Republic vs. Sandiganbayan

A sequestration order signed by only one PCGG commissioner is invalid for violating Section 3 of the PCGG Rules, which requires the authority of at least two commissioners, and their signatures must appear on the writ itself as the best evidence of their approval. Furthermore, a sequestration order is deemed automatically lifted if the PCGG fails to implead the sequestered entity in the corresponding judicial action within the period prescribed by Section 26, Article XVIII of the 1987 Constitution, as merely listing the asset in an annex without impleading the distinct corporation violates due process and does not constitute the required judicial action.

On May 9, 1986, the PCGG issued sequestration orders against all properties of Prime Holdings, Inc. (PHI) and over 111,415 shares of stock of the Philippine Telecommunications Investment Corporation (PTIC) registered in the name of PHI. The two sequestration orders were signed solely by the late PCGG Commissioner Mary Concepcion Bautista. On July 16, 1987, the PCGG filed Civil Case No. 0002 for reconveyance against the Marcoses and their associates; however, PHI and the Cojuangcos were not impleaded, nor were they included in the annexed list of ill-gotten wealth. It was only on April 23, 1990, via an amended complaint, that the PCGG included PHI and the private respondents as party-defendants.

• The Sequestration Orders: On May 9, 1986, the PCGG issued two orders sequestering PHI and its PTIC shares. Both orders were signed exclusively by Commissioner Mary Concepcion Bautista. On the same day, a letter advising the law firm Siguion Reyna Montecillo & Ongsiako of the sequestration resolution was signed by both Commissioner Bautista and Commissioner Raul Daza.
• The Original Complaint: On July 16, 1987, the PCGG filed Civil Case No. 0002 against the Marcoses and their associates to recover ill-gotten wealth. The complaint listed shares of stock in various corporations, including PTIC and PLDT, in an annex. However, PHI and the Cojuangcos were not impleaded as party-defendants, nor were they mentioned in the annexed list.
• The Amended Complaint: On April 23, 1990—more than three years after the constitutional deadline—the PCGG filed an amended complaint impleading PHI, Imelda Cojuangco, and the estate of Ramon Cojuangco as additional defendants, alleging that they held PLDT shares that belonged to the Marcoses.
• Motion to Lift Sequestration: On May 4, 1993, private respondents filed a motion in Civil Case No. 0002 seeking to declare the sequestration orders automatically lifted. They argued that the orders were invalid for lacking the required two-commissioner signatures and that the PCGG failed to file the appropriate judicial action within the six-month period prescribed by Section 26, Article XVIII of the 1987 Constitution.
• Sandiganbayan Rulings: The Sandiganbayan granted the motion on December 17, 1993, declaring the orders automatically lifted. The anti-graft court subsequently denied the PCGG's motion for reconsideration on August 29, 1994.

• Petitioner argued that the sequestration orders were valid despite bearing only one signature, because the PCGG, in its October 15, 1987 meeting, clarified that verbal or written authority from two commissioners suffices, and one commissioner may sign "FOR THE COMMISSION."
• Petitioner contended that Executive Order No. 2 constituted a general writ of sequestration that could not be lifted by the Court.
• Petitioner maintained that impleading PHI in a separate action was unnecessary because PTIC was already listed in the annex of the original complaint, citing Republic vs. Sandiganbayan (First Division).
• Petitioner asserted that the filing of the amended complaint impleading PHI related back to the date of the original complaint, thus complying with the constitutional timeframe.

• Respondent Sandiganbayan upheld private respondents' contentions that the sequestration orders were defective for lacking the authority of at least two commissioners as mandated by PCGG Rules.
• Respondents argued that the PCGG failed to institute the proper judicial action against PHI within the six-month period prescribed by the Constitution, rendering the sequestration orders automatically lifted.
• Private respondents moved to dismiss the petition for certiorari on the ground of laches, asserting that the PCGG filed the petition six and a half months after receiving the denial of its motion for reconsideration, exceeding the reasonable period under Rule 65.

• Procedural Issues:
  • Whether the petition for certiorari should be dismissed on the ground of laches for having been filed beyond a reasonable period.
• Substantive Issues:
  • Whether sequestration orders signed by only one PCGG commissioner are valid and comply with Section 3 of the PCGG Rules and Regulations.
  • Whether the PCGG complied with the constitutional requirement under Section 26, Article XVIII of the 1987 Constitution by merely listing PTIC in the annex of the original complaint without impleading PHI.
  • Whether the amended complaint impleading PHI for the first time relates back to the date of the original complaint for purposes of complying with the prescriptive period.

• Procedural:
  • The Court suspended the "three-month rule" for filing petitions for certiorari in this specific case. Because cases involving sequestered corporations are endowed with public interest and involve matters of public policy, and to dispose of recurring issues, the Court noted the motion to dismiss without action and required respondents to comment.
• Substantive:
  • The sequestration orders signed by only one commissioner are invalid. Section 3 of the PCGG Rules explicitly requires the authority of at least two commissioners. The Court held that the authority of two commissioners must be evident in the order itself; their signatures are the best evidence of their approval. A letter to a law firm signed by two commissioners does not qualify as a writ of sequestration, nor does it provide constructive notice to PHI. The PCGG's 1987 clarification was self-serving and cannot validate the 1986 orders, and any ambiguity must be construed contra proferentem against the PCGG. Executive Order No. 2 is a general policy statement, not a specific writ of sequestration, because it names no particular person or property.
  • The PCGG failed to comply with the constitutional requirement under Section 26, Article XVIII. The original complaint did not implead PHI or the Cojuangcos, nor were they included in the annexed list. Listing PTIC in the annex does not constitute a judicial action against PHI, which is a corporation with a personality distinct from PTIC and PLDT. Impleading PHI was necessary to comply with due process.
  • The amended complaint impleading PHI in 1990 does not relate back to the filing of the original complaint in 1987. The rule on relation back applies only to amendments supplementing facts originally alleged, not to a party impleaded for the first time beyond the prescriptive period. Because the Constitution itself defines the prescriptive period, the late impleading renders the sequestration orders automatically lifted.

• Two-Commissioner Rule for Sequestration Orders — Under Section 3 of the PCGG Rules, a writ of sequestration must bear the signatures of at least two commissioners as the best evidence of their approval. Verbal authority or a subsequent self-serving clarification cannot substitute for the required signatures on the writ itself. Sequestration is an extraordinary remedy that derogates common rights and must be strictly construed against the State.
• Relation Back Doctrine (Limitation in Sequestration) — An amendment impleading a new party for the first time does not relate back to the date of the original complaint for purposes of complying with the prescriptive period set by the Constitution for filing the corresponding judicial action on sequestration orders.
• Sequestration as a Provisional Remedy — Sequestration is merely a provisional remedy intended to prevent the destruction or dissipation of properties pending judicial determination of whether they are ill-gotten. It does not divest title, and the lifting of a sequestration order does not ipso facto mean the properties are not ill-gotten; it merely terminates the government's role as conservator.

• "The fair and sensible interpretation of the PCGG Rule in question is that the authority given by two commissioners for the issuance of a sequestration, freeze or hold order should be evident in the order itself. Simply stated, the writ must bear the signatures of two commissioners, because their signatures are the best evidence of their approval thereof."
• "PHI is a corporation completely separate from PTIC and PLDT. Indeed, it has a personality distinct from said entities. Petitioner has shown no commonality in shareholding, management or operation among them. Neither has it alleged, much less proven, any ground why the separate corporate personality of PHI should be set aside or pierced. And definitely, the most basic considerations of due process prevent a suit against PTIC and PLDT from adversely affecting and prejudicing the proprietary rights of PHI and its likewise unimpleaded shareholders."
• "While it has been held that 'an amendment which merely supplements and amplifies facts originally alleged in the complaint relates back to the date of the commencement of the action and is not barred by the statute of limitations which expired after the service of the original complaint,' such rule does not apply to a party who is impleaded for the first time in the amended complaint that was filed beyond the prescriptive period."

• Republic vs. Dio Island Resort, 258 SCRA 685 (1996) — Followed. The Court voided the sequestration writ issued by a non-commissioner, ruling that Section 3 of the PCGG Rules leaves no room for interpretation; only commissioners may issue writs and they may not delegate this authority.
• Republic vs. Provident International Resources Corp., 269 SCRA 316 (1997) — Distinguished. The Court upheld a one-commissioner signature in Provident only because the writ was issued before the PCGG Rules took effect. In the present case, the writ was issued after the Rules' effectivity.
• Republic vs. Sandiganbayan (First Division) — Distinguished. Petitioner misapplied this case. The ruling that impleading a corporation is unnecessary applies only when the corporation is already identified in the body or annex of the complaint filed within the prescriptive period. Here, PHI was not impleaded or listed in the original complaint.
• Bataan Shipyard & Engineering Co., Inc. (BASECO) vs. PCGG, 150 SCRA 181 (1987) — Cited to emphasize that sequestration is a provisional remedy and that the PCGG acts as a mere conservator, not an owner, over sequestered properties.

• Section 26, Article XVIII, 1987 Constitution — Provides that for sequestration orders issued before the ratification of the Constitution, the corresponding judicial action must be filed within six months; otherwise, the order is deemed automatically lifted. The Court held that the PCGG failed to comply with this provision by not impleading PHI within six months.
• Section 3, PCGG Rules and Regulations — States that a writ of sequestration may be issued upon the authority of at least two commissioners. The Court strictly construed this provision, holding that the authority must be evident on the face of the writ through the signatures of two commissioners.
• Executive Order No. 1 — Created the PCGG and delegated the power to issue writs of sequestration. The Court noted that EO 1 gives specific authority to the PCGG, requiring a prima facie case for sequestration.
• Executive Order No. 2 — Froze all assets of the Marcoses and their associates. The Court held that EO 2 is a general policy statement and notice to the public, not an all-encompassing writ of sequestration, because due process requires that it name specific persons or properties.

Davide, Jr., and Quisumbing, JJ., concurred. Bellosillo, J., filed a concurring opinion.

• Vitug, J. — Reiterated his dissenting opinion in Republic vs. Sandiganbayan, 266 SCRA 515, which maintained that impleading the corporation was unnecessary and that the listing of the corporation in the annex sufficed to comply with the constitutional requirement.