TL;DR

This Supreme Court decision clarifies that a sequestration order issued by the Presidential Commission on Good Government (PCGG) is automatically lifted once a final judicial determination is made regarding the ownership of the sequestered properties. In this case, the Court ruled that because the ownership of the disputed United Coconut Planters Bank (UCPB) shares had already been conclusively decided in a prior case (Cojuangco, Jr. v. Republic), the PCGG’s sequestration orders on those shares were rendered functus officio (no longer effective). The ruling emphasizes that sequestration is a temporary measure to preserve assets pending ownership determination, not a permanent government takeover. Individuals and entities whose assets are sequestered are entitled to the lifting of sequestration once the courts have definitively ruled on the issue of ill-gotten wealth.

The Lifespan of Sequestration: From Provisional Control to Judicial Finality

This case, ECJ and Sons Agricultural Enterprises, et al. v. Presidential Commission on Good Government, revolves around the crucial question of when government sequestration of assets should end. Specifically, it examines whether sequestration orders remain valid even after a final court judgment has determined the ownership of the assets in question. The petitioners, ECJ and Sons Agricultural Enterprises and related companies, sought to lift sequestration orders placed on their United Coconut Planters Bank (UCPB) shares. These orders, issued by the PCGG in 1986, were part of the government’s effort to recover ill-gotten wealth allegedly amassed during the Marcos regime. The core of the legal battle lies in understanding the nature and duration of sequestration as a legal remedy.

Sequestration, as explained by the Supreme Court, is an extraordinary remedy. Its purpose is not to establish ownership but to temporarily control properties to prevent their dissipation or concealment while their status as ‘ill-gotten wealth’ is judicially determined. This power was vested in the PCGG through Executive Orders issued after the 1986 revolution, aimed at recovering assets acquired illegally by the Marcos regime and its associates. The legal framework for sequestration is rooted in the principle of preserving assets pending litigation, similar to an attachment order under the Civil Code. Crucially, sequestration does not transfer ownership to the government; the PCGG acts merely as a conservator, not an owner.

The petitioners argued that the sequestration orders on their UCPB shares should be lifted because there was no prima facie evidence to support the claim that these shares were ill-gotten. They further contended that prior Supreme Court rulings, particularly Republic v. COCOFED and Cojuangco, Jr. v. Republic, which declared certain UCPB shares as public funds, did not apply to their specific shares. The Sandiganbayan, initially agreeing with the petitioners, later reversed its decision, reinstating the sequestration orders based on its interpretation of the COCOFED and Cojuangco, Jr. cases. The Sandiganbayan reasoned that these cases had already determined the public nature of UCPB shares, thus justifying continued sequestration.

However, the Supreme Court disagreed with the Sandiganbayan’s interpretation. The Court clarified that while COCOFED established the prima facie public character of certain UCPB shares for voting purposes, it did not constitute a final determination of ownership for all UCPB shares, especially those held by parties not directly involved in that case. More importantly, the Court emphasized the principle that sequestration is inherently temporary. It ends when the ownership of the sequestered properties is finally adjudicated. In this instance, the Supreme Court pointed to its earlier decision in Cojuangco, Jr. v. Republic, which had already conclusively ruled on the ownership of the UCPB shares linked to Eduardo Cojuangco Jr., including those held by his “fronts, nominees, and dummies,” a category which the Court found included the petitioners.

The Court stated:

Sequestration ends when a final disposition has been made on the sequestered properties. The final disposition involves a determination of whether the sequestered properties were ill-gotten in the appropriate judicial proceedings. “Upon the final disposition of the sequestered properties, the sequestration is rendered functus officio.”

Because Cojuangco, Jr. v. Republic had already reached finality and determined that the UCPB shares in question were indeed public funds and belonged to the Republic, the Supreme Court held that the sequestration orders had served their purpose and were now functus officio. Continuing the sequestration after a final judgment would contradict the very nature of sequestration as a provisional remedy. The Court thus ruled that the Sandiganbayan erred in reinstating the sequestration orders. The case was remanded to the Sandiganbayan for the proper disposition of the shares in accordance with the final judgment in Cojuangco, Jr. v. Republic, effectively lifting the PCGG’s control over the petitioners’ UCPB shares due to the conclusive ownership ruling.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: ECJ AND SONS AGRICULTURAL ENTERPRISES VS. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, G.R. No. 207619, April 26, 2021