PCGG Sequestration: Authority and Due Process Are Key to Validity

G.R. No. 88126, July 12, 1996

Imagine the government suddenly seizing your business, claiming it was built on ill-gotten wealth. That’s the power of a sequestration order. But what happens when that power is abused, or when the proper procedures aren’t followed? This case highlights the critical importance of due process and proper authorization when the Presidential Commission on Good Government (PCGG) issues sequestration orders.

The Supreme Court’s decision in Republic vs. Sandiganbayan underscores that a sequestration order must be issued with proper authority and a prima facie showing of ill-gotten wealth. The PCGG cannot delegate this power to subordinates; it must be exercised by the Commissioners themselves, ensuring fairness and adherence to the rule of law.

Legal Context: PCGG and the Power of Sequestration

The PCGG was created in 1986 to recover ill-gotten wealth accumulated during the Marcos regime. One of its key powers is the ability to issue sequestration orders, which allow the government to take control of assets believed to be illegally obtained. This power is outlined in Executive Orders No. 1 and 2.

However, this power is not absolute. It is subject to the requirements of due process and must be exercised within the bounds of the law. Section 3 of the PCGG’s Rules and Regulations is very clear on who can issue a writ of sequestration:

“Sec. 3.  Who may issue. A writ of sequestration or a freeze or hold order may be issued by the Commission 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.”

This means that at least two Commissioners must authorize the order, based on reasonable grounds to believe that the assets were ill-gotten. The 1987 Constitution, Article XVIII, Section 26, reinforces this, mandating a prima facie case before issuing such an order.

For instance, if the PCGG receives information that a property was purchased with funds embezzled from the government, they must investigate and determine if there is enough evidence to suggest this is true. Only then can they issue a sequestration order, and only with the approval of at least two Commissioners.

Case Breakdown: Dio Island Resort and the Invalid Sequestration

This case revolves around Dio Island Resort, Inc., which was sequestered in 1986 by a PCGG representative, Atty. Jose Tan Ramirez, head of a task force in Region VIII. The problem? Atty. Ramirez wasn’t a Commissioner, and there was no prior determination by the PCGG that the resort was indeed ill-gotten.

Here’s a timeline of the key events:

• April 14, 1986: Atty. Ramirez issues a sequestration order against Dio Island Resort, Inc.
• July 22, 1987: The PCGG files a case against Alfredo Romualdez and others, listing Dio Island Resort as a corporation where Romualdez allegedly owned shares. However, the resort itself was not impleaded as a party to the case.
• June 10, 1988: Dio Island Resort files a motion questioning the validity of the sequestration order.
• June 16, 1988: The PCGG attempts to ratify the sequestration order.
• November 22, 1988: The Sandiganbayan invalidates the sequestration order.
• April 3, 1989: The Sandiganbayan denies the PCGG’s motion for reconsideration.

The Sandiganbayan ruled that the sequestration was invalid because it was not issued by at least two Commissioners. The PCGG’s attempt to ratify the order later on was deemed ineffective. The Supreme Court upheld this decision.

The Supreme Court emphasized that the power to sequester is a quasi-judicial function that cannot be delegated. As the Court stated, “[W]hen a public official is granted discretionary power, it is to be presumed that so much is reposed on his integrity, ability, acumen, judgment. Because he is to look into the facts, weigh them, act upon them, decide on them — acts that should be entrusted to no other.”

Furthermore, the Court noted that once a judicial action involving the subject matter of sequestration is pending, the issue falls under the exclusive jurisdiction of the Sandiganbayan.

“Once suit has been initiated on a particular subject, the entire issue of the alleged ill-gotten wealth — the acts or omissions of a particular defendant or set of defendants — will have become subject exclusively to judicial adjudication.”

Practical Implications: What This Means for You

This case serves as a crucial reminder of the importance of due process and proper authorization in government actions. It clarifies the limits of the PCGG’s power to sequester assets and reinforces the role of the Sandiganbayan in ensuring that these powers are exercised fairly and legally.

For businesses and individuals who may be subject to sequestration orders, this ruling provides a legal basis to challenge orders that are not properly authorized or supported by prima facie evidence. It also highlights the importance of seeking legal counsel to protect your rights.

Key Lessons

• Sequestration orders must be issued by at least two PCGG Commissioners.
• There must be a prima facie showing of ill-gotten wealth before a sequestration order can be issued.
• The power to sequester cannot be delegated to subordinates.
• The Sandiganbayan has the power to review the PCGG’s actions and ensure they are within the bounds of the law.
• Once a judicial action is pending, the issue of sequestration falls under the exclusive jurisdiction of the Sandiganbayan.

Imagine a situation where a businessman’s company is suddenly taken over by the PCGG based on an order issued by a regional officer, not by the Commissioners themselves. Citing this case, the businessman can immediately challenge the order in the Sandiganbayan, arguing that it’s invalid due to lack of proper authorization. This case provides him with the legal ammunition to defend his company and his rights.

Frequently Asked Questions

Q: What is a sequestration order?

A: A sequestration order is a legal order issued by the PCGG that allows the government to take control of assets believed to be ill-gotten.

Q: Who can issue a sequestration order?

A: At least two Commissioners of the PCGG must authorize the issuance of a sequestration order.

Q: What is prima facie evidence?

A: Prima facie evidence is evidence that, on its face, is sufficient to prove a particular fact unless rebutted by other evidence. In the context of sequestration, it means there must be enough evidence to suggest that the assets were indeed ill-gotten.

Q: Can the PCGG delegate its power to sequester?

A: No, the PCGG cannot delegate its power to sequester to its representatives or subordinates. This power must be exercised by the Commissioners themselves.

Q: What happens if a sequestration order is issued without proper authority?

A: A sequestration order issued without proper authority is invalid and can be challenged in court.

Q: What role does the Sandiganbayan play in sequestration cases?

A: The Sandiganbayan has exclusive and original jurisdiction over cases involving the PCGG, including cases challenging the validity of sequestration orders.

Q: What should I do if my property is sequestered?

A: Seek legal counsel immediately to understand your rights and options. You may be able to challenge the sequestration order in court.

Q: Does the ratification of an invalid sequestration order make it valid?

A: No, the ratification of an invalid sequestration order does not make it valid. An order void from the beginning remains void.

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