PCGG vs. Dumayas

The Sandiganbayan has exclusive original jurisdiction over all incidents arising from, incidental to, or related to cases for the recovery of ill-gotten wealth filed pursuant to Executive Order Nos. 1, 2, 14, and 14-A, including claims of ownership over sequestered assets that are inextricably intertwined with the principal ill-gotten wealth case. A petition for declaratory relief filed in the RTC seeking to establish ownership over sequestered coco levy assets is barred by res judicata where the issue of ownership has been finally adjudicated by the Sandiganbayan and affirmed by the Supreme Court.

The case involves the coconut levy funds, which were imposed on the sale of copra pursuant to Republic Act No. 6260 and various presidential decrees issued during martial law, including P.D. No. 755, P.D. No. 961, and P.D. No. 1468. These funds were used to acquire the First United Bank (later renamed UCPB) and, through the CIIF companies, a large block of San Miguel Corporation shares. After the 1986 EDSA revolution, President Corazon C. Aquino issued Executive Order Nos. 1, 2, 14, and 14-A, creating the PCGG and conferring upon the Sandiganbayan exclusive and original jurisdiction over ill-gotten wealth cases. The PCGG issued sequestration orders against shares of stock in UCPB and the CIIF companies, and on July 31, 1987, instituted recovery suit CC No. 0033 before the Sandiganbayan, which was later subdivided into eight complaints, including Civil Case Nos. 0033-A and 0033-F.

The coconut levy funds were created through Republic Act No. 6260 in 1971, which established the Coconut Investment Company to administer the Coconut Investment Fund sourced from a ₱0.55 levy on the sale of every 100 kg. of copra. During martial law, several presidential decrees were issued purportedly to improve the coconut industry, including P.D. No. 755, which authorized the PCA to utilize the Coconut Consumers Stabilization Fund and the Coconut Industry Development Fund collections to acquire a commercial bank, and P.D. No. 961, as amended by P.D. No. 1468, which codified the laws relating to the coconut industry. Letter of Instructions No. 926 directed UCPB, as the investment arm of the coconut farmers through the CIIF, to invest portions of the CIIF levy in oil mills and other private corporations. Through these mechanisms, the coconut levy funds were used to acquire the First United Bank (later renamed UCPB) and, through the CIIF companies, a large block of San Miguel Corporation shares.

After the 1986 EDSA revolution, President Corazon C. Aquino issued Executive Order Nos. 1, 2, 14, and 14-A, creating the PCGG and conferring on the Sandiganbayan exclusive and original jurisdiction over ill-gotten wealth cases. The PCGG issued sequestration orders against shares of stock in UCPB and the CIIF companies, and on July 31, 1987, instituted recovery suit CC No. 0033 before the Sandiganbayan. The case was later subdivided into eight complaints, including Civil Case No. 0033-A (involving the anomalous purchase and use of FUB, now UCPB) and Civil Case No. 0033-F (involving the acquisition of San Miguel Corporation shares). The Sandiganbayan rendered partial summary judgments in these cases on July 11, 2003 and May 7, 2004, respectively.

On January 24, 2012, the Supreme Court decided COCOFED vs. Republic, affirming with modification the partial summary judgments and declaring the coconut levy funds as special public funds of the Government. The Court held that the six CIIF companies, the 14 holding companies, and the CIIF block of SMC shares were owned by the Government, having been acquired using coconut levy funds, and ordered them reconveyed to the Government for the benefit of all coconut farmers and the development of the coconut industry. The motion for reconsideration was denied with finality on September 4, 2012.

On December 28, 2012, UCPB filed a petition for declaratory relief in the RTC of Makati City (Civil Case No. 12-1251) against the six CIIF oil mills, 14 holding companies, PCGG, and other corporations. UCPB alleged that the capital used in establishing the CIIF companies was not exclusively sourced from coconut levy funds, claiming that it invested ₱633 Million as Administrator of the CIIF and around ₱112 million in the six oil mill companies. UCPB claimed 11.03% indirect ownership valued at ₱7.84 Billion in the sequestered shares. COCOLIFE filed a similar petition (Civil Case No. 12-1252), claiming 11.01% ownership by virtue of its being a stockholder owning 146,610,567 UCPB shares and having purchased shares in four CIIF oil companies on December 18, 1985.

PCGG filed motions to dismiss in both cases, citing lack of jurisdiction over the subject matter, the finality of the January 24, 2012 Decision, the unavailability of declaratory relief, estoppel, and failure to implead an indispensable party. The RTC denied the motions to dismiss, prompting PCGG to file the consolidated petitions before the Supreme Court. The Court issued temporary restraining orders on February 26, 2014, enjoining the RTC from proceeding with the hearings.

• Lack of Jurisdiction: PCGG contended that respondent judge gravely abused his discretion in not dismissing the petitions for declaratory relief, which merely aim to re-litigate the issue of ownership already passed upon by the Sandiganbayan under the Partial Summary Judgment rendered in Civil Case No. 0033-F and the January 24, 2012 Decision of this Court in COCOFED vs. Republic. It argued that the RTC has no jurisdiction over the acts performed by PCGG pursuant to its quasi-judicial functions, particularly those relating to the issuance of writs of sequestration, and that all cases involving ill-gotten wealth assets are under the unquestionable jurisdiction of the Sandiganbayan.

• Final and Executory Judgment: PCGG maintained that the petitions for declaratory relief actually seek to modify or alter the Decision of this Court in COCOFED vs. Republic, which has become final and executory.

• Improper Subject of Declaratory Relief: PCGG contended that documents like stock certificates cannot be a proper subject of a petition for declaratory relief, considering that the phrase "other written instruments" contemplated by the Rules of Court pertains to a written document constituting a contract upon which rights and obligations are created.

• Estoppel: PCGG argued that UCPB and COCOLIFE are now estopped from asserting any right over the subject properties on account of their inaction for more than 25 years while the issue of ownership was being litigated.

• No Obligation to Implead: PCGG asserted it has no legal obligation to implead UCPB and COCOLIFE, as held in Universal Broadcasting Corporation vs. Sandiganbayan (5th Div.).

• Authority of Commissioner: Respondents questioned the authority of Commissioner Vicente L. Gengos, Jr. in filing the present petitions and signing the Verification and Certification Against Forum Shopping, pointing out that the PCGG is a collegial body that may function only as such "Commission," and the action should have been properly authorized by all members.

• Jurisdiction of the RTC: UCPB and COCOLIFE argued that since they have properly alleged a case for declaratory relief, jurisdiction over the subject matter lies in the regular courts such as the RTC of Makati City. Citing San Miguel Corporation vs. Kahn, they insisted that the subject matter of their petitions is the declaration of their rights under corporate documents, which relate to investments not sourced from coconut levy funds.

• No Re-examination of Final Judgment: Respondents posited that proceeding to hear the cases below will not pave the way for re-examining the findings of this Court in COCOFED vs. Republic, because the subject matter of their petitions is not the coconut levy funds but their own investments in the CIIF OMG and consequent indirect ownership of the CIIF SMC Block of Shares.

• Not Bound by Prior Adjudication: Respondents maintained that since they were not impleaded in Sandiganbayan Civil Case No. 0033-F and in G.R. Nos. 177857-58 and 178193, they are not bound by any adjudication of ownership rendered therein.

• No Breach from Sequestration: Respondents contended that the writ of sequestration cannot be considered a breach giving rise to a cause of action, as there was no "injury" on their part because they were not impleaded as parties in the sequestration case, and their title and interest remained unaffected.

• Verification and Certification: Whether the signature of only one PCGG Commissioner on the verification and certification against forum shopping is a fatal defect.
• Jurisdiction: Whether the RTC has jurisdiction over the subject matter of Civil Case Nos. 12-1251 and 12-1252, or whether such jurisdiction pertains exclusively to the Sandiganbayan.
• Declaratory Relief: Whether the petitions for declaratory relief complied with the requisites for such remedy.
• Res Judicata and Laches: Whether the doctrine of res judicata and/or laches bars the suits for declaratory relief filed by UCPB and COCOLIFE.

• Verification and Certification: No. The signature of only one Commissioner of petitioner PCGG in the verification and certification against forum shopping is not a fatal defect, as verification is only a formal, not jurisdictional, requirement, and relaxation of the rules is warranted in cases involving coconut levy funds affected with public interest.

• Jurisdiction: No. The RTC has no jurisdiction over suits involving the sequestered coco levy assets and coco levy funds. Under Section 4(C) of P.D. No. 1606, as amended by R.A. No. 7975 and R.A. No. 8249, the Sandiganbayan has exclusive original jurisdiction over civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14, and 14-A, including all incidents arising from, incidental to, or related to such cases.

• Declaratory Relief: The Court deemed it unnecessary to address this issue, having resolved that subject matter jurisdiction pertains to the Sandiganbayan and not the RTC, and that the petitions for declaratory relief are barred by the January 24, 2012 Decision.

• Res Judicata and Laches: Yes. Res judicata under the second aspect (conclusiveness of judgment) is applicable, as the issue of ownership of the sequestered CIIF companies and CIIF SMC Block of Shares was directly and actually resolved by the Sandiganbayan and affirmed by this Court in COCOFED vs. Republic.

• Verification and Certification: The Court held that verification of a pleading is only a formal, not jurisdictional, requirement, and noncompliance does not necessarily render the pleading fatally defective. As to the certification of non-forum shopping, a rigid application of the rules should not defeat the PCGG's mandate under EO 1, EO 2, EO 14, and EO 14-A to prosecute cases for the recovery of ill-gotten wealth. The Court noted that EO 180 was issued on March 18, 2015, reiterating the Government's policy to ensure that all coco levy funds and assets be utilized solely for the benefit of coconut farmers, and that the OSG, PCGG, and other concerned agencies shall file proper pleadings to preserve, protect, or recover the Government's rights in Coco Levy Assets. The Court cited PCGG vs. Cojuangco, Jr. where it gave due course to a petition despite the lack of signature of the Solicitor General, noting the extraordinary circumstances justifying a liberal interpretation of the rules.

• Jurisdiction: The Court held that jurisdiction over the subject matter is determined by the allegations of the complaint and the relief prayed for, regardless of whether the plaintiff is entitled to recovery. Under Section 4(C) of P.D. No. 1606, as amended, the Sandiganbayan has exclusive original jurisdiction over civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14, and 14-A. Citing PCGG vs. Peña, the Court clarified that all incidents arising from, incidental to, or related to such cases necessarily fall under the Sandiganbayan's exclusive and original jurisdiction. The Court found that the respondents' petitions for declaratory relief asserted claims of ownership over the sequestered CIIF companies and indirectly the CIIF SMC Block of Shares, which are undeniably related to the ill-gotten wealth cases (Civil Case Nos. 0033-A and 0033-F) involving the issue of ownership of the aforesaid sequestered companies and shares. The Court distinguished Philippine Amusement and Gaming Corporation vs. Court of Appeals, noting that in that case the PCGG was not a party to the suit, whereas here PCGG was impleaded as co-defendant in Civil Case Nos. 12-1251 and 12-1252. Citing Cuenca vs. PCGG, the Court held that the benchmark is whether the shares are alleged to be ill-gotten wealth of the Marcoses and their perceived cronies, which is sufficient to bring the case within the exclusive jurisdiction of the Sandiganbayan.

• Res Judicata: The Court applied the doctrine of conclusiveness of judgment, which ordains that issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. The Court held that the issue of ownership of the sequestered CIIF companies and CIIF SMC Block of Shares was directly and actually resolved by the Sandiganbayan and affirmed by this Court in COCOFED vs. Republic. Citing Universal Broadcasting Corporation vs. Sandiganbayan (5th Div.), the Court reiterated that it is not necessary to implead companies which are the res of suits for recovery of ill-gotten wealth, as the judgment may simply be directed against the shares of stock shown to have been issued in consideration of ill-gotten wealth. The Court further noted that the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy funds, which have been established to be public in character, and therefore these acquired corporations and assets ought to be regarded and treated as government assets.

• Exclusive Jurisdiction of the Sandiganbayan over Ill-Gotten Wealth Cases — Under Section 4(C) of P.D. No. 1606, as amended by R.A. No. 7975 and R.A. No. 8249, the Sandiganbayan has exclusive original jurisdiction over civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14, and 14-A, issued in 1986. This jurisdiction extends not only to the principal causes of action for the recovery of alleged ill-gotten wealth but also to all incidents arising from, incidental to, or related to such cases, which may not be made the subject of separate actions or proceedings in another forum. The Court applied this doctrine to hold that the RTC had no jurisdiction over the petitions for declaratory relief, as the claims of ownership over the sequestered CIIF companies and CIIF SMC Block of Shares were inextricably intertwined with the ill-gotten wealth cases pending before the Sandiganbayan.

• Conclusiveness of Judgment (Res Judicata) — A fact or question which was in issue in a former suit and there was judicially passed upon and determined by a court of competent jurisdiction is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned, and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. Identity of cause of action is not required but merely identity of issues. The Court applied this doctrine to bar the petitions for declaratory relief, as the issue of ownership of the sequestered CIIF companies and CIIF SMC Block of Shares had been finally adjudicated in COCOFED vs. Republic.

• No Need to Implead Companies which are the Res of the Action — In ill-gotten wealth cases, there is no need to implead firms which are merely the res of the actions, as the judgment may simply be directed against the shares of stock shown to have been issued in consideration of ill-gotten wealth. The Court applied this doctrine to reject the respondents' argument that they were not bound by the prior adjudication because they were not impleaded in the Sandiganbayan cases.

• "It is an important fundamental principle in our judicial system that every litigation must come to an end. Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the fruits of the verdict." — This passage articulates the foundational principle of finality of judgments that underlies the Court's application of res judicata in this case.

• "The Sandiganbayan shall have exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction and over petitions of similar nature, including quo warranto, arising or that may arise in cases filed or which may be filed under Executive Order Nos. 1, 2, 14 and 14-A, issued in 1986." — This quotation from P.D. No. 1606, as amended, defines the scope of the Sandiganbayan's exclusive jurisdiction, which the Court applied to hold that the RTC lacked jurisdiction over the petitions for declaratory relief.

• "The rationale of the exclusivity of such jurisdiction is readily understood. Given the magnitude of the past regime's 'organized pillage' and the ingenuity of the plunderers and pillagers with the assistance of the experts and best legal minds available in the market, it is a matter of sheer necessity to restrict access to the lower courts, which would have tied into knots and made impossible the commission's gigantic task of recovering the plundered wealth of the nation." — This passage from PCGG vs. Peña, quoted by the Court, explains the policy rationale for the exclusive jurisdiction of the Sandiganbayan over ill-gotten wealth cases and their incidents.

• "Since the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy funds – funds, which have been established to be public in character – it goes without saying that these acquired corporations and assets ought to be regarded and treated as government assets. Being government properties, they are accordingly owned by the Government, for the coconut industry pursuant to currently existing laws." — This passage from COCOFED vs. Republic, quoted by the Court, establishes the basis for the final adjudication of ownership of the subject properties, which barred the respondents' claims under res judicata.

• COCOFED vs. Republic, 679 Phil. 508 (2012) — Controlling precedent. The January 24, 2012 Decision affirmed with modification the partial summary judgments in Civil Case Nos. 0033-A and 0033-F, declared the coconut levy funds as public funds, and held that the CIIF companies and CIIF SMC Block of Shares are owned by the Government. This decision became final and executory and served as the basis for the application of res judicata.

• Republic vs. COCOFED, 423 Phil. 735 (2001) — Followed. The Court declared the coconut levy funds as prima facie public funds and held that beneficial ownership of the sequestered UCPB shares prima facie pertains to the government.

• PCGG vs. Peña, 243 Phil. 93 (1988) — Followed. The Court clarified that the Sandiganbayan's exclusive jurisdiction extends to all incidents arising from, incidental to, or related to ill-gotten wealth cases.

• Cuenca vs. PCGG, 561 Phil. 235 (2007) — Followed. The Court upheld the exclusive jurisdiction of the Sandiganbayan over all incidents affecting the shares of a sequestered corporation, holding that the benchmark is whether the shares are alleged to be ill-gotten wealth.

• Universal Broadcasting Corporation vs. Sandiganbayan (5th Div.), 556 Phil. 615 (2007) — Followed. The Court reiterated that it is not necessary to implead companies which are the res of suits for recovery of ill-gotten wealth.

• Philippine Amusement and Gaming Corporation vs. Court of Appeals, 341 Phil. 432 (1997) — Distinguished. The Court noted that in that case, the PCGG was not a party to the suit, unlike in the present case where PCGG was impleaded as co-defendant.

• PCGG vs. Cojuangco, Jr., 361 Phil. 892 (1999) — Followed. The Court gave due course to a petition despite the lack of signature of the Solicitor General, noting extraordinary circumstances justifying a liberal interpretation of the rules.

• Republic vs. Investa Corporation, 576 Phil. 741 (2008) — Followed. The Court held that it is the Sandiganbayan, not the SEC, which has jurisdiction over a petition involving the dilution of the Government's percentage in the stockholdings of a sequestered corporation.

• Section 4(C), P.D. No. 1606, as amended by R.A. No. 7975 and R.A. No. 8249 — Confers upon the Sandiganbayan exclusive original jurisdiction over civil and criminal cases filed pursuant to and in connection with Executive Order Nos. 1, 2, 14, and 14-A, issued in 1986, including petitions for the issuance of writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs in aid of its appellate jurisdiction. The Court applied this provision to hold that the RTC lacked jurisdiction over the petitions for declaratory relief.

• Executive Order Nos. 1, 2, 14, and 14-A, Series of 1986 — E.O. 1 created the PCGG; E.O. 2 asserted that ill-gotten assets come in the form of shares of stocks, etc.; E.O. 14 conferred on the Sandiganbayan exclusive and original jurisdiction over ill-gotten wealth cases. The Court applied these issuances to determine the jurisdiction of the Sandiganbayan over the subject properties.

• Executive Order No. 180, issued March 18, 2015 — Reiterates the Government's policy to ensure that all coco levy funds and coco levy assets be utilized solely and exclusively for the benefit of all coconut farmers and for the development of the coconut industry, and directs the OSG, PCGG, and other concerned agencies to file proper pleadings to preserve, protect, or recover the Government's rights in Coco Levy Assets. The Court cited this issuance to justify the relaxation of the rules on verification and certification against forum shopping.

• Rule 46, Section 3, paragraph 3; Rule 7, Sections 4 and 5, 1997 Rules of Civil Procedure, as amended — Requires petitions for certiorari to be verified and accompanied by a sworn certification of non-forum shopping. The Court applied these rules to determine whether the signature of only one PCGG Commissioner was a fatal defect.

• Section 8, R.A. No. 6260 — Created the Coconut Investment Company to administer the Coconut Investment Fund, sourced from a ₱0.55 levy on the sale of every 100 kg. of copra. This provision established the statutory basis for the coconut levy funds at the center of the case.

• P.D. No. 755, Sections 1 and 2 — Authorized PCA to utilize the CCSF and CIDF collections to acquire a commercial bank and declared that the coconut levy funds shall not be considered special and/or fiduciary funds or form part of the general funds of the government. The Court previously declared these provisions unconstitutional for allowing the use of public funds for private benefit.

• P.D. No. 961, as amended by P.D. No. 1468, Article III, Sections 1 and 5 — Empowered PCA to impose and collect the Coconut Consumers Stabilization Fund Levy and declared that the CCSF and CIDF shall not be construed as special and/or fiduciary funds or as part of the general funds of the national government. The Court previously declared similar provisions unconstitutional.

Sereno, C.J., Carpio, Velasco, Jr., Brion, Bersamin, Del Castillo, Perez, Mendoza, Perlas-Bernabe, and Leonen, JJ., concurred. Leonardo-De Castro, Peralta, and Jardeleza, JJ., took no part. Reyes, J., was on leave.

N/A — No dissenting opinions were noted in the case text.