Case Summary (G.R. No. 75885)
Petitioner
BASECO, a private corporation claiming to be a legitimate shipyard and engineering company incorporated in 1972.
Respondent
Presidential Commission on Good Government (PCGG) and its Commissioners, empowered by Executive Orders Nos. 1 and 2 to sequester, freeze, and provisionally take over assets and entities allegedly tied to the Marcos regime.
Key Dates
– February 28, 1986: EO No. 1 issued.
– March 12, 1986: EO No. 2 issued.
– April 14, 1986: BASECO sequestered.
– July 14, 1986: BASECO provisionally taken over.
– May 27, 1987: Supreme Court decision.
Applicable Law
– Proclamation No. 3 (Freedom Constitution, March 25, 1986), mandating recovery of ill-gotten wealth by sequestration or freezing of assets.
– Executive Order No. 1: creation of PCGG with power to sequester, freeze, investigate, and provisionally take over enterprises allegedly owned or controlled by Marcos and associates.
– Executive Order No. 2: freeze of assets and prohibition on their transfer pending determination of ill-gotten status.
– Executive Order No. 14: mandate to file civil and criminal cases in the Sandiganbayan; allows non-strict application of technical rules in civil actions.
– 1987 Philippine Constitution, Article XVIII, Section 26 (Transitory Provisions): ratification and time limits for sequestration and freeze orders.
PCGG’s Actions and Orders
- Sequestration Order (April 14, 1986): directed agents to place BASECO and affiliates under PCGG control “to prevent destruction, concealment or dissipation” and ensure continuity as going concerns.
- Document Production (April 18, 1986): compelled submission of corporate books and records under threat of contempt.
- Security Contract Termination (April 21, 1986): Capt. Zabala canceled BASECO’s private security agreement and deployed military personnel.
- Change in Fee Collection (July 15, 1986): altered mode of payment for road-use charges at Engineer Island.
- Aborted Wharf Improvement Contract (July 9–30, 1986): PCGG agent entered into, then repudiated, a P210,000 improvement agreement.
- Quarry Operation Orders (June–September, 1986): directed and later re-delegated Mariveles quarry operations and disposal of scrap materials.
- Provisional Takeover (July 14, 1986): invoked EO No. 1 Section 3(c) to install a management team headed by Capt. Siacunco with broad operating powers.
- Termination of Executives: letters sent to BASECO officers informing them of service termination.
Petitioner’s Allegations
– EO Nos. 1 & 2, and subsequent sequestration and takeover acts, violate due process (no notice or hearing), separation of powers (PCGG not a court), absence of remedy to challenge orders, and constitute bills of attainder.
– Document request infringes rights against self-incrimination and unreasonable searches and seizures.
– PCGG unlawfully interfered with contracts and management, including security services, entry-charge contracts, quarry operation contracts, disposal of scrap, and personnel terminations.
Supreme Court’s Analysis on Provisional Remedies
– Nature of Remedies: sequestration, freeze orders, and provisional takeover are provisional measures akin to attachment and receivership, meant only to conserve assets pending judicial determination of ill-gotten status.
– PCGG Powers: limited to administration and conservation—collect rents, defend actions, disburse funds reasonably, enjoin dissipation, punish for contempt, and seek military support. No divestment of title until forfeiture suits are adjudicated.
– Due Process Safeguards: orders issue ex parte upon prima facie showing; PCGG rules allow parties to move for lifting orders within five days, with appeal to the President within fifteen days. 1987 Constitution extends similar safeguards, requires court registration of orders, and mandates judicial actions within defined time frames.
Constitutional Sanction and Limitations
– Proclamation No. 3 & Freedom Constitution: expressly authorized sequestration and freeze orders to recover ill-gotten wealth.
– 1987 Constitution, Section 26: ratifies these orders for up to 18 months post-ratification; requires prim
Case Syllabus (G.R. No. 75885)
Facts and Parties
- Petitioner: Bataan Shipyard & Engineering Co., Inc. (BASECO), a private shipbuilding/shiprepair corporation incorporated on August 30, 1972, with main yards at Engineer Island, Manila and Mariveles, Bataan.
- Respondent: Presidential Commission on Good Government (PCGG), created to recover ill-gotten wealth, chaired by Jovito Salonga and Commissioners Bautista, Diaz, Daza, Doromal, Siacunco, et al.
- Relief sought: Certiorari and prohibition to nullify Executive Orders Nos. 1 & 2 (Feb 28 & Mar 12, 1986), the April 14 sequestration order, the July 14 takeover order, and related acts by PCGG.
Issues Presented
- Validity of Executive Orders Nos. 1 & 2 after adoption of the 1986 Freedom Constitution.
- Constitutionality of PCGG sequestration, takeover, and related orders (due process, self-incrimination, search and seizure, bill of attainder, PCGG as judge).
- Scope of PCGG powers to sequester, freeze, provisionally take over, enter or terminate contracts, change payment modes, and dispose of assets.
- Standing of BASECO stockholders and officers to challenge PCGG actions.
Executive Orders and Legal Basis
- Proclamation No. 3 (Freedom Constitution, Mar 25, 1986): grants President legislative power to recover ill-gotten wealth “through orders of sequestration or freezing.”
- Executive Order No. 1 (Feb 28, 1986): creates PCGG; empowers it to recover Marcos ill-gotten wealth, sequester assets, provisionally take over enterprises “taken over by the government of the Marcos Administration or by entities or persons close to” Marcos, investigate, subpoena, promulgate rules.
- Executive Order No. 2 (Mar 12, 1986): freezes assets of Marcos, his relatives/associates; prohibits transfers, encumbrances, concealment; requires full disclosure within 30 days.
- Executive Order No. 14 (May 7, 1986): authorizes PCGG to file civil/criminal suits in the Sandiganbayan; civil cases may proceed independently, technical rules relaxed; amended to grant witness immunity.
Sequestration Order of April 14, 1986
- Issued by Commissioner Mary Concepcion Bautista.
- Targets: BASECO (Engineer Island & Mariveles Shipyard), Baseco Quarry, Philippine Jai-Alai Corporation, Fidelity Management Co., Romson Realty, Trident Managements, Bay Transport, and all affiliates of Alfredo “Bejo” Romualdez.
- Directives to PCGG agents:
- Implement sequestration with minimum business disruption.
- Maintain companies as going concerns; care for assets.
- Report periodically.
- Request military/police support as needed.
Subsequent Orders Issued Under Sequestration
- Order to produce corporate records (Apr 18):
- Stock transfer book; articles, by-laws; minutes (1973–1986); contracts; stockholder lists; audited and current financial statements; cash reports; inventories; receivables/payables; bank accounts; investment schedules.
- Non-compliance in five days: contempt.
- Engineer Island security contract terminated (Apr 21):
- Capt. Zabala ended BASECO’s civilian security; assigned CAPCOM military personnel.
- Change of payment for entry charges (Jul 15):
- Shifting from monthly billing to per-entry payment.
- Aborted wharf improvement contract (Jul 9):
- Fiscal agent S. Berenguer agreed with Deltamarine for P210,000 improvements in exchange fo