Title
Heirs of Licaros vs. Sandiganbayan
Case
G.R. No. 157438
Decision Date
Oct 18, 2004
Republic sued Marcos, Tan, and Licaros' heirs to recover ill-gotten wealth from GBTC's fraudulent acquisition; SC upheld Sandiganbayan's jurisdiction, no prescription.
fraudulent acquisition
assets
cause of action
A

Case Summary (G.R. No. 194031)

Factual Background

During his lifetime, Gregorio S. Licaros served as Governor of the Central Bank of the Philippines from 1970 to 1980 and died on August 3, 1983. On July 17, 1987, the Republic of the Philippines, through the Presidential Commission on Good Government (PCGG) assisted by the Office of the Solicitor General (OSG), filed a civil action to recover alleged ill-gotten wealth, naming Ferdinand E. Marcos, Imelda R. Marcos, Lucio C. Tan, and others as defendants. The Complaint alleged that Tan, with the connivance of certain government officials including then Central Bank Governor Licaros, had fraudulently acquired the assets of the General Bank and Trust Company (GBTC), later Allied Banking Corporation, for P500,000 despite assets estimated at over P688 million.

Second Amended Complaint and Allegations Against Licaros

The Second Amended Complaint filed September 5, 1991, impleaded the Estate and heirs of Gregorio Licaros and reiterated that Licaros had facilitated the fraudulent acquisition of GBTC assets, describing specific circumstances in 1976–1977 involving Central Bank emergency loans, a proxy over GBTC shares, a Monetary Board resolution declaring GBTC insolvent, and approval of the Tan bid notwithstanding alleged deficiencies in required letters of credit and other concessions. The pleading asserted causes of action for abuse of right and power, unjust enrichment, breach of public trust, accounting, and various damages, and sought reconveyance, reconveyance, restitution, accounting and damages.

Trial Court Proceedings and Motions

On September 3, 2001, the heirs of Licaros moved to dismiss the Second Amended Complaint on the grounds of lack of cause of action and prescription. The Republic opposed the motion. The Sandiganbayan denied the motion to dismiss in an August 13, 2002 Resolution and later denied reconsideration in a February 6, 2003 Resolution, prompting the present certiorari petition under Rule 65.

Issues Presented

Petitioners presented three principal issues: (A) whether the Second Amended Complaint stated a cause of action against the heirs; (B) whether the Complaint was barred by prescription and laches; and (C) whether the Sandiganbayan had jurisdiction to determine the validity of the GBTC liquidation and acquisition in view of a separate pending case before the Supreme Court, G.R. No. 152551.

Petitioners' Contentions

Petitioners argued that acts attributed to Licaros were official acts of the Monetary Board and thus could not give rise to personal liability; that the acquisition of GBTC assets had been effectuated through a public bidding approved by the Monetary Board and done in good faith; and that actions against Licaros’ estate had prescribed. They further contended that resolution of issues touching the validity of GBTC’s liquidation and acquisition was precluded by the pendency of G.R. No. 152551 before the Supreme Court.

Ruling and Disposition

The Supreme Court dismissed the petition and affirmed the Sandiganbayan Resolutions denying the motion to dismiss. The Court held that the Sandiganbayan had not committed grave abuse of discretion in denying the motion to dismiss and that the Second Amended Complaint sufficiently alleged a cause of action against the Estate/Heirs of Licaros. Costs were awarded against petitioners.

Legal Basis and Reasoning — Cause of Action

The Court reiterated the established test for a cause of action: a legal right in favor of the plaintiff, a correlative obligation of the defendant, and an act or omission of the defendant violating that right. The Court applied the standard that, on a motion to dismiss, the complaint’s allegations are hypothetically admitted and the question is whether, assuming those allegations true, the court could render a valid judgment in accordance with the prayer. The Second Amended Complaint plainly alleged that Licaros had conspired with the main defendants in facilitating the allegedly questionable transfer of GBTC assets, and such allegations, if proved, could render him liable with his co-defendants. The Court deemed petitioners’ defenses that the acts were official Monetary Board acts or that the acquisition was through public bidding as matters of defense to be resolved at trial, not in a motion to dismiss.

Legal Basis and Reasoning — Prescription and Laches

The Court held that actions to recover unlawfully acquired properties are exempt from ordinary rules on prescription by virtue of Section 15, Article XI, 1987 Constitution, which states that the State’s right to recover such properties shall not be barred by prescription, laches or estoppel. Accordingly, the action against Licaros’ estate for allegedly ill-gotten wealth did not prescribe. The Court cited Article 1146 of the Civil Code as the ordinary prescription rule, but emphasized the constitutional exception.

Jurisdiction and Pendency of G.R. No. 152551

The Court found the Sandiganbayan to have exclusive jurisdiction over cases involving recovery of properties unlawfully acquired by former President Marcos and his associates under Executive Order No. 14, Section 2, and concluded that subject to Supreme Court review by certiorari, the Sandiganbayan properly entertained the Second Amended Complaint against Licaros’ estate. Having established jurisdiction, the Court declined further discussion of petitioners’ argument that th

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