Raul Daza's invalid sequestration order of the Olot resthouse

Monday July 23, 2012 ()

This is the Philippine Supreme Court ruling on the validity of the PCGG's sequestration order by Commissioner Raul Daza of the Imelda Marcos owned property in Leyte known as the Olot Resthouse.

It will be remembered that Raul Daza, currently representing the first congressional district of Northern Samar in the House of Representatives, went on exile during the Marcos years. Daza was one of the vocal critics of the late President Ferdinand Marcos.

Here it is.

Republic of the Philippines


G.R. No. 155832 December 7, 2010

SANDIGANBAYAN (Fourth Division) and IMELDA R. MARCOS, Respondents.



This case involves the validity of a sequestration order signed, not by the Presidential Commission on Good Government (PCGG) Commissioners, but by designated agents and issued prior to the effectivity of the PCGG Rules and Regulations.

The Facts and the Case

On February 28, 1986, immediately after assuming power, President Corazon C. Aquino issued Executive Order1, creating the PCGG. She empowered the PCGG to recover all ill-gotten wealth allegedly amassed by former President Ferdinand E. Marcos, his family, and close associates during his 20-year regime.

On March 13, 1986 PCGG Commissioner Raul Daza gave lawyers Jose Tan Ramirez (Ramirez) and Ben Abella (Abella), PCGG Region VIII Task Force Head and Co-Deputy, respectively, written authority to sequester any property, documents, money, and other assets in Leyte, belonging to former First Lady Imelda R. Marcos (Mrs. Marcos), Benjamin Romualdez, Alfredo Romualdez, and their agents.

On March 18, 1986, acting on the authority given them, Attys. Ramirez and Abella issued a sequestration order against the Marcoses’ Olot, Tolosa, Leyte property (Olot Resthouse), a 17-room affair sitting on 42 hectares of beachfront land, with a golf course, swimming pool, cottages, a pelota court, and a pavilion.

On July 16, 1987 petitioner Republic of the Philippines, represented by the PCGG, filed a complaint for recovery of ill-gotten wealth against President Marcos and his wife, respondent Mrs. Marcos, before the Sandiganbayan, docketed as Civil Case 0002, which complaint was amended a number of times.1 Mrs. Marcos then filed her answer to the third amended complaint.2

On August 10, 2001 Mrs. Marcos filed a motion to quash the March 18, 1986 sequestration order against the Olot Resthouse,3 claiming that such order, issued only by Attys. Ramirez and Abella, was void for failing to observe Sec. 3 of the PCGG Rules and Regulations.4 The rules required the signatures of at least two PCGG Commissioners. The Republic opposed5 the motion, claiming that Mrs. Marcos was estopped from questioning the sequestration order since by her acts, like seeking PCGG permission to repair the resthouse and entertain guests there, she had conceded the validity of the sequestration; that she failed to exhaust administrative remedies by first seeking its lifting as provided in the PCGG rules; that the rule requiring the signatures of at least two PCGG Commissioners did not yet exist when the Olot Resthouse was sequestered; and that she intended her motion to quash to delay the proceedings against her.

Mrs. Marcos filed a Supplement6 to her earlier motion, claiming no prima facie evidence that the Olot Resthouse constituted ill-gotten wealth. She pointed out that the property is the ancestral home of her family.

On February 28, 2002 the Sandiganbayan issued the assailed Resolution,7 granting the motion to quash and ordering the full restoration of the Olot Resthouse to Mrs. Marcos. The Sandiganbayan ruled that the sequestration order was void because it was signed, not by PCGG Commissioners, but by mere PCGG agents. Although the sequestration order preceded the passage of the PCGG Rules, it remained that the law empowered only the PCGG to issue sequestration orders.8 Besides, under the law,9 the PCGG is the sole entity charged with the responsibility of recovering ill-gotten wealth. Its representatives or agents do not have such power. The Republic moved for reconsideration of the resolution but the Sandiganbayan denied it on August 28, 2002.10 Thus, the Republic filed the present petition for certiorari.

The Issue Presented

The sole issue presented is whether or not the March 18, 1986 sequestration order against the Olot Resthouse, issued by PCGG agents before the enactment of the PCGG rules, was validly issued.

The Court’s Ruling

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 1 and 2.11 When a court nullifies an order of sequestration for having been issued without a prima facie case, the Court does not substitute its judgment for that of the PCGG but simply applies the law.12

In Bataan Shipyard & Engineering Co, Inc. v. PCGG,13 the Court held that a prima facie factual foundation that the properties sequestered are "ill-gotten wealth" is required. The power to determine the existence of a prima facie case has been vested in the PCGG as an incident to its investigatory powers. The two-commissioner rule is obviously intended to assure a collegial determination of such fact.14

Here, it is clear that the PCGG did not make a prior determination of the existence of a prima facie case that would warrant the sequestration of the Olot Resthouse. The Republic presented no evidence before the Sandiganbayan that shows differently. Nor did the Republic demonstrate that the two PCGG representatives were given the quasi-judicial authority to receive and consider evidence that would warrant such a prima facie finding.

Parenthetically, the Republic’s supposed evidence does not show how the Marcoses acquired the sequestered property, what makes it "ill-gotten wealth," and how former President Marcos intervened in its acquisition. Taking the foregoing view, the resolution of the issue surrounding the character of the property sequestered – whether or not it could prima facie be considered ill-gotten – should be necessary.

The issue in this case is not new. The facts are substantially identical to those in the case of Republic v. Sandiganbayan (Dio Island Resort, Inc.).15 There, the same Atty. Ramirez issued a sequestration order on April 14, 1986 against Dio Island Resort, Inc. and all its assets and properties which were thought to be part of the Marcoses’ ill-gotten wealth. Alerted by a challenge to his action, the PCGG passed a resolution "to confirm, ratify and adopt as its own all the Writs of Sequestration" that Attys. Ramirez and Abella issued "to remove any doubt as to the validity and enforceability" of their writs. Still, the Court struck them down as void:

x x x

It is indubitable that under no circumstances can a sequestration or freeze order be validly issued by one not a Commissioner of the PCGG.

The invalidity of the sequestration order was made more apparent by the fact that Atty. Ramirez did not even have any specific authority to act on behalf of the Commission at the time he issued the said sequestration order. x x x

x x x x

Even assuming arguendo that Atty. Ramirez had been given prior authority by the PCGG to place Dio Island Resort under sequestration, nevertheless, the sequestration order he issued is still void since PCGG may not delegate its authority to sequester to its representatives and subordinates, and any such delegation is invalid and ineffective.

Under Executive Order Nos. 1 and 2, PCGG is the sole entity primarily charged with the responsibility of recovering ill-gotten wealth. x x x The power to sequester, therefore, carries with it the corollary duty to make a preliminary determination of whether there is a reasonable basis for sequestering a property alleged to be ill-gotten. After a careful evaluation of the evidence adduced, the PCGG clearly has to use its own judgment in determining the existence of a prima facie case.

x x x x

The absence of a prior determination by the PCGG of a prima facie basis for the sequestration order is, unavoidably, a fatal defect which rendered the sequestration of respondent corporation and its properties void ab initio. Being void ab initio, it is deemed non-existent, as though it had never been issued, x x x.16

The Court is maintaining its above ruling in this case.

Although the two PCGG lawyers issued the sequestration order in this case on March 18, 1986, before the passage of Sec. 3 of the PCGG Rules, such consideration is immaterial following our above ruling.

In PCGG v. Judge Peña,17 the Court held that the powers, functions and duties of the PCGG amount to the exercise of quasi-judicial functions, and the exercise of such functions cannot be delegated by the Commission to its representatives or subordinates or task forces because of the well established principle that judicial or quasi-judicial powers may not be delegated.

It is the Republic’s theory of course that Commissioner Daza’s letter, directing Attys. Ramirez and Abella to search and sequester all properties, documents, money and other assets of respondents, should be considered as the writ of sequestration while the order issued by Attys. Ramirez and Abella should be treated merely as an implementing order.

But the letter did not have the tenor of a sequestration order covering specific properties that the lawyers were ordered to seize and hold for the PCGG. Actually, that letter is of the same kind issued to Attys. Ramirez and Abella in Dio Island Resort. Consequently, there is no reason to depart from the Court’s ruling in the latter case where it said:

The invalidity of the sequestration order was made more apparent by the fact that Atty. Ramirez did not even have any specific authority to act on behalf of the Commission at the time he issued the said sequestration order. Thus, the respondent Court noted:

"Contrary to plaintiff's representation, nothing exists to support its contention that the Task Force had been given prior authority to place DIO under PCGG control. On the contrary, as the text of the above letters clearly show, Attys. Jose Tan Ramirez and Ben Abella, had acted on broad and non-specific powers: ‘By authority of the commission and the powers vested in it. x x x.’"18

Petitioner Republic argues that Mrs. Marcos should be deemed estopped from questioning the sequestration of her Olot Resthouse by her actions in regard to the same. But a void order produces no effect and cannot be validated under the doctrine of estoppel. For the same reason, the Court cannot accept petitioner’s view that Mrs. Marcos should have first sought the lifting of the sequestration order through a motion to quash filed with the PCGG. Being void, the Sandiganbayan has the power to strike it down on sight.

Besides, the lifting of the sequestration order will not necessarily be fatal to the main case since it does not follow from such lifting that the sequestered properties are not ill-gotten wealth. Such lifting simply means that the government may not act as conservator or may not exercise administrative or housekeeping powers over the property.19 Indeed, the Republic can be protected by a notice of lis pendens.

WHEREFORE, the Court DISMISSES the petition for lack of merit and AFFIRMS the challenged resolutions of the Fourth Division of the Sandiganbayan dated February 28, 2002 and August 28, 2002 in Civil Case 0002, which granted respondent Imelda R. Marcos’ Motion to Quash the March 18, 1986 Sequestration Order covering the Olot Resthouse.

Further, the Court DIRECTS the Register of Deeds of Leyte to immediately annotate a notice of lis pendens on the certificate of title of the Olot Resthouse with respect to the Republic of the Philippines’ claim over the same in Civil Case 0002 of the Sandiganbayan.

No pronouncement as to costs.


Associate Justice


Chief Justice

Associate Justice
Associate Justice
(On Official Leave)
Associate Justice
Associate Justice
Associate Justice
Associate Justice(No part)
Associate Justice
Associate Justice
Associate Justice
Associate Justice
Associate Justice
Associate Justice
Associate Justice


Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court.

Chief Justice


* On official leave.

** No part. Justice Fernanda Lampas-Peralta acted as Assistant Solicitor General.

1 Rollo, Vol. I, pp. 86-122.

2 Id. at 157-195.

3 Id. at 196-202.

4 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.

5 Rollo, Vol. I, pp. 205-226.

6 Id. at 230-236.

7 Id. at 58-84; penned by Associate Justice Narciso S. Nario, and concurred in by Associate Justices Rodolfo G. Palattao and Nicodemo T. Ferrer.

8 Republic of the Philippines v. Sandiganbayan (Dio Island Resort, Inc.), 328 Phil. 210, 219 (1996).

9 Executive Orders 1 and 2.

10 Rollo, Vol. I, p. 85.

11 EXECUTIVE ORDER 1 – CREATING THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT. WHEREAS, vast resources of the government have been amassed by former President Ferdinand E. Marcos, his immediate family, relatives, and close associates both here and abroad;

x x x x

Sec. 2. The Commission shall be charged with the task of assisting the President in regard to the following matters:

(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship.

x x x x


x x x x

NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, hereby:

(1) Freeze all assets and properties in the Philippines in which former President Marcos and/or his wife, Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents, or nominees have any interest or participation; x x x

12 Presidential Commission on Good Government v. Tan, G.R. Nos. 173553-56, December 7, 2007, 539 SCRA 464, 479-480.

13 234 Phil. 180, 214 (1987).

14 Republic of the Philippines v. Sandiganbayan, 355 Phil. 181, 195 (1998).

15 Supra note 8.

16 Id. at 218-219, 222.

17 243 Phil. 93 (1988).

18 Republic of the Philippines v. Sandiganbayan, supra note 8, at 218.

19 Presidential Commission on Good Government v. Sandiganbayan, 418 Phil. 8, 20 (2001).

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