PCGG v. Sandiganbayan, et.

Al GR No 124772

Date: Aug. 14, 2007

Topic:
Digested by: Claire Lois A. Mariano

Actors

Petitioner:
Presidential Commission on Good Government (PCGG)
Magtanggol C. Guinigundo, in his capacity as Chairman thereof

Respondent:
Sandiganbayan
Officeco Holdings, N.V

Facts
1. The OSG wrote to the Federal Office for Police Matters in Berne Switzerland,
a. Requesting assistance to ascertain and provide the OSG with information as to:
i. where and in which cantons the ill-gotten fortune of the Marcoses and
other accused are located
ii. The names of the depositors
iii. The banks and amounts involved
b. Take precautionary measures, such as sequestration, to freeze the assets to
preserve their existing value and prevent any further transfer thereof
2. The Office of the District Attorney in Zurich, heeded to the OSG’s request and directed
Swiss Banks in Zurich to freeze the accounts of the accused in PCGG I.S. No. 1 and
those in the “List of Companies and Foundations”.
3. Following the order, the Bankers Trust A.G. of Zurich froze the accounts of Officeco
Holdings, N.V.
4. Officeco appealed the Order of the District Attorney to the Attorney General of the
Canton of Zurich. The Attorney General affirmed the Order of the District Attorney.
5. Officeco further appealed to the Swiss Federal Court which likewise dismissed the
appeal.
6. Officeco made representations with the OSG and the PCGG for them to officially advise
the Swiss Federal Office for Police Matters to unfreeze Officeco’s assets. The PCGG
required Officeco to present countervailing evidence to support its request.
7. Instead of complying, Officeco filed a complaint to the Sandiganbayan docketed as Civil
Case No. 0164.
a. Praying for the PCGG and the OSG to officially advise the Swiss government to
exclude from the freeze of sequestration order the account of Officeco with BTAG
and to unconditionally release the account of Officeco.
8. The PCGG filed a motion to dismiss and motion for reconsideration both were dismissed
by the Sandiganbayan.

Issue
1. Whether the Sandiganbayan erred in not dismissing Civil Case No. 0164 on the grounds
of (1) res judicata; (2) lack of jurisdiction on account of the "act of state doctrine"; (3)
 PCGG v. Sandiganbayan, et. Al GR No 124772

Date: Aug. 14, 2007

Topic:
Digested by: Claire Lois A. Mariano

lack of cause of action for being premature for failure to exhaust administrative remedies;
and (4) lack of cause of action for the reason that mandamus does not lie to compel
performance of a discretionary act, there being no showing of grave abuse of discretion
on the part of petitioners.

Ruling
SC

The petition was DISMISSED. The court found that the Sandiganbayan did not act with grave
abuse of discretion in denying petitioner’s motion to dismiss.

Res Judicata
Elements of Judicata
1. The former judgment or order must be final
2. It must be a judgement or order on the merits, that is, it was rendered after a
consideration of the evidence or stipulations submitted by the parties at the trial of
the case
3. It must have been rendered by a court having jurisdiction over the subject matter
and the parties
4. There must be between the first and second actions, identity of parties of subject
matter and of cause of action. This requisite is satisfied if the two actions are
substantially between the same parties. (MISSING ELEMENT)
1. The court ruled that the fourth element is absent, thus res judicata does not apply to
prevent the Sandiganbayan from proceeding with Civil Case No. 0164

Act of State Doctrine

1. The court disagrees with the petitioner’s contention that the Sandiganbayan "could not
grant or deny the prayers in [Officeco’s] complaint without first examining and
scrutinizing the freeze order of the Swiss officials in the light of the evidence, which
however is in the possession of said officials" and that it would therefore "sit in judgment
on the acts of the government of another country."
2. The parameters of use of the act of State Doctrine were clarified in Banco Nacional de
Cuba v Sabbatino held that INTERNATIONAL LAW DOES NOT REQUIRE THE
APPLICATION OF THIS DOCTRINE NOR DOES IT FORBID THE
APPLICATION OF THE RULE EVEN IF IT IS CLAIMED THAT THE ACT OF
STATE IN QUESTION VIOLATED INTERNATIONAL LAW. Moreover, due to
the doctrine’s peculiar nation-to-nation character, in practice the usual method for
an individual to seek relief is to exhaust local remedies and then repair to the
executive authorities of his own state to persuade them to champion his claim in
diplomacy or before an international tribunal.
3. Assuming international law requires the application of the act of state doctrine,
 PCGG v. Sandiganbayan, et. Al GR No 124772

Date: Aug. 14, 2007

Topic:
Digested by: Claire Lois A. Mariano

a. The Sandiganbayan will not examine and review the freeze orders of the
concerned Swiss officials in Civil Case No. 0164.
b. The Sandiganbayan will not require the Swiss officials to submits its adjudication
nor will it settle a dispute involving said officials.
c. The Sandiganbayan will only review and examine the propriety of maintaining
PCGG’s position with respect to Officeco’s accounts with BTAG for the purpose
of further determining the propriety of issuing a writ against the PCGG and the
OSG.
4. Everything considered, the act of state doctrine finds no application in this case and
petitioners’ resort to it is utterly mislaid.

Exhaustion of Administrative Remedies

1. Petitioners advert to Officeco’s failure to exhaust the administrative remedies provided in

Secs. 5 and 6 of the PCGG Rules and Regulations
2. The aforementioned provisions shows that they refer only to sequestration orders, freeze
orders and hold orders issued by the PCGG in the Philippines. They cannot be made to
apply to the freeze orders involved in this case which were issued by the government of
another country.
3. The court held that it was an error for petitioners to treat Officeco’s request for the lifting
the freeze orders as a request under Secs. 5 and 6 of the PCGG Rules and Regulations
a. The PCGG cannot even grant the remedy embodied in the said rules, i.e., lifting
of the freeze orders.
b. Any argument towards a conclusion that PCGG can grant the remedy of
lifting the freeze order is totally inconsistent with its earlier argument using
the act of state doctrine. PCGG’s cognizance of such a request and treating it
as a request under Secs. 5 and 6 of its rules would require a re-examination
or review of the decision of the Swiss court, a procedure that is prohibited by
the act of state doctrine.

Complaint States a Cause of Action

1. The court upheld sufficiency of the complaint on whether Officeco’s complaint before the
Sandiganbayan states a cause of action.
2. Officeco had alleged that it had sent several letters to the PCGG and the OSG for these
bodies to advise the Swiss authorities to drop or exclude Officeco’s account with BTAG
from the freeze or sequestration, but no formal response was received by petitioners on
these letters.
3. Neither the PCGG nor the OSG replied to the requests of Officeco within 15 days as
required by law, such inaction is equivalent to a denial of these requests. As such, no
other recourse was left except for judicial relief.
 PCGG v. Sandiganbayan, et. Al GR No 124772

Date: Aug. 14, 2007

Topic:
Digested by: Claire Lois A. Mariano

Referenced Law:
Section 5(a) of Republic Act No. 6713, or the Code of Conduct and Ethical Standards for Public
Officials and Employees, states:

Section 5. Duties of Public Officials and Employees. ― In the performance of their duties, all
public officials and employees are under obligation to:

(a) Act promptly on letters and requests. ― All public officials and employees shall, within
fifteen (15) working days from receipt thereof, respond to letters, telegrams or other means of
communications sent by the public. The reply must contain the action taken on the request.

Discussion on about the complaint of Officeco in the Sandiganbayan:

If proven, Officeco would be entitled to the main reliefs sought in its complaint in view of
petitioner’s refusal to exclude Officeco’s account with BTAG in the list of ill gotten wealth in the
Sandiganbayan.

The complaint is as follows:

1. The freeze order has been in effect for eleven (11) years, since 1986, without any judicial
action instituted by the PCGG and the OSG against Officeco;
2. The PCGG and the OSG have no document or proof that the account of Officeco with
BTAG belongs to the Marcoses nor their cronies. Information on this matter was even
requested by the OSG from the PCGG and the latter from Swiss authorities who, up to
the present, have not responded positively on the request;
3. Requests by Officeco to the PCGG and OSG to make representations with the Swiss
authorities for the latter to release Officeco’s account with the BTAG from the freeze
order remain unacted upon despite the mandate in Section 5(a) of Republic Act No. 6713.

The truth of the allegations may be properly determined only if Civil Case No. 0164 is allowed
to proceed. such that if they are found to be supported by preponderance of evidence, adverse
findings may properly be made against PCGG and the corresponding reliefs granted in favor of
Officeco.

Officeco claims that on two separate occasions, upon request of counsel for Security Bank and
Trust Company, the PCGG and OSG advised the Swiss authorities to release from the freeze
order two other securities accounts with BTAG because of such representation the grant of
release was effected.

Officeco claims that PCGG and OSG is in violation of the equal protection clause for favorably
acting on SBTC’s request and not on Officeco’s request.
 PCGG v. Sandiganbayan, et. Al GR No 124772

Date: Aug. 14, 2007

Topic:
Digested by: Claire Lois A. Mariano

If it were true that the PCGG and the OSG facilitated the release of two deposit accounts upon
the request of SBTC and these accounts are similarly situated to Officeco’s frozen account with
BTAG, the operation of the equal protection clause of the Constitution dictates that Officeco’s
account should likewise be ordered released. Again, this matter can properly be resolved if Civil
Case No. 0164 is allowed to proceed.

Definition of terms
Res Judicata:
Means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by
judgment. The doctrine of res judicata provides that a final judgment on the merits rendered by a
court of competent jurisdiction is conclusive as to the rights of the parties and their privies and
constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of
action.

Act of State Doctrine:

The act of state doctrine is one of the methods by which States prevent their national courts from
deciding disputes which relate to the internal affairs of another State, the other two being
immunity and non-justiciability. It is an avoidance technique that is directly related to a State’s
obligation to respect the independence and equality of other States by not requiring them to
submit to adjudication in a national court or to settlement of their disputes without their consent.
It requires the forum court to exercise restraint in the adjudication of disputes relating to
legislative or other governmental acts which a foreign State has performed within its territorial
limits.

Link: https://lawphil.net/judjuris/juri2007/aug2007/gr_124772_2007.html