J.A.B. Bulao & Associates

CASE 2011-0198: BPI EMPLOYEES UNION – METRO MANILA AND ZENAIDA UY VS. BANK OF THE PHILIPPINE ISLANDS (G.R. NO. 178699); BANK OF THE PHILIPPINE ISLANDS VS. BPI EMPLOYEES UNION (G.R. NO. 178735) (21 SEPTEMBER 2011, DEL CASTILLO, J.) (BRIEF TITLE: BPI EMPLOYEES VS. BPI)

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DISPOSITIVE:

          WHEREFORE, the petitions in G.R. Nos. 178699 and 178735 are both PARTIALLY GRANTED.  The Amended Decision dated July 4, 2007 of the Court of Appeals in CA-G.R. SP No. 92631 is hereby AFFIRMED with  MODIFICATIONS.  The back wages of Zenaida Uy should be computed as follows:

1.           Basic Monthly Salary, Cost of Living Allowance, Financial Assistance and Quarterly Bonus, with P10,895.00 as the base figure which is her salary rate at the time of her dismissal, computed from the time of her dismissal on December 14, 1995 up to her reinstatement on August 1, 2006;

2.           Teller’s Functional Allowance, based on the rate at the time of her dismissal;

3.           Holiday Pay, based on the rate at the time of her dismissal;

4.           Attorney’s Fees, which is 10% of the total amount of the award; and

5.           Interest at 12% per annum on the total amount of the awards commencing from the finality of the Decision in G.R. No. 137863 until full payment thereof.

6.           The award for the monetary conversion of vacation and sick leave is deleted.  

The Voluntary Arbitrator is hereby ORDERED TO RECOMPUTE the amounts due to Zenaida Uy in accordance with the above disposition.

SO ORDERED.

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Republic of thePhilippines

Supreme Court

Manila

FIRST DIVISION

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

DEL CASTILLO, J.:

The base figure in computing the award of back wages to an illegally dismissed employee is the employee’s basic salary plus regular allowances and benefits received at the time of dismissal, unqualified by any wage and benefit increases granted in the interim.^[1][1]

            By these consolidated Petitions for Review on Certiorari,^[2][2] the Bank of the Philippine Islands (BPI), BPI Employees Union-Metro Manila (the Union) and Zenaida Uy (Uy) seek modification of the Court of Appeals’ (CA) Amended Decision^[3][3] dated July 4, 2007 in CA-G.R. SP No. 92631.  Said Amended Decision computed Uy’s back wages and other monetary awards pursuant to the final and executory Decision^[4][4] dated March 31, 2005 of this Court in G.R. No. 137863 based on her salary rate at the time of her dismissal and disregarded the salary increases granted in the interim as well as other benefits which were not proven to have been granted at the time of Uy’s dismissal from the service.

Factual Antecedents

            On December 14, 1995, Uy’s services as a bank teller in BPI’s Escolta Branch was terminated on grounds of gross disrespect/discourtesy towards an officer, insubordination and absence without leave.  Uy, together with theUnion, thus filed a case for illegal dismissal.

            On December 31, 1997, the Voluntary Arbitrator^[5][5] rendered a Decision^[6][6] finding Uy’s dismissal as illegal and ordering BPI to immediately reinstate Uy and to pay her full back wages, including all her other benefits under the Collective Bargaining Agreement (CBA) and attorney’s fees.^[7][7]

            On October 28, 1998, the CA affirmed with modification the Decision of the Voluntary Arbitrator.  Instead of reinstatement, the CA ordered BPI to pay Uy her separation pay.  Further, instead of full back wages, the CA fixed Uy’s back wages to three years.^[8][8]

The case eventually reached this Court when both parties separately filed petitions for review on certiorari.  While BPI’s petition which was docketed as G.R. No. 137856 was denied for failure to comply with the requirements of a valid certification of non-forum shopping,^[9][9]  Uy’s and the Union’s petition which was docketed as G.R. No. 137863 was  given due course.

On March 31, 2005, the Court rendered its Decision^[10][10] in G.R. No. 137863, the dispositive portion of which reads:

WHEREFORE, the instant petition is GRANTED. The assailed 28 October 1998 Decision and 8 March 1999 Resolution of the Court of Appeals are hereby MODIFIED as follows: 1) respondent BPI is DIRECTED to pay petitioner Uy backwages from the time of her illegal dismissal until her actual reinstatement; and 2) respondent BPI is ORDERED to reinstate petitioner Uy to her former position, or to a substantially equivalent one, without loss of seniority right and other benefits attendant to the position.

SO ORDERED.^[11][11]

Ruling of the Voluntary Arbitrator

After the Decision in G.R. No. 137863 became final and executory, Uy and the Unionfiled with the Office of the Voluntary Arbitrator a Motion for the Issuance of a Writ of Execution.^[12][12]

In Uy’s computation, she based the amount of her back wages on the current wage level and included all the increases in wages and benefits under the CBA that were granted during the entire period of her illegal dismissal. These include the following: Cost of Living Allowance (COLA), Financial Assistance, Quarterly Bonus, CBA Signing Bonus, Uniform Allowance, Medicine Allowance, Dental Care, Medical and Doctor’s Allowance, Teller’s Functional Allowance, Vacation Leave, Sick Leave, Holiday Pay, Anniversary Bonus, Burial Assistance and Omega watch.^[13][13]

BPI disputed Uy’s/Union’s computation arguing that it contains items which are not included in the term “back wages” and that no proof was presented to show that Uy was receiving all the listed items therein before her termination.  It claimed that the basis for the computation of back wages should be the employee’s wage rate at the time of dismissal.^[14][14] 

In an Order dated December 6, 2005,^[15][15] the Voluntary Arbitrator agreed with Uy’s/Union’s contention that full back wages should include all wage and benefit increases, including new benefits granted during the period of dismissal. The Voluntary Arbitrator opined that this Court’s March 31, 2005 Decision in G.R. No. 137863 reinstated his December 31, 1997 Decision which ordered the payment of full back wages computed from the time of dismissal until actual reinstatement including all benefits under the CBA.  Nonetheless, the Voluntary Arbitrator excluded the claims for uniform allowance, anniversary bonus and Omega watch for want of basis for their grant.

The Voluntary Arbitrator thus granted the motion for issuance of writ of execution and computed Uy’s back wages in the total amount of P3,897,197.89 as follows: 

Basic Monthly Salary (BMS) ………………………………………….P 2,062, 087.50

Cost of Living Allowance………………………………………………….           56, 100.00

Financial Assistance…………………………………………………………..           39,000.00

Total Quarterly Bonuses ………………………………………………….       693, 820.00

CBA Signing Bonus………………………………………………………….          32, 500.00

Medicine Allowance………………………………………………………….          58, 400.00

Dental Care   ………………………………………………………………………         14, 120.00

Medical and Doctor’s Allowance………………………………        58, 400.00

Teller’s Functional Allowance………………………………….             25, 500.00

Vacation Leave………………………………………………………………….         187, 085.50

Sick Leave…………………………………………………………………………        187, 085.50

HolidayPay……………………………………………………………………….        128, 808.65

Attorney’s Fee……………………………………………………………………        354, 290.72

Grand Total…………………………………………………………………………P 3,897,197.89^[16][16]

A Writ of Execution^[17][17] and a Notice of Garnishment^[18][18] were subsequently issued.

Ruling of the Court of Appeals

            Imputing grave abuse of discretion on the part of the Voluntary Arbitrator, BPI filed with the CA a Petition for Certiorari with urgent Motion for the Issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction.^[19][19] BPI alleged that the Voluntary Arbitrator’s erroneous computation of back wages amended and varied the terms of the March 31, 2005 final and executory Decision in G.R. No. 137863.  

            Specifically, it averred that the Voluntary Arbitrator erred in computing back wages based on the current rate and in including the wage increases or benefits given in the interim as well as attorney’s fees.  BPI further argued that there was no basis for the award of teller’s functional allowance, cash conversion of vacation and sick leaves and dental care allowance.

In their Comment,^[20][20] Uy and the Union alleged that  BPI’s remedy is not a certiorari petition under Rule 65 of the Rules of Court but an appeal from judgments, final orders and resolutions of voluntary arbitrators under Rule 43 of the Rules of Court.  They also contended that BPI’s petition is wanting in substance.

Meanwhile, the CA issued a TRO^[21][21] restraining the implementation of the December 6, 2005 Order of the Voluntary Arbitrator and the corresponding Writ of Execution issued on December 12, 2005.  Upon receipt of the TRO, Uy and the Union filed an Urgent Motion for Clarification^[22][22] on whether the TRO encompasses even the implementation of the reinstatement aspect of the March 31, 2005 Decision of this Court in G.R. No. 137863.

The CA initially rendered a Decision^[23][23] on May 24, 2006.  In said Decision, the CA held that BPI’s resort to certiorari was proper and that the award of CBA benefits and attorney’s fees has legal basis.  The CA however found that the Voluntary Arbitrator erroneously computed Uy’s back wages based on the current rate.  The CA also deleted the award of dental allowance since it was granted in 2002 or more than six years after Uy’s dismissal.

Both parties thereafter filed their respective motions for reconsideration.  Consequently, on July 4, 2007, the CA issued the herein assailed Amended Decision. 

In its Amended Decision, the CA upheld the propriety of BPI’s resort to certiorari.  It also ruled that this Court’s March 31, 2005 Decision in G.R. No. 137863 did not reinstate the December 31, 1997 Decision of the Voluntary Arbitrator awarding full back wages including CBA benefits. The CA ruled that the computation of Uy’s full back wages, as defined under Republic Act No. 6715, should be based on the basic salary at the time of her dismissal plus the regular allowances that she had been receiving likewise at the time of her dismissal.  It held that any increase in the basic salary occurring after Uy’s dismissal as well as all benefits given after said dismissal should not be awarded to her in consonance with settled jurisprudence on the matter.  Accordingly, the CA pronounced that Uy’s basic salary, which amounted to P10,895.00 at the time of her dismissal on December 14, 1995, is to be used as the base figure in computing her back wages, exclusive of any increases and/or modifications. As Uy’s entitlement to COLA, quarterly bonus and financial assistance are not disputed, the CA retained their award provided that, again, the base figure for the computation of these benefits should be the rate then prevailing at the time of Uy’s dismissal. 

The CA deleted the award of CBA signing bonus, medicine allowance, medical and doctor’s allowance and dental care allowance for lack of sufficient proof that these benefits were already being received and enjoyed by Uy at the time of her dismissal. However, it held that the teller’s functional allowance should rightfully be given to Uy as a regular bank teller as well as the holiday pay and monetary equivalent of vacation and sick leave benefits.  As for the attorney’s fees, the CA ruled that Uy’s right over the same has already been resolved and has attained finality when it was neither assailed nor raised as an issue after the Voluntary Arbitrator awarded it in favor of Uy.

Finally, the CA likewise ruled that Uy’s reinstatement was effectively restrained by the TRO issued by it.  Pertinent portions of the CA’s Amended Decision read:

All told, We find Petitioner’s Motion for Reconsideration to be partly meritorious and so hold that Private Respondent Uy is entitled to the following sums to be included in the computation:

1.              Basic Monthly Salary, COLA and Quarterly Bonus, with P10,895.00 as the base figure, computed from the time of her dismissal up to her actual reinstatement;

2.              Teller’s Functional Allowance, based on the rate at the time of her dismissal;

3.              Monetary Equivalent of Vacation and Sick Leaves, and Holiday Pay, based on the rate at the time of her dismissal;

4.              Attorney’s Fees, which is 10% of the total amount of the award.

Anent the Private Respondent’s Urgent Motion for Clarification, Private Respondent asked whether the TRO issued by this Court on January 3, 2006 restrained the reinstatement of Private Respondent Uy.

We answer in the affirmative.

The wordings of the Resolution ordering the issuance of a temporary restraining order are clear. The TRO was issued to restrain the implementation and/or enforcement of the Public Respondent’s Order dated December 6, 200[5] and the Writ of Execution, dated December 12, 200[5]. Considering that said Order and the ensuing Writ are for the reinstatement of Private Respondent Uy, hence, the TRO, indeed, effectively restrained Uy’s reinstatement.

WHEREFORE, Private Respondents’ Motion for Partial Reconsideration is DENIED and Petitioner’s Motion for Partial Reconsideration is GRANTED IN PART. The Decision of this Court promulgated on May 24, 2006 is hereby amended, and the Public Respondent Voluntary Arbitrator is ordered to recompute the amount of backwages due to Private Respondent Uy consistent with the foregoing ruling.

SO ORDERED.^[24][24]

From the foregoing Amended Decision, both parties separately filed petitions before this Court.  Uy’s and the Union’s petition is docketed as G.R. No 178699, and that of BPI is docketed as G.R. No. 178735.  The Court resolved to consolidate both petitions in a Resolution dated September 3, 2007.^[25][25]

Issues

G.R. No. 178699

Uy and theUnionargue that the CA effectively amended the final Decision in G.R. No. 137863.  They allege that the issues raised in G.R. No. 137863 were confined only to the propriety of the CA’s award of back wages for a fixed period of three years as well as the order for the payment of separation pay in lieu of reinstatement.  Hence, the Voluntary Arbitrator’s award of CBA benefits as  components of Uy’s back wages and the attorney’s fees, which were not raised as issues in G.R. No. 137863, should no longer be disturbed. 

Uy and the Unionlikewise assail the CA’s order restraining Uy’s reinstatement despite the finality of this Court’s Decision ordering such reinstatement.  They also fault the CA in not dismissing BPI’s petition for being an improper mode of appeal.  Finally, Uy and the Unionassert that a twelve percent (12%) interest per annum should be imposed on the total amount due to Uy, computed from the finality of the Decision of this Court in G.R. No. 137863 until full compliance thereof by BPI. 

G.R. No. 178735

On the other hand, BPI alleges that Uy’s/Union’s petition should be dismissed for lack of proof of service of the petition on the lower court concerned as required by the Rules of Court.  BPI also argues that the CA erred in including the teller’s functional allowance and the vacation and sick leave cash equivalent in the computation of Uy’s backwages.  Also, BPI questions the propriety of the award of attorney’s fees.

Our Ruling

The March 31, 2005 Decision of this Court in G.R. No. 137863 did not reinstate the December 31, 1997 Decision of the Voluntary Arbitrator which ordered the payment of full back wages including all benefits under the CBA.

            We agree with the CA’s finding that the March 31, 2005 Decision of this Court in G.R. No. 137863 did not in anyway reinstate the Voluntary Arbitrator’s December 31, 1997 Decision regarding the award of CBA benefits.

To recall, after Uy and the Unionfiled the case for illegal dismissal, the Voluntary Arbitrator rendered his Decision^[26][26] on December 31, 1997, the dispositive portion of which reads:

                WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of complainant Zenaida Uy as illegal and ordering the respondent Bank of the Philippine Islands to immediately reinstate her to her position as bank teller of the Escolta Branch without loss of seniority rights and with full backwages computed from the time she was dismissed on December 14, 1995 until she is actually reinstated in the service, and including all her other benefits which are benefits under their Collective Bargaining Agreement (CBA).

                For reasonable attorney’s fees, respondent is also ordered to pay complainant the equivalent of 10% of the recoverable award in this case.

                SO ORDERED.^[27][27]

On appeal, the CA, in its October 28, 1998 Decision,^[28][28] affirmed with modification the Decision of the Voluntary Arbitrator.  Instead of full back wages, the CA limited the award to three years.  Also, in lieu of reinstatement, the CA ordered BPI to pay separation pay, thus:

WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that instead of reinstatement, the petitioner Bank of the Philippine Islands is DIRECTED to pay Uy back salaries not exceeding three (3) years and separation pay of one month for every year of service. The said judgment is AFFIRMED in all other respects.

SO ORDERED.^[29][29]

As already discussed, both parties appealed to this Court. However, BPI’s petition was dismissed outright for failure to comply with the requirements for a valid certification of non- forum shopping. Uy’s and theUnion’s petition docketed as G.R. No. 137863, on the other hand, was given due course. On March 31, 2005, the Court rendered its Decision disposing thus:

WHEREFORE, the instant petition is GRANTED. The assailed 28 October 1998 Decision and 8 March 1999 Resolution of the Court of Appeals are hereby MODIFIED as follows: 1) respondent BPI is DIRECTED to pay petitioner Uy backwages from the time of her illegal dismissal until her actual reinstatement; and 2) respondent BPI is ORDERED to reinstate petitioner Uy to her former position, or to a substantially equivalent one, without loss of seniority right and other benefits attendant to the position.

SO ORDERED.^[30][30]

From the foregoing, it is clear that Uy’s and the Union’s contention that the March 31, 2005 Decision of this Court in G.R. No. 137863 in effect reinstated the December 31, 1997 Decision of the Voluntary Arbitrator awarding full back wages including the CBA benefits, is without basis. What is clear is that the March 31, 2005 Decision modified the October 28, 1998 Decision of the CA by awarding full back wages instead of limiting the award to a period of three years.  This interpretation is further bolstered by the Court’s discussion in the main body of March 31, 2005 Decision as to the meaning of “full back wages” in view of the passage of Republic Act No. 6715^[31][31] on March 21, 1989 which amended Article 279 of the Labor Code, as follows:

ART. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by the Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (Italics supplied)

Jurisprudence dictates that such award of back wages is without qualifications and deductions,^[32][32] that is, “unqualified by any wage increases or other benefits that may have been received by co-workers who were not dismissed.”^[33][33] It is likewise settled that the base figure to be used in the computation of back wages is pegged at the wage rate at the time of the employee’s dismissal unqualified by deductions, increases and/or modifications.^[34][34]

We thus fully agree with the observation of the CA in its Amended Decision that the back wages as discussed in the March 31, 2005 Decision in G.R. No. 137863 did not include salary increases and CBA benefits, viz:       

There is no ambiguity or omission in the dispositive portion of the SC decision but Public Respondent erroneously concluded that said SC decision effectively reinstated Public Respondent’s December 31, 1997 Decision.  There is a need to read the findings and conclusions reached by the Supreme Court in the subject decision to understand what was finally adjudicated.

In the dispositive portion of Its Decision of March 31, 2005, the Supreme Court expressly awarded Uy full backwages from the time of her dismissal up to the time of her actual reinstatement.  The full backwages, as referred to in the body of the decision pertains to “backwages” as defined in Republic Act No. 6715.  Under said law, and as provided in numerous jurisprudence, “full backwages” means backwages without any deduction or qualification, including benefits or their monetary equivalent the employee is enjoying at the time of his dismissal.

Clearly, it is the intention of the Supreme Court to grant unto Private Respondent Uy full backwages as defined under RA 6715.  Consequently, any benefit or allowance over and above that allowed and provided by said law is deemed excluded under said SC Decision.  The CBA benefits awarded by Public Respondent is not within the benefits under RA 6715.  Said benefits are not to be included in the backwages.  x x x^[35][35] 

The CA correctly deleted the

award of CBA benefits.

Thus, we find that the CA properly disregarded the salary increases and correctly computed Uy’s back wages based on the salary rate at the time of Uy’s dismissal plus the regular allowances that she had been receiving likewise at the time of her dismissal.^[36][36] The CA also correctly deleted the signing bonus, medicine allowance, medical and doctor’s allowance and dental care allowance, as they were all not proven to have been granted to Uy at the time of her dismissal from service.

The award of attorney’s fees is proper.

We likewise affirm the CA’s award of attorney’s fees.  The issue on its grant has already been threshed out and settled with finality when the parties failed to question it on appeal.  As aptly held by the CA in its Amended Decision:

Based on the evidence, We find Uy to be entitled to Attorney’s fees. True, the SC Decision did not include the award of attorney’s fees; however, after the Public Respondent awarded said attorney’s fees in favor of Private Respondent Uy, said award was neither assailed nor raised as an issue before the Court of Appeals and the Supreme Court. Hence, the March 31, 2005 Decision of the Supreme Court and the Court of Appeals’ Decision as modified no longer mention said award.

Consequently, as the right of Uy to attorney’s fees has already been resolved and had attained finality, Petitioner cannot now question its inclusion to the computation of awards given to Private Respondent Uy during the execution proceedings.^[37][37]

The issue concerning the CA’s temporary restraining order which covered the reinstatement aspect of this Court’s final decision has been rendered moot by Uy’s subsequent reinstatement in BPI’s payroll on August 1, 2006.

            While we agree with Uy’s/Union’s postulation that it was improper for the CA to restrain the implementation of the reinstatement aspect of this Court’s final and executory Decision considering that BPI’s appeal with the CA only questioned the propriety of the Voluntary Arbitrator’s computation of back wages, suffice it to say that this particular issue has already been rendered moot by Uy’s reinstatement.  As manifested by BPI in its Comment,^[38][38] Uy, with her acquiescence, was reinstated in BPI’s payroll on August 1, 2006.  Notably, this fact was not at all disputed or denied by Uy in any of her pleadings.

BPI’s resort to certiorari under Rule 65 of the Rules of Court is proper.

            Section 1, Rule 41 of the Rules of Court explicitly provides that no appeal may be taken from an order of execution, the remedy of an aggrieved party being an appropriate special civil action under Rule 65 of the Rules of Court.  Thus, BPI correctly availed of the remedy of certiorari under Rule 65 of the Rules of Court when it assailed the December 6, 2005 order of execution of the Voluntary Arbitrator.

A  legal   interest   at   12%   per   annum

should be imposed upon the monetary awards granted in favor of Uy commencing from the finality of this Court’s March 31, 2005 Decision  until full satisfaction thereof.

            Pursuant to our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals,^[39][39] the legal interest of 12% per annum shall be imposed upon the monetary award granted in favor of Uy, from the time this Court’s March 31, 2005 Decision became final and executory until full satisfaction thereof, for the delay caused. This natural consequence of a final judgment is not defeated notwithstanding the fact that the parties were at variance in the computation of what is due to Uy under the judgment.^[40][40]

The CA was properly served with a copy of Uy’s/Union’s petition in compliance with the Rules of Court.

            BPI’s allegation that Uy’s/Union’s petition in G.R. No. 178699 should be dismissed outright for failure to furnish the lower court concerned of their petition is without basis.  Records disclose that Uy’s/Union’s petition was accompanied with an affidavit of service with the corresponding registry receipt^[41][41] showing that the CA was duly provided with a copy of the petition.  

Uy is entitled to teller’s functional allowance but not to vacation and sick leave cash conversion.

            BPI contends that at the time of Uy’s dismissal, she was no longer functioning as a teller but as a low-counter staff and as such, Uy is not anymore entitled to the teller’s functional allowance pursuant to company policy.  Furthermore, BPI argues that Uy is neither entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these benefits at the time of her dismissal. 

            We rule that Uy is entitled to the teller’s functional allowance since Uy’s function as a teller at the time of her dismissal was factually established and was never impugned by the parties during the proceedings held in the main case.  Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned as a low-counter staff at the time of her dismissal.  It is a hornbook rule that he who alleges must prove.^[42][42]  Neither was there any proof on record which could support this bare allegation.

            As to the vacation and sick leave cash conversion benefit, we disagree with the CA’s pronouncement that entitlement to the same should not be necessarily proved. It is to be noted that this privilege is not statutory or mandatory in character but only voluntarily granted.^[43][43]  As such, the existence of this benefit as well as the employee’s entitlement thereto cannot be presumed but should be proved by the employee.^[44][44]  The records, however, failed to prove that Uy was receiving this benefit at the time of her dismissal on December 14, 1995.  The CBA covering the period April 1, 2001 to March 31, 2006, which was presented by the parties does not at all prove that vacation and sick leave credits, as well as the privilege of converting the same into cash, were granted before the CBA’s effectivity in 2001.  We thus hold that Uy failed to prove that she is entitled to such benefit as a matter of right.

            WHEREFORE, the petitions in G.R. Nos. 178699 and 178735 are both PARTIALLY GRANTED.  The Amended Decision dated July 4, 2007 of the Court of Appeals in CA-G.R. SP No. 92631 is hereby AFFIRMED with  MODIFICATIONS.  The back wages of Zenaida Uy should be computed as follows:

1.           Basic Monthly Salary, Cost of Living Allowance, Financial Assistance and Quarterly Bonus, with P10,895.00 as the base figure which is her salary rate at the time of her dismissal, computed from the time of her dismissal on December 14, 1995 up to her reinstatement on August 1, 2006;

2.           Teller’s Functional Allowance, based on the rate at the time of her dismissal;

3.           Holiday Pay, based on the rate at the time of her dismissal;

4.           Attorney’s Fees, which is 10% of the total amount of the award; and

5.           Interest at 12% per annum on the total amount of the awards commencing from the finality of the Decision in G.R. No. 137863 until full payment thereof.

6.           The award for the monetary conversion of vacation and sick leave is deleted.  

The Voluntary Arbitrator is hereby ORDERED TO RECOMPUTE the amounts due to Zenaida Uy in accordance with the above disposition.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

JOSE PORTUGAL PEREZ

Associate Justice

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 RENATO C. CORONA

Chief Justice

CASE NO. 2011-0197: PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT VS. SANDIGANBAYAN (SECOND DIVISION), TOURIST DUTY FREE SHOPS, INC., BANK OF AMERICA AND RIZAL COMMERCIAL BANKING CORPORATION (G.R. NO. 152500, 14 SEPTEMBER 2011, PERALTA, J.) SUBJECTS: SEQUESTRATION ORDERS AND FREEZE ORDERS; PRELIMINARY INJUNCTION; RES JUDICATA. (BRIEF TITLE: PCGG VS. TOURIST DUTY FREE SHOPS).

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DISPOSITIVE:

“WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolution dated July 26, 2001, October 5, 2001, January 23, 2002 and the Writ of Preliminary Mandatory Injunction and Preliminary Injunction dated August 3, 2001 are hereby SET ASIDE. Consequently, the Sequestration Order dated March 11, 1986 directed against Tourist Duty Free Shops, Inc. and the Freeze Order issued subsequent thereto, STAND subject to the final outcome of Civil Case No. 0142.

The Sandiganbayan is DIRECTED to resolve Civil Case No. 0142 with dispatch.

SO ORDERED.”

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Republic of thePhilippines

Supreme Court

Manila

                                                           THIRD DIVISION

x—————————————————————————————-x

                        DECISION

PERALTA, J.:

Assailed in this Petition for Certiorari and Prohibition with Urgent Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction^[1][1] under Rule 65 of the Rules of Court filed by the Presidential Commission on Good Government (PCGG) are the following Orders of the Sandiganbayan: (1) Resolution^[2][2] dated July 26, 2001 granting Tourist Duty Free Shops, Inc.’s (TDFSI’s) motion for the issuance of a writ of preliminary mandatory and prohibitory injunction against the implementation of the Sequestration Order dated March 11, 1986 upon the posting of a bond in the amount of P100,000.00; (2) The Writ of Preliminary Mandatory Injunction and Preliminary Injunction^[3][3] dated August 3, 2001;^[4][4] (3) Resolution^[5][5] dated October 5, 2001 holding in abeyance the resolution of PCGG’s motion for reconsideration and suspending the implementation of the writ of preliminary mandatory and prohibitory injunction; (4) Resolution^[6][6] dated January 23, 2002 denying PCGG’s motion for reconsideration and omnibus motion and increasing the amount of the injunction bond to P1million; (5) Order^[7][7] dated January 23, 2002 setting the pre-trial and trial of the case; and (6) Order dated January 24, 2002 resetting the trial.^[8][8]

          The facts of the case are as follows:

          By virtue of Presidential Decree (P.D.) No. 1193,^[9][9] as amended by P.D. No. 1394,^[10][10] then President Ferdinand E. Marcos authorized TDFSI to establish, operate and maintain duty and tax free stores at all international airports and seaports, as well as at selected hotels, tourist resorts, and commercial or trading centers throughout the country.

On March 11, 1986, the PCGG issued to TDFSI a Sequestration Order^[11][11] signed by then Commissioner Mary Concepcion Bautista which reads as follows:

                                                                   March 11, 1986

The Manager

Tourist Duty Free Shops, Inc.

Food Terminal, Inc. Compound

Taguig, MetroManila

Sir:

            The Presidential Commission on Good Government, by authority of the President of thePhilippines, has decided to sequester the facilities, assets and funds of Tourist Duty Free Shops, Inc. in order to prevent any dispositions thereof to the prejudice of the people. You are hereby ordered to refrain from:

1.      entering into new contracts or transactions;

2.      making any disbursements of funds of the corporation, except in the ordinary course of business and for the payment of salaries of legitimate employees which are due; and

3.      withdrawing funds from the accounts of the corporation, or its branches or subsidiaries.

Please preserve all the records of the corporation, and do not remove or allow the removal of any documents or other records.

                                                Very truly yours,

                                             (SGD.) MARY CONCEPCION BAUTISTA

                                                                     Commissioner

          On March 11, 1986, the PCGG issued a Freeze Order^[12][12] directing the Manager of Rizal Commercial Banking Corporation (RCBC) to freeze any withdrawals, transfers or remittances from the funds of TDFSI in the said bank.

On May 2, 1986, TDFSI filed before the Court a Petition for Certiorari, Prohibition and Injunction with Preliminary Injunction and/or Restraining Order^[13][13] to annul and stop the enforcement of the Sequestration Order. The case was docketed as G.R. No. 74302.

On May 27, 1986, the Court issued a Resolution^[14][14] in favor of PCGG and against TDFSI, the dispositive portion of which reads:

Accordingly, the Court Resolved as follows:

(1)               The sequestration order of all the assets of petitioner stands and, therefore, no temporary restraining order will issue against the same;

(2)               The respondent Commission’s order authorizing the Philippine Tourism Authority to conduct an audit and inventory of petitioner’s goods likewise stands and no temporary restraining order will issue against the same, provided that petitioner Company will be entitled to a sufficient number of representatives as it may designate to be present to protect its interest in the taking of such audit and inventory;

(3)               After the completion of such audit and inventory by the Philippine Tourism Authority within the period of five (5) days from notice hereof, petitioner TDFSI shall be permitted to undertake the following activities under the supervision of respondent Commission’s authorized representatives: (a) to dispose and sell all its existing stocks in the ordinary course of business at such reasonable number of outlets as may be determined by respondent Commission. All proceeds of such sales shall at the end of the day be turned over to the respondent Commission’s duly- authorized representatives. The respondent Commission in turn shall hold the same in trust and deposit such proceeds in special trust account so designated; and (b) to pay by means of checks issued by and countersigned by the respondent Commission’s fiscal agent, or comptroller or duly-authorized representatives so designated, ordinary operational expenses such as payrolls, rentals, utilities, etc.

It is understood that no new contracts or transactions may be entered into by petitioner, nor shall any payment for accounts of, suppliers be made, except with the approval of the Commission.

Finally, the Court directs the Clerk of Court to deliver the three (3) keys deposited with the Court to respondent Commission’s duly-authorized representative x x x^[15][15]

Upon the issuance of Executive Order No. 14^[16][16] and on petition^[17][17] of TDFSI, the Court issued a Resolution^[18][18] dated October 8, 1991 dismissing the petition in G.R. No. 74302 without prejudice to the filing of a case before the Sandiganbayan. The resolution had become final and executory on October 16, 1991 and was recorded in the Book of Entries of Judgments.^[19][19] 

Meanwhile, on July 21, 1987, the Republic of the Philippines, represented by the PCGG, filed a Complaint for Reconveyance, Reversion, Accounting, Restitution and Damages^[20][20] against Bienvenido Tantoco, Bienvenido R. Tantoco, Jr., Gliceria R. Tantoco, Maria Lourdes Tantoco-Pineda, Dominador Santiago, Ferdinand E. Marcos and Imelda R. Marcos. The case was docketed as Civil Case No. 0008.

On December 18, 1991, following the dismissal of G.R. No. 74302, TDFSI filed a Complaint for Injunction and Specific Performance with Prayer for Issuance of Restraining Order and/or Preliminary Mandatory and Prohibitory Injunction^[21][21] against the PCGG, Bank of America (BA) and RCBC before the Sandiganbayan. The case was docketed as Civil Case No. 0142.^[22][22]

In its Complaint, TDFSI assailed the Sequestration Order, having been signed by only one of the five PCGG Commissioners and having been issued without the requisite investigation. Considering that no action had been filed for the recovery of TDFSI’s assets, funds and properties, and no list of the sequestered assets had been made, TDFSI claimed that the Sequestration Order was deemed automatically lifted.^[23][23] It also questioned PCGG’s act of preventing RCBC and BA from allowing TDFSI to withdraw from its accounts without the approval of the PCGG. In support of the prayer for the issuance of a restraining order and/or a writ of preliminary mandatory and prohibitory injunction, TDFSI claimed that the continued refusal of RCBC and BA to allow withdrawal of its funds without PCGG’s approval has prevented TDFSI from investing its own funds in money-making ventures and, unless remedied upon, stands to suffer irreparable damage in the form of lost opportunities.^[24][24]

On June 15, 1992, the Sandiganbayan issued a Resolution^[25][25] dismissing Civil Case No. 0142 without prejudice to the re-filing of the proper motions in Civil Case No. 0008. Civil Case No. 0142 was dismissed allegedly because the issues are intimately related with those raised in Civil Case No. 0008 such that the resolution of the issues raised in the former might render inutile or nugatory any future determination and resolution of the merits of the causes of action in the latter case. TDFSI’s motion for reconsideration was likewise denied on September 23, 1992.^[26][26]

When elevated to the Court in G.R. No. 107395, we reversed and set aside the above resolutions on January 26, 2000.^[27][27] The Court held that the elements of litis pendentia were absent. It explained that there is no identity of parties and causes of action. It also concluded that any decision that may be rendered in any of the two cases cannot constitute res judicata on the other.

Consequently, Civil Case No. 0142 was remanded for further proceedings. On July 26, 2001, the Sandiganbayan issued the first assailed Resolution^[28][28] granting TDFSI’s motion for the issuance of a writ of preliminary mandatory and prohibitory injunction. The dispositive portion of the resolution is quoted below for easy reference:

ACCORDINGLY, and finding merit, the Motion of plaintiff for the issuance of a writ of preliminary mandatory injunction and preliminary injunction is hereby granted upon posting of a bond in the amount of One Hundred Thousand (P100,000.00), Pesos. Defendant-PCGG is enjoined from further implementing the writ of sequestration or the letter dated March 11, 1986 until further orders from this Court.

As regard to the defendant-banks, considering that it has no reason to prevent plaintiff from withdrawing funds with them or transacting business with them and there exist a contract separate and distinct from the issue/s under consideration, they are likewise enjoined, until further orders from this Court, from requiring prior approval from defendant-PCGG before it allows plaintiff to withdraw funds or monies and/or transact business with them, and said defendant-banks are likewise ordered to accept whatever checks plaintiff has issued.

SO ORDERED.^[29][29]  

          While recognizing the PCGG’s authority to issue the Sequestration Order to carry out its vital task of recovering justly and expeditiously ill-gotten wealth, the Sandiganbayan found that the continued implementation of said Order would greatly cause irreparable damage to TDFSI. The court held that in issuing the Sequestration Order against TDFSI, PCGG did not observe the Rules and Regulations implementing Executive Order Nos. 1^[30][30] and 2.^[31][31] It explained that no investigation was conducted, no notice nor opportunity to adduce evidence was given to TDFSI, and no public hearing was conducted. More importantly, the court observed that the Sequestration Order was signed by only one of the PCGG Commissioners, which is violative of its own Rules and Regulations dated April 11, 1986.

          On August 3, 2001, the assailed Writ of Preliminary Mandatory Injunction and Preliminary Injunction^[32][32] was issued, the pertinent portion of which reads:

            NOW THEREFORE, you (defendant Presidential Commission on Good Government), your officers, agents, representatives and/or persons acting upon your orders or, in your place or stead, are hereby ENJOINED from further implementing the writ of sequestration or the letter dated March 11, 1986 until further orders from this Court and as regards the defendant-banks (Bank of America and Rizal Commercial Banking Corp.) your officers, agents, representatives, and/or persons acting upon your orders or, in your place or stead, are likewise ENJOINED until further orders from this Court from requiring prior approval from defendant-PCGG before it allows plaintiff to withdraw funds or monies and/or transact business with them, and defendant-banks are likewise ordered to accept whatever checks plaintiff has issued.^[33][33] (Emphasis supplied.)  

Aggrieved, PCGG filed an Urgent Motion to Recall Writ of Preliminary Mandatory Injunction and Preliminary Injunction,^[34][34] Motion for Reconsideration,^[35][35] and Supplemental Motion for Reconsideration.^[36][36]

On October 5, 2001, the Sandiganbayan issued the third assailed Resolution^[37][37] holding in abeyance the resolution of the three motions named in the preceding paragraph and other related incidents. In the same resolution, the court suspended the implementation of the writ of preliminary mandatory and prohibitory injunction in order to avoid “judicial apostacy.”

On January 23, 2002, the Sandiganbayan issued the fourth assailed Resolution^[38][38] denying PCGG’s motion for reconsideration. The court held that the Sequestration Order is void for failure to comply with Executive Order No. 1 which requires the PCGG as a body to issue the order. It also explained that in G.R. No. 74302, the Court did not decide with finality the issue of whether or not the assets and funds in question are ill-gotten wealth of the Marcoses.

On even date, the Sandiganbayan issued the fifth assailed Order^[39][39] setting the case for pre-trial. The sixth assailed Order^[40][40] was issued on January 24, 2002, resetting the trial of the case.

For failure to obtain a favorable decision, PCGG comes before the Court in this Petition for Certiorari and Prohibition with Temporary Restraining Order and/or Writ of Preliminary Injunction based on the following grounds:

WHETHERRESPONDENT COURTACTED ARBITRARILY AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDERS AND PROCEEDED TO CONDUCT THE PRE-TRIAL/TRIAL OF CIVIL CASE NO. 0142, CONSIDERING THAT:

I.

THE HONORABLE COURT EN BANC HAD ALREADY SUSTAINED IN ITS RESOLUTION DATED JANUARY 26, 1986 IN G.R. NO. 74302 THE VALIDITY OF THE ISSUANCE OF THE SEQUESTRATION ORDER: AND, RELEVANTLY, IN G.R. NO. 107395, THE HONORABLE COURT DENIED A SIMILAR APPLICATION FOR AN INJUNCTIVE WRIT FILED BY TDFSI TO ENJOIN THE ENFORCEMENT OF THE SUBJECT SEQUESTRATION ORDER.

II.

IN VIEW OF THE PRONOUNCEMENT OF THE HONORABLE COURT IN G.R. NO. 74302 AS WELL AS THE JUDICIAL ADMISSIONS IN CIVIL CASE NO. 0008, IT COULD NO LONGER BE DISPUTED THAT THE FUNDS OF TDFSI SUBJECT OF THE ASSAILED WRIT OF SEQUESTRATION CONSTITUTE ILL-GOTTEN WEALTH OF THE MARCOSES.

III.

ASSUMING ARGUENDO THAT THE ISSUE OF THE VALIDITY OF THE SEQUESTRATION ORDER COULD STILL BE RE-LITIGATED, IT IS ALREADY SETTLED IN LIGHT OF G.R. NO. 74302, THAT SEQUESTRATION ORDERS SIGNED BY ONE COMMISSIONER BUT ISSUED PRIOR TO THE ADOPTION OF THE PCGG RULES ARE VALID, AND THAT CORPORATE ENTITIES MERELY CONSTITUTING THE RES IN RECOVERY OF ILL-GOTTEN WEALTH CASES NEED NOT BE IMPLEADED AS PARTY DEFENDANTS THEREIN.

IV.

THE ASSAILED ORDERS OFRESPONDENT COURT, PARTICULARLY THE GRANT OF THE INJUNCTIVE WRIT, AMOUNT TO A PREJUDGMENT OF CIVIL CASE NO. 0142 AND RENDERS NUGATORY ANY JUDGMENT THAT MAY EVENTUALLY BE PROMULGATED BYRESPONDENT COURTIN THAT CASE.

V.

THE INJUNCTIVE WRIT WAS ISSUED IN UTTER DISREGARD OF THE BASIC REQUIREMENTS THAT: (A) THE APPLICANT MUST HAVE A CLEAR AND UNMISTAKEABLE LEGAL RIGHT; AND (B) THE APPLICANT WILL SUSTAIN IRREPARABLE DAMAGE OR INJURY UNLESS THE INJUNCTIVE WRIT IS ISSUED.

VI.

THE AMOUNT OF THE BOND FIXED BY RESPONDENT COURT IS DEVOID OF ANY BASIS AND IS NOT SUFFICIENT TO COVER WHATEVER DAMAGES THE PCGG AND THE FILIPINO PEOPLE MAY SUFFER AS A RESULT OF THE ISSUANCE OF THE INJUNCTIVE WRIT.

VII.

THE POSTING OF A COUNTERBOND BY PCGG CANNOT OPERATE TO ESTOP THE LATTER FROM QUESTIONING THE ASSAILED ORDERS CONSIDERING THAT PCGG POSTED IT OUT OF SHEER NECESSITY AND URGENCY UPON RESPONDENT COURT’S ORDER IN ORDER TO IMMEDIATELY EFFECT THE LIFTING OF THE INJUNCTIVE WRIT AND THEREBY PREVENT THE DISSIPATION OF THE SEQUESTERED ASSETS, WITHOUT, HOWEVER, WAIVING THE GROUNDS RAISED IN ITS MOTION FOR RECONSIDERATION AND SUPPLEMENTAL MOTION FOR RECONSIDERATION.

VIII.

THE ISSUANCE OF THE INJUNCTIVE WRITS CAUSED AND WILL CONTINUE TO CAUSE GRAVE AND IRREPARABLE DAMAGE AND PREJUDICE TO THE REPUBLIC AND THE FILIPINO PEOPLE AT LARGE, CONTRARY TO AND IN EVIDENT DISAVOWAL OF THE PCGG’S CONSTITUTIONALLY AND STATUTORILY ENSHRINED MANDATE OF RECOVERING THE ILL-GOTTEN WEALTH OF THE MARCOSES AND THEIR CRONIES.

IX.

THE ASSAILED ORDERS OF RESPONDENT COURT, PARTICULARLY THE DENIAL OF PCGG’S MOTION FOR ACCOUNTING OF THE FUNDS AND DEPOSITS SUBJECT OF THE SEQUESTRATION ORDER, AMOUNT TO A CAPRICIOUS, WHIMSICAL AND UTTER ABDICATION OF RESPONDENT COURT’S DUTY AS LEGAL CUSTODIAN OF THOSE FUNDS AND DEPOSITS, TO PRESERVE THEM AS THE WRIT THE DETERMINATION OF RESPONDENT COURT IN CIVIL CASE NO. 0008 AS TO WHETHER THEY ARE ILL-GOTTEN WEALTH OR LAWFULLY ACQUIRED PROPERTIES.^[41][41]

The petition is meritorious.

A perusal of the records of the case and the pleadings submitted before the Court would shows that the PCGG and TDFSI have thoroughly argued for and against the validity of the Sequestration Order in support of their respective positions. However, we would like to stress that we are confronted only with the preliminary issue of the propriety of the issuance by the Sandiganbayan of the writ of preliminary mandatory and prohibitory injunction against the  implementation of the March 11, 1986 Sequestration Order of the PCGG directed against TDFSI. The validity of the Sequestration Order is yet to be decided by the Sandiganbayan in Civil Case No. 0142.

PCGG insists that in issuing the injunctive writ, the Sandiganbayan contravened and overturned the Court’s resolution in G.R. No. 74302 which denied TDFSI’s similar application for an injunctive writ and affirmed the validity of the Sequestration Order.^[42][42] PCGG points out that the reasons cited for the issuance of the injunctive writ were the very same grounds that were already invoked, considered and passed upon in the earlier case. The issuance of the injunctive writ is, therefore, violative of the principles of res judicata, litis pendentia and law of the case.^[43][43] In other words, TDFSI could not assail anew the validity of the Sequestration Order.

We do not agree.

This Court’s May 27, 1986 Resolution in G.R. No. 74302 clearly states that it merely disposed of the preliminary issue of whether or not the Court should grant TDFSI’s prayer for the issuance of a temporary restraining order against the PCGG’s Sequestration and Freeze Orders. It appears that after the issuance of the above resolution and upon the issuance of Executive Order No. 14 vesting the Sandiganbayan with the exclusive and original jurisdiction over ill-gotten wealth cases to be prosecuted by the PCGG with the assistance of the Office of the Solicitor General, TDFSI filed a petition to dismiss the case which the Court granted. Apparently, the case was dismissed by the Court without prejudice to its re-filing with the Sandiganbayan. Clearly, there is no final determination yet of the validity of the assailed Sequestration and Freeze Orders. The May 27, 1986 Resolution relied on by PCGG is only an interlocutory order and an incident of the dismissed case. PCGG cannot therefore rely on the principles of res judicata, litis pendentia or law of the case.      

Res judicata exists when the following elements are present: (a) the former judgment must be final; (b) the court which rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter, and cause of action.^[44][44] Obviously, the third requisite is wanting. Res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause.^[45][45]

As the dismissal of G.R. No. 74302 was without prejudice, it was not a judgment on the merits. A judgment on the merits is one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal or merely technical point. The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced.^[46][46] In other words, the discontinuance of a case not on the merits does not bar another action on the same subject matter.^[47][47] TDFSI thus re-filed the case to the Sandiganbayan in a petition for injunction docketed as Civil Case No. 0142 assailing anew the validity of the Sequestration and Freeze Orders.

To be sure, the provisional remedy, like any other interlocutory order, cannot survive the main case of which it is but an incident.^[48][48] The findings of fact and opinion of a court when issuing (or denying) the writ of preliminary injunction are interlocutory in nature and made even before the trial on the merits is commenced or terminated.^[49][49]  Thus, the May 27, 1986 interlocutory order of the Court died with the dismissal of the main case in G.R. No. 74302. The right of TDFSI to re-file the main case carries with it its right to apply for the provisional remedies available under the Rules of Court.

Although the principles of res judicata, litis pendentia and law of the case are inapplicable to set aside the assailed resolutions and writ of preliminary mandatory and prohibitory injunction, we hold that the issuance of writ of certiorari and prohibition is proper.

In support of its prayer for the issuance of a writ of preliminary mandatory and prohibitory injunction, TDFSI presented before the court a quo  the following  documentary evidence: (1) the Complaint filed by TDFSI with the court below in Civil Case No. 0142;^[50][50] (2) The General Information Sheet of TDFSI;^[51][51] (3) Presidential Decree No. 1193;^[52][52] (4) Presidential Decree No. 1394;^[53][53] (5) The Sequestration Order;^[54][54] (6) Correspondence between TDFSI and Bank of America;^[55][55] (7) Letter  of TDFSI addressed to the Sandiganbayan inquiring from the latter whether or not an action for recovery of ill-gotten wealth against TDFSI has been filed by the PCGG;^[56][56] and (8) a Certification from the Sandiganbayan that as of a particular date, no such action has been filed.^[57][57]  PCGG, on the other hand, did not present any evidence. 

Based on the foregoing evidence, the Sandiganbayan declared the Sequestration and Freeze Orders null and void and used such nullity as a justification for the issuance of the questioned writ of preliminary mandatory and prohibitory injunction. Specifically, it concluded that said Orders are invalid on the following grounds: (1) no investigation was conducted by the PCGG before the issuance of the Sequestration and Freeze Orders; (2) even if there was an investigation, no notice or opportunity to adduce evidence was given to TDFSI; (3) no public hearing was conducted; (4) the Sequestration and Freeze Orders were signed by only one Commissioner; (5) the Sequestration and Freeze Orders contained no explanation as to why they were issued; and (6) the Sequestration and Freeze Orders were automatically lifted, since there was actually no case for recovery of ill-gotten wealth filed because TDFSI was not impleaded as a defendant.

We hold that the Sandiganbayan gravely abused its discretion amounting to lack or excess of jurisdiction in issuing the questioned preliminary injunctive writ. The grounds relied upon by the Sandiganbayan are not sufficient to warrant the issuance of said writ. The documentary evidence listed above merely show that TDFSI is a corporation, that a sequestration order signed by a PCGG Commissioner was issued against it, and that no action for recovery of ill-gotten wealth was filed by PCGG against TDFSI at the time the inquiry was made.

Section 3, Rule 58 of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction, viz:

(a)                That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

(b)               That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c)                That a party, court or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.^[58][58]

From the foregoing, it can be inferred that two (2) requisites must exist to warrant the issuance of an injunctive relief, namely: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.^[59][59]  Otherwise stated, before a writ of preliminary injunction may be issued, there must be a clear showing that there exists a right to be protected and that the acts against which the writ is to be directed are violative of established right.^[60][60]

Without making a definitive conclusion as to the validity of the Sequestration and Freeze Orders being the main issue in Civil Case No. 0142 which is yet to be decided by the Sandiganbayan, we conclude that the pieces of evidence enumerated above do not, in any way, show that TDFSI has a right to be protected and that the implementation of the Sequestration and Freeze Orders is violative of its rights.

In Bataan Shipyard & Engineering Co., Inc. (BASECO) v. PCGG,^[61][61] the Court has already described the nature and purpose of Sequestration and Freeze Orders and the extent of the PCGG’s power to implement the same, and we quote:

By the clear terms of the law, the power of the PCGG to sequester property claimed to be “ill-gotten” means to place or cause to be placed under its possession or control said property, or any building or office wherein any such property and any records pertaining thereto may be found, including “business enterprises and entities” – for the purpose of preventing the destruction, concealment or dissipation of, and otherwise conserving and preserving, the same – until  it can be determined, through appropriate judicial proceedings, whether the property was in truth “ill-gotten,” i.e., acquired through or as a result of improper or illegal use of or the conversion of funds belonging to the Government or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of official position, authority, relationship, connection or influence, resulting in unjust enrichment of the ostensible owner and grave damage and prejudice to the State. x x x

A “freeze order” [on the other hand] prohibits the person having possession or control of property alleged to constitute “ill-gotten wealth” from transferring, conveying, encumbering or otherwise depleting or concealing such property, or from assisting or taking part in its transfer, encumbrance, concealment, or dissipation. In other words, it commands the possessor to hold the property and conserve it subject to the orders and disposition of the authority decreeing such freezing. In this sense, it is akin to a garnishment by which the possessor or ostensible owner of property is enjoined not to deliver, transfer, or otherwise dispose of any effects or credits in his possession or control, and thus becomes in a sense an involuntary depositary thereof.^[62][62]  

Pending the determination of whether or not the subject properties are “ill-gotten,” there is an obvious and imperative need for preliminary, provisional measures to prevent concealment, disappearance, destruction, dissipation, or loss of the assets and properties subject of the suits, or to restrain or foil acts that may render moot and academic, or effectively hamper, delay or negate efforts to recover the same.^[63][63] The implementation of these orders should, therefore, not be restrained unless there is a clear ground to do so. More so in this case, considering that the Sandiganbayan’s conclusions are contrary to established jurisprudence. 

It has been settled in a number of cases that Sequestration and Freeze Orders signed by only one Commissioner and issued prior to the adoption of the PCGG Rules and Regulations cannot be invalidated. The PCGG Rules and Regulations were promulgated on April 11, 1986. Section 3^[64][64] thereof requires that the sequestration order be issued upon the authority of at least two Commissioners. The questioned Sequestration Order was, however, issued on March 11, 1986 prior to the promulgation of the PCGG Rules and Regulations. Consequently, we cannot reasonably expect the PCGG to abide by said rules which were nonexistent at the time the subject orders were issued by then Commissioner Mary Concepcion Bautista.^[65][65]

 The Court notes that on July 21, 1987, the Republic of the Philippines, represented by the PCGG, filed a Complaint for Reconveyance, Reversion, Accounting, Restitution and Damages against the Marcoses and the alleged stockholders and owners of TDFSI docketed as Civil Case No. 0008. While no case had been commenced against TDFSI itself, it has been a well-established doctrine that as to corporations allegedly organized with ill-gotten wealth but are not themselves guilty of misappropriation, fraud or other illicit conduct, there is no need to implead them. Their impleading is not proper on the strength alone of their being formed with ill-gotten funds, absent any other particular wrongdoing on their part.^[66][66] And even in cases where there is a need to implead the sequestered corporation as indispensable or necessary party, its sequestration is not rendered functus officio, since it is a mere technical defect which can be cured at any stage of the proceedings.^[67][67] The Sandiganbayan cannot, therefore, nullify the Sequestration and Freeze Orders on this basis alone.

 Among the rights explicitly acknowledged in Bataan Shipyard & Engineering Co., Inc. v. PCGG^[68][68] is that the owners of properties have the “opportunity to contest” actions or orders of sequestration issued by the PCGG.^[69][69] That “opportunity to contest” includes resort to the courts as in Civil Case No. 0142.^[70][70] In that case, which is the main case where the questioned preliminary injunctive writ is an incident, the parties’ respective evidence are presented for the final determination of the validity of the questioned Sequestration and Freeze Orders. The Court is yet to determine whether the requisites for the valid issuance of said Orders are present.      

In view of the foregoing disquisition and considering that the pre-trial and trial of the case had been completed before the Sandiganbayan, we need not discuss the other issues raised by the PCGG.

WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolution dated July 26, 2001, October 5, 2001, January 23, 2002 and the Writ of Preliminary Mandatory Injunction and Preliminary Injunction dated August 3, 2001 are hereby SET ASIDE. Consequently, the Sequestration Order dated March 11, 1986 directed against Tourist Duty Free Shops, Inc. and the Freeze Order issued subsequent thereto, STAND subject to the final outcome of Civil Case No. 0142.

The Sandiganbayan is DIRECTED to resolve Civil Case No. 0142 with dispatch.

SO ORDERED.

                                      DIOSDADO M. PERALTA

                                      Associate Justice

WE CONCUR:

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson

ROBERTO A. ABAD                                JOSE CATRAL MENDOZA

      Associate Justice                                                Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                      PRESBITERO J. VELASCO, JR.

   Associate Justice

    Third Division, Chairperson

          CERTIFICATION

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

                                                                   RENATO C. CORONA

                                                                             Chief Justice