6. SB admitted the amended complaint in the Case.

Respondents filed a motion to dismiss and lift

sequestration.
a. They cited the republic case- they did not have
to be impleaded as defendants and that the
government had no cause of action against
them.
b. They sought a hearing that would require the
govt to present prima facie evidence that would
justify their sequestration and, in its absence,
that the sequestration orders be deemed
automatically lifted.
7. SB granted motion to dismiss
ISSUE/S:
1. WON SB gravely abused its discretion in dismissing the
complaint against respondent corporations on the grounds
that there was no need for it and that the amendment did
not state a cause of action against such corporations. NO
2. WON SB gravely abused its discretion in lifting the orders of
sequestration against defendant corporations
RATIO:
FIRST ISSUE: Defendant Corporations
For an act to be struck down as having been done with
grave abuse of discretion, such abuse must be patent and
gross, a screaming aberration, to use a phrase.
SB's dismissal of the complaint as against respondent
corporations cannot be regarded as falling in this category.
Sandiganbayan merely relied on this Courts ruling in
the Republic case that impleading corporations,
which are alleged to have been capitalized with illgotten wealth, is unnecessary since judgment may
be rendered against the individual defendants,
divesting them of their shares of stock

REPUBLIC V. SANDIGANBAYAN REYES

TOPIC: ILL-GOTTEN WEALTH
DOCTRINE: When corporations are organized with ill-gotten
wealth but are not themselves guilty of wrongdoing and are
merely the res of the actions, there is no need to implead
them. Judgment may simply be directed against the shares of
stock that were issued in consideration of ill-gotten wealth.
1. From 1986 to 1988, PCGG issued various sequestration
orders against the Enriquez group, all of whom were
alleged associates of spouses Imerlda and Ferdinant
Marcos.
2. Republic through PCGG filed a complaint against
spouses Marcos and the Enriquez group for
reconveyance, reversion, accounting, restitution and
damages. Annexed to such complaint was a list of
corporations
where
individual
defendants
are
stockholders.
3. In 1991, govt moved for the admission of an amended
complaint to implead respondent corporations except
for Notions and Potions and Sun and Shade as
defendants.
a. The corporations were beneifically owned or
controlled by individual defendants and that the
latter used them as fronts to defeat public
convenience, protect fraudulent schemes, or
evade obligations and liabilities.
4. Meantime, respondents Silahis, Philippine Village and
Ternate separately challenged the sequestration orders
PCGG issued.
i. SB issued a writ of preliminary injunction
5. SB elevated the matter to the SC. SC set aside the writ
or preliminary injunction. It held that corporations need
not be formally impleaded to maintain the existing
sequestrations.

 March 10, 1986 order was issued solely

against Ternate. Two years later, however,
the PCGG suddenly issued the April 4, 1988
Supplemental
Writ
of
Sequestration,
including Fantasia, Monte Sol, Olas del Mar,
and Puerto Azul.
PCGG alleged that these corporations
were affiliates and shell companies of
Puerto Azul, without stating the basis
for these findings
None of the above orders included
respondents Notions and Potions, Ocean
Villas, Sulo Dobbs, and Sun and Shade.
there is no clear showing of a prima facie case that
the sequestered properties were ill-gotten wealth.
Amended complaint stated no cause of action
against the respondent corporations while, except
for general averments, the orders themselves did
not state the reasons behind their issuance.
Government simply asserts that the
PCGG may be presumed to have acted
pursuant to law and based on prima facie
evidence.
DISPOSITIVE: petition dismissed.

Amended complaint states that it is a civil action against the

individual defendants for their alleged misappropriation and
theft of public funds, plunder of the nations wealth,
extortion, blackmail, bribery, embezzlement and other acts
of corruption, betrayal of public trust and brazen abuse of
power. The Government makes no allegations that
respondent corporations as such committed these acts.
SECOND ISSUE: Sequestration Orders
Government avers that assuming the dismissal of the
complaint as to respondent corporations was justified,
Sandiganbayan did not have to lift the sequestration orders
against them.
PCGG Rules and Regulations required the signatures
of at least two commissioners on a sequestration
order. Two signatures are the best evidence of the
Commissions approval; otherwise, the order is as in
this case null and void.
Sequestration orders were only signed by
one commissioners.
Sequestration orders may only issue upon a
showing of a prima facie case that the properties
are ill-gotten wealth. While sequestration orders
may issue ex parte, a prima facie factual foundation
that the sequestered properties are ill-gotten wealth
is required.