Case Summary (G.R. No. 75885)
Key Dates and Orders Challenged
- Executive Orders invoked by petitioner: EO No. 1 (Feb. 28, 1986) and EO No. 2 (Mar. 12, 1986).
- Specific PCGG acts challenged: sequestration order dated April 14, 1986 (issued by Commissioner Bautista), April 18, 1986 order to produce corporate documents, April–July 1986 operational directives at Engineer Island and Mariveles (security contract termination, amendment of payment mode for entry charges), June 20–26, 1986 quarry and scrap disposal orders, and takeover order dated July 14, 1986 (issued by Commissioner Ramon A. Diaz).
Relief Sought by Petitioner
- Declaration that Executive Orders Nos. 1 and 2 are unconstitutional and void.
- Annulment of the sequestration order of April 14, 1986, the July 14 takeover order, and all subsequent orders and acts (including termination of BASECO executives).
Core Legal Questions Presented
- Whether Executive Orders Nos. 1 and 2 and the PCGG’s sequestration/takeover actions violated due process, the right against self-incrimination, and protection against unreasonable search and seizure.
- Whether the PCGG acted as prosecutor and judge in the same cause or whether its acts amounted to a bill of attainder.
- What are the lawful scope and limits of PCGG powers with respect to sequestration, freeze orders, and provisional takeover of business enterprises.
Governing Statutory and Constitutional Framework
- Proclamation No. 3 (Freedom Constitution) authorized presidential measures to recover ill-gotten properties and directed priority to sequestration/freezing measures.
- Executive Order No. 1: created the PCGG; declared purpose to recover ill-gotten wealth, and granted powers including sequestration, provisional takeover (to prevent disposal/dissipation), investigations, subpoenas, and contempt powers.
- Executive Order No. 2: froze assets alleged to be connected to Ferdinand E. Marcos, Imelda Marcos, relatives, associates and their nominees; prohibited transfers; required disclosure.
- Executive Order No. 14: empowered PCGG, with assistance of the Solicitor General, to file/prosecute cases in the Sandiganbayan; provided civil action modalities, including proof by preponderance and relaxed technical rules, and required judicial proceedings.
- 1987 Constitution (Transitory Provisions, Art. XVIII, Sec. 26): ratified authority to issue sequestration/freeze orders (subject to an 18‑month maximum operative period unless extended by Congress), mandated issuance only upon showing of a prima facie case, required registration of orders with the proper court, and required filing of judicial actions within six months from ratification (for prior orders) or from issuance (for later orders), with automatic lifting of orders if judicial action is not commenced in time.
Nature and Purpose of Sequestration, Freeze Orders and Provisional Takeover
- Sequestration: a conservatory measure placing property, buildings or records under PCGG control to prevent destruction, concealment or dissipation pending judicial adjudication whether property is “ill‑gotten.” The remedy is provisional and not intended to divest title.
- Freeze order: injunction-style restraint on transfer, conveyance, encumbrance or concealment of assets; akin to garnishment or injunction to preserve status quo.
- Provisional takeover: a greater incursion than sequestration where the PCGG may assume control of the business operation itself for enterprises alleged to have been taken over by the Marcos Administration or persons close to Marcos; still provisional and conditioned on necessity to prevent disposal or dissipation.
Procedural Safeguards and Requisites for Valid PCGG Orders
- Prima facie showing: both Executive Orders and the 1987 Constitution require a prima facie basis for issuing sequestration/freeze orders. PCGG Rules require authorization by at least two commissioners and may be grounded on complaint or motu proprio reasonable grounds.
- Ex parte issuance: ex parte issuance is permissible as a conservatory remedy to avoid alerting alleged possessors and triggering concealment or dissipation, analogous to preliminary attachment or receivership.
- Opportunity to contest: PCGG Rules allow the person affected to request lifting of writs within five days of receipt; PCGG may lift after due hearing or motu proprio and its resolution may be appealed to the Office of the President within fifteen days. Registration of orders with the proper court and prompt filing of judicial action (Sandiganbayan) are required under EO No. 14 and the 1987 Constitution’s transitory provision.
Constitutional and Doctrinal Bases for PCGG Authority
- The recovery measures are grounded in the People’s mandate articulated in Proclamation No. 3 and executed under the President’s powers during the transitional government; the measures also rest on the State’s police power to promote public welfare and protect public resources.
- The 1987 Constitution’s transitory provision expressly ratified authority to issue such sequestration/freeze orders, imposed temporal and procedural safeguards, and required judicial follow-up.
- Executive Action does not replace judicial adjudication: the provisional remedies conserve assets pending court determination (exclusive referral of ultimate determinations to Sandiganbayan under EO No. 14).
Court’s Analysis on Due Process, Bill of Attainder, and PCGG Roles
- Due process: prior notice and hearing are not inherently required for ex parte provisional conservatory remedies; what is constitutionally required is a prima facie factual foundation and an adequate prompt opportunity to contest and to obtain judicial determination. The executive orders and PCGG rules provided for such safeguards and the 1987 Constitution further limited the duration and required court actions.
- Bill of attainder: the executive orders do not adjudicate guilt nor inflict punishment; they are conservatory administrative measures pending judicial proceedings and thus are not legislative punishment without trial.
- PCGG as investigator/administrator, not judge: PCGG’s role is investigative and conservatory; it may issue sequestration/freeze/takeover orders and later file cases in the Sandiganbayan for adjudication; it is not empowered to render final judgments divesting title.
Self-Incrimination and Search/Seizure Issues
- Privilege against self-incrimination: does not extend to juridical persons; corporations cannot invoke the privilege to resist production of corporate books and records. EO No. 14‑A provided immunity to individuals compelled to testify before PCGG (protection against use of compelled testimony in criminal prosecutions except perjury or failure to comply).
- Unreasonable search and seizure: the Court found no illegal search in the facts before it and treated production of documents under PCGG subpoenas as within lawful investigatory powers.
Limits on PCGG Authority and Proper Exercise of Powers
- Conservator role: PCGG may exercise administrative powers essential to conserving sequestered assets — bring/defend suits, collect rents, pay necessary debts, safeguard assets, and seek government assistance; it is not owner and should minimize interference with business operations.
- Provisional takeover constraints: where takeover is authorized (businesses taken over by Marcos or persons close to him), control may extend to management only to the minimum degree necessary to protect assets from dissipation; wholesale replacement of management or radical policy changes should be avoided unless necessary and justified.
- Voting of sequestered shares: PCGG was authorized by a presidential memorandum to vote sequestered shares pending judicial determination, but the exercise of such voting power must align with the conservatory purpose and not be used to effect arbitrary substitutions of directors or fundamental policy shifts except where necessary to prevent dissipation and where replacements are competent and honest.
Factual Findings Regarding BASECO and Justification for Sequestration/Takeover
- Documentary and testimonial record established a detailed chain of transactions by which BASECO acquired NASSCO assets (Mariveles shipyard, Engineer Island), extensive loans, land from EPZA, and other assets often with presidential approval or intervention (documents bearing Marcos’s handwriting/approval).
- Price reductions, stock assignments, authorized transfers, and reports to President Marcos (including by persons with close ties) evidenced substantial presidential involvement and benefit.
- Substantial shareholding appeared to be held through three juridical persons controlling approximately 95.82% of BASECO stock; certificates and deeds corresponding to more than 95% of BASECO outstanding shares were found in Malacañang endorsed in blank, and deeds of assignment for the controlling nominee corporations were among documents seized and placed in PCGG custody.
- Petitioner’s inability to produce original stock certificates and the presence of endorsements in Malacañang supported a prima facie conclusion that BASECO was owned or controlled by Ferdinand E. Marcos through nominees or dummies and that BASECO acquired government assets in ways that warranted provisional measures.
Court’s Conclusions and Disposition
- The petition was dismissed. The Court upheld the constitutionality and validity of Executive Orders Nos. 1 and 2 as applied, and the PCGG’s sequestration and provisional takeover of BASECO (including the voting of sequestered shares and replacement of directors) were sustained as lawful in the circumstances shown.
- The Court emphasized the provisional character of the measures and the requirement that judicial proceedings be filed expeditiously to adjudicate ultimate ownership and entitlement; it lifted the temporary restraining order previously issued.
Treatment of Specific Petitioner Complaints
- Orders to produce corporate documents: lawful under EO No. 1 investigatory powers; no self-incrimin
Case Syllabus (G.R. No. 75885)
Procedural Posture and Relief Sought
- Petition filed by Bataan Shipyard & Engineering Co., Inc. (BASECO) in a special civil action of certiorari and prohibition challenging:
- Executive Order No. 1 (Feb. 28, 1986) and Executive Order No. 2 (Mar. 12, 1986).
- Sequestration order dated April 14, 1986 issued by Commissioner Mary Concepcion Bautista and subsequent orders, sequestration, takeover, and other acts by the Presidential Commission on Good Government (PCGG) and its agents.
- Specific prayers by BASECO:
- Declare Executive Orders Nos. 1 and 2 unconstitutional and void.
- Annul the April 14, 1986 sequestration order and all subsequent orders and acts based thereon, including the July 14, 1986 takeover order and termination of BASECO executives’ services.
- Court disposition:
- Petition dismissed; temporary restraining order (issued Oct. 14, 1986) lifted.
- Majority holds PCGG actions sustained as lawful and within the governing law and rules.
Orders and Acts Challenged by Petitioner (Factual Summary)
- Basic Sequestration Order (April 14, 1986):
- Issued by Commissioner Mary Concepcion Bautista directing agents to sequester BASECO and numerous affiliated companies and to implement sequestration with minimum business disruption, ensure continuity as going concerns, report periodically, and request military/police support as necessary.
- Order for Production of Documents (April 18, 1986):
- Letter from Mr. Jose M. Balde (acting for PCGG) required production within five days of corporate records covering 1973–1986: stock transfer book; articles of incorporation; by-laws; minutes (stockholders, board, executive committee); contracts; yearly certified stock lists; audited financial statements (1973–Dec. 31, 1985); monthly financials to Mar. 31, 1986; cash position reports; inventory lists; AR/AP schedules; depository bank lists and signatories; schedule of investments. Warning of contempt under EO Nos. 1 & 2 if not produced.
- Orders re Engineer Island (April–July 1986):
- Termination of security contract within Engineer Island (Apr. 21, 1986) with CAPCOM military personnel assigned.
- Change in mode of payment for entry charges: payment upon entry instead of monthly billing (Memorandum July 15, 1986).
- Aborted Contract for Wharf Improvement (July 9–30, 1986):
- PCGG fiscal agent S. Berenguer purported to contract with Deltamarine Integrated Port Services, Inc. for P210,000 improvements and exclusive privileges; later PCGG Head Capt. Jorge B. Siacunco informed Deltamarine (July 30, 1986) that new management could not honor the contract and improvements would be unauthorized and at Deltamarine’s risk.
- Orders for quarry operation and scrap disposal (June–Sept. 1986):
- Commissioner Bautista directed planning to maximize operation of Sesiman Rock Quarry and later authorized A.T. Abesamis to operate the quarry (agreement Sept. 17, 1986).
- Commissioner Bautista (June 26, 1986) authorized cleaning/beautifying company compound and disposal/sale of metal scraps, equipment and machinery no longer usable, subject to audit/verification safeguards.
- TAKEOVER Order (July 14, 1986):
- Commissioner Ramon A. Diaz ordered provisional takeover by PCGG of BASECO, Philippine Dockyard Corporation and affiliated companies, invoking Sec. 3(c) of EO No. 1; management team headed by Capt. Siacunco was designated with enumerated powers including conducting all operations, installing key officers, entering contracts, ensuring assets not dissipated, disbursing funds as necessary, seeking military support, and accountability to PCGG.
- Termination of BASECO Officers:
- Capt. Siacunco advised termination of services of President Hilario M. Ruiz, EVP Manuel S. Mendoza, GM Moises M. Valdez, Finance Manager Gilberto Pasimanero, and Legal Dept. Mgr. Benito R. Cuesta I.
Petitioner’s Principal Legal Objections
- Due process and notice:
- Sequestration/takeover ordered without prior notice or hearing; argued former Freedom Constitution (Mar. 25, 1986) adopted Bill of Rights and thus required due process.
- PCGG characterization and function:
- PCGG is an investigative agency, not a court; cannot act as prosecutor and judge in the same cause.
- Lack of review/remedy:
- Executive issuances provide no adequate proceeding or process for prompt challenge of takeover once effected.
- Bill of attainder allegation:
- Executive Orders directed against specified persons, argued to be punitive without judicial trial.
- Production of documents:
- Order to produce corporate records alleged to violate right against self-incrimination and protection from unreasonable search and seizure.
- Interference with ownership and management:
- PCGG acts alleged to unduly interfere with petitioner’s dominion and management including termination of contracts and personnel, authorization of contracts benefiting third parties, authorization to operate quarry and dispose scrap, termination of executives, intended election of PCGG-controlled Board, theft of company property, and indiscriminate digs at Engineer Island.
Governing Law and Executive Directives (Statutory/Constitutional Basis)
- Proclamation No. 3 (Freedom Provisional Constitution, Mar. 25, 1986):
- President authorized to continue exercising legislative power until new legislature convened and to prioritize recovery of ill-gotten properties amassed by leaders/supporters of prior regime through sequestration/freeze orders.
- Executive Order No. 1:
- Created PCGG; declared urgent need to recover ill-gotten wealth amassed by Marcos, family, relatives, subordinates, close associates; PCGG charged to recover such wealth, including takeover/sequestration of business enterprises and entities owned/controlled by them.
- PCGG powers (inter alia): sequester property/records, provisionally take over enterprises to prevent disposal/dissipation, enjoin/ restrain acts that would render PCGG efforts moot, investigate, subpoena, administer oaths, punish for contempt, promulgate necessary rules/regulations.
- Executive Order No. 2:
- Declared Government’s possession of evidence of assets purportedly pertaining to Marcos and close associates, froze assets in Philippines in which Marcos et al. have interest, prohibited transfers/encumbrances/ concealment/dissipation, penalized assisting in depletion, and required full disclosure by nominees/agents/trustees within 30 days of publication.
- Executive Order No. 14 (effective May 7, 1986):
- Authorized PCGG, with Solicitor General and other agencies, to file and prosecute all cases investigated by it, with such cases filed with Sandiganbayan (exclusive original jurisdiction).
- Civil suits for restitution, reparation, forfeiture may be filed separately and proved by preponderance of evidence; technical rules of procedure/evidence not strictly applied to such civil cases.
Nature, Purpose and Limits of Provisional Remedies (Sequestration, Freeze, Provisional Takeover)
- Overarching principles:
- Remedies designed as provisional measures to conserve assets pending adjudication whether assets were “ill-gotten.”
- Remedies rooted in State police power and constitutional mandate to recover ill-gotten wealth; must balance public interest with protection of private property and due process.
- Sequestration:
- Defined as placing property, buildings, offices, records, and business enterprises under PCGG possession/control to prevent destruction, concealment, dissipation and to conserve pending judicial determination of whether acquisition was illegal or vitiated.
- Comparable to conservatory writs in other jurisdictions; temporary and conditional.
- Freeze order:
- Prohibits possessor from transferring, conveying, encumbering, depleting, or concealing the property; akin to garnishment/involuntary depositary.
- Provisional takeover:
- Permitted where business enterprises were taken over by Marcos administration or entities/persons close to him; involves assumption of control over business operations, not merely physical assets.
- More intrusive than sequestration; still provisional and limited to preventing disposal/dissipation.
- No divestment of title:
- Remedies do not divest legal title; final divestment only by judicial process as directed by Executive Orders (EO No. 1, EO No. 2, EO No. 14).
- Temporal limits and constitutional command:
- 1987 Constitution, Art. XVIII, Sec. 26 (Transitory Provisions) limits authority to issue sequestration/freeze orders to not more than 18 months after ratification unless Congress extends; requires sequestration/freeze orders issued only upon showing of prima facie case; orders and lists to be registered with proper court; judicial action for orders issued before ratification to be filed within six months from ratification (and within six months of issuance for post-ratification orders); orders automatically lifted if no judicial action commenced as prescribed.
- Relationship to attachment/receivership:
- Remedies akin to preliminary attachment and receivership; temporary, conservatory, and subject to control of issuing court/agency.
- Ex parte issuance:
- Like attachment or receivership, sequestration/freeze/takeover may issue ex parte given temporariness and need to avoid alerting possessors who might dissipate assets; justified by constitutional mandate to recover ill-gotten wealth and prevent frustration of government efforts.
Requisites for Validity and Due Process Safeguards
- Prima facie factual foundation:
- Sequestration, freeze or takeover must rest on at least prima facie evidence that warrants such provisional measures; EO No. 14 and PCGG rules require fairness and due process.
- PCGG Rules (Sec. 7) require authority of at least two commissioners; orders may issue on affirmation/complaint of interested party or motu proprio upon reasonable grounds.
- 1987 Constitution (Art. XVIII, Sec. 26) requires prima facie showing before