Lucio Tan Scores Victory Before Supreme Court

The Supreme Court affirmed the decision of the Sandiganbayan in Civil Case Nos. 0096-009 which had declared null and void and of no legal effect the writs of sequestration issued by the Philippine Commission on Good Government (PCGG) over the shares of stock of Lucio C. Tan, et al, in Allied Banking Corporation, Foremost Farms, Inc., Fortune Tobacco Corporation, and Shareholdings, Inc.

In a 19-page decision penned by Justice Angelina Sandoval-Gutierrez, the High Court’s First Division found no prima facie evidence sufficient to warrant the sequestration of the shares of stock of Tan, et al. for allegedly being ill-gotten wealth. It noted that under Section 26, Article XVIII of the Constitution, an order of sequestration may only issue upon a showing “of a prima facie case” that the properties are ill-gotten wealth under Executive Orders Nos. 1 and 2. Defining ill-gotten wealth as that acquired through improper or illegal use of government funds or through abuse of official position or authority resulting in unjust enrichment of the owner and damage and prejudice to the State, the Supreme Court held that the PCGG lacks evidence to show that the shares of stock in question belong to the government. The Court also found no proof that Tan, et al. took undue advantage of their relationship or connection with former President Ferdinand Marcos or his family and associates. Failing to show how the questioned properties were acquired or whether former President Marcos intervened in their acquisition, the Supreme Court found no factual basis for the sequestration of the stocks and thus denied the PCGG’s petition assailing the Sandiganbayan’s decision. It noted that no records exist as to the reason why the shares of stock are being sequestered and the record of the proceedings, on the basis of which, issuance of the order of sequestration was authorized.

From June 1986 to January 1987, or prior to the ratification of the 1987 Constitution, the PCGG, as part of its mandate to recover ill-gotten wealth during the Marcos administration, issued orders sequestering shares of stock of Tan, et al. in the corporations. Tan, et al. then filed petitions for certiorari, prohibition, and injunction in the Supreme Court to nullify the PCGG’s orders of sequestration, which the Court referred to the Sandiganbayan. In their petitions, Tan, et al. alleged that the sequestration orders were in violation of their right to “life, liberty or property without due process of law.” Invoking Article XVIII, Section 26 of the Constitution, in a supplemental petition they also argued that “a sequestration or freeze order shall be issued only upon showing of a prima facie case.” In its “Joint Decision,” dated February 14, 2006, the Sandiganbayan declared the assailed writs null and void for lack of the prima facie factual foundation that the properties covered are ill-gotten. The anti-graft court said that the prima facie requirement is based not only on Art. XVIII, Sec. 26 of the 1987 Constitution, but on provisions of the Freedom Constitution which recognized the power and duty of the President to enact measures to achieve the mandate of the people to recover ill-gotten properties amassed by the leaders and supporters of the previous regime and protect the interest of the people through orders of sequestration or freezing of assets or accounts. In addition, the Sandiganbayan invoked Executive Orders Nos. 2 and 14 issued by then President Corazon Aquino which state that former President Marcos and his family and associates should be afforded fair opportunity to contest before the appropriate authorities allegations of corruption against them and that there be due regard to the requirements of fairness and due process. The Sandiganbayan stressed further that sequestration is “an extraordinary, harsh and even severe remedy. It should be confined to its lawful parameters and exercised, with due regard, in the words of its enabling laws, to the requirements of fairness, due process and justice.”
Concurring in the decision were Justices Consuelo Ynares-Santiago, who was designated to sit as an additional member of the First Division, and Renato C. Corona. Chief Justice Reynato S. Puno and Justice Adolfo S. Azcuna took no part. (GR Nos. 17353-56, PCGG v. Tan, December 7, 2007)

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