G.R. No. 75885. May 27, 1987
BATAAN SHIPYARD & ENGINEERING CO., INC. (BASECO), PETITIONER, VS. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, CHAIRMAN JOVITO SALONGA, COMMISSIONER MARY CONCEPCION BAUTISTA, C…
NARVASA, J.:
Challenged in this special civil action of certiorari and
prohibition by a private corporation known as the Bataan
Shipyard and Engineering Co., Inc. are:
(1) Executive Orders Numbered 1 and 2, promulgated by President Corazon
C. Aquino on February 28, 1986 and March 12, 1986,
respectively, and (2) the sequestration, takeover, and other orders issued, and
acts done in accordance with said executive orders by the Presidential
Commission on Good Government and/or its Commissioners and agents, affecting
said corporation.
1. The Sequestration, Takeover,
and Other Orders Complained of
a. The Basic Sequestration Order
The sequestration order which, in the view of the petitioner
corporation, initiated all its misery, was issued on April 14, 1986 by Commissioner Mary Concepcion Bautista.
It was addressed to three of the agents of the Commission, hereafter
simply referred to as PCGG. It reads as
follows:
“RE: SEQUESTRATION ORDER
By virtue of the powers vested in the
Presidential Commission on Good Government by authority of the President of the
Philippines,
you are hereby directed to sequester the following companies:
1.
Bataan
Shipyard and Engineering Co., Inc. (Engineering
Island Shipyard and Mariveles Shipyard)
2.
Baseco
Quarry
3.
Philippine Jai-Alai Corporation
4.
Fidelity Management Co., Inc.
5.
Romson
Realty, Inc.
6.
Trident Management Co.
7.
New Trident Management
8.
Bay Transport
9.
And all affiliate companies of
Alfredo “Bejo” Romualdez
You are hereby ordered:
1.
To implement this sequestration
order with a minimum disruption of these companies’ business activities.
2.
To ensure the continuity of these
companies as going concerns, the care and maintenance of these assets until
such time that the Office of the President through the Commission on Good
Government should decide otherwise.
3.
To report to the Commission on
Good Government periodically.
Further, you are authorized to request for
Military/Security Support from the Military /Police authorities, and such other
acts essential to the achievement of this sequestration order.”[1]
b. Order for Production of Documents
On the strength of the above sequestration order, Mr. Jose M. Balde, acting for the PCGG, addressed a letter dated April 18, 1986 to the President and
other officers of petitioner firm, reiterating an earlier request for the
production of certain documents, to wit:
1.
Stock Transfer Book
2.
Legal documents, such as:
2.1. Articles of
Incorporation
2.2. By-Laws
2.3. Minutes of the Annual
Stockholders Meeting from 1973 to 1986
2.4. Minutes of the Regular
and Special Meetings of the Board of Directors from 1973 to 1986
2.5. Minutes of the
Executive Committee Meetings from 1973 to 1986
2.6. Existing contracts with
suppliers/contractors/others.
3.
Yearly list of stockholders with
their corresponding share/stockholdings from 1973 to 1986 duly certified by the
Corporate Secretary
4.
Audited Financial Statements such
as Balance Sheet, Profit & Loss and others from 1973 to December 31, 1985
5.
Monthly Financial Statements for
the current year up to March
31, 1986
6.
Consolidated Cash Position Reports
from January to April 15, 1986
7.
Inventory listings of assets
updated up to March 31, 1986
8.
Updated schedule of Accounts
Receivable and Accounts Payable
9.
Complete list of depository banks for
all funds with the authorized signatories for withdrawals thereof
10.
Schedule of company investments
and placements.[2]
The letter closed with the warning that
if the documents were not submitted within five days, the officers would be
cited for “contempt in pursuance with Presidential Executive Order Nos. 1
and 2.”
c. Orders Re Engineer Island
(1) Termination of Contract for Security Services
A third order assailed by petitioner corporation, hereafter
referred to simply as BASECO, is that issued on April 21, 1986 by a Capt. Flordelino B. Zabala, a member of
the task force assigned to carry out the basic sequestration order. He sent a letter to BASECO’s
Vice-President for Finance,[3]
terminating the contract for security services within the Engineer
Island compound between BASECO and
“Anchor and FAIRWAYS” and “other civilian security
agencies,” CAPCOM military personnel having already been assigned to the
area.
(2) Change of Mode of Payment of Entry Charges
On July 15, 1986, the same Capt. Zabala
issued a Memorandum addressed to “Truck Owners and Contractors”,
particularly a “Mr. Buddy Ondivilla, National
Marine Corporation,” advising of the amendment in part of their contracts
with BASECO in the sense that the stipulated charges for use of the BASECO road
network were made payable “upon entry and not anymore subject to monthly
billing as was originally agreed upon”.[4]
d. Aborted Contract for Improvement of Wharf at Engineer
Island
On July 9, 1986, a PCGG fiscal agent, S. Berenguer,
entered into a contract in behalf of BASECO with Deltamarine
Integrated Port Services, Inc., in virtue of which the latter undertook to
introduce improvements costing approximately P210,000.00 on the BASECO wharf at
Engineer Island, allegedly then in poor condition, avowedly to “optimize
its utilization and in return maximize the revenue which would flow into the
government coffers,” in consideration of Deltamarine’s
being granted “priority in using the improved portion of the wharf ahead
of anybody” and exemption “from the payment of any charges for the
use of wharf including the area where it may install its bagging
equipments” “until the improvement remains in a condition suitable
for port operations.”[5]
It seems however that this contract was never consummated. Capt. Jorge B. Siacunco,
“Head-(PCGG) BASECO Management Team”, advised Deltamarine
by letter dated July 30, 1986
that “the new management is not in a position to honor the said
contract” and thus “whatever improvements ** (may be introduced)
shall be deemed unauthorized ** and shall be at ** (Deltamarine’s)
own risk.”[6]
e. Order for
Operation of Sesiman Rock Quarry, Mariveles,
Bataan
By Order dated June 20, 1986, Commissioner Mary Bautista first
directed a PCGG agent, Mayor Melba O. Buenaventura, “to plan and implement
progress towards maximizing the continuous operation of the BASECO Sesiman Rock Quarry ** by conventional methods”; but
afterwards, Commissioner Bautista, in representation of the PCGG, authorized
another party, A.T. Abesamis, to operate the quarry,
located at Mariveles, Bataan,
an agreement to this effect having been executed by them on September 17, 1986.[7]
f. Order to Dispose of Scrap, etc.
By another Order of Commissioner Bautista, this time dated June 26, 1986. Mayor Buenaventura was also “authorized
to clean and beautify the Company’s compound,” and in this connection, to
dispose of or sell “metal scraps” and other materials, equipment and
machineries no longer usable, subject to specified guidelines and safeguards
including audit and verification.[8]
g. The TAKEOVER Order
By letter dated July 14,
1986, Commissioner Ramon A. Diaz decreed the provisional takeover
by the PCGG of BASECO, “the Philippine Dockyard Corporation and all their
affiliated companies.”[9]
Diaz invoked the provisions of Section 3 (c) of Executive Order No. 1,
empowering the Commission –
” ** To provisionally takeover in the public interest or to
prevent its disposal or dissipation, business enterprises and properties taken
over by the government of the Marcos Administration or by entities or persons
close to former President Marcos, until the transactions leading to such
acquisition by the latter can be disposed of by the appropriate
authorities.”
A management team was designated to
implement the order, headed by Capt. Siacunco, and
was given the following powers:
“1. Conducts all aspects of operation of the subject
companies;
2.
Installs key officers, hires and
terminates personnel as necessary;
3.
Enters into contracts related to
management and operation of the companies;
4.
Ensures that the assets of the
companies are not dissipated and used effectively and efficiently; revenues are
duly accounted for; and disburses funds only as may be necessary;
5.
Does actions including among
others, seeking of military support as may be necessary, that will ensure
compliance to this order;
6.
Holds itself fully accountable to
the Presidential Commission on Good Government on all aspects related to this
take-over order.”
h. Termination of Services of BASECO Officers
Thereafter, Capt. Siacunco sent letters
to Hilario M. Ruiz, Manuel S. Mendoza, Moises M. Valdez, Gilberto Pasimanero,
and Benito R. Cuesta I, advising of the termination
of their services by the PCGG.[10]
2. Petitioner’s Plea and Postulates
It is the foregoing specific orders and acts of the PCGG and its
members and agents which, to repeat, petitioner BASECO would have this Court
nullify. More particularly, BASECO prays
that this Court –
1) declare unconstitutional and void Executive Orders Numbered 1
and 2;
2) annul the sequestration order dated April 14, 1986, and all other orders subsequently
issued and acts done on the basis thereof, inclusive of the takeover order of July 14, 1986 and the termination of
the services of the BASECO executives.[11]
a. Re Executive Orders No. 1 and 2, and the
Sequestration and Takeover Orders
While BASECO concedes that “sequestration, without
resorting to judicial action, might be made within the context of Executive
Orders Nos. 1 and 2 before March 25, 1986 when the Freedom Constitution was
promulgated, under the principle that the law promulgated by the ruler under a
revolutionary regime is the law of the land, it ceased to be acceptable
when the same ruler opted to promulgate the Freedom Constitution on March 25,
1986 wherein under Section 1 of the same, Article IV (Bill of Rights) of the
1973 Constitution was adopted providing, among others, that ‘No person shall be
deprived of life, liberty and property without due process of law.’ (Const.,
Art. IV, Sec. 1).”[12]
It declares that its objection to the constitutionality of the
Executive Orders “as well as the Sequestration Order ** and Takeover Order
** issued purportedly under the authority of said Executive Orders, rests on
four fundamental considerations: First,
no notice and hearing was accorded ** (it) before its properties and business
were taken over; Second, the PCGG is not a court, but a purely
investigative agency and therefore not competent to act as prosecutor and judge
in the same cause; Third, there is nothing in the issuances which
envisions any proceeding, process or remedy by which petitioner may
expeditiously challenge the validity of the takeover after the same has been
effected; and Fourthly, being directed against specified persons, and in
disregard of the constitutional presumption of innocence and general rules and
procedures, they constitute a Bill of Attainder.”[13]
b. Re Order to Produce Documents
It argues that the order to produce corporate records from
1973 to 1986, which it has apparently already complied with, was issued without
court authority and infringed its constitutional right against
self-incrimination, and unreasonable search and seizure.[14]
c. Re PCGG’s Exercise
of Right of Ownership and Management
BASECO further contends that the PCGG had unduly interfered with
its right of dominion and management of its business affairs by –
1)
terminating its contract for
security services with Fairways & Anchor, without the consent and against
the will of the contracting parties; and amending the mode of payment of entry
fees stipulated in its Lease Contract with National Stevedoring & Lighterage Corporation, these acts being in violation of
the non-impairment clause of the constitution;[15]
2)
allowing PCGG Agent Silverio Berenguer to enter into
an “anomalous contract” with Deltamarine
Integrated Port Services, Inc., giving the latter free use of BASECO premises;[16]
3)
authorizing PCGG Agent, Mayor
Melba Buenaventura, to manage and operate its rock quarry at Sesiman, Mariveles;[17]
4)
authorizing the same mayor to sell
or dispose of its metal scrap, equipment, machinery and other materials;[18]
5)
authorizing the takeover of
BASECO, Philippine Dockyard Corporation, and all their affiliated companies;
6)
terminating the services of BASECO
executives: 0 President Hilario M. Ruiz; EVP Manuel
S. Mendoza; GM Moises M. Valdez; Finance Mgr.
Gilberto Pasimanero; Legal Dept. Mgr. Benito R. Cuesta I;[19]
7)
planning to elect its own Board of
Directors;[20]
8)
“allowing willingly or
unwillingly its personnel to take, steal, carry away from petitioner’s premises
at Mariveles ** rolls of cable wires, worth
P600,000.00 on May 11, 1986;”[21]
9)
allowing “indiscriminate
diggings” at Engineer Island
to retrieve gold bars supposed to have been buried therein.[22]
3. Doubts, Misconceptions regarding
Sequestration, Freeze and Takeover Orders
Many misconceptions and much doubt about the matter of
sequestration, takeover and freeze orders have been engendered by
misapprehension, or incomplete comprehension if not indeed downright ignorance
of the law governing these remedies. It
is needful that these misconceptions and doubts be dispelled so that uninformed
and useless debates about them may be avoided, and arguments tainted by
sophistry or intellectual dishonesty be quickly exposed and discarded. Towards this end, this opinion will essay an
exposition of the law on the matter. In
the process many of the objections raised by BASECO will be dealt with.
4. The Governing Law
a. Proclamation No. 3
The impugned executive orders are avowedly meant to carry out the
explicit command of the Provisional Constitution, ordained by Proclamation No.
3,[23]
that the President — in the exercise of legislative power which she was
authorized to continue to wield “(u)ntil a
legislature is elected and convened under a new Constitution” —
“shall give priority to measures to achieve the mandate of the
people,” among others to (r)ecover
ill-gotten properties amassed by the leaders and supporters of the previous
regime and protect the interest of the people through orders of sequestration
or freezing of assets or accounts.”[24]
b. Executive Order No. 1
Executive Order No. 1 stresses the “urgent need to recover
all ill-gotten wealth,” and postulates that “vast resources of the
government have been amassed by former President Ferdinand E. Marcos, his
immediate family, relatives, and close associates both here and abroad.”[25]
Upon these premises, the Presidential Commission on Good Government was
created,[26]
“charged with the task of assisting the President in regard to ** (certain
specified) matters,” among which was precisely –
“** The recovery of all ill-gotten wealth accumulated by
former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located in the Philippines or
abroad, including the takeover or sequestration of all business
enterprises and entities owned or controlled by them, during his
administration, directly or through nominees, by taking undue advantage of
their public office and/or using their powers, authority, influence,
connections or relationship.”[27]
In relation to the takeover or sequestration that it was
authorized to undertake in the fulfilment of its
mission, the PCGG was granted “power and authority” to do the
following particular acts, to wit:
1. “To sequester or place or cause to be
placed under its control or possession any building or office wherein any
ill-gotten wealth or properties may be found, and any records pertaining
thereto, in order to prevent their destruction, concealment or disappearance
which would frustrate or hamper the investigation or otherwise prevent the
Commission from accomplishing its task.”
2. “To provisionally take over in the
public interest or to prevent the disposal or dissipation, business enterprises
and properties taken over by the government of the Marcos Administration or by
entities or persons close to former President Marcos, until the transactions
leading to such acquisition by the latter can be disposed of by the appropriate
authorities.”
3. “To enjoin or restrain any actual or
threatened commission of acts by any person or entity that may render moot
and academic, or frustrate or otherwise make ineffectual the efforts of the
Commission to carry out its task under this order.”[28]
So that it might ascertain the facts germane to its objectives,
it was granted power to conduct investigations; require submission of evidence
by subpoenae ad testificandum
and duces tecum;
administer oaths; punish for contempt.[29]
It was given power also to promulgate such rules and regulations as may be
necessary to carry out the purposes of ** (its creation)”.[30]
c. Executive Order No. 2
Executive Order No. 2 gives additional and more specific data and
directions respecting “the recovery of ill-gotten properties amassed by
the leaders and supporters of the previous regime”. It declares that:
1)
” ** the Government of the
Philippines is in possession of evidence showing that there are assets and
properties purportedly pertaining to former Ferdinand E. Marcos, and/or his
wife Mrs. Imelda Romualdez Marcos, their close
relatives, subordinates, business associates, dummies, agents or nominees which
had been or were acquired by them directly or indirectly, through or as a
result of the improper or illegal use of funds or properties owned by the
government of the Philippines or any of its branches, instrumentalities,
enterprises, banks or financial institutions, or by taking undue advantage of
their office, authority, influence, connections or relationship, resulting in
their unjust enrichment and causing grave damage and prejudice to the Filipino
people and the Republic of the Philippines;” and
2)
” ** said assets and
properties are in the form of bank accounts, deposits, trust accounts, shares
of stocks, buildings, shopping centers, condominiums, mansions, residences,
estates, and other kinds of real and personal properties in the Philippines and
in various countries of the world.”[31]
Upon these premises, the President –
1)
froze “all assets and
properties in the Philippines in which former President Marcos and/or his wife,
Mrs. Imelda Romualdez Marcos, their close relatives,
subordinates, business associates, dummies, agents, or nominees have any
interest or participation;”
2)
prohibited former President
Ferdinand Marcos and/or his wife ** , their close relatives, subordinates, business
associates, dummies, agents, or nominees from transferring, conveying,
encumbering, concealing or dissipating said assets or properties in the
Philippines and abroad, pending the outcome of appropriate proceedings in the
Philippines to determine whether any such assets or properties were acquired by
them through or as a result of improper or illegal use of or the conversion of
funds belonging to the Government of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking
undue advantage of their official position, authority, relationship, connection
or influence to unjustly enrich themselves at the expense and to the grave
damage and prejudice of the Filipino people and the Republic of the Philippines”;
3)
prohibited “any person
from transferring, conveying, encumbering or otherwise depleting or
concealing such assets and properties or from assisting or taking part in
their transfer, encumbrance, concealment, or dissipation under pain of such penalties
as are prescribed by law;” and
4)
required “all persons
in the Philippines holding such assets or properties, whether located in the
Philippines or abroad, in their names as nominees, agents or trustees, to make full
disclosure of the same to the Commission on Good Government within
thirty (30) days from publication of * (the) Executive Order, ** “[32]
d. Executive Order No. 14
A third executive order is relevant: Executive Order No.14,[33]
by which the PCGG is empowered, “with the assistance of the Office of the
Solicitor General and other government agencies, ** to file and prosecute
all cases investigated by it ** as may be warranted by its findings.”[34]
All such cases, whether civil or criminal, are to be filed “with the Sandiganbayan, which shall have exclusive and
original jurisdiction thereof.”[35]
Executive Order No. 14 also pertinently provides that “(c)ivil suits for restitution, reparation of damages, or
indemnification for consequential damages, forfeiture proceedings provided for
under Republic Act No. 1379, or any other civil actions under the Civil Code or
other existing laws, in connection with ** (said Executive Orders Numbered 1
and 2) may be filed separately from and proceed independently of any criminal
proceedings and may be proved by a preponderance of evidence”; and that,
moreover, the “technical rules of procedure and evidence shall not be
strictly applied to ** (said) civil cases.”[36]
5. Contemplated Situations
The situations envisaged and sought to be governed are
self-evident, these being:
1) that “(i)ll-gotten properties (were)
amassed by the leaders and supporters of the previous regime”;[37]
a)
more particularly, that “(i)ll-gotten wealth (was)
accumulated by former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates, * * located in the Philippines or
abroad, ** (and) business enterprises and entities (came to be) owned or
controlled by them, during ** (the Marcos) administration, directly or through
nominees, by taking undue advantage of their public office and/or using their
powers, authority, influence, connections or relationship;”[38]
b)
otherwise stated, that “there
are assets and properties purportedly pertaining to former President Ferdinand
E. Marcos, and/or his wife Mrs. Imelda Romualdez
Marcos, their close relatives, subordinates, business associates, dummies,
agents or nominees which had been or were acquired by them directly or
indirectly, through or as a result of the improper or illegal use of funds or
properties owned by the Government of the Philippines or any of its branches,
instrumentalities, enterprises, banks or financial institutions, or by taking
undue advantage of their office, authority, influence, connections or
relationship, resulting in their unjust enrichment and causing grave damage and
prejudice to the Filipino people and the Republic of the Philippines;”[39]
c)
that “said assets and
properties are in the form of bank accounts, deposits, trust accounts, shares
of stocks, buildings, shopping centers, condominiums, mansions, residences,
estates, and other kinds of real and personal properties in the Philippines and
in various countries of the world;”[40]
and
2) that certain “business enterprises and properties (were)
taken over by the government of the Marcos Administration or by entities or
persons close to former President Marcos.”[41]
6. Government’s Right and Duty to Recover All
Ill-Gotten Wealth
There can be no debate about the validity and eminent propriety
of the Government’s plan “to recover all ill-gotten wealth.”
Neither can there be any debate about the proposition that
assuming the above described factual premises of the executive orders and
Proclamation No. 3 to be true, to be demonstrable by competent evidence, the
recovery from Marcos, his family and his minions of the assets and properties
involved, is not only a right but a duty on the part of Government.
But however plain and valid that right and duty may be, still a
balance must be sought with the equally compelling necessity that a proper
respect be accorded and adequate protection assured, the fundamental rights of
private property and free enterprise which are deemed pillars of a free society
such as ours, and to which all members of that society may without exception
lay claim.
” * * Democracy, as a way of life enshrined in the
Constitution, embraces as its necessary components freedom of conscience,
freedom of expression, and freedom in the pursuit of happiness. Along with these freedoms are included
economic freedom and freedom of enterprise within reasonable bounds and under
proper control. * * Evincing much concern for the protection of property, the
Constitution distinctly recognizes the preferred position which real estate has
occupied in law for ages. Property is
bound up with every aspect of social life in a democracy as democracy is
conceived in the Constitution. The
Constitution realizes the indispensable role which property, owned in
reasonable quantities and used legitimately, plays in the stimulation to
economic effort and the formation and growth of a solid social middle class
that is said to be the bulwark of democracy and the backbone of every
progressive and happy country.”[42]
a. Need of Evidentiary Substantiation
in Proper Suit
Consequently, the factual premises of the executive orders cannot
simply be assumed. They will have to be
duly established by adequate proof in each case, in a proper judicial
proceeding, so that the recovery of the ill-gotten wealth may be validly and
properly adjudged and consummated; although there are some who maintain that
the fact — that an immense fortune, and “vast resources of the government
have been amassed by former President Ferdinand E. Marcos, his immediate
family, relatives, and close associates both here and abroad”, and they
have resorted to all sorts of clever schemes and manipulations to disguise and
hide their illicit acquisitions — is within the realm of judicial notice,
being of so extensive notoriety as to dispense with proof thereof. Be this as it may, the requirement of
evidentiary substantiation has been expressly acknowledged, and the procedure
to be followed explicitly laid down, in Executive Order No. 14.
b. Need of Provisional Measures to Collect and Conserve Assets Pending
Suits
Nor may it be gainsaid that pending the institution of the suits
for the recovery of such “ill-gotten wealth” as the evidence at hand
may reveal, there is an obvious and imperative need for preliminary,
provisional measures to prevent the concealment, disappearance, destruction,
dissipation, or loss of the assets and properties subject of the suits, or to
restrain or foil acts that may render moot and academic, or effectively hamper,
delay, or negate efforts to recover the same.
7. Provisional Remedies Prescribed by Law
To answer this need, the law has prescribed three (3) provisional
remedies. These are: (1) sequestration; (3) freeze orders; and (3)
provisional takeover.
Sequestration and freezing are remedies applicable generally to
unearthed instances of “ill-gotten wealth.” The remedy of
“provisional takeover” is peculiar to cases where “business
enterprises and properties (were) taken over by the government of the Marcos
Administration or by entities or persons close to former President Marcos.”[43]
a. Sequestration
By the clear terms of the law, the power of the PCGG to
sequester property claimed to be “ill-gotten” means to
place or cause to be placed under its possession or control said property, or
any building or office wherein any such property and any records pertaining
thereto may be found, including “business enterprises and entities”,
— for the purpose of preventing the destruction, concealment or dissipation
of, and otherwise conserving and preserving, the same — until it can be
determined, through appropriate judicial proceedings, whether the property was
in truth “ill-gotten,” i.e., acquired through or as a result of
improper or illegal use of or the conversion of funds belonging to the
Government or any of its branches, instrumentalities, enterprises, banks or
financial institutions, or by taking undue advantage of official position,
authority, relationship, connection or influence, resulting in unjust
enrichment of the ostensible owner and grave damage and prejudice to the State.[44] And
this, too, is the sense in which the term is commonly understood in other
jurisdictions.[45]
b. “Freeze Order”
A “freeze order” prohibits the person having possession
or control of property alleged to constitute ”ill-gotten wealth”
“from transferring, conveying, encumbering or otherwise depleting or
concealing such property, or from assisting or taking part in its transfer,
encumbrance, concealment or dissipation”[46]. In other words, it commands the possessor to
hold the property and conserve it subject to the orders and disposition of the
authority decreeing such freezing. In
this sense, it is akin to a garnishment by which the possessor or ostensible
owner of property is enjoined not to deliver, transfer, or otherwise dispose of
any effects or credits, in his possession or control, and thus becomes in a
sense an involuntary depositary thereof.[47]
c. Provisional Takeover
In providing for the remedy of “provisional takeover”,
the law acknowledges the apparent distinction betweeen
“ill-gotten” “business enterprises and entities” (going
concerns, businesses in actual operation), generally, as to which the remedy of
sequestration applies, it being necessarily inferred that the remedy entails no
interference, or the least possible interference with the actual management and
operations thereof; and “business enterprises which were taken over by
the government of the Marcos Administration or by entities or persons close to
him“, in particular, as to which a “provisional
takeover” is authorized, “in
the public interest or to prevent disposal or dissipation of the
enterprises.”[48]
Such a “provisional takeover” imports something more than
sequestration or freezing, more than the placing of the business under physical
possession and control, albeit without or with the least possible interference
with the management and carrying on of the business itself. In a “provisional takeover,” what
is taken into custody is not only the physical assets of the business
enterprise or entity, but the business operation as well. It is in fine the assumption of control not
only over things, but over operations or on-going activities. But, to repeat, such a “provisional
takeover” is allowed only as regards “business enterprises **
taken over by the government of the Marcos Administration or by entities or
persons close to former President Marcos.”
d. No
Divestment of Title Over Property Seized
It may perhaps be well at this point to stress once again the
provisional, contingent character of the remedies just described. Indeed the law plainly qualifies the remedy
of takeover by the adjective, “provisional.” These remedies may be
resorted to only for a particular exigency:
to prevent in the public interest the disappearance or dissipation of
property or business, and conserve it pending adjudgment
in appropriate proceedings of the primary issue of whether or not the
acquisition of title or other right thereto by the apparent owner was attended
by some vitiating anomaly. None of the
remedies is meant to deprive the owner or possessor of his title or any right
to the property sequestered, frozen or taken over and vest it in the
sequestering agency, the Government or other person. This can be done only for the causes and by
the processes laid down by law.
That this is the sense in which the power to sequester, freeze or
provisionally take over is to be understood and exercised, the language of the
executive orders in question leaves no doubt.
Executive Order No. 1 declares that the sequestration of property the
acquisition of which is suspect shall last “until the transactions
leading to such acquisition ** can be disposed of by the appropriate
authorities.”[49]
Executive Order No. 2 declares that the assets or properties therein mentioned
shall remain frozen “pending the outcome of appropriate proceedings in
the Philippines
to determine whether any such assets or properties were acquired” by
illegal means. Executive Order No.
14 makes clearer that judicial proceedings are essential for the resolution of
the basic issue of whether or not particular assets are “ill-gotten,”
and resultant recovery thereof by the Government is warranted.
e. State of Seizure
Not To Be Indefinitely Maintained; The Constitutional Command
There is thus no cause for the apprehension voiced by BASECO[50]
that sequestration, freezing or provisional takeover is designed to be an end
in itself, that it is the device through which persons may be deprived of their
property branded as “ill-gotten,” that it is intended to bring about
a permanent, rather than a passing, transitional state of affairs. That this is not so is quite explicitly
declared by the governing rules.
Be this as it may, the 1987 Constitution should allay any
lingering fears about the duration of these provisional remedies. Section 26 of its Transitory Provisions[51]
lays down the relevant rule in plain terms, apart from extending ratification
or confirmation (although not really necessary) to the institution by
presidential fiat of the remedy of sequestration and freeze orders:
“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.”[52]
f. Kinship to Attachment, Receivership
As thus described, sequestration, freezing and provisional
takeover are akin to the provisional remedy of preliminary attachment, or
receivership.[53]
By attachment, a sheriff seizes property of a defendant in a civil suit so that
it may stand as security for the satisfaction of any judgment that may be
obtained, and not disposed of, or dissipated, or lost intentionally or
otherwise, pending the action.[54]
By receivership, property, real or personal, which is subject of litigation, is
placed in the possession and control of a receiver appointed by the Court, who
shall conserve it pending final determination of the title or right of
possession over it.[55]
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.
g. Remedies, Non-Judicial
Parenthetically, that writs of sequestration or freeze or takeover
orders are not issued by a court is of no moment. The Solicitor General draws attention to the
writ of distraint and levy which since 1936 the
Commissioner of Internal Revenue has been by law authorized to issue against
property of a delinquent taxpayer.[56]
BASECO itself declares that it has not manifested “a rigid insistence on
sequestration as a purely judicial remedy ** (as it feels) that the law should
not be ossified to a point that makes it insensitive to change.” What it
insists on, what it pronounces to be its “unyielding position, is that any
change in procedure, or the institution of a new one, should conform to due
process and the other prescriptions of the Bill of Rights of the
Constitution.”[57]
It is, to be sure, a proposition on which there can be no disagreement.
h. Orders May Issue Ex Parte
Like the remedy of preliminary attachment and receivership, as
well as delivery of personal property in replevin
suits, sequestration and provisional takeover writs may issue ex parte.[58]
And as in preliminary attachment, receivership, and delivery of personalty, no objection of any significance may be raised
to the ex parte issuance of an order of
sequestration, freezing or takeover, given its fundamental character of
temporariness or conditionality; and taking account specially of the
constitutionally expressed “mandate of the people to recover ill-gotten
properties amassed by the leaders and supporters of the previous regime and
protect the interest of the people”;[59]
as well as the obvious need to avoid alerting suspected possessors of
“ill-gotten wealth” and thereby cause that disappearance or loss of
property precisely sought to be prevented, and the fact, just as self-evident,
that “any transfer, disposition, concealment or disappearance of said
assets and properties would frustrate, obstruct or hamper the efforts of the
Government” at the just recovery thereof.[60]
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.[61]
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.”[62]
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 ** (and other parties affected) be afforded
fair opportunity to contest these claims before appropriate Philippine
authorities,”[63]
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 proprio
when the Commission has reasonable grounds to believe that the issuance
thereof is warranted.[64]
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”.[65]
b. Opportunity to Contest
And Sections 5 and 6 of the same Rules and Regulations lay down
the procedure by which a party may seek to set aside a writ of sequestration or
freeze order, viz:
“SECTION 5. Who may
contend.- The person against whom a writ of sequestration or freeze or hold
order is directed may request the lifting thereof in writing, either personally
or through counsel within five (5) days from receipt of the writ or order, or
in the case of a hold order, from date of knowledge thereof.
“SECTION 6. Procedure
for review of writ or order.- After due hearing or motu
proprio for good cause shown, the Commission may lift
the writ or order unconditionally or subject to such conditions as it may deem
necessary, taking into consideration the evidence and the circumstances of the
case. The resolution of the Commission
may be appealed by the party concerned to the Office of the President of the Philippines
within fifteen (15) days from receipt thereof.”
Parenthetically, even if the requirement for a prima facie
showing of “ill-gotten wealth” were not expressly imposed by some
rule or regulation as a condition to warrant the sequestration or freezing of
property contemplated in the executive orders in question, it would
nevertheless be 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.[66]
9. Constitutional Sanction of Remedies
If any doubt should still persist in the face of the foregoing
considerations as to the validity and propriety of sequestration, freeze and
takeover orders, it should be dispelled by the fact that these particular
remedies and the authority of the PCGG to issue them have received
constitutional approbation and sanction.
As already mentioned, the Provisional or “Freedom”
Constitution recognizes the power and duty of the President to enact
“measures to achieve the mandate of the people to *** (r)ecover ill-gotten properties amassed by the leaders and
supporters of the previous regime and protect the interest of the people
through orders of sequestration or freezing of assets or accounts”. And as also already adverted to, Section 26,
Article XVIII of the 1987 Constitution[67] treats
of, and ratifies the “authority to issue sequestration or freeze orders
under Proclamation No. 3 dated March
25, 1986.”
The institution of these provisional remedies is also premised
upon the State’s inherent police power, regarded as “the power of promoting
the public welfare by restraining and regulating the use of liberty and
property’,[68]
and as “the most essential, insistent and illimitable of powers ** in the
promotion of general welfare and the public interest”,[69]
and said to be “co-extensive with self-protection and ** not inaptly
termed (also) the law of overruling necesity.”[70]
10. PCGG not a “Judge”; General
Functions
It should also by now be reasonably evident from what has thus
far been said that the PCGG is not, and was never intended to act as, a
judge. Its general function is to
conduct investigations in order to collect evidence establishing
instances of “ill-gotten wealth”; issue sequestration, and such
orders as may be warranted by the evidence thus collected and as may be
necessary to preserve and conserve the assets of which it takes custody and
control and prevent their disappearance, loss or dissipation; and eventually file
and prosecute in the proper court of competent jurisdiction all cases
investigated by it as may be warranted by its findings. It does not try and decide, or hear and
determine, or adjudicate with any character of finality or compulsion, cases
involving the essential issue of whether or not property should be forfeited
and transferred to the State because “ill-gotten” within the meaning
of the Constitution and the executive orders.
This function is reserved to the designated court, in this case, the Sandiganbayan.[71]
There can therefore be no serious regard accorded to the accusation, leveled by
BASECO,[72]
that the PCGG plays the perfidious role of prosecutor and judge at the same
time.
11. Facts Preclude Grant of Relief to Petitioner
Upon these premises and reasoned conclusions, and upon the facts
disclosed by the record, hereafter to be discussed, the petition cannot
succeed. The writs of certiorari
and prohibition prayed for will not issue.
The facts show that the corporation known as BASECO was owned or
controlled by President Marcos “during his administration, through
nominees, by taking undue advantage of his public office and/or using his
powers, authority, or influence”; and that it was by and through the same
means, that BASECO had taken over the business and/or assets of the National
Shipyard and Engineering Co., Inc., and other government-owned or controlled
entities.
12. Organization and Stock Distribution of BASECO
BASECO describes itself in its petition as “a shiprepair and shipbuilding company ** incorporated as a
domestic private corporation ** (on Aug 30,) 1972 by a consortium of Filipino shipowners and shipping executives. Its main office is at Engineer
Island, Port Area, Manila,
where its Engineer Island Shipyard is housed, and its main shipyard is located
at Mariveles, Bataan.”[73]
Its Articles of Incorporation disclose that its authorized capital stock is
P60,000,000.00 divided into 60,000 shares, of which 12,000 shares with a value
of P12,000,000.00 have been subscribed, and on said subscription, the aggregate
sum of P3,035,000.00 has been paid by the incorporators.[74]
The same articles identify the incorporators, numbering fifteen (15), as
follows: (1) Jose A. Rojas, (2) Anthony
P. Lee, (3) Eduardo T. Marcelo, (4) Jose P. Fernandez, (5) Generoso
Tanseco, (6) Emilio T. Yap, (7) Antonio M. Ezpeleta, (8) Zacarias Amante, (9) Severino de la Cruz,
(10) Jose Francisco, (11) Dioscoro Papa, (12) Octavio Posadas, (13) Manuel S.
Mendoza, (14) Magiliw Torres, and (15) Rodolfo
Torres.
By 1986, however, of these fifteen (15) incorporators, six (6)
had ceased to be stockholders, namely:
(1) Generoso Tanseco,
(2) Antonio Ezpeleta, (3) Zacarias
Amante, (4) Octavio Posadas, (5) Magiliw Torres, and
(6) Rodolfo Torres. As of this year,
1986, there were twenty (20) stockholders listed in BASECO’s
Stock and Transfer Book.[75]
Their names, and the number of shares respectively held by them are as follows:
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13. Acquisition of NASSCO by BASECO
Barely six months after its incorporation, BASECO acquired from
National Shipyard & Steel Corporation, or NASSCO, a government-owned or
controlled corporation, the latter’s shipyard at Mariveles,
Bataan, known as the Bataan
National Shipyard (BNS), and — except for NASSCO’s
Engineer Island Shops and certain equipment of the BNS, consigned for future
negotiation — all its structures, buildings, shops, quarters, houses, plants,
equipment and facilities, in stock or in transit. This it did in virtue of a “Contract of
Purchase and Sale with Chattel
Mortgage” executed on February 13
1973. The price was
P52,000,000.00. As partial payment
thereof, BASECO delivered to NASSCO a cash bond of P11,400,000.00, convertible
into cash within twenty-four (24) hours from completion of the inventory
undertaken pursuant to the contract. The
balance of P41,600,000.00, with interest at seven percent (7%) per annum, compounded
semi-annually, was stipulated to be paid in equal semi-annual installments over
a term of nine (9) years, payment to commence after a grace period of two (2)
years from date of turnover of the shipyard to BASEC0.[76]
14. Subsequent Reduction of Price; Intervention
of Marcos
Unaccountably, the price of P52,000,000.00 was reduced by more
than one-half, to P24,311,550.00, about eight (8) months later. A document to this effect was executed On October 9, 1973, entitled “Memorandum
Agreement,” and was signed for NASSCO by Arturo Pacificador,
as Presiding Officer of the Board of Directors, and David R. Ines, as General Manager.[77]
This agreement bore, at the top right corner of the first page, the word
“APPROVED” in the handwriting of President Marcos, followed by
his usual full signature. The document
recited that a down payment of P5,862,310.00 had been made by BASECO, and the
balance of P19,449,240.00 was payable in equal semi-annual installments over
nine (9) years after a grace period of two (2) years, with interest at 7% per
annum.
15. Acquisition of 300 Hectares from Export
Processing Zone Authority
On October 1, 1974, BASECO acquired three hundred (300) hectares
of land in Mariveles from the Export Processing Zone
Authority for the price of P10,047,940.00 of which, as set out in the document
of sale, P2,000,000.00 was paid upon its execution, and the balance stipulated
to be payable in installments.[78]
16. Acquisition of Other Assets of NASSCO; Intervention
of Marcos
Some nine months afterwards, or on July 15, 1975, to be precise, BASECO, again with the
intervention of President Marcos, acquired ownership of the rest of the assets
of NASSCO which had not been included in the first two (2) purchase
documents. This was accomplished by a
deed entitled “Contract of Purchase and Sale”[79],
which, like the Memorandum of Agreement dated October 9, 1973 supra also bore at the upper
right-hand corner of its first page, the handwritten notation of President
Marcos reading, “APPROVED, July
29, 1973,” and underneath it, his usual full signature. Transferred to BASECO were NASSCO’s “ownership and all its titles, rights and
interests over all equipment and facilities including structures, buildings,
shops, quarters, houses, plants and expendable or semi-expendable assets,
located at the Engineer Island, known as the Engineer Island Shops, including
all the equipment of the Bataan National Shipyards
(BNS) which were excluded from the sale of BNS to BASECO but retained by BASECO
and all other selected equipment and machineries of NASSCO at J. Panganiban Smelting Plant.” In the same deed, NASSCO
committed itself to cooperate with BASECO for the acquisition from the National
Government or other appropriate Government entity of Engineer
Island. Consideration for the sale was set at
P5,000,000.00; a downpayment of P1,000,000.00 appears
to have been made, and the balance was stipulated to be paid at 7% interest per
annum in equal semi-annual installments over a term of nine (9) years, to
commence after a grace period of two (2) years.
Mr. Arturo Pacificador again signed for
NASSCO, together with the general manager, Mr. David R. Ines.
17. Loans Obtained
It further appears that on May 27, 1975 BASECO obtained a loan from the NDC, taken
from “the last available Japanese war damage fund of $19,000,000.00,”
to pay for “Japanese made heavy equipment (brand new).”[80]
On September 3, 1975, it got
another loan also from the NDC in the amount of P30,000,000.00 (id.). And on January 28, 1976, it got still another loan, this time
from the GSIS, in the sum of P12,400,000.00.[81]
The claim has been made that not a single centavo has been paid on these loans.[82]
18. Reports to President Marcos
In September, 1977, two (2) reports were submitted to President
Marcos regarding BASECO. The first was
contained in a letter dated September
5, 1977 of Hilario M. Ruiz, BASECO
president.[83]
The second was embodied in a confidential memorandum dated September 16, 1977 of Capt. A. T. Romualdez.[84]
They further disclose the fine hand of Marcos in the affairs of BASECO, and
that of a Romualdez, a relative by affinity.
a. BASECO President’s Report
In his letter of September 5, 1977, BASECO President Ruiz
reported to Marcos that there had been “no orders or demands for ship
construction” for some time and expressed the fear that if that state of
affairs persisted, BASECO would not be able to pay its debts to the Government,
which at the time stood at the not inconsiderable amount of P165,854,000.00.[85]
He suggested that, to “save the situation,” there be a “spin-off
(of their) shipbuilding activities which shall be handled exclusively by an
entirely new corporation to be created”; and towards this end, he informed
Marcos that BASECO was -?
” ** inviting NDC and LUSTEVECO
to participate by converting the NDC shipbuilding loan to BASECO amounting to
P341.165M and assuming and converting a portion of BASECO’s
shipbuilding loans from REPACOM amounting to P52.2M or a total of P83.365M as NDC’s equity contribution in the new corporation. LUSTEVECO will participate by absorbing and
converting a portion of the REPACOM loan of Bay Shipyard and Drydock, Inc., amounting to P32.538M.”[86]
b. Romualdez‘ Report
Capt. A. T. Romualdez‘ report to the
President was submitted eleven (11) days later.
It opened with the following caption:
“MEMORANDUM:
FOR : The
President
SUBJECT : An
Evaluation and Re-assessment of a
Performance of a Mission
FROM : Capt.
A. T. Romualdez.”
Like Ruiz, Romualdez wrote that BASECO
faced great difficulties in meeting its loan obligations due chiefly to the
fact that “orders to build ships as expected ** did not materialize.”
He advised that five stockholders had “waived and/or
assigned their holdings in blank,” these being: (1) Jose A. Rojas, (2) Severino
de la Cruz, (3) Rodolfo Torres, (4) Magiliw Torres,
and (5) Anthony P. Lee. Pointing out
that “Mr. Magiliw Torres ** is already dead and
Mr. Jose A. Rojas had a major heart attack,” he made the following quite
revealing, and it may be added, quite cynical and indurate recommendation, to wit:
** (that) their replacements (be effected)
so we can register their names in the stock book prior to the implementation of
your instructions to pass a board resolution to legalize the
transfers under SEC regulations;
“2. By getting their
replacements, the families cannot question us later on; and
“3. We will owe no
further favors from them.“[87]
He also transmitted to Marcos, together with the report, the
following documents:[88]
1. “Stock certificates indorsed and assigned in blank with assignments
and waivers;”[89]
2. The articles of incorporation, the amended articles, and the
by-laws of BASECO;
3. “Deed of Sales, wherein NASSCO sold to BASECO four (4)
parcels of land in ‘Engineer Island’,
Port Area, Manila;”
4. “Transfer Certificate of Title No. 124822 in the name of
BASECO, covering ‘Engineer Island’;”
5. “Contract dated October
9, 1973, between NASSCO and BASECO re structure and equipment at Mariveles, Bataan;”
6. “Contract dated July
16, 1975, between NASSCO and BASECO re structure and equipment at Engineer
Island, Port Area, Manila;”
7. “Contract dated October
1, 1974, between EPZA and BASECO re 300 hectares of land at Mariveles, Bataan;”
8. “List of BASECO’s fixed
assets;”
9. “Loan Agreement dated September 3, 1975, BASECO’s loan
from NDC of P30,000,000.00;”
10. “BASECO-REPACOM Agreement dated May 27, 1975;”
11. “GSIS loan to BASECO dated January 28, 1976 of P12,400,000.00 for the housing
facilities for BASECO’s rank-and-file
employees.”[90]
Capt. Romualdez also recommended that BASECO’s loans be restructured “until such period when
BASECO will have enough orders for ships in order for the company to meet loan
obligations”, and that –
“An LOI may be issued to government agencies using
floating equipment, that a linkage scheme be applied to a certain percent of BASECO’s net profit as part of BASECO’s
amortization payments to make it justifiable for you, Sir.”[91]
It is noteworthy that Capt. A. T. Romualdez
does not appear to be a stockholder or officer of BASECO, yet he has presented a
report on BASECO to President Marcos, and his report demonstrates intimate
familiarity with the firm’s affairs and problems.
19. Marcos’ Response to Reports
President Marcos lost no time in acting on his subordinates’
recommendations, particularly as regards the “spin-off” and the
“linkage scheme” relative to “BASECO’s
amortization payments.”
a. Instructions re “Spin-Off”
Under date of September 28, 1977, he addressed a Memorandum to
Secretary Geronimo Velasco of the Philippine National Oil Company and Chairman Constante Farinas of the National Development Company,
directing them “to participate in the formation of a new corporation
resulting from the spin-off of the shipbuilding component of BASECO
along the following guidelines:
a. Equity participation of government shall be
through LUSTEVECO and NDC in the amount of P115,903,000 consisting of the
following obligations of BASECO which are hereby authorized to be converted
to equity of the said new corporation, to wit:
1. NDC P83,865,000 (P31.165M
loan & P52.2M Reparation)
2. LUSTEVECO P32,538,000
(Reparation)
b. Equity participation of government shall be in
the form of non-voting shares.
For immediate compliance.”[92]
Mr. Marcos’ guidelines were promptly complied with by his
subordinates. Twenty-two (22) days after
receiving their president’s memorandum, Messrs. Hilario
M. Ruiz, Constante L. Farinas and Geronimo Z.
Velasco, in representation of their respective corporations, executed a PRE?INCORPORATION
AGREEMENT dated October 20, 1977.[93]
In it, they undertook to form a shipbuilding corporation to be known as
“PHIL-ASIA SHIPBUILDING CORPORATION,” to bring to realization their
president’s instructions. It would seem
that the new corporation ultimately formed was actually named “Philippine
Dockyard Corporation (PDC)”.[94]
b. Letter of
Instructions No. 670
Mr. Marcos did not forget Capt. Romualdez‘
recommendation for a letter of instructions.
On February 14, 1978,
he issued Letter of Instructions No. 670 addressed to the Reparations Commission
(REPACOM), the Philippine National Oil Company (PNOC), the Luzon Stevedoring
Company (LUSTEVECO), and the National Developoment
Company (NDC). What is commanded therein
is summarized by the Solicitor General, with pithy and not inaccurate observations
as to the effects thereof (in italics), as follows:
” ** 1) the shipbuilding equipment
procured by BASECO through reparations be transferred to NDC subject to
reimbursement by NDC to BASECO (of) the amount of P18.285M allegedly
representing the handling and incidental expenses incurred by BASECO in the
installation of said equipment (so instead of NDC getting paid on its loan
to BASECO ,it was made to pay BASECO instead the amount of P18.285M); 2)
the shipbuilding equipment procured from reparations through EPZA, now in the
possession of BASECO and BSDI (Bay Shipyard & Drydocking,
Inc) be transfered to LUSTEVECO through PNOC; and ;
3) the shipbuilding equipment (thus) transferred be invested by LUSTEVECO
acting through PNOC and NDC, as the government’s equity participation in a
shipbuilding corporation to be established in partnership with the private
sector “
” **
** **
“And so, through a simple letter of
instruction and memorandum, BASECO’s loan obligations
to NDC and REPACOM ** in the total amount of P83.365M and BCD’s REPACOM loan of
P32.438M were wiped out and converted into non-voting preferred shares.[95]
20. Evidence of Marcos’ Ownership of
BASECO
It cannot therefore be gainsaid that, in the context of the
proceedings at bar, the actuality of the control by President Marcos of BASECO
has been sufficiently shown.
Other evidence submitted to the Court by the Solicitor General
proves that President Marcos not only exercised control over BASECO, but
also that he actually owns well nigh one hundred percent of its
outstanding stock.
It will be recalled that according to petitioner itself, as of April 23, 1986, there were 218,819
shares of stock outstanding, ostensibly owned by twenty (20) stockholders.[96]
Four of these twenty are juridical persons:
(1) Metro Bay
Drydock, recorded as holding 136,370 shares; (2) Fidelity
Management, Inc., 65,882 shares; (3) Trident Management, 7,412
shares; and (4) United Phil. Lines, 1,240 shares. The first three corporations, among
themselves, own an aggregate of 209,664 shares of BASECO stock or 95.82%
of the outstanding stock.
Now, the Solicitor General has drawn the Court’s attention to the
intriguing circumstance that found in Malacanang
shortly after the sudden flight of President Marcos, were certificates
corresponding to more than ninety-five percent (95%) of all the
outstanding shares of stock of BASECO, endorsed in blank, together with deeds
of assignment of practically all the outstanding shares of stock of the three
(3) corporations above mentioned (which hold 95.82% of all BASECO
stock), signed by the owners thereof although not notarized.[97]
More specifically, found in Malacanang
(and now in the custody of the PCGG) were:
1)
the deeds of assignment of all
600 outstanding shares of Fidelity Management Inc. — which supposedly owns
as aforesaid 65,882 shares of BASECO stock;
2)
the deeds of assignment of 2,499,995
of the 2,500,000 outstanding shares of Metro Bay Drydock
Corporation — which Allegedly owns 136,370 shares of BASECO stock;
3)
the deeds of assignment of 800
outstanding shares of Trident Management Co., Inc. — which allegedly owns
7,412 shares of BASECO stock, assigned in blank;[98]
and
4)
stock certificates corresponding to
207,725 out of the 218,819 outstanding shares of BASECO stock; that is, all
but 5% — all endorsed in blank.[99]
While the petitioner’s counsel was quick to dispute this asserted
fact, assuring this Court that the BASECO stockholders were still in possession
of their respective stock certificates and had “never endorsed ** them in
blank or to anyone else,”[100]
that denial is exposed by his own prior and subsequent recorded statements as a
mere gesture of defiance rather than a verifiable factual declaration.
By resolution dated September
25, 1986, this Court granted BASECO’s
counsel a period of 10 days “to SUBMIT, as undertaken by him, **
the certificates of stock issued to the stockholders of ** BASECO as of April 23, 1986, as listed in Annex
‘P’ of the petition.”[101]
Counsel thereafter moved for extension; and in his motion dated October 2, 1986, he declared inter
alia that “said certificates of stock are in
the possession of third parties, among whom being the respondents themselves **
and petitioner is ‘still endeavoring to secure copies thereof from
them.”[102]
On the same day he filed another motion praying that he be allowed “to secure
copies of the Certificates of Stock in the name of Metro Bay Drydock, Inc., and of all other Certificates of Stock of
petitioner’s stockholders in possession of respondents.”[103]
In a Manifestation dated October 10, 1986,[104]
the Solicitor General not unreasonably argued that counsel’s aforestated motion to secure copies of the stock
certificates “confirms the fact that stockholders of petitioner
corporation are not in possession of ** (their) certificates of stock,”
and the reason, according to him, was “that 95% of said shares ** have
been endorsed in blank and found in Malacanang after
the former President and his family fled the country.” To this
manifestation BASECO’s counsel replied on November 5, 1986, as already
mentioned, stubbornly insisting that the firm’s stockholders had not really
assigned their stock.[105]
In view of the parties conflicting declarations, this Court
resolved on November 27, 1986 among other things “to require ** the
petitioner ** to deposit upon proper receipt with Clerk of Court Juanito Ranjo the originals of
the stock certificates alleged to be in its possession or accessible to it,
mentioned and described in Annex, ‘P’ of its petition, ** (and other pleadings)
** within ten (10) days from notice.”[106]
In a motion filed on December 5, 1986,[107]
BASECO’s counsel made the statement, quite surprising
in the premises, that “it will negotiate with the owners (of the BASECO
stock in question) to allow petitioner to borrow from them, if available, the
certificates referred to” but that “it needs a more sufficient time therefor” (sic).
BASECO’s counsel however eventually had to
confess inability to produce the originals of the stock certificates, putting
up the feeble excuse that while he had “requested the stockholders to
allow ** (him) to borrow said certificates, ** some of ** (them) claimed that
they had delivered the certificates to third parties by way of pledge and/or to
secure performance of obligations, while others allegedly have entrusted them
to third parties in view of last national emergency.”[108]
He has conveniently omitted, nor has he offered to give the details of the
transactions adverted to by him, or to explain why he had not impressed on the
supposed stockholders the primordial importance of convincing this Court of
their present custody of the originals of the stock, or if he had done so, why
the stockholders are unwilling to agree to some sort of arrangement so that the
originals of their certificates might at the very least be exhibited to the
Court. Under the circumstances, the
Court can only conclude that he could not get the originals from the
stockholders for the simple reason that, as the Solicitor General maintains,
said stockholders in truth no longer have them in their possession, these
having already been assigned in blank to then President Marcos.
21. Facts Justify Issuance of Sequestration and
Takeover Orders
In the light of the affirmative showing by the Government that, prima
facie at least, the stockholders and directors of BASECO as of April, 1986[109]
were mere “dummies”, nominees or alter egos of President
Marcos; at any rate, that they are no longer owners of any shares of stock in
the corporation, the conclusion cannot be avoided that said stockholders and directors
have no basis and no standing whatever to cause the filing and prosecution of
the instant proceeding; and to grant relief to BASECO, as prayed for in the
petition, would in effect be to restore the assets, properties and business
sequestered and taken over by the PCGG to persons who are “dummies,”
nominees or alter egos of the former president.
From the standpoint of the PCGG, the facts herein stated at some
length do indeed show that the private corporation known as BASECO was
“owned or controlled by former President Ferdinand E. Marcos ** during his
administration, ** through nominees, by taking advantage of ** (his) public
office and/or using ** (his) powers, authority, influence **”, and that
NASSCO and other property of the government had been taken over by BASECO; and
the situation justified the sequestration as well as the provisional takeover
of the corporation in the public interest, in accordance with the terms of
Executive Orders No. 1 and 2, pending the filing of the requisite actions with
the Sandiganbayan to cause divestment of title
thereto from Marcos, and its adjudication in favor of the Republic pursuant to
Executive Order No. 14.
As already earlier stated, this Court agrees that this assessment
of the facts is correct; accordingly, it sustains the acts of sequestration and
takeover by the PCGG as being in accord with the law, and, in view of what has
thus far been set out in this opinion, pronounces to be without merit the
theory that said acts, and the executive orders pursuant to which they were
done, are fatally defective in not according to the parties affected prior
notice and hearing, or an adequate remedy to impugn, set aside or otherwise
obtain relief therefrom, or that the PCGG had acted
as prosecutor and judge at the same time.
22. Executive Orders Not a Bill of Attainder
Neither will this Court sustain the theory that the executive
orders in question are a bill of attainder.[110]
“A bill of attainder is a legislative act which inflicts punishment
without judicial trial.”[111]
“Its essence is the substitution of a legislative for a judicial
determination of guilt.”[112]
In the first place, nothing in the executive orders can be
reasonably construed as a determination or declaration of guilt. On the contrary, the executive orders, inclusive
of Executive Order No. 14, make it perfectly clear that any judgment of guilt
in the amassing or acquisition of “ill-gotten wealth” is to be handed
down by a judicial tribunal, in this case, the Sandiganbayan,
upon complaint filed and prosecuted by the PCGG. In the second place, no punishment is
inflicted by the executive orders, as the merest glance at their provisions
will immediately make apparent. In no
sense, therefore, may the executive orders be regarded as a bill of attainder.
23. No Violation of Right against
Self-Incrimination and Unreasonable Searches and Seizures
BASECO also contends that its right against self-incrimination
and unreasonable searches and seizures had been transgressed by the Order of April 18, 1986 which required it “to
produce corporate records from 1973 to 1986 under pain of contempt of the
Commission if it fails to do so.” The order was issued upon the authority
of Section 3 (e) of Executive Order No. 1, treating of the PCGG’s
power to “issue subpoenas requiring ** the production of such books,
papers, contracts, records, statements of accounts and other documents as may
be material to the investigation conducted by the Commission”, and
paragraph (3), Executive Order No. 2 dealing with its power to “(r)equire all persons in the Philippines holding ** (alleged
“ill-gotten”) assets or properties, whether located in the
Philippines or abroad, in their names as nominees, agents or trustees, to make
full disclosure of the same ** .” The contention lacks merit.
It is elementary that the right against self-incrimination has no
application to juridical persons.
“While an individual may lawfully refuse to answer
incriminating questions unless protected by an immunity statute, it does not
follow that a corporation, vested with special privileges and franchises, may
refuse to show its hand when charged with an abuse of such privileges **”[113]
Relevant jurisprudence is also cited by
the Solicitor General.[114]
“ ** corporations are not entitled to all of the constitutional
protections which private individuals have.
** They are not at all within the privilege against
self-incrimination, although this court more than once has said that the
privilege runs very closely with the 4th Amendment’s Search and Seizure
provisions. It is also settled that
an officer of the company cannot refuse to produce its records in its
possession, upon the plea that they will either incriminate him or may
incriminate it.” (Oklahoma Press Publishing Co. v. Walling, 327 U.S.
186; emphasis, the Solicitor General’s)
“** The corporation is a creature of the state. It is presumed to be incorporated for the
benefit of the public. It received
certain special privileges and franchises, and holds them subject to the laws
of the state and the limitations of its charter. Its powers are limited by law It can make no
contract not authorized by its charter.
Its rights to act as a corporation are only preserved to it so long as
it obeys the laws of its creation. There
is a reserve right in the legislature to investigate its contracts and find out
whether it has exceeded its powers. It
would be a strange anomaly to hold that a state, having chartered a corporation
to make use of certain franchises, could not, in the exercise of sovereignty
inquire how these franchises had been employed, and whether they had been
abused and demand the production of the corporate books and papers for that
purpose. The defense amounts to
this: that an officer of the corporation
which is charged with a criminal violation of the statute may plead the
criminality of such corporation as a refusal to produce its books. To state this proposition is to answer
it. While an individual may lawfully
refuse to answer incriminating questions unless protected by an immunity
statute, it does not follow that a corporation, vested with special privileges
and franchises may refuse to show its hand when charged with an abuse of such
privileges. (Wilson v. United
States, 55 Law Ed., 771, 780 [emphasis, the Solicitor General’s])”
At any rate, Executive Order No.14-A, amending Section 4 of
Executive Order No. 14 assures protection to individuals required to produce
evidence before the PCGG against any possible violation of his right against
self-incrimination. It gives them
immunity from prosecution on the basis of testimony or information he is
compelled to present. As amended, said
Section 4 now provides that –
“ ** **.
“The witness may not refuse to comply with the order on the
basis of his privilege against self-incrimination; but no testimony or other
information compelled under the order (or any information directly or
indirectly derived from such testimony, or other information) may be used
against the witness in any criminal case, except a prosecution for perjury,
giving a false statement, or otherwise failing to comply with the order.”
The constitutional safeguard against unreasonable searches and
seizures finds no application to the case at bar either. There has been no search undertaken by any
agent or representative of the PCGG, and of course no seizure on the occasion
thereof.
24. Scope and Extent of Powers of the PCGG
One other question remains to be disposed of, that respecting the
scope and extent of the powers that may be wielded by the PCGG with regard to
the properties or businesses placed under sequestration or provisionally taken
over. Obviously, it is not a question to
which an answer, can be easily given, much less one which will suffice for
every conceivable situation.
a. PCGG May Not Exercise Acts of Ownership
One thing is certain, and should he stated at the outset: the PCGG cannot exercise acts of dominion
over property sequestered, frozen or provisionally taken over. As already earlier stressed with no little
insistence, the act of sequestration, freezing or provisional takeover of property
does not import or bring about a divestment of title over said property; does
not make the PCGG the owner thereof. In
relation to the property sequestered, frozen or provisionally taken over, the PCGG
is a conservator, not an owner.
Therefore, it can not perform acts of strict ownership; and this is
specially true in the situations contemplated by the sequestration rules where,
unlike cases of receivership, for example, no court exercises effective
supervision or can upon due application and hearing, grant authority for the
performance of acts of dominion.
Equally evident is that the resort to the provisional remedies in
question should entail the least possible interference with business operations
or activities so that, in the event that the accusation of the business
enterprise being “ill-gotten” be not proven, it may be returned to
its rightful owner as far as possible in the same condition as it was at the
time of sequestration.
b. PCGG Has Only Powers of Administration
The PCGG may thus exercise only powers of administration over the
property or business sequestered or provisionally taken over, much like a
court-appointed receiver,[115]
such as to bring and defend actions in its own name; receive rents; collect
debts due; pay outstanding debts; and generally do such other acts and things
as may be necessary to fulfill its mission as conservator and
administrator. In this context, it may
in addition enjoin or restrain any actual or threatened commission of acts by
any person or entity that may render moot and academic, or frustrate or
otherwise make ineffectual its efforts to carry out its task; punish for direct
or indirect contempt in accordance with the Rules of Court; and seek and secure
the assistance of any office, agency or instrumentality of the government.[116]
In the case of sequestered businesses generally (i.e., going concerns,
businesses in current operation), as in the case of sequestered objects, its
essential role, as already discussed, is that of conservator, caretaker,
“watchdog” or overseer. It is
not that of manager, or innovator, much less an owner.
c. Powers over Business Enterprises Taken
Over by Marcos or Entities or Persons Close to him; Limitations Thereon
Now, in the special instance of a business enterprise shown by
evidence to have been “taken over by the government of the Marcos
Administration or by entities or persons close to former President
Marcos,”[117]
the PCGG is given power and authority, as already adverted to, to
“provisionally take (it) over in the public interest or to prevent **
(its) disposal or dissipation”; and since the term is obviously employed
in reference to going concerns, or business enterprises in operation, something
more than mere physical custody is connoted; the PCGG may in this case exercise
some measure of control in the operation, running, or management of the
business itself. But even in this
special situation, the intrusion into management should be restricted to the
minimum degree necessary to accomplish the legislative will, which is “to
prevent the disposal or dissipation” of the business enterprise. There should be no hasty, indiscriminate,
unreasoned replacement or substitution of management officials or change of
policies, particularly in respect of viable establishments. In fact, such a replacement or substitution
should be avoided if at all possible, and undertaken only when justified by
demonstrably tenable grounds and in line with the stated objectives of the
PCGG. And it goes without saying that
where replacement of management officers may be called for, the greatest
prudence, circumspection, care and attention should accompany that undertaking
to the end that truly competent, experienced and honest managers may be
recruited. There should be no role to be
played in this area by rank amateurs, no matter how well meaning. The road to hell, it has been said, is paved
with good intentions. The business is
not to be experimented or played around with, not run into the ground, not
driven to bankruptcy, not fleeced, not ruined.
Sight should never be lost sight of the ultimate objective of the whole
exercise, which is to turn over the business to the Republic once judicially
established to be “ill-gotten.” Reason dictates that it is only under
these conditions and circumstances that the supervision, administration and
control of business enterprises provisionally taken over may legitimately be
exercised.
d. Voting of Sequestered Stock; Conditions Therefor
So, too, it is within the parameters of these conditions and
circumstances that the PCGG may properly exercise the prerogative to vote
sequestered stock of corporations, granted to it by the President of the Philippines
through a Memorandum dated June 26,
1986. That Memorandum
authorizes the PCGG, “pending the outcome of proceedings to determine the
ownership of ** (sequestered) shares of stock,” “to vote such shares
of stock as it may have sequestered in corporations at all stockholders
meetings called for the election of directors, declaration of dividends,
amendment of the Articles of Incorporation, etc.” The Memorandum should be
construed in such a manner as to be consistent with, and not contradictory of
the Executive Orders earlier promulgated on the same matter. There should be no exercise of the right to
vote simply because the right exist, or because the stocks sequestered
constitute the controlling or a substantial part of the corporate voting
power. The stock is not to be voted to
replace directors, or revise the articles or by-laws, or otherwise bring about
substantial changes in policy, program or practice of the corporation except
for demonstrably weighty and defensible grounds, and always in the context of
the stated purposes of sequestration or provisional takeover, i.e., to prevent
the dispersion or undue disposal of the corporate assets. Directors are not to be voted out simply
because the power to do so exists.
Substitution of directors is not to be done without reason or rhyme,
should indeed be shunned if at all possible, and undertaken only when essential
to prevent disappearance or wastage of corporate property, and always under
such circumstances as assure that the replacements are truly possessed of
competence, experience and probity.
In the case at bar, there was adequate justification to vote the
incumbent directors out of office and elect others in their stead because the
evidence showed prima facie that the former were just tools of President
Marcos and were no longer owners of any stock in the firm, if they ever were at
all. This is why, in its Resolution of
October 28, 1986,[118]
this Court declared that –
“Petitioner has failed to make out a case of grave abuse or
excess of jurisdiction in respondents’ calling and holding of a stockholders’
meeting for the election of directors as authorized by the Memorandum of the President
** (to the PCGG) dated June 26, 1986, particularly where as in this case, the
government can, through its designated directors properly exercise control and
management over what appear to be properties and assets owned and
belonging to the government itself and over which the persons who appear in
this case on behalf of BASECO have failed to show any right or even any
shareholding in said corporation.”
It must however be emphasized that the
conduct of the PCGG nominees in the BASECO Board in the management of the
company’s affairs should henceforth be guided and governed by the norms herein
laid down. They should never for a
moment allow themselves to forget that they are conservators, not owners of the
business; they are fiduciaries, trustees, of whom the highest degree of
diligence and rectitude is, in the premises, required.
25. No Sufficient Showing of Other Irregularities
As to the other irregularities complained of by BASECO, i.e., the
cancellation or revision, and the execution of certain contracts, inclusive of
the termination of the employment of some of its executives,[119]
this Court cannot, in the present state of the evidence on record, pass upon
them. It is not necessary to do so. The issues arising therefrom
may and will be left for initial determination in the appropriate action. But the Court will state that absent any
showing of any important cause therefor, it will not
normally substitute its judgment for that of the PCGG in these individual
transactions. It is clear however, that
as things now stand, the petitioner cannot he said to have established the
correctness of its submission that the acts of the PCGG in question were done
without or in excess of its powers, or with grave abuse of discretion.
WHEREFORE, the petition is dismissed. The temporary restraining order issued on October 14, 1986 is lifted.
Yap, Fernan, Paras,
Gancayco, and Sarmiento, JJ., concur.
Teehankee, C.J., concurs in a separate opinion.
Feliciano, J., joins J. Melencio-Herrera’s qualified
concurring opinion.
Bidin and
Cortes, JJ., join J. Gutierrez, Jr. in his concurring and dissenting opinion.
Cruz, J., dissents in a
separate opinion.
Padilla, J., see concurring
opinion.
[1]
Annex A, petition, rollo, p. 26
[2]
Annex B, petition, rollo, p. 27
[3]
Annex C, petition, rollo, p. 28
[4]
Annex D-A, petition, rollo, p. 38
[5]
Annex E, petition, rollo, p. 39
[6]
Annex F, petition, rollo, p. 41
[7]
Annex G, petition, rollo, p. 42; Annex G-1, Suppl. Pleading; rollo, pp
150 et seq
[8]
Annex H, petition, rollo, p. 43; see also Suppl. Pleading, rollo,
pp. 136-137
[9]
Annex J, petition, rollo, p. 56
[10]
Annexes K, L, M, N and O, petition, rollo, pp.
57-61
[11] Rollo, p. 23
[12] Id.,
p. 11; emphasis supplied
[13] Id.,
p. 12
[14] Id.,
p. 6
[15] Id.,
pp. 6-7
[16] Id.,
p. 7
[17] Id.
[18] Id.,
p. 8.
[19] Id.,
p. 9
[20] Id.,
pp. 603-605
[21] Id.,
p. 8: Annex I, petition
[22] Id.,
p. 9
[23]
Promulgated on March 25, 1986
[24]
ART. II, Sec. 1, d; emphasis supplied
[25]
Whereas Clauses (Preamble)
[26]
Sec. 1
[27]
Sec. 2, a; emphasis supplied
[28]
Sec. 3, [b], [c], and [d]; emphasis supplied
[29]
Sec. 3, [a], [e], [f]
[30]
Sec. 3, [h]
[31]
First two Whereas Clauses; emphasis supplied
[32]
Emphasis supplied
[33]
Effective May 7, 1986
[34]
Sec. 1; emphasis supplied
[35]
Sec. 1; emphasis supplied
[36]
Sec. 3
[37]
Sec. 1, [d], ART. II, Provisional Constitution, Proclamation No. 3
[38]
Sec. 2, [a], Ex. Ord. No. 1
[39]
First Whereas Clause, Ex. Ord. No. 2
[40]
Second Whereas Clause, Ex. Ord. No. 2
[41]
Sec. 3 [c], Ex. Ord. No. 1
[42] Tuason, J., in Guido v. Rural Progress
Administration, 84 Phil. 847, emphasis supplied
[43]
Sec. 3 [c], Ex. Ord. No. 1
[44]
Except for the statement as to the duration of the writ of sequestration, this
is substantially the definition of sequestration set out in Section 1 (B) of
the Rules and Regulations of the PCGG (Rollo,
pp. 195-196). The term is used in the Revised
Anti-Subversion Law, P.D. NO. 885, to mean “the seizure of private
property or assets in the hands of any person or entity in order to prevent the
utilization, transfer or conveyance of the same for purposes inimical to
national security, or when necessary to protect the interest of the Government
or any of its instrumentalities. It
shall include the taking over and assumption of the management, control and
operation of the private property or assets seized” (reiterated in P.D.
No. 1835, the Anti- Subversion Law of 1981, repealed by P.D. No. 1975
prom. on May 2, 1985) (See Phil. Law Dictionary, Moreno, 1982 ed., pp.
568-569).
[45]
“As employed under the statutory and code provisions of some states, the
writ of sequestration is merely, but essentially, a conservatory measure,
somewhat in the nature of a judicial deposit.
It is a process which may be employed as a conservatory writ whenever the
right of the property is involved, to preserve, pending litigation, specific
property subject to conflicting claims of ownership or liens and privileges
**.” 79 C.J.S., 1047. “In Louisiana. A mandate of the court, ordering the sheriff,
in certain cases, to take in his possession, and to keep, a thing of which
another person has the possession, until after the decision of a suit, in order
that it be delivered to him who shall be adjudged entitled to have the property
or possession of that thing. ** .” Bouvier’s Law Dictionary, 3rd Rev., Vol
2, p. 3046. “Sequester” means, according to Black’s Law Dictionary,
“to deposit a thing which is the subject of a controversy in the hands of
a third person, to hold for the contending parties; to take a thing which is
the subject of a controversy out of the possession of the contending parties,
and deposit it in the hands of a third person.”
[46]
Ex. Ord. No. 2
[47]
See, e.g., de la Rama v. Villarosa,
8 SCRA 413, citing 5 Am. Jur., 14; Tayabas Land Co. v. Sharruf,
et al., 41 Phil. 382
[48]
Sec.3 [c], Ex. Ord. No. 1
[49] Id.
[50] Rollo, pp. 693-695
[51]
ART. XVIII
[52]
Emphasis supplied
[53]
BASECO’s counsel agrees (Rollo, p. 690).
[54]
Rule 57, Rules of Court
[55]
Rule 59, Rules of Court
[56]
C.A. No. 466; Chap. II, Title IX, National Internal Revenue Code of 1977; rollo, pp. 197198
[57] Rollo, p. 692
[58] Secs. 3 and 4, Rule 57; Sec. 3, Rule 59; Secs. 1-3, Rule 60, Rules of Court; see, e.g., Filinvest Credit Corp. v. Relova,
117 SCRA 420; see, too, 79 C.J.S. 1047 to the following effect: “The conservatory writ of sequestration
has been held to be a process of the most extensive application, under which
the whole of a person’s estate may be seized.
This writ of sequestration, like other conservatory remedies by which
the property of defendant is taken from his possession before judgment without
notice, and on the ex-parte showing of
plaintiff; is a remedy stricti juris; summary in its nature. ** .”
[59]
Sec. 1 (d), ART. II, Freedom Constitution (Proclamation No. 3); Ex Ord. No. 14
[60]
Ex. Ord. No. 2
[61]
What is anathema to due process is not so much the absence of previous notice
but the absolute absence thereof and lack of opportunity to be heard. See Caltex (Phil.) v.
Castillo, et al., 21 SCRA 1071, citing Fuentes v. Binamira,
L-14965, Aug. 31, 1961; Bermejo v. Barrios, 31
SCRA 764; Cornejo v. Sec. of justice, et al.,
57 SCRA 663; Superior Concrete Products, Inc. v. WCC, 82 SCRA 270; Tajonera v. Lamaroza, 110
SCRA 440
[62]
Last Whereas Clause
[63]
Also, Last Whereas Clause
[64] Rollo, p. 206
[65]
See footnote No. 50, supra
[66]
“A decision with absolutely nothing to support it is a nullity **” (Ang Tibay v. C.I.R., 69
Phil. 635, 642, citing Edwards v. McCoy, 22 Phil. 598
[67] Eff., Feb. 2, 1987
[68]
Freund, The Police Power (Chicago,
1904), cited by Cruz, I.A., Constitutional Law, 4th ed., p. 42
[69]
Smith, Bell & Co. v. Natividad, 40 Phil.
136, citing U.S. v. Toribio, 15 Phil. 85,
Churchill and Tait v. Rafferty, 32 Phil. 580,
and Rubi v. Provincial Board of Mindoro, 39 Phil 660
[70] Rubi v. Provincial Board, supra
[71]
Ex. Ord. No. 14
[72] Rollo, pp. 695-697
[73]
Par. 6, petition; rollo, p. 4
[74] Anex 100, Solicitor General’s Comment and Memorandum; rollo, p. 178
[75]
Annex P, petition
[76]
Annex 101, Solicitor General’s Comment; etc.; rollo,
pp. 367, 184
[77]
Annex 102, id., rollo, pp. 384, 185
[78]
Annex 103, id., rollo, pp. 393, 185
[79]
Annex 104, id., rollo, p. 404
[80]
Annex 9 [par. 31], and Annex 1 [p. 4] of the Solicitor General’s Manifestation
dated Sept. 24, 1986
[81] Id.
[82]
Annex 9 of Solicitor General’s aforsaid Manifestation
[83]
Annex 8, id.
[84]
Annex 1, id.
[85]
See footnotes No, 80-82 , supra
[86]
Emphasis supplied
[87] Rollo, p. 72; emphasis supplied
[88] Id.,
pp. 71-72
[89]
See par. 20, infra
[90]
Emphasis supplied; see par. 17, “Loans Obtained,” supra
[91]
Emphasis supplied
[92] Rollo, p 81
[93] Annex
6 of Solicitor General’s Manifestation, etc., dtd. Sept. 24, 1986, supra
[94] Rollo, pp. 192, 688
[95] Id.,
pp. 190-192
[96]
Annex P, petition, supra
[97]
Comment and Memorandum (in amplification of oral arguments) filed by the
Solicitor General on Oct. 15, 1986
(rollo, pp. 178 et seq);
Resolution, Oct. 28, 1986
(rollo, p. 611-A)
[98]
Annexes 1 to 19 and 19-A, id.
[99]
Annexes 20 to 99, inclusive, id.
[100]
Reply to Respondents’ Manifestation, etc. dtd. Nov. 5, 1986; rollo,
pp. 682 et seq
[101]
Rollo, p. 117
[102]
Id., p. 126; emphasis
supplied
[103]
Id., pp .128-129; emphasis
supplied
[104]
Id., p. 177 (A)
[105]
Id., pp. 682 et seq
[106]
Id., p. 739
[107]
Id., p. 760
[108]
Compliance dtd. Dec. 20, 1986; rollo, p
775
[109]
Annex P, petition, supra
[110]
Art. IV, Sec. 1 (12), 1973 Constitution
[111]
Peo. v. Ferrer, 48
SCRA 382, 395-396, citing Cummings v. U.S.,
4 Wall. (71 U S.) 277 (1867); accord,
Ex parte Garland,
4 Wall. (71 U.S.)
333 (1867), it being observed that this definition “was adopted by this
Court in People vs. Carlos, 78 Phil. 535, 544 (1947) and in People vs. Montenegro,
91 Phil. 883,885 (1952).”
112 Id.,
at pp. 396-397, citing De Veau v. Braisted,
363 U.S. 144,
160 (1960); United States
v. Lovett, 328 U S. 303,315 (1946)
113 Martin, Law &
Jurisprudence on the Freedom Constitution of
the Philippines, 1986 ed., p 310, citing Hale v. Henkel, 201 US 43
115 See Sec. 7, Rule 59, Rules of Court
116 Sec. 3, d, f, g, Ex. Ord. No. 1
117[117]
Sec. 4 [c], Exh. Ord. No.1
119 See Supplemental Pleading, rollo, pp. 136 et seq, and
Urgent Motion to Resolve Plea for Restraining Order, filed Oct. 16, 1986, rollo,
pp. 413 et seq
6 pt
6 pt
0
3
DISSENTING OPINION
CRUZ, J.:
My brother Narvasa has
written a truly outstanding decision that bespeaks a penetrating and analytical
mind and a masterly grasp of the serious problem we are asked to
resolve. He deserves and I offer him my
sincere admiration.
There is no question that all lawful efforts should be taken to
recover the tremendous wealth plundered from the people by the past regime in
the most execrable thievery perpetrated in all history. No right-thinking Filipino can quarrel with
this necessary objective, and on this score I am happy to concur with the ponencia.
But for all my full
agreement with the basic thesis of the majority, I regret I find myself unable
to support its conclusions in favor of the respondent PCGG. My view is that these conclusions clash with
the implacable principles of the free society, foremost among which is due
process. This demands our reverent
regard.
Due process protects the life, liberty and property of every
person, whoever he may be. Even the
most despicable criminal is entitled to this protection. Granting this distinction to Marcos, we are
still not justified in depriving him of this guaranty on the mere
justification that he appears to own the BASECO shares.
I am convinced and so submit that the PCGG cannot at this time
take over the BASECO without any court order and exercise thereover acts of
ownership without court supervision. Voting the shares is an act of ownership. Reorganizing the board of directors is an act of ownership. Such acts are clearly unauthorized. As the majority opinion itself stresses, the
PCGG is merely an administrator whose authority is limited to preventing the
sequestered properties from being dissipated or clandestinely transferred.
The court action prescribed in the Constitution is not inadequate
and is available to the PCGG. The
advantage of this remedy is that, unlike the ad libitum measures
now being taken, it is authorized and at the same time also limited
by the fundamental law. I see no reason
why it should not now be employed by the PCGG, to remove all doubts regarding
the legality of its acts and all suspicions concerning its motives.
6 pt
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CONCURRING AND DISSENTING OPINION
GUTIERREZ, JR., J.:
I concur, in part, in the
erudite opinion penned for the Court by my distinguished colleague Mr. Justice
Andres R. Narvasa. I agree insofar as it
states the principles which must govern PCGG sequestrations and emphasizes the
limitations in the exercise of its broad grant of powers.
I concur in the general propositions embodied in or implied from
the majority opinion, among them:
(1) The efforts of
Government to recover ill-gotten properties amassed by the previous regime
deserve the fullest support of the judiciary and all sectors of society. I believe, however, that a nation professing
adherence to the rule of law and fealty to democratic processes must adopt ways
and means which are always within the bounds of lawfully granted authority and
which meet the tests of due process and other Bill of Rights protections.
(2) Sequestration is intended to prevent the destruction,
concealment, or dissipation of ill-gotten wealth. The object is conservation and preservation. Any exercise of power beyond these
objectives is lawless usurpation.
(3) The PCGG exercises only such powers as are granted by law and
not proscribed by the Constitution. The
remedies it enforces are provisional and contingent. Whether or not sequestered property is indeed ill-gotten must be
determined by a court of justice. The
PCGG has absolutely no power to divest title over sequestered property or to
act as if its findings are final.
(4) The PCGG does not own sequestered property. It cannot and must not exercise acts of
ownership. To quote the majority
opinion, “one thing is certain x x x, the PCGG cannot
exercise acts of dominion.”
(5) The provisional takeover in
a sequestration should not be
indefinitely maintained. It is the duty
of the PCGG to immediately
file appropriate criminal or civil cases once the evidence has been gathered.
It is the difference
between what the Court says and
what the PCGG does which constrains me to dissent. Even as the Court emphasizes principles of
due process and fair play, it has unfortunately validated ultra vires acts
violative of those very same principles. While we stress the rules which must govern the PCGG in the exercise of its powers, the Court has failed to stop or check
acts which go beyond the power of sequestration given by law to the PCGG.
We are all agreed in the Court that the PCGG is not a judge. It is an investigator and prosecutor. Sequestration is only a preliminary or ancillary
remedy. There must be a principal and
independent suit filed in court to establish the true ownership of sequestered
properties. The factual premise that a
sequestered property was ill-gotten by former President Marcos, his family,
relatives, subordinates, and close associates cannot be
assumed. The
fact of ownership must be established in a proper suit before a court of
justice.
But what has the Court,
in effect, ruled?
Pages 21 to 33 of the
majority opinion are dedicated to a statement of facts which conclusively and indubitably shows that
BASECO is owned by President Marcos – and that it was acquired and vastly enlarged by the former President’s taking
undue advantage of his public office and using his powers, authority, or
influence.
There has been no court hearing, no trial, and no presentation of
evidence. All that we have is what the
PCGG has given us. The petitioner has
not even been allowed to see this evidence, much less refute it.
What the PCGG has gathered in the course of its seizures and investigations may be
gospel truth. However, that truth must
be properly established in a trial court, not unilaterally determined by the PCGG or declared by this Court in a special proceeding which only asks us to
set aside or enjoin an illegal exercise of power. After this decision, there is nothing more for a trial court to
ascertain. Certainly, no lower court
would dare to arrive at findings contrary to this Court’s conclusions, no
matter how insistent we may be in labelling such conclusions as “prima facie“. To
me, this is the basic flaw in PCGG
procedures that the Court is,
today, unwittingly legitimating. Even
before the institution of a court case, the PCGG concludes that
sequestered property is ill-gotten wealth and proceeds to exercise acts of
ownership over said properties. It
treats sequestered property as its own even before the oppositor-owners have
been divested of their titles.
The Court declares that a state of seizure is not to be
indefinitely maintained. This means that
court proceedings to either forfeit the sequestered properties or clear the
names and titles of the petitioners must be filed as soon as possible.
This case is a
good example of disregard or avoidance of this requirement. With the kind of evidence which the PCGG professes to
possess, the forfeiture case could have been filed simultaneously with the
issuance of sequestration orders or shortly thereafter.
And yet, the records show
that the PCGG appears to concentrate more on the means
rather than the ends, in running the BASECO, taking over the board
of directors and management, getting rid of security guards, disposing of
scrap, entering into new contracts and otherwise behaving as if it were already
the owner. At this late date and with
all the evidence PCGG claims to have, no court case has been filed.
Among the interesting items elicited during the oral arguments or
found in the records of this
petition are:
(1) Upon sequestering BASECO, some PCGG personnel lost no time in digging up paved premises with
jack hammers in a frantic search for buried gold bars.
(2) Two top PCGG volunteers charged each other with stealing
properties under their custody. The PCGG had to step in, dismiss the erring
representatives, and replace them with new ones.
(3) The petitioner claims the lower bid of a rock quarry operator
was accepted even as a higher and more favorable bid was offered. When the questionable deal was brought to
our attention, the awardee allegedly raised his bid to the level of the better
offer. The successful bidder later
submitted a comment in intervention explaining his side. Whoever is telling the truth, the fact
remains that multi-million peso contracts involving the operations of
sequestered companies should be entered into under the supervision of a court,
not freely executed by the PCGG even when the petitioner-owners question the
propriety and integrity of those transactions.
(4) The PCGG replaced eight out of eleven members of the BASECO
board of directors with its own men. Upon taking over full control of the corporation, the newly installed
board reversed the efforts of the former owners to protect their
interests. The new board fired the
BASECO lawyers who instituted the instant petition. It then filed a motion to withdraw this very same petition we are
now deciding. In other words, the
“new owners” did not want the Supreme Court to continue poking into
the legality of their acts. They moved
to abort the petition filed with us.
Any suspicion of
impropriety would have been avoided if the PCGG had filed the
required court proceedings and exercised its acts of management and
control under court supervision. The
requirements of due process would have been met.
One other matter I wish
to discuss in this separate opinion is PCGG’s selection of eight out of
the eleven members of the BASECO board of directors.
The election of the members of a board of directors is distinctly and unqualifiedly an act
of ownership. When stockholders of a
corporation elect or remove members of a board of directors, they exercise
their right of ownership in the company they own. By no stretch of the imagination can the revamp of a board of
directors be considered as a mere act of conserving assets or preventing the
dissipation of sequestered assets. The
broad powers of a sequestrator are more than enough to protect sequestered
assets. There is no need and no legal
basis to reach out further and exercise ultimate acts of ownership.
Under the powers which
PCGG has assumed and wields, it can amend the articles and by-laws of a
sequestered corporation, decrease the capital stock, or sell substantially all
corporate assets without any effective check from the owners not yet divested
of their titles or from a court of justice. The PCGG is tasked to preserve assets but when it exercises the acts of
an owner, it could also very well destroy. I hope that the case of the Philippine Daily Express,
a major newspaper closed by the PCGG, is an isolated example. Otherwise, banks, merchandizing firms,
investment institutions, and other sensitive businesses will find themselves in
a similar quandary.
I join the PCGG and all right thinking Filipinos in condemning
the totalitarian acts which made possible the accumulation of ill-gotten
wealth. I, however, dissent when
authoritarian and ulta vires methods are used to recover that
stolen wealth. One wrong cannot be
corrected by the employment of another wrong.
I, therefore, vote to grant the petition. Pending the filing of an appropriate case
in court, the PCGG must be enjoined from exercising any and all acts of
ownership over the sequestered firm.
6 pt
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CONCURRING OPINION
MELENCIO-HERRERA, J.:
I would like to qualify my concurrence in so far as the voting of
sequestered stock is concerned.
The voting of sequestered stock is, to my mind, an exercise of an
attribute of ownership. It goes beyond the
purpose of a writ of sequestration, which is essentially to preserve the
property in litigation (Article 2005, Civil Code). Sequestration is in the nature of a judicial deposit (ibid.).
I have no objection to according the right to vote sequestered stock
in case of a take-over of business actually belonging to the government or whose capitalization
comes from public funds but which, somehow, landed in the hands of private
persons, as in the case of BASECO. To
my mind, however, caution and prudence should be exercised in the case of
sequestered shares of an on-going private business enterprise, specially the
sensitive ones, since the true and real ownership of said shares is yet to be
determined and proven more conclusively by the Courts.
It would be more in keeping with legal norms if forfeiture
proceedings provided for under Republic Act No. 1379 be filed in Court and the
PCGG seek judicial appointment as a receiver or administrator, in which case,
it would be empowered to vote sequestered shares under its custody (Section 55,
Corporation Code). Thereby, the assets
in litigation are brought within the Court’s jurisdiction and the presence of
an impartial Judge, as a requisite of due process, is assured. For, even in its historical context,
sequestration is a judicial matter that is best handled by the Courts.
I consider it imperative that sequestration measures be
buttressed by judicial proceedings the soonest possible in order to settle the
matter of ownership of sequestered shares and to determine whether or not they
are legally owned by the stockholders of record or are “ill-gotten wealth”
subject to forfeiture in favor of the State. Sequestration alone, being actually an ancillary remedy to a principal
action, should not be made the
basis for the exercise of acts of dominion
for an indefinite period of time.
Sequestration is an extraordinary, harsh, and severe remedy. It should be confined to its lawful parameters and exercised,
with due regard, in the words of its enabling laws, to the requirements of fairness, due process (Executive
Order No. 14, May 7, 1986), and justice
(Executive Order No. 2, March 12, 1986).
6 pt
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CONCURRING OPINION
PADILLA, J.:
The majority opinion
penned by Mr. Justice Narvasa maintains and upholds the valid distinction
between acts of conservation and preservation of assets and acts of
ownership. Sequestration, freeze and temporary
take-over encompass the first type of acts. They do not include the second type of acts which are reserved only to
the rightful owner of the assets or business sequestered or temporarily taken
over.
The removal and election
of members of the board of directors of a corporate enterprise is, to me, a
clear act of ownership on the part of the shareholders of the corporation. Under ordinary circumstances, I would deny
the PCGG the authority to change and elect the members of BASECO’s Board of
Directors. However, under the facts as
disclosed by the records, it appears that the certificates of stock
representing about ninety-five (95%) per cent of the total ownership in
BASECO’s capital stock were found endorsed in blank in Malacanang (presumably
in the possession and control of Mr. Marcos) at the time he and his family fled
in February 1986. This circumstance let
alone the extent of the control Mr. Marcos exercised, while in power, over
policy decisions affecting BASECO, entirely satisfies my mind that BASECO was
owned and controlled by Mr. Marcos. This is calling a spade a spade. I am also entirely satisfied in my mind that Mr. Marcos could not have
acquired the ownership of BASECO out of his lawfully-gotten wealth.
Consequently, even ahead
of judicial proceedings, I am convinced
that the Republic of the Philippines, through the PCGG, has the right and even the duty to take-over full control and
supervision of BASECO.
Clean
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SEPARATE CONCURRING OPINION
TEEHANKEE, C.J.:
I fully concur with the
masterly opinion of Mr. Justice Narvasa. In the process of disposing of the issues
raised by petitioner BASECO in the case at bar, it comprehensively discusses the laws and principles governing the
Presidential Commission on Good Government (PCGG) and defines the scope and
extent of its powers in the discharge of its monumental task of recovering the
“ill-gotten wealth, accumulated by former President Ferdinand E. Marcos,
his immediate family, relatives, subordinates and close associates, whether
located in the Philippines or abroad (and) business enterprises and entities
owned or controlled by them during …. (the Marcos) administration, directly
or through nominees, by taking undue advantage of their public office and/or
using their powers, authority, influence, connections or relationship.”[1]
The Court is unanimous
insofar as the judgment at bar upholds the imperative need of recovering the
ill-gotten properties amassed by the previous regime, which “deserves the
fullest support of the judiciary and all sectors of society.”[2] To quote the pungent language of Mr. Justice
Cruz, “(T)here is no question that all lawful efforts should be taken to recover the tremendous wealth
plundered froth the people by the past regime in the most execrable thievery
perpetrated in all history. No
right-thinking Filipino can quarrel with this necessary objective, and on this
score I am happy to concur with the ponencia.”[3]
The Court is likewise
unanimous in its judgment dismissing the petition to declare unconstitutional
and void Executive Orders Nos. 1 and 2 and to annul the sequestration order of
April 14, 1986. For indeed, the 1987 Constitution overwhelmingly
adopted by the people at the February 2, 1987 plebiscite expressly recognized
in Article XVIII, section 26 thereof[4] the vital functions of respondent PCGG to
achieve the mandate of the people to recover such ill-gotten wealth and
properties as ordained by
Proclamation No. 3 promulgated on March 25, 1986.
The Court is likewise
unanimous as to the general rule set forth in the main opinion that “the
PCGG cannot exercise acts of dominion over property sequestered, frozen or
provisionally taken over” and “(T)he PCGG may thus exercise only
powers of administration over the property or business sequestered or
provisionally taken over, much like a court-appointed receiver, such as to
bring and defend actions in its own name; receive rents; collect debts due; pay
outstanding debts; and generally do such other acts and things as may be
necessary to fulfill its mission as conservator and administrator. In this
context, it may in addition enjoin or restrain any actual or threatened
commission of acts by any person or entity that may render moot and academic,
or frustrate or otherwise make ineffectual its efforts to carry out its task;
punish for direct or indirect contempt
in accordance with the Rules of Court; and seek and secure the assistance of
any office, agency or instrumentality of the government. In the case of sequestered businesses generally (i.e. going concerns, businesses in
current operation), as in the case of sequestered objects, its essential role,
as already discussed, is that of conservator, caretaker, ‘watchdog’ or
overseer. It is not that of manager, or
innovator, much less an owner.”[5]
Now, the case at bar
involves one where the third and most encompassing and rarely invoked of
provisional remedies[6], the provisional takeover of the Baseco properties and business operations has been availed
of by the PCGG, simply because the evidence on hand, not only prima facie but convincingly with substantial and
documentary evidence of record establishes that the corporation known as
petitioner BASECO “was owned or controlled by President Marcos ‘during his
administration, through nominees, by taking undue advantage of his public
office and/or using his powers, authority, or influence;’ and that it was by
and through the same means, that BASECO had taken over the business and/or
assets of the [government-owned] National Shipyard and Engineering Co., Inc.,
and other government-owned or controlled entities.” The documentary
evidence shows that petitioner BASECO (read Ferdinand E. Marcos) in successive
transactions all directed and approved by the former President – in an orgy of
what according to the PCGG’s then chairman, Jovito Salonga, in his statement
before the 1986 Constitutional Commission, “Mr. Ople
once called ‘organized pillage'” – gobbled up the government corporation
National Shipyard & Steel Corporation (NASSCO), its shipyard at Mariveles, 300 hectares of land in Mariveles
from the Export Processing Zone Authority, Engineer Island itself in
Manila and its complex of equipment and facilities including structures,
buildings, shops, quarters, houses, plants and expendable or semi-expendable
assets and obtained huge loans of $19,000,000.00 from the last available
Japanese war damage fund, P30,000,000.00 from the NDC and P12,400,000.00 from
the GSIS. The sordid details are set
forth in detail in Paragraphs 11 to 20 of the main opinion. They include confidential reports from then BASECO president Hilario
M. Ruiz and the deposed President’s brother-in-law, then Captain (later
Commodore) Alfredo Romualdez, who although not on
record as an officer or stockholder of BASECO reported directly to the deposed
President on its affairs and made the recommendations, all approved by the
latter, for the gobbling up by BASECO of all the choice government assets and
properties.
All this evidence has
been placed of record in the case at bar.
And petitioner has had all the time and opportunity to refute it,
submittals to the contrary notwithstanding, but has dismally failed to do so. To cite one glaring instance: as stated in the main opinion, the evidence
submitted to this Court by the Solicitor General “proves that
President Marcos not only exercised control over BASECO, but also that he
actually owns well nigh one hundred percent of its outstanding stock.” It
cites the fact that three corporations, evidently front or dummy corporations,
among twenty shareholders, in name, of BASECO, namely Metro Bay Drydock, Fidelity Management, Inc. and Trident Management
hold 209,664 shares or 95.82% of BASECO’s outstanding
stock. Now, the Solicitor General points
out further that BASECO certificates “corresponding to more than
ninety-five percent (95%) of all the outstanding shares of stock of BASECO,
endorsed in blank, together with deeds of assignment of practically all the outstanding
shares of stock of the three (3) corporations above mentioned (which hold 95.82% of all BASECO stock), signed by
the owners thereof although not notarized”[7]
were found in Malacañang shortly after the deposed President’s sudden flight from the country
on the night of February 25, 1986.
Thus, the main opinion’s unavoidable conclusion that “(W)hile the petitioner’s counsel was quick to dispute this
asserted fact, assuring this Court that the BASECO stockholders were still in
possession of their respective stock certificates and had ‘never endorsed ***
them in blank or to anyone else,’ that denial is exposed by his own prior and
subsequent recorded statements as a mere gesture of defiance rather than a
verifiable factual declaration…. Under the circumstances, the Court can only
conclude that he could not get the originals from the stockholders for the
simple reason that as the Solicitor General maintains, said stockholders
in truth no longer have them in their possession, these having already been
assigned in blank to President Marcos.”[8]
With this strong unrebutted evidence of record in this Court, Justice Melencio-Herrera, joined by Justice Feliciano, expressly
concurs with the main opinion upholding the commission’s take-over, stating
that “(I) have no objection to according the right to vote sequestered
stock in case of a take-over of business actually belonging to the government
or whose capitalization comes from public funds but which, somehow, landed in
the hands of private persons, as in the case of BASECO.” They merely
qualify their concurrence with the injunction that such take-overs be exercised with “caution and prudence”
pending the determination of “the true and real ownership” of the
sequestered shares. Suffice it to say in
this regard that each case has to be judged from the pertinent
facts and circumstances and that the main opinion emphasizes sufficiently that
it is only in the special instances specified in the governing laws grounded on
the superior national interest and welfare and the practical necessity of
preserving the property and preventing its loss or disposition that the
provisional remedy of provisional take-over is exercised.
Here, according to the
dissenting opinion, “the PCGG concludes that sequestered property is ill-gotten
wealth and proceeds to exercise acts of ownership over said
properties….” and adds that “the fact of ownership must be
established in a proper suit before a court of justice” – which this Court
has preempted with its finding that “in the context of the proceedings at
bar, the actuality of the control by President Marcos of BASECO has been
sufficiently shown.”
But BASECO who has
instituted this action to set aside the sequestration and take-over orders of
respondent commission has chosen to raise these very issues in this Court. We cannot ostrich-like hide our head in the
sand and say that it has not yet been established in the proper court that what
the PCGG has taken over here are government properties, as a matter of
record and public notice and knowledge, like the NASSCO, its Engineer Island
and Mariveles Shipyard and entire complex, which have
been pillaged and placed in the name of the dummy or front company named BASECO
but from all the documentary evidence of record shown by its street certificates
all found in Malacañang should in reality read
“Ferdinand E. Marcos” and/or his brother-in-law. Such take-over can in no way be termed
“lawless usurpation”, for the government does not commit any act of
usurpation in taking over its own properties that have been
channeled to dummies, who are called upon to prove in the proper court action
what they have failed to do in this Court, that they have lawfully acquired
ownership of said properties, contrary to the documentary evidence of
record, which they must likewise explain away.
This Court, in the exercise of its jurisdiction on certiorari and
as the guardian of the Constitution and protector of the people’s basic
constitutional rights, has entertained many petitions on the part of parties
claiming to be adversely affected by sequestration and other orders of the
PCGG. This Court set the criterion that
such orders should issue only upon showing of a prima facie case,
which criterion was adopted in the 1987 Constitution. The Court’s judgment cannot be faulted if
much more than a prima facie has been shown in this case, which
the faceless figures claiming to represent BASECO have failed to refute or
disprove despite all the opportunity to do so.
The record plainly shows
that petitioner BASECO which is but a mere shell to mask its real owner did not
and could not explain how and why they received such favored and preferred
treatment with tailored Letters of Instruction and handwritten personal
approval of the deposed President that handed it on a silver platter the whole
complex and properties of NASSCO and Engineer Island and the Mariveles Shipyard.
It certainly would be the height of absurdity and helplessness if
this government could not here and now
take over the possession and custody of its very own properties and assets
that had been stolen from it and which it had pledged to recover for the
benefit and in the greater interest of the Filipino people, whom the past
regime had saddled with a huge $27-billion foreign debt that has since
ballooned to $28.5-billion.
Thus, the main opinion correctly concludes that “(I)n the
light of the affirmative showing by the
Government that, prima facie at least, the stockholders and
directors of BASECO as of April, 1986 were mere ‘dummies’, nominees or alter
egos of President Marcos, at any rate, that they are no longer owners of
any shares of stock in the corporation, the conclusion cannot be avoided that
said stockholders and directors have no basis and no standing whatever to cause
the filing and prosecution of the instant proceeding; and to grant relief to
BASECO, as prayed for in the petition, would in effect be to restore the
assets, properties and business sequestered and taken over by the PCGG to
persons who are ‘dummies’ nominees or alter egos of the former
President.”[9]
And Justice Padilla in
his separate concurrence “called a spade a spade,” citing the street
certificates representing 95% of BASECO’s outstanding
stock found in Malacañang after Mr. Marcos’ hasty
flight in February, 1986 and the extent of the control he exercised over
policy decisions affecting BASECO and concluding that “Consequently, even
ahead of judicial proceedings, I am convinced that the Republic of the
Philippines, thru the PCGG, has the right and even the duty to take over full
control and supervision of BASECO.”
Indeed, the provisional
remedies available to respondent commission are rooted in the police
power of the State, the most pervasive and
the least limitable of the powers of Government since it represents “the power of sovereignty, the power to govern
men and things within the limits of its domain.”[10] Police power has been defined as the power
inherent in the State “to prescribe regulations to promote the health,
morals, education, good order or safety, and general welfare of the
people.”[11] Police power rests upon public necessity and
upon the right of the State and of the public to self-protection.[12] “Salus
populi suprema est lex” or “the
welfare of the people is the Supreme Law.”[13] For this reason, it is co-extensive with the
necessities of the case and the safeguards of public interest.[14] Its scope expands and contracts with
changing needs.[15] “It may be said in a general way that
the police power extends to all the great public needs. It may be put forth in aid of what is
sanctioned by usage, or held by the prevailing morality or strong and
preponderant opinion to be greatly and immediately necessary to the public
welfare.”[16] That the public interest or the general
welfare is subserved by sequestering the purported
ill?gotten assets and properties and taking over stolen properties of the
government channeled to dummy or front companies is stating the obvious. The recovery of these ill-gotten assets and
properties would greatly aid our financially crippled government and hasten our
national economic recovery, not to mention the fact that they rightfully belong
to the people. While as a measure of
self-protection, if, in the interest of general welfare, police power may be
exercised to protect citizens and their businesses in financial and economic
matters, it may similarly be exercised to protect the government itself against
potential financial loss and the possible disruption of governmental
functions.[17] Police power as the power of self-protection
on the part of the community bears the same relation to the community that the
principle of self-defense bears to the individual.[18] Truly, it may be said that even more than
self-defense,
the recovery of ill-gotten
wealth and of the government’s own properties involves the material and moral
survival of the nation, marked as the past regime was by the obliteration of
any line between private funds and the public treasury and abuse of unlimited
power and elimination of any accountability in public office, as the evidence
of record amply shows.
It should be mentioned
that the tracking down of the deposed President’s actual ownership of the
BASECO shares was fortuitously facilitated by the recovery of the street
certificates in Malacañang after his hasty flight
from the country last year. This is not
generally the case.
For example, in the
ongoing case filed by the government to recover from the Marcoses
valuable real estate holdings in New York and the Lindenmere
estate in Long Island, former PCGG chairman Jovito Salonga has revealed that their names “do not appear
on any title to the property. Every
building in New York is titled in the name of a Netherlands Antilles
corporation, which in turn is purportedly owned by three Panamanian
corporations, with bearer shares. This
means that the shares of this corporation can change hands any time, since they
can be transferred, under the law of Panama, without previous registration on
the books of the corporation. One of the first documents that we discovered shortly after the February
revolution was a declaration of trust handwritten by Mr. Joseph Bernstein on
April 4, 1982 on a Manila Peninsula Hotel stationery stating that he would act as a trustee for the benefit of President Ferdinand Marcos and would
act solely pursuant to the instructions of Marcos with respect to the Crown
Building in New York.”[19]
This is just to stress
the difficulties of the tasks confronting respondent PCGG, which nevertheless
has so far commendably produced unprecedented positive results. As stated by then chairman Salonga:
“PCGG has turned over to the Office of the President around 2
billion pesos in cash, free of any lien.
It has also delivered to the President – – as a result of a compromise
settlement – – around 200 land titles involving vast tracts of land in Metro
Manila, Rizal, Laguna, Cavite,
and Bataan, worth
several billion pesos. These lands are
now available for low-cost housing projects for the benefit of the poor
and the dispossessed amongst our people.
“In the legal custody of the Commission, as a result of
sequestration proceedings, are expensive jewelry amounting to 310 million
pesos, 42 aircraft amounting to 718 million pesos, vessels amounting to 748
million pesos, and shares of stock amounting to around 215 million pesos.
“But, as I said, the bulk of the ill-gotten wealth is located
abroad, not in the Philippines. Through
the efforts of the PCGG, we have caused the freezing or sequestration of
properties, deposits, and securities probably worth many billions of pesos in
New York, New Jersey, Hawaii, California, and more importantly — in
Switzerland. Due to favorable
developments in Switzerland, we may expect, according to our Swiss lawyers, the
first deliveries of the Swiss deposits in the foreseable
future, perhaps in less than a year’s time.
In New York, PCGG through its lawyers who render their services free of
cost to the Philippine government, succeeded in getting injunctive relief
against Mr. and Mrs. Marcos and their nominees and agents. There is now an offer for settlement that is
being studied and explored by our lawyers there.
“If we succeed in recovering not all (since this is impossible)
but a substantial part of the ill-gotten wealth here and in various countries
of the world — something the revolutionary governments of China, Ethiopia,
Iran and Nicaragua were not able to accomplish at all with respect to properties out side their territorial boundaries
— the Presidential Commission on Good Government, which has undertaken the
difficult and thankless task of trying to undo what had been done so secretly
and effectively in the last twenty years, shall have more than justified its
existence.”[20]
The misdeeds of some PCGG
volunteers and personnel cited in the dissenting opinion do not detract at all
from the PCGG’s accomplishments, just as no one would do away with newspapers because
of some undesirable
elements. The point is that all such
misdeeds have been subject to public exposure and as stated in the dissent
itself, the erring PCGG representatives have been forthwith dismissed and
replaced.
The magnitude of the tasks that confront respondent PCGG with its
limited resources and staff support and volunteers should be appreciated,
together with the assistance that foreign governments and lawyers have
spontaneously given the commission.
A word about the PCGG’s firing of the
BASECO lawyers who filed the present petition challenging its questioned
orders, filing a motion to withdraw the petition, after it had put in eight of
its representatives as directors of the BASECO board of directors. This was entirely proper and in accordance
with the Court’s Resolution of October 28, 1986, which denied BASECO’s motion for the issuance of a restraining order
against such take-over and declared that “the government can, through its
designated directors, properly exercise control and management over what appear to be properties and assets owned and belonging to the government
itself and over which the persons who appear in this case on behalf of BASECO have
failed to show any right or even any shareholding in said corporation.” In other words, these dummies or fronts cannot seek to question the
government’s right to recover the very properties and assets that have been
stolen from it by using the very same stolen properties and funds derived therefrom. If they
wish to pursue their own empty claim, they must do it on their own, after first
establishing that they indeed have a lawful right and/or shareholding in
BASECO.
Under the 1987
Constitution, the PCGG is called upon to file the judicial proceedings for
forfeiture and recovery of the sequestered or frozen properties covered by its
orders issued before the ratification of the Constitution on February 2, 1987, within six months from such ratification,
or by August 2, 1987. (For those orders
issued after such ratification, the judicial action or proceeding must be
commenced within six months from the issuance thereof.) The PCGG has not really
been given much time, considering the magnitude of its tasks. It is entitled to some forbearance, in availing of the
maximum time granted it for the filing
of the corresponding judicial action with the Sandiganbayan.
[1]
Executive Order No. 1, section 2.
[2]
Gutierrez, J., concurring and dissenting opinion.
[3]
Lone dissenting opinion of Cruz,
J.
[4]
Text reproduced in Par. 7, sub-par. 3 of main opinion.
[5]
Main opinion, par. 24.
[6]
The other two provisional remedies are the issuance of sequestration and (2)
freeze orders. See main opinion, par. 7.
[7]
Main opinion, par. 20.
[8]
Idem.
[9]
Main opinion, par. 21.
[10]
Chief Justice Taney, cited in Morfe vs. Mutuc, 22 SCRA 424 (1968).
[11]
Annotation, 35 SCRA 500, citing Primicias vs. Fugoso,
80 Phil. 71; Ignacio vs. Elas, 55 OG 2162.
[12]
Churchill vs. Rafferty, 32 Phil. 580, citing 8 Cyc.,
863.
[13]
Annotation, 35 SCRA 500, at p. 501, citing Coke 139.
[14]
Vol. 16A AMJUR 2d, Constitutional Law, Sec. 370.
[15]
BERNAS, Primer on the 1973 Constitution, p. 32, 1983 ed.
[16]
Churchill vs. Rafferty, 32 Phil. 580, citing Noble State Bank vs.
Haskell (219 US
[1911] 575).
[17]
Vol. 16 AMJUR 2d, Constitutional Law, Sec. 420.
[18]
Vol. 16 AMJUR 2d, Constitutional
Law, Sec. 370.
[19]
Jovito R. Salonga: “The Practical and Legal Aspects of the
Recovery of Ill-gotten Wealth,” Gregorio Araneta
Memorial Lecture delivered on August
25, 1986 at the Ateneo Law School.
[20]
Idem.