328 Phil. 210


[ G.R. No. 88126, July 12, 1996 ]





The main issue raised in this case is: Is a sequestration order prepared, issued and signed by the head of a task force of the PCGG, and not by any two of the Commissioner, valid and legal?

Questioned in this petition for Certiorari, Prohibition and Mandamus are the following Resolutions of the respondent Sandiganbayan:
(i) Resolution promulgated on November 22, 1988[1] in Civil Case No. 0010 (PCGG Case No. 11) invalidating a sequestration order issued by the head of a PCGG Task Force in Region VIII and ordering the PCGG to return to herein respondent Dio Island Resort, Inc. the latter's property taken by the PCGG agents; and

(ii) Resolution promulgated on April 3, 1989[2] denying petitioner PCGG's motion for reconsideration.
The Facts

On April 14, 1986, a sequestration order[3] was issued by Atty. Jose Tan Ramirez, a PCGG representative and head of its task force in Region VIII against Dio Island Resort, Inc. and all its assets and properties. The said order was served upon representatives of respondent corporation on April 15, 1986.

On July 22, 1987, petitioner filed with respondent Court a complaint docketed as Civil Case No. 0010 against Alfredo T. Romualdez, Ferdinand E. Marcos, Imelda R. Marcos and forty six (46) other defendants, for reversion, reconveyance, restitution, accounting and damages, seeking to recover alleged "ill-gotten wealth" acquired and accumulated by said defendants. Although respondent corporation was mentioned and listed in Annex "A" of the aforesaid complaint as among those corporations where defendant Alfredo T. Romualdez purportedly owned shares of stock, it was not impleaded as a party thereto.

In its Manifestation and Motion dated June 10, 1988 filed in the same case, respondent corporation asked respondent Court to stop the PCGG and its agents from further interfering with and exercising ownership over said resort, and to require the return of its properties and assets covered by said order. It further alleged that "up to the present time, there is no case filed against movant (herein respondent Dio Island Resort, Inc.) before the Sandiganbayan by reason of which, the alleged sequestration order is deemed automatically lifted pursuant to Article XVIII, Section 26 of the Constitution." In the course of the hearing of said motion, the validity of the sequestration order issued by PCGG's representative. Atty. Jose Tan Ramirez, was directly questioned.

Alerted by such challenge, the PCGG, at its Commission Meeting held on June 16, 1988, passed a resolution[4] "to confirm, ratify and adopt as its own all the Writs of Sequestration issued in the name x x x and under the authority of the Commission and signed by its duly authorized representatives in Region VIII, Messrs. Jose Ramirez and Ben Abella", including the sequestration order over Dio Island Resort, in order "to remove any doubt as to the validity and enforceability" of said writs.

On November 22, 1988, the respondent Court granted respondent corporation's manifestation and motion and issued the first of its assailed Resolutions, holding inter alia that the PCGG had not legally sequestered the assets of respondent corporation because they were seized pursuant to an order issued only by a "duly authorized representative" of the PCGG. Penned by Presiding Justice Francis E. Garchitorena, the said Resolution in its dispositive portion provided:
"WHEREFORE, the plaintiff, particularly the PCGG, is ordered to return to the movant Dio Island Resort, Inc., all of the property, assets, furniture, fixture and equipment which have been taken away from movant by virtue or as a result of the acts of the PCGG's authorized representative and to effect full compliance herewith within thirty (30) days from receipt hereof."
PCGG's Motion for Reconsideration of the abovementioned Resolution was denied by respondent Court in its April 3, 1989 Resolution, where it held that:
"1. DIO ISLAND RESORT, INC., was not sequestered on March 18, 1986 nor at anytime thereafter;

2.  The confirmation, ratification and adoption by the PCGG of the "writs of sequestration" issued in its name by its duly authorized representatives Region VIII, Attys. Jose Ramirez and Ben Abella (Annex "1", Opposition to Manifestation and Motion) on June 16, 1988 cannot have the effect of curing the basic infirmities of those acts -- twenty-seven (27) months after the fact, sixteen (16) months after the ratification of the Constitution and eleven months after the suit thereon was filed. Messrs. Ramirez and Abella did not possess the authority to sequester so that there was nothing for the PCGG to confirm or to ratify, much less adopt, with any legal effect.

This Court has said in its original Resolution and it now says so once more: until the plaintiff through the PCGG establishes before the Sandiganbayan by at least prima facie evidence that attachment, receivership or any other provisional remedy is appropriate, no rights can be exercised by the PCGG over the Dio Island Resorts, Inc., its properties both movable and immovable.

WHEREFORE, plaintiff's Motion for Reconsideration dated December 8, 1988 is DENIED for lack of merit."

Hence, this Petition.
The Issues

Petitioner, in claiming that respondent Court committed grave abuse of discretion amounting to want or excess of jurisdiction, raised issues which can be succinctly summed up as follows:
1.  Were Dio Island Resort, Inc. and its assets validly sequestered? and

2.  Does the Sandiganbayan have jurisdiction over a motion questioning the validity of a "sequestration order" issued by a duly authorized representative of the PCGG?
The Court's Ruling

We affirm the impugned Resolutions in toto. The respondent Court acted strictly within the bounds of law and prevailing jurisprudence, and we find nothing in the assailed Resolutions that even remotely might suggest any abuse of discretion.

First Issue: Validity of Sequestration Order

The sequestration order subject of the case below was not issued in accordance with the Rules and Regulations of the PCGG promulgated on April 11, 1986. Sec. 3 of said Rules clearly outlines the requirements for the issuance of a sequestration order, thus:
"Sec. 3.  Who may issue. A writ of sequestration or a freeze or hold order may be issued by the Commission upon the authority of at least two Commissioners, based on the affirmation or complaint of an interested party or motu proprio when the Commission has reasonable grounds to believe that the issuance thereof is warranted."
The aforequoted provision, couched in clear and simple language, leaves no room for interpretation. On the basis thereof, it is indubitable that under no circumstances can a sequestration or freeze order be validly issued by one not a Commissioner of the PCGG.

The invalidity of the sequestration order was made more apparent by the fact that Atty. Ramirez did not even have any specific authority to act on behalf of the Commission at the time he issued the said sequestration order. Thus, the respondent Court noted:[5]
"Contrary to plaintiff's representation, nothing exists to support its contention that the Task Force had been given prior authority to place DIO under PCGG control. On the contrary, as the text of the above letters clearly show, Attys. Jose Tan Ramirez and Ben Abella, had acted on broad and non-specific powers: 'By authority of the commission and the powers vested in it. . . .'" (Italics ours)
Even assuming arguendo that Atty. Ramirez had been given prior authority by the PCGG to place Dio Island Resort under sequestration, nevertheless, the sequestration order he issued is still void since PCGG may not delegate its authority to sequester to its representatives and subordinates, and any such delegation is invalid and ineffective.

Under Executive Order Nos. 1 and 2, PCGG is the sole entity primarily charged with the responsibility of recovering ill-gotten wealth. Under Sec. 3 of the Rules it promulgated, the PCGG may issue a writ of sequestration upon the authority of at least two Commissioners "when the Commission has reasonable grounds to believe that the issuance thereof is warranted." The power to sequester, therefore, carries with it the corollary duty to make a preliminary determination of whether there is a reasonable basis for sequestering a property alleged to be ill-gotten. After a careful evaluation of the evidence adduced, the PCGG clearly has to use its own judgment in determining the existence of a prima facie case. In Republic vs. Sandiganbayan,[6] this Court underscored the indispensability of such prima facie finding by the Commission to support a sequestration.
"The issue on the existence of prima facie evidence in support of the issuance of a sequestration order has likewise been laid to rest in the BASECO case, in this wise:

'8. Requisites for Validity

What is indispensable is that, again as in the case of attachment and receivership, there exist a prima facie factual foundation, at least, for the sequestration, freeze or takeover order, and adequate and fair opportunity to contest it and endeavor to cause its negation or nullification.

Both are assured under the executive orders in question and the rules and regulations promulgated by the PCGG.

a. Prima Facie Evidence as Basis for Orders

Executive Order No. 14 enjoins that there be 'due regard to the requirements of fairness and due process.' Executive Order No. 2 declares that with respect to claims on allegedly 'ill-gotten' assets and properties, 'it is the position of the new democratic government that President Marcos x x (and other parties affected) be afforded fair opportunity to contest these claims before appropriate Philippine authorities.' Section 7 of the Commission's Rules and Regulations provides that sequestration or freeze (and takeover) orders issue upon the authority of at least two commissioners, based on the affirmation or complaint of an interested party, or motu propio when the Commission has reasonable grounds to believe that the issuance thereof is warranted. A similar requirement is now found in Section 26, Art. XVIII of the 1987 Constitution, which requires that 'a sequestration or freeze order shall be issued only upon showing of a prima facie case.' (Emphasis in the original text.)"
And as correctly held by respondent Court:[7]
"The enabling Executive Orders of the Commission had granted it the power and imposed upon it the duty to make a preliminary determination and the identification of what these "ill-gotten" and "crony owned" properties. This power was not granted to, and this duty was not imposed upon, the Commission's subordinates or extensions. While subordinate entities, such as a committee or a task force may have been authorized to investigate for, and to report to, the PCGG and may have even actually seized properties which may have been apparent to the task force as having been ill-gotten, the preliminary determination of the character of the property to be 'ill-gotten' remained (with) (and never left) the Commission."
This Court had also ruled in PCGG vs. Peña[8] that the Commission, in the discharge of its vital task "to recover the tremendous wealth plundered from the people by the past regime x x x", was vested with ample powers and authority to sequester or place properties and records under its control, to provisionally take over business enterprises and properties constituting ill-gotten wealth, and to enjoin or restrain the commission of acts by any person that may thwart the efforts of the Commission to carry out its mission. And in order to ascertain facts germane to its objectives, the Commission was likewise granted power to conduct investigations, require submission of evidence by subpoena, administer oaths, punish for contempt, and promulgate rules and regulations. The foregoing powers, functions and duties of the Commission amount to the exercise of quasi-judicial functions, Peña declared. The exercise of such functions cannot be delegated by the Commission to its representatives or subordinates or task forces because, as explained in Villegas vs. Auditor General:[9]
"x x x As well established is the principle that judicial or quasi-judicial powers may not be delegated. In the absence of constitutional or statutory authority, an administrative officer may not alienate or surrender his discretionary power or powers which require exercise of judgment or deputize another for him with respect thereto. For, when a public official is granted discretionary power, it is to be presumed that so much is reposed on his integrity, ability, acumen, judgment. Because he is to look into the facts, weigh them, act upon them, decide on them -- acts that should be entrusted to no other. x x." (Emphasis supplied)
In the instant case, there was clearly no prior determination made by the PCGG of a prima facie basis for the sequestration of Dio Island Resort, Inc. Respondent Court found as follows:

"While some agent or agents ("authorized representatives") of the PCGG may have seized the properties in question, they did not do so upon specific determination by the Commission (but, at best, upon the determination of the authorized agents themselves) that the properties sequestered were "ill-gotten". The issue in sequestrations and freeze orders, it must be noted, is not primarily whether a particular property or asset is actually "ill-gotten" wealth but whether the Commission has made an informed determination of that fact. The reason for this is simple: the PCGG is the only entity authorized by law in the first instance to seize properties purporting to be ill-gotten as described in the pertinent Executive Orders."[10]

"Nothing has been presented which would indicate that before or after the above quoted letter of "sequestration" a prima facie finding had been made by the PCGG that DIO was an ill-gotten asset. Or even, though improperly, that the Task Force was given the authority to appreciate evidence in order to exercise quasi-judicial functions of prima facie determination of ill-gotten wealth."[11]
The absence of a prior determination by the PCGG of a prima facie basis for the sequestration order is, unavoidably, a fatal defect which rendered the sequestration of respondent corporation and its properties void ab initio. Being void ab initio, it is deemed non-existent, as though it had never been issued, and therefore is not subject to ratification by the PCGG. The PCGG does not have the magic power to cloak with validity a patently void act done without proper authority. As pointed out by respondent corporation, the "ratification" by the PCGG at its commission meeting held June 16, 1988, or more than two years after the issuance of the sequestration order, was therefore nothing but an exercise in futility.

The PCGG had propounded an interesting theory -- that the resolution adopted by the PCGG at its June 16, 1988 commission meeting be considered as another writ of sequestration, issued afresh by the Commissioners themselves.

We reject the proposition. First of all, the said Resolution by its very terms referred to, adopted and ratified the sequestration order of Atty. Ramirez dated April 14, 1986; there is no way it can be deemed a brand-new sequestration writ by itself. But even granting that it is indeed a new writ, the same would have to be considered ineffectual, because of the pendency of a judicial action involving the subject matter of sequestration. As mentioned hereinabove, the PCGG had filed before respondent Sandiganbayan Civil Case No. 0010 against Alfredo Romualdez, the Marcoses and others, for reversion, reconveyance, recovery of alleged "ill-gotten wealth" and so forth; marked as Annex "A" and attached to the complaint in said case was a list of corporations where Alfredo Romualdez allegedly owned stock, in which list the name of respondent corporation was included. In brief, the matter of the legality and propriety of the sequestration of respondent corporation became but an incident in said Civil Case No. 0010 and thus subject exclusively to judicial adjudication by the respondent Court. We thus uphold the ruling of respondent Court on this issue:
"x x x (c) While Freeze Orders and writs of sequestration may continue to be issued within eighteen (18) months from February 2, 1987, this could obviously refer only to matters which have not yet been subject of litigation initiated by the Republic (i.e., the PCGG); because

(d) Once suit has been initiated on a particular subject, the entire issue of the alleged ill-gotten wealth -- the acts or omissions of a particular defendant or set of defendants -- will have become subject exclusively to judicial adjudication. The issue of ill-gotten properties under the causes of action alleged in the Complaints will have been removed from the quasi-judicial level of the PCGG and elevated to the judicial level of the SANDIGANBAYAN, the Court which today maintains exclusive original jurisdiction on these matters;

(e)  Writs may thereafter [i.e., after the lapse of eighteen months from February 2, 1987] still issue, of course, and writs already issued may thereafter be certainly quashed, dissolved, set aside or modified; but this time, only by the Courts, whether the Sandiganbayan or the Supreme Court. The power over these assets has become exclusively judicial."[12]
The foregoing holding has its roots in the very nature of sequestration orders and writs. BASECO[13] stated it in no uncertain terms:
"f.  Kinship to Attachment, Receivership

"As thus described, sequestration, freezing and provisional takeover are akin to the provisional remedy of preliminary attachment, or receivership. x x x All these remedies -- sequestration, freezing, provisional takeover, attachment and receivership -- are provisional, temporary, designed for particular exigencies, attended by no character of permanency or finality, and always subject to the control of the issuing court or agency."
And this was amplified in Republic vs. Sandiganbayan,[14] thus:
"x x x [T]he PCGG's power to sequester alleged ill-gotten properties is likened to the provisional remedies of preliminary attachment or receivership which are always subject to the control of the court. That this power of the PCGG is provisional in nature has been emphasized in the Baseco case. We rule that the extent of such power should be related to the role of the Sandiganbayan in sequestration cases. x x x

xxx xxx xxx

The Sandiganbayan is tasked to determine the nature of properties sequestered by the PCGG -- whether or not they are ill-gotten and the actual owners of such sequestered properties. The court acts as the arbiter between PCGG which maintains that the sequestered properties are ill-gotten wealth and should be recovered in favor of the government and the claimants to such sequestered properties who maintain that such properties are not part of the ill-gotten wealth of the late President Marcos, his family, cronies and business associates. Necessarily, these properties should come within the jurisdiction of the Sandiganbayan which, therefore, has ample power to control the proceedings including the issuance of orders, and ancillary writs of attachment in order to effectuate its judgment or decree. x x x"
Second Issue: Jurisdiction of Sandiganbayan

Petitioner, citing Pena and invoking the doctrines of primary administrative jurisdiction and exhaustion of administrative remedies, contends that the Sandiganbayan cannot entertain respondent corporation's Manifestation and Motion challenging the propriety of its sequestration order, and determine whether the prima facie requirement had been complied with by the Commission, as such matter should properly be addressed to the PCGG itself.

We cannot possibly sustain such a puerile stand. Peña itself already dealt with the matter when it stated that under Section 2 of Executive Order No. 14, all cases of the Commission regarding alleged ill-gotten properties of former President Marcos and his relatives, subordinates, cronies, nominees and so forth, 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."

Any remaining doubts with respect to the jurisdiction of the Sandiganbayan ought to have been removed by the following pronouncement:
"We do not agree that the resolution issued by respondent court (Sandiganbayan) is tantamount to an encroachment of a purely administrative or executive function. While the PCGG is ordinarily allowed a free hand in the exercise of its administrative or executive function, respondent Sandiganbayan is empowered to determine in an appropriate case, if in the exercise of such functions, the PCGG has gravely abused its discretion or has overstepped the boundaries of the power conferred upon it by law. Any act or order transgressing the parameter of the objectives for which the PCGG was created, if tainted with abuse of discretion, is subject to a remedial action by the Sandiganbayan, the court vested with exclusive and original jurisdiction over cases involving the PCGG (PCGG v. Peña, 159 SCRA 556 [1988]; PCGG v. Securities and Exchange Commission, G. R. No. 82188, June 30, 1988) including cases filed by those who challenge PCGG's acts or orders (Holiday Inn [Phil.] v. Sandiganbayan, 186 SCRA 447 [1990]). Settled is the rule that when a law confers jurisdiction upon a court, it is deemed to have all the incidental powers necessary to render the exercise of such jurisdiction effective (Zuñiga v. Court of Appeals, 95 SCRA 740 [1980])."[15] (Underscoring ours.)
Obviously, respondent corporation's motion properly belonged to the class of cases challenging PCGG's acts.

Incidentally, we should also register our agreement with the following asseverations made by respondent Court:
"In other words, nowhere did the plaintiff Republic of the Philippines declare that, as an agency which acts for it, the PCGG had the power to declare that the rules and regulations which it enacted would be beyond the reach of the Courts. Put very simply, nothing in the Freedom Constitution (Proc. No. 3) placed the PCGG beyond the realm of ordinary judicial review, whether of its acts or of its otherwise valid enactments.

On the contrary, the very statutory authority (E.O. No. 14) that acknowledged the duty of the PCGG to initiate suit to confirm its initial finding of "ill-gotten" wealth, also vested upon this Court jurisdiction to determine if the acts of the PCGG for the recovery of "ill-gotten" wealth were valid and correct. The Supreme Court for its part has read this investiture of exclusive and original jurisdiction with this Court to include "those who wish to question or challenge the Commission's act or orders in such cases" (PCGG vs. Pena, G.R. No. 77663, April 12, 1988). Neither the legislative enactment nor jurisprudence grant the PCGG authority to establish rules and regulations which will determine when this Court could exercise jurisdiction over the PCGG's act and when this Court could not so act.

In other words, once a case has been filed with this Court, the party aggrieved by the acts of the PCGG cannot be required to resort to the procedures established by PCGG's own internal rules to have the matter reviewed by the Office of the President as provided in Sec. 6 thereof. On the contrary, resort to this Court becomes the proper, if not the only, remedy available to such a person.

In this instance, when the lack of authority on the part of the PCGG is apparent from its own averments, to compel the aggrieved defendant to take recourse to administrative process is wasteful and, therefore unnecessary."[16]
The Court took its time deciding this case, filed in May 1989, in its desire to give the government the benefit of the doubt and to consider its position in the best possible light. We even considered applying the very recent ruling of this Court in Republic vs. Sandiganbayan [First Division], Maria Clara Lobregat, et al., G.R. No. 96073 (promulgated June 18, 1996), where this Court directed the Sandiganbayan to resolve within sixty days from notice the preliminary question, among others, of whether there exists prima facie factual foundation for the sequestration of shares of stock subject matter of said case. However, we could not adopt the same measure here since in the aforesaid case, there was never any question as to the validity of the sequestration writ involved therein, whereas in the instant case, the very issue at hand is precisely the validity of such sequestration order.


All told, in the final analysis, it is not possible to ignore the fact that the PCGG and its agents and representatives failed to follow the Commission's own Rules in their attempt to effect the sequestration of Dio Island Resort. That failure, as pointed out by respondent Court, is not a mere technicality. The PCGG's failure to establish even just prima facie basis for the sequestration order as required in BASECO is no less than a flagrant and indecent disregard of 'the requirements of fairness and due process' being upheld in Executive Order No. 14 and by our Constitution, which requirements, in the words of BASECO, are "exigible in this jurisdiction in which the Rule of Law prevails and official acts which are devoid of rational basis in fact or law, or are whimsical and capricious, are condemned and struck down". Over and above the exigencies of recovering ill-gotten wealth, we must carry out the more pressing constitutional task of seeing to it that all parties are afforded due process and substantial justice. Thus we declare that, in issuing and enforcing the subject sequestration order which, from its very inception, was unauthorized and invalid, the PCGG has overstepped the limits of the powers bestowed upon it by law. Ineluctably, this Court must uphold its constitutional duty to give justice to all. Even those suspected by the state of having acquired and/or accumulated ill-gotten wealth are entitled to the benefits of the new democratic space brought by the people's revolution in 1986 and the due process clause of the 1987 Constitution.

WHEREFORE, premises considered, the herein petition is hereby DISMISSED for lack of merit. The assailed Resolutions are AFFIRMED in toto.


Narvasa, C.J., (Chairman), Padilla, Regalado, Davide, Jr., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, and Torres, JJ., concur.
Padilla, J., see separate concurring opinion.
Romero, J., no part, did not take part in the deliberation.
Hermosisima, J., no part, being signatory to the assailed Sandiganbayan decision.

By the First Division, composed of JJ. Francis E. Garchitorena, presiding justice and ponente, Segundino G. Chua (special member designated pursuant to Supreme Court Adm. Order No. 56 dated June 1, 1988 and SB Adm. Order No. 184-88 dated June 8, 1988) and Luciano A. Joson, members; rollo, pp. 27-35.

[2] Penned also by PJ. Francis E. Garchitorena and concurred in by JJ. Regino C. Hermosisima, Jr. and Augusto M. Amores; rollo, pp. 37-47.

[3] Rollo, p. 48.

[4] Per the Certification dated June 21, 1988 of the PCGG Commission Secretary quoting excerpts from the Minutes of the Commission Meeting held June 16, 1988; rollo, pp. 49-50.

[5] Resolution of April 3, 1989, p. 4; rollo, p. 40.

[6] 192 SCRA 743 (December 26, 1990), citing BASECO vs. PCGG, 150 SCRA 181 (May 22, 1987). The same doctrine was reiterated in Republic vs. Sandiganbayan, Sipalay Trading Corp. and Allied Banking Corporation, G.R. No. 122708-09, (March 29, 1996).

[7] Resolution promulgated April 3, 1989, pp. 4-5; rollo, pp. 40-41.

[8] 159 SCRA 556, 564 (April 12, 1988).

[9] 18 SCRA 877, 884 (November 29, 1966).

[10] Resolution promulgated November 22, 1988, pp. 3-4; rollo, pp. 29-30. (Underscoring in the original text.)

[11] Resolution promulgated April 3, 1989, p. 4; rollo, p. 40. (Underscoring in the original text.)

[12] Resolution of April 3, 1989, pp. 7-8; rollo, pp. 43-44.

[13] Supra, at pp. 213-214.

[14] 186 SCRA 864, 871, 873-875 (June 27, 1990).

[15] Republic vs. Sandiganbayan, 221 SCRA 189, 195 (April 7, 1993).

[16] Resolution promulgated November 22, 1988, pp. 7-8; rollo, pp. 33-34. (Emphasis ours)


PADILLA, J., separate concurring opinion:

I agree with the Court's decision that the subject writ or order of sequestration is not a valid sequestration writ or order, not having been issued by at least two (2) PCGG Commissioners as required by law. At the same time, I reiterate my dissenting opinion in G.R. No. 96073 entitled Republic of the Philippines v. Sandiganbayan, et. al. And companion cases, dated 23 January 1995, to the effect that the Sandiganbayan itself as not acquired jurisdiction over Dio Resort, Inc. because it has not been impleaded as a defendant in Civil Case No. 0010 even if it has been listed in annexes to said complaint as among the corporations where the defendants in said case have allegedly ill-gotten wealth.

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