REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. THE HONORABLE SANDIGANBAYAN (FIRST DIVISION), RESPONDENT.

The nature and scope of the power of administration of the Presidential
Commission on Good Government (PCGG) over sequestered properties is again put
in issue in this petition for certiorari to declare null and void the
resolution^[1]
of the First Division of the Sandiganbayan,
promulgated on May 18, 1989, denying the PCGG’s
motion to sell the aircraft subject of this petition.

The records show that on July 31,
1987, petitioner Republic of the Philippines, through the PCGG, filed with respondent
court a complaint, docketed as Civil Case No. 0033, against Eduardo Cojuangco, Jr. and sixty (60) other defendants for reconveyance, reversion, accounting, restitution and
damages.  The complaint was subsequently
amended and eventually expanded on January 25, 1988.

Among the sequestered assets involved in said Civil Case No. 0033
is an aircraft, more particularly described as Follows:

Avions Dassault – Breguet Falcon 50

Jet Model – 1982

Manufacturer’s Serial No. 082

Cert, of Reg. No. RP-C754

On March 20, 1989,
the PCGG filed in respondent court a Motion for Authority to Sell Sequestered
Aircraft Pending Litigation, alleging inter alia
that:

“2.     From the time it
was sequestered up to the present, the aircraft has been parked at the Villamor Airbase at Pasay City
and due to non-use and continuous exposure to the elements like rust and
corrosion, the same is fast deteriorating. 
Likewise, from the time of its sequestration the said aircraft has not
been properly maintained or flown for maintenance purposes resulting in its
depreciation and deterioration faster than usual.

“3.     In a letter dated
January 27, 1989 to the
PCGG, International Enterprise, Inc. offered to buy the subject aircraft x x x.

“4.     Pursuant to such
offer, the PCGG requested the Philippine Airlines (PAL) for an evaluation of
the same aircraft. PAL came up with the finding that buying a brand new
aircraft is mere justified than reconditioning the subject aircraft into flying
condition which would entail an expense of not less than $6 to $8 Million US
Dollars, x x x

“5.     Earlier, on
January 11 and 20, 1989, an American firm named AVSTAR of Seattle, Washington,
U.S.A. evaluated and appraised the aircraft to be worth no more than $4 Million
US Dollars, x x x

“6.     Considering that
the aircraft is fast depreciating and deteriorating, there is an imperative
need for its sale so as not to render it valueless pending termination of the
proceedings in the ‘instant case, not to mention the maintenance expense that
would be saved by PCGG if the sale were to be allowed.

“7.     The sale of the
aircraft has been recommended by the PCGG as shown in the attached copy of the
Memorandum dated February 2, 1989,
x x x.

“8.     The proceeds of
the sale, if allowed, may be deposited in escrow for the benefit of whoever
shall be adjudged the rightful owner of the said aircraft in the instant
case.”^[2]

At the scheduled hearing of the said motion on March 22, 1989,
the Sandiganbayan deferred consideration thereof for
the reason that “the Office of the Solicitor General has not been fully
apprised of the relationships involved between the parties to the case, the
airplane subject of sequestration and the owner thereof which is the United
Chemicals Corporation x x x.”^[3]

On April 7, 1989, the PCGG filed with the Sandiganbayan
a Motion for Early Resolution,^[4]
alleging that the PCGG’s power of administration
necessarily includes the authority to sell sequestered assets which are in
immediate danger of deterioration, purportedly in accordance with the principle
laid down in Bataan Shipyard &
Engineering Co., Inc. vs. Presidential Commission on Good Government, et al.^[5]
(BASECO case), to the effect that the PCGG may exercise “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; and generally do such other
acts and things as may be necessary to fulfill its mission as conservator and
administrator.” The PCGG likewise invoked Section 11 of Rule 57 of the
Rules of Court.

At the hearing set on April
14, 1989, the PCGG,
through counsel, argued on. the urgency of the aircraft’s sale. During the same
hearing, Atty. Estelito P. Mendoza, appearing for
defendant Eduardo Cojuangco, Jr., interposed no
objection to PCGG’s decision to sell and
“categorically informed the Court that defendant Cojuangco
would neither be benefited nor prejudiced by whatever disposition the Court
might make on the motion to sell the aircraft.” Thereafter, the incident
was submitted for resolution.^[6]

On April 27, 1989,
the PCGG filed a Motion to Withdraw its Earlier Motion for Authority to Sell
Aircraft,^[7]
after the Sandiganbayan failed to resolve the first
motion filed by the PCGG.  However,
instead of resolving this last motion, the Sandiganbayan
issued its aforesaid resolution,^[8]
now subject of this petition, denying PCGG’s motion
to sell the aircraft “since in the very first instance, no justification prima
facie . or otherwise has been demonstrated for its seizure
from its Lessee,”^[9]
considering that the Certificate of Registration of the aircraft issued by the
Bureau of Air Transportation on October 30, 1986, identifies the owner as
“UNITED COCONUT CHEMICALS, INC. (Lessee).”^[10]

In so holding, the Sandiganbayan
declared that:

“Unquestionably, neither the issue of the ownership of the
aircraft nor of the propriety of the sequestration thereof has been raised in
the pleadings before the Court regard.” (sic) to the motion to sell the
aircraft in question.

“The invocation, however, of the power of the court to
authorize the disposition of a sequestered asset or seized property (the
sequestration or seizure of which was not upon this Court’s authority) must
necessarily, though perhaps implicitly, include a plea for the affirmance of the propriety of that seizure.  And were there no reason for this Court to doubt
the original seizure, then this Court would, as it must, accord the PCGG the rebuttable presumption of regularity in its acts.

“The plaintiff-movant through the
PCGG itself, however, has presented this Court with facts which serve to dilute
the presumption of regularity which this Court would accord PCGG’s
own acts, namely:

1.            The aircraft in
question is apparently NOT owned by UNICHEM;

2.            It is apparently
NOT owned by defendant Cojuangco either but, upon
plaintiff’s own admission, by ‘Faysound‘.  Certainly, no averment has been made either by PCGG or anybody else to prove false
the data on the Certificate of Registration of that aircraft to that effect;

3.            UNICHEM itself
is not a sequestered corporation (only the shares of stock therein owned by defendant
Cojuangco appear to have been sequestered);

4.            The lease over
the aircraft, according to the plaintiff itself, lapsed (in 1987) more than two
years ago;

5.            The renewal of
the Certificate of Registration was issued by the Bureau of Air Transportation
on October 30, 1986, four
months AFTER this and other aircraft had been ordered sequestered, per writ of
sequestration on file with this Court.

“There is, then, every indication on the very face of the
pleadings of plaintiff-movant and the allegations in
open Court that the sequestration of the aircraft now sought to be sold was not
in order.  It is true that no one, not
even the lessor, has come to Court nor, as far as
this Court is properly informed, has anyone sought to question the propriety of
the plaintiff’s (or PCGG’s) seizure thereof anywhere
else.  This silence from others who may
be parties in interest to this aircraft, however, does not justify
authorization of the projected sale of that aircraft when it becomes apparent
that the premises for such an authorization do not exist – in this instance a
valid sequestration.

“It will not do to say. that the issue
of ownership can be taken up later when, the case proceeds to trial since one
of the issues even now, remains the prima facie propriety of PCGG’s seizure thereof which PCGG now makes abundantly
apparent to have been absent.^[11]

Hence, this petition with the Sandiganbayan
as the respondent.

On June 6, 1989, a temporary restraining order was issued by the
Court en banc ordering respondent Sandiganbayan,
its agents, representatives or any person or persons acting in its place or
stead to cease and desist from enforcing its resolution promulgated on May 18,
1989 in Civil Case-No. 0033.^[12]

Under date of November 7, 1989, petitioner manifested to this
Court that the aircraft subject of the petition had been sold by PCGG to Walter
Fuller Aircraft, Inc. on September 28, 1989 “to preserve the value of the
aircraft and to prevent its rapid deterioration,” pursuant to which the
“sequestration was (then) lifted, and it would be substituted by the
proceeds of the sale deposited in escrow, x x x.”^[13]

The PCGG asseverates that the sale of the subject aircraft is in
pursuance, of the exercise of its administrative power to preserve and conserve
sequestered assets under its control and supervision; that the Sandiganbayan may not interfere with PCGG’s
decision to sell the aircraft or with an act involving an exercise of
administrative discretion of PCGG consonant with PCGG’s
mandated duty to preserve and conserve the sequestered asset; that the
“courtesy”‘ motion to sell the sequestered aircraft pending
litigation was “filed by the PCGG purely in deference to the Sandiganbayan and by way of informing the said court about
the sale; that equitable and pragmatic considerations justify the PCGG decision
to sell the aircraft; that the determination by the Sandiganbayan
as to the ownership of the said aircraft prior to the termination of the trial
of the case is premature; and that there exists prima facie
evidence to justify the sequestration of the aircraft.

Contrarily and in support of its assailed
resolution, the Sandiganbayan argues that no prima
facie evidence exists to warrant the sequestration of the subject aircraft, and
that the sale thereof requires prior judicial authority from the Sandiganbayan.

I. It is the submission of the PCGG that its power to administer
and conserve necessarily includes the authority to sell sequestered assets
which are in immediate danger of deterioration or dissipation, such as the
aircraft subject of this petition, since, after all, the purpose of such sale
is to preserve the remaining value of the assets in the form of cash placed in
escrow.  It avers that the sale of the
aircraft is in pursuit of its mandated objectives of conserving or preserving
the sequestered asset in the valid exercise of its discretionary administrative
functions.  It likewise asserts that in
accordance with the ruling laid down in Presidential Commission on Good
Government. et al. vs. Securities and Exchange Commission, et al.^[14]
(SEC case), it may resort to “acts of strict ownership” provided said
acts are for the objective of conservation, preservation or otherwise
prevention of dissipation of sequestered assets.

This Court, in the SEC case above adverted to, held that:

“x x x To our mind, though, it is not so much the nature of the
act proposed to be done by the PCGG that is essential, but rather, the purpose
for doing so.  The prime consideration
should be: is the act proposed to be done by the PCGG merely an act of
administration or an act of strict ownership essential to the pursuit of its
objectives?  For it cannot be totally
discounted that situations may arise wherein only through an act of strict
ownership can the PCGG be able to prevent the dissipation of the assets of the
sequestered corporation or business.’x x x.”

The cited case involves the power of the PCGG to vote the
sequestered shares for the purpose of deleting from the Articles of
Incorporation and By-Laws of Eastern Telecommunications Philippines, Inc.
(ETPI) the “right of first refusal” clause.  While recognizing the PCGG’s
right to exercise acts of strict ownership necessary to the attainment of its
objectives, the Court denied therein said right from the PCGG for the reason
that “[w]e cannot see our way clear as to how this move could help prevent
the dissipation of the corporation’s assets, particularly when it has its own
representatives in the Board of Directors, who can effectively provide such
measures and safeguards to prevent such dissipation.”

The leading BASECO case, hereinbefore cited, emphasized in no
uncertain terms that the PCGG has only powers of administration, hence it may
not exercise acts of ownership.  It bears
repeating for convenient reference what the Court underscored therein:

“a.     PCGG May Not
Exercise .Acts of Ownership

One thing is certain, and should be 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, 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.” (Emphasis in the original text.)

To this, general rule, an exception was also provided for, to
wit:

“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 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 exists 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, x x x“

The Presidential Memorandum of June 26, 1986 referred to in the BASECO case reads as
follows:

“Consistent with Executive Order Nos. 1, 2 and 14, as regards
recovery of ill-gotten wealth, the Commission is authorized 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; adoption and amendment of by-laws;
sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of corporate properties,-incurring, creating. or increasing
bonded indebtedness; increase or decrease of capital stock; merger or
consolidation of the corporation with another or other corporations; investment
of corporate funds in another corporation or business or for purposes other
than the primary purpose for which it was organized; or for similar purposes
pending the outcome of proceedings to determine the ownership of said shares of
stock.”^[15]

In the light of the foregoing pronouncements, we hold that the
ruling laid down in the SEC case relied upon by the PCGG should be given a
strict and limited interpretation and application.  Firstly, the PCGG may perform such acts of
strict ownership only as may necessarily be required by or result from the
exercise of its vested power to vote on the sequestered shares of stock of a
corporation; and, secondly, such act is essential to the attainment of the PCGG’s stated purpose for sequestration, i.e., to prevent
the dissipation of the corporate assets.

In the case at bar, the PCGG has categorically stated that the
sale of the subject aircraft is in pursuance of its administrative duty to
preserve and conserve the sequestered asset. 
We have earlier discussed, quoting our ruling in the BASECO case, the various
acts falling within the ambit of the PCGG’s power of
administration.  The sale of sequestered
property, which is an attribute of ownership, is ordinarily not within the
“preservation and conservation” aspect of the PCGG’s
administrative objectives.  On the basis
of our preceding discussions, the instant case is not necessarily one of the
situations contemplated by the law and jurisprudence mentioned therein.  It is thus patently erroneous for the PCGG to
rely only on our ruling in the SEC case, which involves the exercise of an act
of strict ownership, in order to sanction an act which is clearly beyond the
realm of its administrative powers. 
Hence, proper court authority, i.e., the approval of the Sandiganbayan, is a condition sine qua non to the
sale of the sequestered aircraft, the lack of which constitutes a grave abuse
of discretion on the part of PCGG and would render the sale null and void.

That the filing-of the motion to sell was merely in deference or
an act of “courtesy “to the Sandiganbayan and
did not necessarily mean that the PCGG was invoking the court’s authority is,
to our mind, a belated and contrived submission of the PCGG designed to becloud
the resultant implications of such act. 
For all intents and purposes, the filing of the motion to sell must be
considered as an outright recognition by the PCGG of the power of the Sandiganbayan to allow or disallow the sale.  It cannot now dispute such authority after
it, had submitted thereto and had obtained an adverse judgment therefrom.

II. The PCGG insists that respondent cannot interfere in its
decision to sell the subject aircraft, on the former’s
assumption that the exercise of such discretion is in pursuance of it’s
administrative duty to preserve and conserve sequestered assets.

While we are not discounting the ruling enunciated in Presidential
Commission on Good Government vs. Peña, etc, et al.^[16]
(PENA case) invoked by the PCGG, reiterating the elementary principle that
“purely administrative and discretionary functions may not be interfered
with by the courts,” suffice it to say that this doctrine finds no proper
application to the case at bar.  As
hereinbefore explained, the sale of a sequestered asset is not within the
limited .administrative powers vested in the PCGG.

III. It is likewise the theory of the PCGG that the similarity
between its power of sequestration and the provisional remedy of preliminary
attachment or receivership is exclusive. 
By this, it means that the similarity refers only to the fact that the
property under sequestration, receivership or preliminary attachment may be
sold pendente lite
whenever necessary, such as perishable goods or where the sale will subserve the interests of all parties to the case.  It contends that the only difference between
the sale of assets under sequestration and those under ordinary attachment or
receivership is that in the. former, the decision to sell involves PCGG’s exercise of executive or administrative discretion,
while in the latter, the decision involves the Sandiganbayan’s
exercise of judicial discretion.  Finally,
so it claims, while property under preliminary attachment may be sold only upon
authority of the court having jurisdiction over the main case,^[17]
this rule does not apply to sequestered properties for the following reasons:
(1) the writ of preliminary attachment is issued by the court while the writ of
sequestration is issued by the PCGG; (2) the authority to sell the property
under preliminary attachment is derived from the Rules of Court while that of
sequestration emanates from Executive Order Nos. 1 and 2; and (3) while the
property in preliminary attachment is deemed under the custody of the court,
the sequestered property is under the custody of PCGG.^[18]

The thesis does not merit acceptance.

We have deliberated on and resolved this issue in the BASECO case,
which we reiterated in Republic of the Philippines
vs. Sandiganbayan, et al.^[19]
(REPUBLIC case), thus:

“f.      Kinship to
Attachment, Receivership

As thus described, sequestration, freezing and provisional takeover
are akin to the provisional remedy of preliminary attachment, or
receivership.  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.  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.  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.” (Emphasis ours.)

In the REPUBLIC case, we declared that “the PCGG’ s. power
to sequester alleged ill-gotten properties is likened to the provisional
remedies of preliminary attachment or receivership which are always subject to
the control of the court.” As a matter of fact, there is nothing in the
BASECO case nor in the REPUBLIC case which would at least indicate or suggest
that there exists such an exception as is theorized by the PCGG.  On the contrary, we have even likened a
sequestration order to the remedies of preliminary attachment and receivership
on several aspects, such as, that it may be issued ex parte;
no objection of any significance may be raised to its ex parte
.issuance; and there must be prima facie evidence as basis for the
issuance thereof.  At any rate, the PCGG
has not advanced any substantial argument as will justify a deviation from the
broad authority of the courts in respect to the aforementioned provisional
remedies.  Necessarily, we cannot rule
differently.

IV. The issue on the existence of prima facie evidence in
support of the issuance of a sequestration order has likewise been laid to rest
in the BASECO case, in this wise:

“8.     Requisites for
Validity

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

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

a.       Prima Facie
Evidence as Basis for Orders

Executive Order No. 14 enjoins that there be “due regard to the
requirements of fairness and due process.’ Executive Order No. 2 declares that
with respect to claims on allegedly ‘ill-gotten’ assets and .properties.
“it is the position of the new democratic government that President Marcos
* * (and other parties affected) be afforded fair opportunity to contest these
claims before appropriate Philippine authorities.’ Section 7 of the
Commission’s Rules and Regulations provides that sequestration or freeze (and
takeover) orders, issue upon the authority of at least two commissioners, based
on the affirmation or complaint of an interested party, or motu proprio when the
Commission has reasonable grounds to believe that the issuance thereof
is warranted.  A similar requirement is
now found in Section 26, Art. XVIII of the 1987 Constitution, which requires
that a ‘sequestration or freeze order shall be issued only upon showing of a prima
facie case.’” [Emphasis in the original text.)

The orders or decisions of PCGG are appealable
to the Sandiganbayan whose resolutions or decisions
are, in turn reviewable by this Court.

The questioned resolution of respondent is premised primarily on
the requirement that there can be no valid sequestration of the aircraft absent
a showing that prima facie evidence exists in support thereof.  The PCGG claims otherwise, and we quote at
length its contentions in its reply dated April 25. 1990:

“Sometime in April 1986, PCGG agents duly armed with a search
and seizure order, conducted a search on the Araza Building
owned by Cojuangco located at Makati, Metro Manila.  Among the documents seized by reason thereof
are papers, concerning Faysound Limited (Faysound, for short). 
x x x.

“Handwritten entries on the foregoing documents reveal, among
others, the minutes of meetings in Faysound
Limited.  For instance, the entry dated
October 23, 1982 reads: “(I)ssuance of power of
attorney to Mr. James B. Jensen, Jr. of San Francisco, U.S.A. to act for
the company to lease the company’s aircraft Falcon Jet 50.’ x x x.

“Another entry also bearing similarly shows the following:

Faysound Limited

Purchase price Falcon Jet 50-82. – $9,875,000

1.            US $100,000 now
with FJC (obviously referring .to Falcon Jet Corporation, the seller of the
aircraft) as refundable be converted to non-refundable deposit before end of
working hours Oct. 4, 1982 Monday San Francisco time on Tuesday Oct. 5, 1982
Manila time.

2.            US $100,000 to
be remitted by Tuesday October 5, 1982
San Francisco time on Wed Oct. 6
Manila Time

3.            US dollars
300,000 to be remitted by Monday Oct. (illegible) San Francisco time

This will aggregate to US $500,000 as non-refundable deposit
above-mentioned monies to be remitted to James Jensen, Jr. for transfer to FJC.

4.            Balance of US
$9,375,000 either by direct remittance or letter of credit in favor of FJC to
be due on Oct. 28, 1982 or
three weeks from date of purchase agreement.

28-9-82
remittance to J B Jensen & Co. US $100,000 c/o Bank
Orient San Francisco as refundable deposit for one brand new Falcon 50 aircraft

5-10-82 JB
Jensen US $100.000 10-25-82
Faysound Ltd – credit Acct .(illegible) US $100,000
by order of Long. Reach Business.

8-10 James B. Jensen US $300,000

2-11-82 Johnson
and Anton, Inc.promissory payment of insurance
covered account full risk insurance (illegible).

x             x                      x

“That Mr. Jensen acted as Faysound’s
agent in the purchase of the aircraft from Falcon Jet Corporation is confirmed
by the delivery report dated October
30, 1982 which shows that the same aircraft was turned  over to Faysound’s
representatives, namely J. Jensen. Jr., R. Tomacruz
and F. Hedlund. x x x.

“Other documents reveal that Faysound
borrowed the money utilized in the purchase of the aircraft from Long Reach
Business S.A., a corporation incorporated under the laws of Panama which is
managed by Robert Wang (a Director of Faysound
Limited) and Mimi Ho who reported directly to Atty. Luis Vera-Cruz of the ACCRA
Law Office, then the lawyer of Cojuangco.  x x x.

“What unmasks the whole charade is the fact that Ms. Anna. Wu
and Mr. Wang communicated and/or reported, directly to Mrs. Yolanda Uy, one of the very visible officers of Cojuangco
here in Manila, x x x.

“As stated in the petition, James B. Jensen had consistently
acted as Cojuangco’s agent in the
importation/purchase of farm machineries and heavy equipment in the U.S.
x x x.  Moreover, he is the same fellow who brought
in the Porsche Targa 911S for Cojuangco
in 1971 which vehicle is now under-sequestration.

“From the foregoing circumstances, the following facts unfair:

1.            James B. Jensen
actually and directly purchased the aircraft in question for Faysound Limited.

2.            Faysound Limited is a Hongkong
corporation with Mr. Wang and Ms. Ho as visible officers who reported directly
to Mrs. Yolanda Uy, a visible agent or representative
of Cojuangco.

3.            The money used
in the purchase of the aircraft was borrowed by Faysound
Limited from Long Reach Business S.A. a Panamanian corporation managed by Mr.
Wang and Ms. Ho who also reported directly to Atty. Luis Vera-Cruz of the ACCRA
Law Office, then the lawyer of Cojuangco.

“The connecting link of the above persons point to Cojuangco, who was then the president of UNICHEM to which
the subject aircraft appears to have been leased, as the ostensible owner of
the same aircraft.

“Even the lease agreement itself entered into between Faysound and UNICHEM shows that it was a sham document
calculated to camouflage the actual owner of the same aircraft.  As may be noted therein, the agreement
appears to have been entered into on. October 23, 1982, or six (6) days before
the aircraft was actually sold to Faysound on October
29, 1982 as indicated in the Bill of Sale. x x x.  There is no
stipulation or clause setting forth what happens if Faysound
was not able to purchase the aircraft. 
But what renders the agreement even more dubious is the fact that on
page 3 thereof under the heading ‘RENT’, the amount of rent is established as
‘in such amounts and upon such terms as will be determined by the parties.’ It
is not reasonable to assume that two (2) unrelated parties would enter Into a
lease agreement involving a multi-million dollar aircraft without firmly and
clearly establishing exactly when lease payments are to be made and the total
amount of all such lease payments.  On
the other hand, if a single entity owned both the lessee and the lessor, then such a loosely drawn agreement would make
sense.  Moreover, on page 10 of the lease
agreement, under the heading of “USE OF AIRCRAFT FOR DEMONSTRATION,’ the lessor demands the. right to take possession of the
aircraft at any time for purposes of demonstrating the aircraft, provided that
the lessor supplies the lessee with written
notification at least three (3) days in advance.  There is no indication of how many such
demonstrations can be held during the life of the lease agreement or how long
each such demonstration may last.  In
such a case, the lessor could ultimately have control
of the aircraft more frequently than would the lessee even though the lessee is
paying an undetermined amount of rent for the exclusive use of the
aircraft.  To suggest that this is riot a
standard part of an aircraft lease agreement is to grossly understate the
matter.

x        x          x

“If Cojuangco’s interest were not
really connected with Faysound, how can one
reasonably answer the following questions:

1.            Why would
documents relating to this company bearing on the minutes of the meeting of the
company dealing on the acquisition of the aircraft and the increase in
capitalization be in his custody thru his agents?

2.            Why would the
officers of this corporation report on the activities of the corporation
directly to him also thru Mrs. Yolanda Uy?

3.            Why would Long
Reach Business S.A. extend a loan of approximately US $9,000,000 to Faysound Limited whose authorized capital was even less
than US $10,000?  It should be here stressed
that the officers of Long Reach Business, Faysound
Limited, Marvel and Wayumaku Limited have the same
directors and officers.  As hereinbefore
stated, the officers of Long Reach Business reported directly on its activities
to Atty. Vera-Cruz of the ACCRA Law Office, then lawyer for Cojuangco.

4.            If the funds
used in the purchase of the subject aircraft came from legitimate sources of Cojuangco, why was there a need to resort to the devious
scheme hereinbefore demonstrated, Cojuangco hiding
behind the cloak of anonymity?

“It should be emphasized that the acquisition of the subject
aircraft is not an isolated scheme.  It
was also used in the purchase/lease of the King Air 200 SN BB-975.  Said King Air was purchased from Beech
Aircraft.  Corporation thru Mr. Mike
Campos of Liberty Aviation, and the funds used in the purchase thereof, came
from the United Coconut Planters Bank (UCPB), as shown in the letter dated March 21, 1983 of Domingo J. Polotan addressed to Mr. Amado C.
Mamuric, both from UCPB.  x x x.  However, the deed
of sale reflects the name of a different buyer, Faysound
find not UCPB, as shown in a communication dated April 27, 1983 from A. Mamuric addressed to JIBCO ATTN: NG WAI SUN/HENRY SY,’ x x x.  Thus, in the lease agreement over the said
King Air, Faysound Limited appears as the owner while
UCPB appears merely as the lessor.”^[20]

It must be noted, however, that the hereinabove quoted
dissertation, as well as the documents presented by the PCGG before this Court^[21]
to prove the existence of a prima facie case of ill-gotten wealth, were
never presented to the Sandiganbayan, in spite of the
latter’s order to that effect.  In his
Comment, Presiding Justice Francis E. Garchitorena,
of the Sandiganbayan, pointed out to this Court the
following incidents, which, were not mentioned in the petition of the PCGG.
viz.:

“15.   On April 14, 1989, the Motion for
Authority to Sell the AIRCRAFT was extensively argued with Solicitor Herminio Miranda appearing for the PCGG.  At that time, the attention of the PCGG was
called to the fact that the very Certificate of Registration of the AIRCRAFT
showed that UNICHEM was not the owner but only a lessee of the AIRCRAFT
so that:

(a)          There appeared to
have been no basis for the sequestration, to begin with, and

(b)          Certainly, that
there would be no basis for further keeping the AIRCRAFT in sequestration at
all, since the lease of the AIRCRAFT, according to the PCGG itself during oral
argument, had apparently expired in 1987, two years’ prior to the PCGG’s Motion for Authority to Sell that AIRCRAFT

The PCGG, however, through the Solicitor General’s representatives,
particularly Solicitor Miranda, categorically declared in open Court that it
would not go into who was the owner of the AIRCRAFT at that time, even
if the lease thereof, in favor of UNICHEM had already expired, and no prodding
from the Court, produced any information or clarification on the matter of
ownership of the AIRCRAFT or the basis for its original sequestration, much
less on the continuation of the sequestration of the AIRCRAFT after the expiry
of the lease thereof

At no time thereafter was the SANDIGANBAYAN informed by the PCGG
nor by the OSG of, nor was there any intimation by the PCGG about, facts and
circumstances surrounding the AIRCRAFT’s ownership and
sequestration other than what appeared in the AIRCRAFT’S Certificate of
Registration.

x        x          x

The sequestrable character of the
aircraft

[One of the first things that must be stated is that the PCGG NEVER
even intimated to the Court anything that is now contained in pages 27 and 28 of the PCGG’s
Petition before this Honorable Supreme Court, namely that according to
documents in PCGG’s .possession.:

(a)          there is a close
connection if not identity between Faysound
(the lessor of the AIRCRAFT) and Cojuangco;

(b)          James B. Jensen
who allegedly acted a(s) Faysound’s agent in the
purchase and lease of the AIRCRAFT had also been Cojuangco’s
agent for the acquisition of fare machinery and heavy equipment and who brought
into the country a Porsche Targa, 9115 in. 1971 for Cojuangco, which vehicle is also sequestered

(c)          Documents seized
from Cojuangco’s Arraza Building
reveal journal entries of various, transactions, concerning the same aircraft.

all of which allegedly
constitute more than prima facie evidence for PCGG to have sequestered the
AIRCRAFT.]”^[22]

We cannot, therefore, fault the Sandiganbayan
for denying the motion to sell the aircraft considering that the PCGG adamantly
refused to present evidence in support of its claim that there was a valid sequestration
thereof.  Neither can the PCGG in all
good faith impute a grave abuse of discretion on the part of the Sandiganbayan.  For
one, we do not subscribe to the theory of the Solicitor General that it is not
supposed to present evidence during the hearing on the motion to sell since the
proper time to litigate the issue of ownership over the aircraft is during the
trial proper.  At the outset, the Sandiganbayan was not trying to determine ownership of the
aircraft but merely required prima facie evidence that it is ill-gotten
wealth, precisely because the only evidence presented before it by the PCGG,
which is the Certificate of Registration, did not sufficiently establish that
the aircraft was owned, directly or indirectly, by Eduardo Cojuangco,
Jr.  It would have been improbable at
that time for the Sandiganbayan to accept.  on its face, the Solicitor General’s
representation that the aircraft is ill-gotten on the basis of the PCGG’s lone evidence, without delving further into the
actual relationship between the registered owner and Eduardo Cojuangco, Jr., which thus led to the denial of the motion
to sell.

On this score, our attention has been invited by Presiding
Justice Garchitorena to the fact that this is already
the third time that the PCGG chose to disclose certain factual matters and
evidence involved in a case in the . Sandiganbayan
distressingly only for ‘the first time before this Court.  Consequently, we digress to strictly enjoin
the Office of the Solicitor General which represents the PCGG to scrupulously
prevent and avoid such a procedure which cannot but unnecessarily produce an
impasse, as in the case at bar, with the caveat that a repetition thereof will
not be tolerated by the Court.

Furthermore, the belated revelations by PCGG before the Court of
the alleged prima facie evidentiary support to warrant the sequestration
of the aircraft evidently cannot subserve the purpose
of its present petition.  We need not
belabor the rule that this Court is not a trier of
facts and is not in a position to pass upon the merits of PCGG’s
present submissions based on unauthenticated and controverted
evidence.  Obviously, these matter should
have been adduced in the first instance before the proper forum, the Sandiganbayan, especially considering that said court
precisely called for such evidence and the crux of its assailed resolution
rested on the existence velinon of said evidence.

Nor does the supervention of the sale of
the airplane on September 28, 1989, during and despite the pendency
of this case before the Court, completely render academic the proceedings
herein as to leave us no alternative but to yield our. imprimatur to a fait
accompli.  From the preceding
discussion of the cases hereinbefore cited and the contending submissions of
the parties in the present recourse, we cannot but make the observation that
the decision to sell the aircraft is not within the limited administrative
powers of the PCGG but requires the sanction of the Sandiganbayan
which can grant or withhold the same in the exercise of sound discretion and on
the basis of the evidence before it. 
Without such approval by the judicial authority concerned, and no abuse
of discretion on its part having been established, it irresistibly follows that
any sale of said aircraft under the circumstances obtaining in this case would
constitute a prohibited and invalid disposition by the PCGG.

Also to put things in the proper perspective, it must be
emphasized that our issuance of the temporary restraining order of June 6, 1989 did not in any way
authorize PCGG to sell the aircraft.  It
was only to prevent the Sandiganbayan from taking
further actions proceeding upon or pursuant to its assumption that the airplane
has been unlawfully sequestered and should not be in the custody of the PCGG since
that was the bone of contention to be resolved at that posture of the
case.  PCGG could not have been unaware
that, as held in the BASECO and REPUBLIC cases, a definite and positive order
of the Sandiganbayan authorizing the sale of the
aircraft is required.

WHEREFORE, the
petition at bar is hereby DISMISSED.  The
Presidential Commission on Good Government is hereby ordered to deposit the
proceeds of the sale of the subject aircraft under a special time deposit with
the Philippine National Bank for the account of the Sandiganbayan
in escrow for the person or persons natural or juridical, who may be adjudged
lawfully entitled thereto.  The Solicitor
General is also ordered to submit to this Court, within ten (10) days from
notice hereof, certified true copies of the bill of sale and all other
pertinent documents regarding the sale of said aircraft to Walter Fuller
Aircraft. Inc.

SO ORDERED.

Fernan, Narvasa,
Melencio-Herrera, Cruz, Paras,
Feliciano, Gancayco, Padilla, Bidin,
Sarmiento, Grino-Aquino, and Medialdea, JJ., concur.

Gutierrez, Jr., see concurring
opinion.

---

^[1]
Penned by Presiding Justice Francis E. Garchitorena, with Associate Justices Regino Hermosisima,
Jr. and Augusto M. Amores,
concurring; Annex A, Petition; Rollo, 35.

^[2]
Annex E, Petition; Rollo,
57-59.

^[3]
Rollo, 8-9.

^[4]
Annex F, id.; ibid., 62-70.

^[5]
150 SCRA 181 (1987).

^[6]
Rollo, 9.

^[7]
Annex G, id.; ibid., 72-74.

^[8]
Annex A, id.; ibid., 35-38.

^[9]
Rollo, 47.

^[10]
Ibid., 36.

^[11]
Ibid., 38-39.

^[12]
Ibid. 76.

^[13]
Ibid., 78.

^[14]
G.R. No. 82138, June 30,
1980.

^[15]
A copy of the said memorandum-was
obtained b from the Presidential Commission on Good Government.

^[16]
159 SCRA 556 (1988).

^[17]
Sec. 12, Rule 57, Rules of Court.

^[18]
Reply, 12; Rollo,
163.

^[19]
G.R. No. 88228; June 27,
1990.

^[20]
Reply. 13-21; Rollo.
164-172.

^[21]
Annexes “A” to “I”
of the Reply; Rollo. 181-258.

^[22]
Comment, 10-11, 15-16; Rollo, 97-98, 103-104.

---

300

6 pt
6 pt
0
3