G.R. No.

173082
PALM AVENUE HOLDING CO., INC., and PALM A VENUE REALTY AND DEVELOPMENT
CORPORATION, Petitioners,
vs.
SANDIGANBAYAN 5TH Division, REPUBLIC OF THE PHILIPPINES, represented by the
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), Respondent.

FACTS:
The Presidential Commission on Good Government (PCGG) sequestered all of the Palm Companies'
assets, properties, records, and documents by an order of sequestration dated October 27, 1986. The assets
in question included 16,237,339 shares of stock in the Benguet Corporation that were registered in the
Palm Companies' name. The Palm Companies' Attorney-in-Fact, Jose S. Sandejas, had written a letter
citing Benjamin "Kokoy" Romualdez, a well-known ally of former President Ferdinand E. Marcos, as the
beneficial owner of the shares of Benguet Corporation held in the Palm Companies' name. The PCGG had
relied on this letter.
The Palm Companies were not initially named as defendants in the complaint that the Republic,
represented by the PCGG, filed with the Sandiganbayan and docketed as Civil Case No. 0035. However,
the Sandiganbayan ordered the listed firms to be impleaded in a Resolution dated June 16, 1989. This
order to file in G.R. No. 906675 was eventually upheld by the Court. Nov. 5, 1991. The Palm Companies
were identified as defendants in an amended complaint that the Republic filed on January 17, 1997 in
accordance with the aforementioned order. The modified complaint was accepted by the graft court on
October 15, 2001.
The Palm Companies filed an urgent motion to lift the Writ of Sequestration on February 11, 1997, but it
was denied on January 10, 2003.

ISSUE:
Whether or not Palm Companies’ prayer for the lifting of the Writ of Sequestration against their assets be
granted?

RULING:
Supreme Court lifted the writ of Sequestration against Palm Avenue Holdings and Palm Companies’
assets and properties.
Failure to name these corporations as defendants and simply attaching a list of such entities to the
complaints violates their right to due process since it effectively disregards their distinct and separate
personality without having them heard. The Palm Companies were only referenced as Item Nos. 47 and
48 in Annex A of the Complaint as one of the corporations in which defendant Romualdez held shares.
Furthermore, while the warrant of sequestration was issued on October 27, 1986, the Palm Companies
were impleaded in the action only in 1997, more than a decade after the Constitution was ratified in 1987,
well beyond the statutory period.
In order to recognize the distinct and separate personalities of corporations, the Sandiganbayan, which is
still a valid body of law, reiterates the requirement that the Republic actually name them as defendants in
the complaint. Failing to do so would entail depriving these entities of their right to due process. In this
instance, the lawsuit filed in Civil Case No. 0035 against Benjamin Romualdez as a stakeholder in the
Palm Companies is not an action against those companies, hence the warrant of sequestration issued
against their assets is invalid.

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Therefore, the sequestration order issued against the Palm Companies automatically lifted due to the
failure to implead them within the period prescribed. Nevertheless, releasing the order of sequestration
will not always be damaging to the main lawsuit because it does not imply that the sequestered
possessions are not ill-gotten. The lifting of the sequester will simply mean the end of the government's
role as conservator. In other words, the PCGG may no longer exercise administrative or housekeeping
powers, and its candidates may no longer vote the sequestered shares to enable them to obtain seats on the
subject company's corporate board.

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