Philippines v. Sandiganbayan

G.R. No. 88126 (July 12, 1996)

SC voided sequestration of Dio Island Resort for lacking proper PCGG commissioner's approval.

Facts:

On April 14, 1986, a sequestration order was issued by Atty. Jose Tan Ramirez, the head of the Presidential Commission on Good Government (PCGG) Task Force in Region VIII, against Dio Island Resort, Inc. and all its assets. This order was served to representatives of the corporation on April 15, 1986. Subsequently, on July 22, 1987, the PCGG filed a complaint in the Sandiganbayan, Civil Case No. 0010, against Alfredo T. Romualdez, Ferdinand E. Marcos, Imelda R. Marcos, and 46 other defendants, seeking to recover alleged ill-gotten wealth. Although Dio Island Resort, Inc. was mentioned in the complaint, it was not made a party to the case.

On June 10, 1988, Dio Island Resort, Inc. filed a motion in the Sandiganbayan, requesting the court to stop the PCGG from interfering with its operations and to return its properties, arguing that the sequestration order was invalid as no case had been filed against it, thus rendering the order automatically lifted under Article XVIII, Section 26 of the 1987 Constitution. The validity of the sequestration order was contested during the hearing.

In response to the challenge, the PCGG held a meeting on June 16, 1988, where it passed a resolution to confirm and ratify the sequestration orders issued by its representatives, including the one against Dio Island Resort, Inc. On November 22, 1988, the Sandiganbayan ruled that the sequestration order was invalid because it was issued by a representative of the PCGG rather than by at least two Commissioners, as required by the PCGG's own rules. The court ordered the return of the resort's properties. The PCGG's motion for reconsideration was denied on April 3, 1989, leading to the filing of the present petition.

Issues:

  1. Were the assets of Dio Island Resort, Inc. validly sequestered?
  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?

Arguments:

Petitioner (PCGG):

  • The PCGG argued that the sequestration order was valid as it was issued by a representative acting under the authority of the Commission. They contended that the subsequent ratification of the order by the PCGG removed any doubts regarding its validity.
  • The PCGG also claimed that the Sandiganbayan lacked jurisdiction to question the validity of the sequestration order, asserting that such matters should be addressed to the PCGG itself.

Respondent (Dio Island Resort, Inc.):

  • Dio Island Resort, Inc. contended that the sequestration order was invalid because it was not issued by at least two Commissioners of the PCGG, as mandated by the PCGG's rules.
  • They argued that the PCGG's ratification of the order was ineffective since the original order was void ab initio and could not be validated retroactively.
  • The corporation maintained that the Sandiganbayan had jurisdiction to review the validity of the sequestration order, as it was an incident of the ongoing civil case.

Court's Decision and Legal Reasoning:

The Supreme Court affirmed the Sandiganbayan's resolutions, ruling that the sequestration order was invalid. The Court emphasized that the PCGG's own rules required that a sequestration order must be issued by at least two Commissioners, and Atty. Ramirez did not possess the authority to issue such an order. The Court noted that the PCGG's failure to establish a prima facie basis for the sequestration rendered the order void from the outset.

The Court further clarified that the power to sequester properties is a quasi-judicial function that cannot be delegated to subordinates or representatives. The PCGG's attempt to ratify the order two years after its issuance was deemed ineffective, as the original act was void and could not be validated.

Regarding jurisdiction, the Court held that the Sandiganbayan had exclusive original jurisdiction over cases involving alleged ill-gotten wealth, including challenges to the PCGG's actions. The Court ruled that the Sandiganbayan was empowered to review the PCGG's acts to ensure they did not exceed the authority granted by law.

Significant Legal Principles Established:

  • A sequestration order must be issued by at least two Commissioners of the PCGG, as per its own rules.
  • The power to sequester is a quasi-judicial function that cannot be delegated to representatives or subordinates.
  • The Sandiganbayan has exclusive original jurisdiction over cases involving alleged ill-gotten wealth and can review the validity of PCGG actions.