through abuse of authority, objected to the
 Held that the action was one for specific performancem since it sought to listing in the PSE
have PCGG withdraw its objection to the listing of the increase in PHC's o While the government (Republic of the Philippines) owns 35% of POTC,
capital stock at the PSE the latter has a separate and distinct legal personality with petitioner
o Following Section 19, of B.P. 129, the RTC has exclusive jurisdiction PHILCOMSAT and PHC
over the case o Respondent PCGG, which is not even the registered owner of a single
 Also ruled that the case was a "dispute among its directors," and thus, PHILCOMSAT share has no personality to meddle in PHC's affairs and
was an intra-corporate dispute block the listing of PHILCOMSAT's share in the stock exchange.
o The determination of whether or not the PCGG should withdraw its o The twin element of corporate relationship and intra-corporate issues
request to defer the listing of the PHILCOMSAT shares until the were never met in the complaint
conflicting claims between the two sets of board of directors of POTC  Third, PCGG has ceased to have a valid and justifiable reason for blocking
and PHILCOMSAT is settled, is an intra-corporate controversy the listing of the increase in PHC's capital stock because the appointment of
 August 14, 2012: The Sandiganbayan denied petitioners' motion for new government nominees and the stockholders' meetings of POTC,
reconsideration PHILCOMSAT and PHC in 2007:
 Reiterated its earlier ruling that it did not have jurisdiction over the o Paved the way for unified boards and
controversy since it was an intra-corporate dispute. o Erased whatever alleged uncertainty that existed previously on who has
control over these corporations
 Pointed out that in PHILCOMSAT's complaint, it was stated that:
 More importantly, the PCGG itself has recognized the valid election
o The Republic of the Philippines is the 34.9% owner of POTC
of the POTC, PHILCOMSAT and PHC boards and, therefore, the
 POTC wholly owns PHILCOMSAT
basis for its objection is no longer obtaining
 PHILCOMSAT owns 81% of PHC
o As such, the Republic of the Philippines, with 28.7% indirect  Lastly, the PCGG is a co-equal body with the RTC and since co-equal
ownership in PHC, also its largest single beneficial owner bodies have no power to control the other, the RTC cannot compel the
 The RP continues to sustain the incalculable loss of holding illiquid PCGG to follow its order.
or unmarketable shares in a publicly listed company." ISSUE/S & RATIO:
 Held that evidently, while the PCGG may not be a stockholder, director, 1. W/N the controversy to compel PCGG to withdraw its objection to the
officer, member or even associate of the plaintiff corporations, it bears listing of PHILCOMSAT's shares in PHC is an intra-coroporate controversy
emphasis that the Commission has an interest in the PHC shares – YES
o Prompting the PCGG to request the PSE to suspend the listing of the INTRA-CORPORATE CONTROVERSY
SEC approved increase in capital stock of PHC
 To determine if a case involves an intra-corporate controversy, the courts have
 Ruled that the Commission's interest in the aforesaid shares determines applied two tests:
the "nature of the question under controversy" in the instant case 1. The relationship test and
o Consequently, the reiteration of this Court's pronouncement in the 2. The nature of the controversy test
assailed Resolution of having no jurisdiction over the subject matter of
the instant case.
 Under the relationship test, the existence of any of the following relationships
makes the conflict intra-corporate:
 PHILCOMSAT and PHC filed a petition for review on certiorari with the SC, they
argued that the allegations in the complaint do not qualify as an intra- corporate  (1) between the corporation, partnership or association and the public;
controversy because "not a single element of an intra-corporate controversy  (2) between the corporation, partnership or association and the State insofar
exists in this case." as its franchise, permit or license to operate is concerned;
 First the cause of action in this case — to compel PCGG to withdraw its  (3) between the corporation, partnership or association and its stockholders,
objection to the listing of PHILCOMSAT's shares in PHC — is not an intra- partners, members or officers; and
corporate dispute  (4) among the stockholders, partners or associates themselves
 On the other hand, the nature of the controversy test dictates that:
  The controversy must not only be rooted in the existence of an intra- otherwise make ineffectual the efforts of the Commission to carry out its
corporate relationship, but must as well pertain to the enforcement of the task under this Order
parties' correlative rights and obligations under the Corporation Code and  In Republic v. Sandiganbayan, the Court settled that, due to the Compromise
the internal and intra-corporate regulatory rules of the corporation Agreement validly entered into by the Republic through the PCGG, the Republic
 A combined application of the relationship test and the nature of the controversy of the Philippines now owns 4,727 shares of POTC.
test has become the norm in determining whether a case is an intra-corporate  As it stands today, the Republic of the Philippines owns 34.9% of POTC,
controversy which wholly owns PHILCOMSAT, which in turn owns 81% of PHC
 Such controversies are to be "heard and decided by the branches of the  The Republic, then, has an interest in the proper operations of the
RTC, specifically designated by the Court to try and decide such cases." PHC, however indirect this interest may seem to be.
RELATIONSHIP TEST  Chairman Sabio, while himself not a stockholder of the subject corporations, was
 Under the relationship test, an intra-corporate controversy arises when the acting as head of the PCGG
conflict is "between the corporation, partnership or association and its  PCGG is the agency tasked to adopt safeguards so that incidents of graft
stockholders, partners, members or officers." and corruption
 PHILCOMSAT’s ARGUMENT: The PCGG is not a stockholder, partner, member  As well as cases of abuse of "powers, authority, influence, connections or
or officer of the corporation relationship" in these corporations are eliminated
 SC: This is misleading and inaccurate.  The Republic acts through the PCGG’s lawfully designated representatives
 The PCGG was created under Executive Order No. 1 (E.O. 1) to assist the or nominees.
President in:  Thus, PCGG nominees and directors sit in the boards of directors of
(a) The recovery of all ill-gotten wealth accumulated by former President sequestered corporations not for themselves but on behalf of the Republic.
Ferdinand E. Marcos, his immediate family, relatives, subordinates and  It is their duty to protect and advance the interests of the Republic of the
close associates, whether located in the Philippines or abroad, including the Philippines.
takeover or sequestration of all business enterprises and entities owned or NATURE OF CONTROVERSY TEST
controlled by them, during his administration, directly or through nominees,
 The nature of the controversy test examines the controversy in relation to the
by taking undue advantage of their public office and/or using their powers,
"enforcement of the parties' correlative rights and obligations under the
authority, influence, connections or relationship.
Corporation Code and the internal and intra-corporate regulatory rules of the
(b) The investigation of such cases of graft and corruption as the President
corporation."
may assign to the Commission from time to time.
(c) The adoption of safeguards to ensure that the above practices shall not be  The controversy in the present case stems from the act of Chairman Sabio in
repeated in any manner under the new government, and the institution of requesting the PSE to suspend the listing of PHC's increase in capital stock
adequate measures to prevent the occurrence of corruption because of still unresolved issues on the election of the POTC's and
 This Court, in PCGG v. Peña, further explained: PHILCOMSAT's respective boards of directors.
 In the discharge of its vital task "to recover the tremendous wealth plundered  The act of Chairman Sabio in asking the SEC to suspend the listing of
from the people by the past regime in the most execrable thievery PHC's shares was done in pursuit of protecting the interest of the
perpetrated in all history," or "organized pillage" Republic of the Philippines, a legitimate stockholder in PHC's controlling
 The Commission was vested with the ample power and authority: parent company, POTC.
o to sequester or place or cause to be placed under its control or  The character of the shares held by the PCGG/Republic, on whose behalf
possession any building or office wherein any ill-gotten wealth or the PCGG Chairman is presumed to be acting, is irrelevant to Chairman
properties may be found, and any records pertaining thereto, in order to Sabio's actions.
prevent their destruction, concealment or disappearance which would  Any shareholder, harboring any apprehensions or concerns, could have
frustrate or hamper the investigation or otherwise prevent the done the same or posed the same objection.
Commission from accomplishing its task o It was an act that had no relation to any proceeding or question of ill-
o to provisionally takeover in the public interest or to prevent the disposal gotten wealth or sequestration.
or dissipation of business enterprises and properties taken over by the o The PCGG was merely protecting the rights and interest of the Republic
government of the Marcos Administration or by entities or persons close of the Philippines.
to former President Marcos, until the transactions leading to such  From the foregoing, it is clear that the dispute in the present case is an intra-
acquisition by the latter can be disposed of by the appropriate corporate controversy.
authorities.
o to enjoin or restrain any actual or threatened commission of acts by any 2. W/N the Sandiganbayan has jurisdiction over the case – NO, it is the
person or entity that may render moot and academic, or frustrate or regular courts that has jurisdiction
 As such, it is clear that the jurisdiction lies with the regular courts and not with the
Sandiganbayan.
 Section 5 of Presidential Decree No. 902-A conferred original and exclusive
jurisdiction over intra-corporate disputes on the SEC.
 However, Section 5.2 of R.A. 8799, transferred the jurisdiction over such
cases to courts of general jurisdiction, or the appropriate RTC.
 PHILCOMSAT’s ARGUMENT: The case must be decided by the Sandiganbayan
because the RTC is co-equal to the PCGG and therefore would have no authority
to issue an order to the latter
 In the exercise of its functions, the PCGG is a co-equal body with the regional trial
courts, and co-equal bodies have no power to control the other
 PCGG v Hon. Pena: RTCs DO NOT have jurisdiction over the PCGG in the
exercise of its powers under the applicable Executive Orders and Article XVIII,
Section 26 of the Constitution
 Therefore RTCs may not interfere with and restrain or set aside the orders
and actions of the Commission
 Under Section 2 of the President's Executive Order No. 14 issued on May 7,
1986, 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
 The RTC is co-equal to the PCGG only in relation to cases falling under the latter's
function under the applicable Executive Orders, specifically Section 2 of E.O. 14,
and Section 26, Article XVIII of the 1987 Constitution.
 Note that in this case, the acts complained of DO NOT pertain to the PCGG's
function under the aforementioned provisions of law and the Constitution
 i.e., it is not a case involving "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, . . ." nor can it be considered an "[incident] arising from, incidental to,
or related to" such cases.
 Rather, the PCGG, acting as representative of the Republic, was exercising a duty
of a stockholder to ensure the proper and lawful exercise of corporate acts.
 Based on the foregoing, the Sandiganbayan correctly dismissed the complaint for
lack of jurisdiction.

Ruling/Dispositive Portion:
WHEREFORE, the petition is DENIED. The Resolutions of the Sandiganbayan in Civil
Case No. SB-12-CVL-0001 promulgated on 3 May 2012 and 14 August 2012 are
AFFIRMED. Costs against petitioners.