336 Phil. 304
PANGANIBAN, J.:
1. declaring the writ of sequestration to have been automatically lifted for alleged failure of petitioner to file the proper judicial action against respondent corporations within the period fixed in Section 26, Article XVIII of the 1987 Constitution;The errors assigned may be condensed into two principal issues, to wit:
2. applying the rulings in PCGG vs. Interco and Republic vs. Olivares that the filing by petitioner of the judicial action against a stockholder of the sequestered company is not the judicial action contemplated by the Constitution; and
3. ruling that the sequestration order dated March 19, 1986, signed by only one PCGG commissioner, violated Section 3 of the PCGG Rules and Regulations requiring the authority of two (2) PCGG commissioners for the issuance of such order.
1. Whether a proper judicial action was filed against respondent corporations in compliance with, and within the period contemplated in, Section 26, Article XVIII of the Constitution; andPetitioner contends that the complaint docketed as Civil Case No. 0021 filed on July 29, 1987, against Edward Marcelo, et al. and amended on September 11, 1991, to implead respondent corporations as defendants, is the proper judicial action contemplated under the subject provision of the Constitution that would warrant the continuance of the sequestration. The Solicitor General further claims that Civil Case No. 0021 justifies the application of the doctrine of "piercing the veil of corporate fiction" since the records bear prima facie evidence that respondent corporations, which are wholly owned and controlled by defendants therein, were used to hide their ill-gotten wealth. Anyhow, he says, this issue has even been rendered moot and academic with the amendment of the complaint impleading respondent corporations as parties-defendants in the aforementioned case. In addition, petitioner postulates that Civil Case No. 0021 which sought to recover ill-gotten wealth was an action in rem or quasi in rem, the alleged ill-gotten wealth (respondent corporations, among others) of individual defendants, being the res or subject matter of the case.
2. Whether the sequestration order issued on March 19, 1986 against respondent-corporations was valid and effective despite having been signed by only one commissioner, contrary to the PCGG Rules and Regulations requiring the authority of at least two commissioners therefor.
"The authority of at least two commissioners which is required under Sec. 3 of the PCGG Rules and Regulations may be written or verbal authority. Such authority may be reflected in the Minutes or the Commission meeting held en banc covering the pertinent recommendation/approval on the issuance of the order; or the Commissioner-in-charge intending to issue the Order may simply obtain the concurrence of another (sic) Commissioner after explaining the evidence supporting such order.Respondent corporations, on the other hand, pray for the denial of the instant petition because petitioner allegedly failed to take the appropriate remedy which should have been an appeal under Rule 45 of the Rules of Court, and not a certiorari proceeding under Rule 65, since the petition does not proffer a question of jurisdiction.
It is sufficient for only one Commissioner to sign the Order 'FOR THE COMMISSION'. After April 11, 1986, the Commission has encouraged the practice of two Commissioners signing the Order. (Excerpt from Minutes of PCGG Meeting on 15 October 1987, Annex 'L')"[16]
"Political normalization of the country -- which fortunately came not too long after the EDSA Revolution of 1986 -- did not abrogate, or diminish the strength of the lofty state policy for recovery of ill-gotten wealth, no matter that its prosecution has thus far yielded what not a few are disposed to regard as at best only mixed results, or was attended by much abuse on the part of some of its officers or 'fiscal agents'; indeed, that circumstance should vigorously argue for its more sustained and effective pursuit and implementation.
And equally, if not more, important, strong paramount public policy is not to be set at naught by technical rules of procedure or by narrow constructions of constitutional provisions that frustrate their clear intent or unreasonably restrict their scope. x x x"[24]
"Does inclusion in the complaints filed by the PCGG before the Sandiganbayan of specific allegations of corporations being 'dummies' or under the control of one or another of the defendants named therein and used as instruments for acquisition, or as being depositaries or products, of ill-gotten wealth; or the annexing to said complaints of a list of said firms, but without actually impleading them as defendants, satisfy the constitutional requirement that in order to maintain a seizure effected in accordance with Executive Order No. 1, s. 1986, the corresponding 'judicial action or proceeding' should be filed within the six-month period prescribed in Section 26, Article XVIII, of the (1987) Constitution?"[25]As in this case, the corporations, in which defendants in the original complaints allegedly owned and controlled substantial interest, were not impleaded as parties-defendants but merely mentioned or listed, and specifically described in the complaints as instruments in the illegal acquisition of wealth, or as depositaries of illegal wealth, or as constituting the fruits thereof. In fact, one of the respondent-corporations (Marcelo Fiberglass Corporation, the assets of which were also sequestered) in that case was of exactly the same status as herein respondent-corporations, having been likewise listed in Civil Case No. 0021 as one of the companies controlled by therein defendant Edward Marcelo.[26]
"And as to corporations organized with ill-gotten wealth, but are not themselves guilty of misappropriation, fraud or other illicit conduct -- in other words, the companies themselves are the object or thing involved in the action, the res thereof -- there is no need to implead them either. Indeed, 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. The judgment may simply be directed against the shares of stock shown to have been issued in consideration of ill-gotten wealth.The instant petition falls squarely within the case cited. Respondent corporations were among the properties listed in the original complaint (Civil Case No. 0021) as having been illegally accumulated by the defendants "in flagrant breach of public trust and of their fiduciary obligations as public officers, with gross abuse of power and authority and in brazen violation of the Constitution and laws of the Philippines." They were subsequently impleaded as parties-defendants in the same case by way of an amended complaint duly granted by public respondent.[29] Hence, we reiterate our rule cited above that, with these premises, there was faithful compliance with Section 26, Article XVIII of the Constitution.
x x x Distinguished, in terms of juridical personality and legal culpability from their erring members or stockholders, said corporations are not themselves guilty of the sins of the latter, of the embezzlement, asportation, etc., that gave rise to the Government's cause of action for recovery; their creation or organization was merely the result of their members' (or stockholders') manipulations and maneuvers to conceal the illegal origins of the assets or monies invested therein. In this light, they are simply the res in the actions for the recovery of illegally acquired wealth, and there is, in principle, no cause of action against them and no ground to implead them as defendants in said actions.
xxx xxx xxx
Even in those cases where it might reasonably be argued that the failure of the Government to implead the sequestered corporations as defendants is indeed a procedural aberration, as where said firms were allegedly used, and actively cooperated with the defendants, as instruments of conduits for conversion of public funds or property or illicit or fraudulent obtention of favored Government contracts, etc., slight reflection would nevertheless lead to the conclusion that the defect is not fatal, but one correctible under applicable adjective rules -- e.g., Section 10, Rule 5 of the Rules of Court [specifying the remedy of amendment during trial to authorize or to conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in relation to the rule respecting the omission of so-called necessary or indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to advert to the old, familiar doctrines that the omission to implead such parties 'is a mere technical defect which can be cured at any stage of the proceedings even after judgment'; and that, particularly in the case of indispensable parties, since their presence and participation is essential to the very life of the action, for without them no judgment may be rendered, amendments of the complaint in order to implead them should be freely allowed, even on appeal, in fact even after rendition of judgment by this Court, where it appears that the complaint otherwise indicates their identity and character as such indispensable parties.
Again, even conceding the adjective imperfection of the omission to implead the sequestered corporations as indispensable or necessary parties, it bears repeating that their sequestrations would not thereby be rendered functus officio, since, as already pointed out, judicial actions or proceedings have in truth been filed concerning or regarding said sequestration in literal and faithful compliance with Section 26, Article XVIII of the Constitution."[28]
"These fresh pronouncements,[31] however, did not reverse, abandon or supplant 'INTERCO'. What the Court did was to explain the two apparently colliding dispositions by making this 'hairline', but critical, distinction:'XVI . The 'Interco' and 'PJI ' Rulings
We need only to recall at this juncture that, as in 'INTERCO', evidence of the PCGG is nil to even come up with a prima facie case against SIPALAY (and ALLIED). This similitude is the one decisive factor that draws the instant case away from the 'Final Dispositions' made by the Court in the 1995 'Republic vs. Sandiganbayan' case - thus making 'INTERCO', as supported by the 'Aetna' and 'Seno' cases, the controlling precedent. The principle of Stare Decisis, indeed, is most compelling, for 'when the court has once laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same.'[32]”
"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 questioned sequestration order was, however, issued on March 19, 1986, prior to the promulgation of the PCGG Rules and Regulations. As a consequence, we cannot reasonably expect the Commission to abide by said rules which were nonexistent at the time the subject writ was issued by then Commissioner Mary Concepcion Bautista. Basic is the rule that no statute, decree, ordinance, rule or regulation (and even policies) shall be given retrospective effect unless explicitly stated so.[33] We find no provision in said Rules which expressly gives them retroactive effect, or implies the abrogation of previous writs issued not in accordance with the same Rules. Rather, what said Rules provide is that they "shall be effective immediately," which, in legal parlance, is understood as "upon promulgation." Only penal laws are given retroactive effect insofar as they favor the accused.[34]
"(Sec. 3 of the PCGG Rules and Regulations), 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.In the case at bar, there is no question as to the presence of prima facie evidence justifying the issuance of the sequestration order against respondent corporations. But the said order cannot be nullified for lack of the other requisite (authority of at least two commissioners) since, as explained earlier, such requisite was nonexistent at the time the order was issued.
xxx xxx xxx
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."
We further said:
"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. x x x
xxx xxx xxx
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."
What were obviously lacking in the above case were the basic requisites for the validity of a sequestration order which we laid down in BASECO vs. PCGG,[36] thus:
"Section (3) 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 proprio when the Commission has reasonable grounds to believe that the issuance thereof is warranted."[37]
"Sec. 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the President, the Congress may extend said period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from its ratification. For those issued after such ratification, the judicial action or proceeding shall be commenced within six months from the issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided."
"It is thus both needful and timely to pronounce that:
1) Section 26, Article XVIII of the Constitution does not, by its terms or any fair interpretation thereof, require that corporations or business enterprises alleged to be repositories of 'ill-gotten wealth', as the term is used in said provision, be actually and formally impleaded in the actions for the recovery thereof, in order to maintain in effect existing sequestrations thereof;
2) complaints for the recovery of ill-gotten wealth which merely identify and/or allege said corporations or enterprises to be the instruments, repositories or the fruits of ill-gotten wealth, without more, come within the meaning of the phrase 'corresponding judicial action or proceeding' contemplated by the constitutional provision referred to; the more so, that normally, said corporations, as distinguished from their stockholders or members, are not generally suable for the latter's illegal or criminal actuations in the acquisition of the assets invested by them in the former;
3) even assuming the impleading of said corporations to be necessary and proper so that judgment may comprehensively and effectively be rendered in the actions, amendment of the complaints to implead them as defendants may, under existing rules of procedure, be done at any time during the pendency of the actions thereby initiated, and even during the pendency of an appeal to the Supreme Court - a procedure that, in any case, is not inconsistent with or proscribed by the constitutional time limits to the filing of the corresponding complaints 'for' - i.e., with regard or in relation to, in respect of, or in connection with, or concerning - orders of sequestration, freezing, or provisional takeover."