REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, PETITIONER, VS. SANDIGANBAYAN (4TH DIVISION) AND POTENCIANO T. ILUSORIO, SUBSTITUTED …

Republic versus Sandiganbayan and Ilusorio

The Case

This is a petition for certiorari filed by the Republic of the Philippines, represented by the Presidential Commission on Good Government, against the Fourth Division of the Sandiganbayan and Potenciano Ilusorio. The Republic asks the Supreme Court to annul the Sandiganbayan's Resolution of December 20, 1999, which denied the motions to vacate the earlier Order of June 8, 1998 approving a Compromise Agreement between the Commission and Ilusorio. The case matters because it is the Court's clearest statement on two points: the mandatory character of a motion for reconsideration before certiorari under Rule 65, and the authority of the Presidential Commission on Good Government to compromise claims over properties surrendered to it as alleged ill-gotten wealth.

Procedural History

On July 22, 1987, the Republic, through the Presidential Commission on Good Government and assisted by the Solicitor General, filed a complaint for reconveyance, reversion, accounting, restitution and damages before the Sandiganbayan against Jose Africa, Manuel Nieto, the Marcoses, Roberto Benedicto, Juan Ponce Enrile and Potenciano Ilusorio. Ilusorio filed an Amended Answer with a cross-claim against the Marcoses and a third-party complaint against Mid-Pasig Land Development Corporation and Independent Realty Corporation. Mid-Pasig was declared in default for failing to answer the third-party complaint, and its motions to lift the default were denied.

On June 28, 1996, the Commission entered into a Compromise Agreement with Ilusorio, which then President Fidel Ramos approved. On June 8, 1998, the Sandiganbayan approved the agreement, dismissed the complaint against Ilusorio, and ordered the issuance of the corresponding stock certificates. Mid-Pasig and Independent Realty then filed separate motions to vacate the Order, and the Commission itself concurred with them. On December 20, 1999, the Sandiganbayan denied the motions for lack of merit. Without filing a motion for reconsideration, the petitioners went directly to the Supreme Court on certiorari, alleging grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

After the people power revolution of February 1986, President Corazon Aquino created the Presidential Commission on Good Government to recover all ill-gotten wealth accumulated by former President Ferdinand Marcos, his family, relatives, subordinates and close associates. Jose Campos, a confessed crony of the former President, voluntarily surrendered to the Commission the properties, assets and corporations he held in trust for Marcos, among them Independent Realty Corporation and Mid-Pasig Land Development Corporation.

The Republic's complaint alleged that the defendants acted as dummies, nominees or agents of the Marcoses in corporations such as Mid-Pasig and Independent Realty, and that through manipulations they appropriated a substantial portion of the shareholdings in the Philippine Overseas Telecommunications Corporation held by Honorio Poblador, Jose Valdez and Francisco Reyes. Ilusorio denied acquiring ill-gotten wealth, insisting he had never held public office and that he owned 5,400 shares acquired through honest toil, which the Marcos spouses allegedly took from him through threats and intimidation and placed in the names of their alter egos.

On June 28, 1996, the Commission, acting for the Republic, Mid-Pasig and Independent Realty, entered into a Compromise Agreement with Ilusorio. Under it, Ilusorio recognized the Government's ownership of 4,727 shares registered in the names of the two corporations, while the Government recognized his ownership of 673 shares. The Sandiganbayan approved the agreement on June 8, 1998. Mid-Pasig and Independent Realty moved to vacate, arguing that the agreement did not bind them and was grossly disadvantageous to the Government, and the Commission itself later agreed, questioning the authority of the Commissioner who signed it. The Sandiganbayan denied the motions, and the petitioners came to the Supreme Court without first seeking reconsideration.

Issues

• Whether or not the petitions for certiorari may be entertained despite the petitioners' failure to file a motion for reconsideration of the assailed Resolution.
• Whether or not the Sandiganbayan acted with grave abuse of discretion in denying the motions to vacate the Order approving the Compromise Agreement.
• Whether or not the Compromise Agreement binds Mid-Pasig and Independent Realty and whether the Commission had authority to dispose of the shares registered in their names.

Applicable Provisions

Section 1 of Rule 65 of the 1997 Rules of Civil Procedure provides:

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

This provision governs the petitioners' chosen remedy and supplies the requisites they failed to satisfy, particularly the absence of any plain, speedy and adequate remedy in the ordinary course of law.

Ruling

On the first issue, the Court held that the petitions must fail. As a rule, certiorari lies only when the lower court has been given the opportunity to correct the error imputed to it through a motion for reconsideration. The rationale rests on the presumption that the court which issued the assailed order may amend the same if given the chance. A motion for reconsideration is therefore a condition sine qua non, a prerequisite that cannot be dispensed with, before filing a petition for certiorari. The Court stressed that the plain, speedy and adequate remedy referred to in Section 1 of Rule 65 is precisely a motion for reconsideration, and that strict application of the rule prevents unnecessary and premature resort to appellate proceedings.

The petitioners claimed they were deprived of due process, that there was extreme urgency, and that a motion for reconsideration would be useless. The Court was not persuaded. Petitioners may not arrogate to themselves the determination of whether a motion for reconsideration is necessary. To dispense with the requirement, they must show a concrete, compelling and valid reason, and must demonstrate that the Sandiganbayan acted capriciously, whimsically and arbitrarily by reason of passion and personal hostility, apparent on the face of the assailed Resolution. They failed to do so.

On the merits, the Court found no grave abuse of discretion. The Sandiganbayan correctly held that Mid-Pasig, having been declared in default, had no legal standing to file its motion to vacate. More importantly, both Mid-Pasig and Independent Realty had admitted in their own pleadings that they had been turned over to the Government and that the shares registered in their names formed part of the ill-gotten wealth of the Marcoses. Having relinquished all rights and interests over the shares in favor of the Republic, they had nothing left to protect. The Commission therefore had full authority to act on behalf of the Republic and of both corporations, and to dispose of 673 of the 5,400 shares in favor of Ilusorio as an integral part of the Compromise Agreement.

Doctrine

A petition for certiorari under Rule 65 is subject to the settled rule that a motion for reconsideration must first be filed with the lower court. That motion is a condition sine qua non, a mandatory prerequisite, and the plain, speedy and adequate remedy contemplated by Section 1 of Rule 65. The petitioner who would skip it must show a concrete, compelling and valid reason, such as capricious, whimsical and arbitrary action apparent on the face of the assailed resolution; the petitioner cannot simply decide for himself that reconsideration would be useless.

On the substantive side, properties and corporations voluntarily surrendered to the Presidential Commission on Good Government as part of the alleged ill-gotten wealth of the Marcoses pass into the control of the Government. A corporation that has admitted in its own pleadings that it was surrendered to the Government and that the shares registered in its name belong to the Republic cannot later claim a right or interest adverse to the Government. The Commission may therefore compromise and dispose of such shares on behalf of the Republic and of the surrendered corporations.

Disposition

The petitions were dismissed, and the Resolution of the Sandiganbayan denying the motions to vacate the Order approving the Compromise Agreement was affirmed; the Republic, through the Commission, lost its bid to annul the compromise, and Ilusorio prevailed.

Remember This

Memorize this line: a motion for reconsideration is a condition sine qua non before certiorari, and the petitioner may not arrogate to himself the judgment that it would be useless. Examiners use this case in remedial law on the requisites of Rule 65, and in special proceedings on the authority of the Presidential Commission on Good Government over surrendered ill-gotten wealth.