PCGG vs Sandiganbayan

Facts: The PCGG issued writs of sequestration against OWNI. Then, it sent Corporate
Secretary Africa of Ocean Wireless Network, Inc. (OWNI) a letter directing him to send
notices to all stockholders of record of OWNI for special stockholders’ meeting. He was
required to issue one qualifying share each to PCGG Commissioners Maceren and
Castro from the unissued shares and to record the transfer in the stock and transfer
book of OWNI. Failure to comply within 5 days from receipt thereof, Assistant Solicitor
General Desuasido would be designated as acting corporate secretary.

During the special stockholders’ meeting of OWNI, PCGG voted all the Class A shares
in the election of directors and elected to the board of directors Commissioners
Maceren, Parlade and Gutierrez representing the Class A shares, and Brooker and
Miller representing Class B and C shares. The new board of directors then elected
Maceren as Chairman of the Board, Gutierrez as President, ASG Desuasido as Acting
Corporate Secretary and Velasco as Acting Treasurer. None of the registered Class A
shareholders of OWNI was present in that special stockholders meeting.Corporate
Secretary Africa wrote the SEC questioning the election of the PCGG nominees as
directors of the OWNI board on the ground that they were not stockholders of the
OWNI.

Then, a special stockholders’ meeting of OWNI took place where another election of
directors for Class “A” shares were held. Thus, the PCGG sought to enjoin the new
directors from interfering with PCGG’s management of OWNI and/or representing
themselves as directors. Sandiganbayan nullified the writs of sequestration, stressing
the need to file a separate action against OWNI.

Issue: WON there the contention of petitioner PCGG is correct.

Ruling: No. A suit against individuals as shareholders in a corporation is not a suit

against the corporation. Failure to implead the corporations as defendants and merely
annexing a list of such corporations to the complaints is a violation of their right to due
process for it would in effect be disregarding their distinct and separate personality
without a hearing.

The SC ruled that the writ of sequestration issued against OWNI is not valid because
the suit in Civil Case No. 0009 against Manuel H. Nieto and JoseL. Africa+ as
shareholders in OWNI is not a suit against OWNI. This Court has held that “failure to
implead these corporations as defendants and merely annexing a list of such
corporations to the complaint is a violation of their right to due process for it would in
effect be disregarding their distinct and separate personality without a hearing.”