The Supreme Court ruled that a notice issued by the Presidential Commission on Good Government (PCGG), though titled as a notice of lis pendens, was actually a notice of sequestration. Because of this, it had to comply with the constitutional and procedural requirements for sequestration orders. The Court emphasized the need to protect individuals’ property rights, especially when the government seeks to recover alleged ill-gotten wealth. This decision clarifies the importance of adhering to strict legal standards when restricting property rights through sequestration.

When a ‘Lis Pendens’ is Really Sequestration in Disguise: Whose Wealth Is It Anyway?

This case revolves around the Republic of the Philippines’ attempt to recover properties allegedly linked to the Marcos family. At the heart of the dispute is a notice issued by the PCGG, initially labeled as a notice of lis pendens. However, the Sandiganbayan and ultimately the Supreme Court, saw it as something more potent: a notice of sequestration. This distinction is critical because a notice of sequestration carries far greater implications and must adhere to stricter legal safeguards. The question is whether the PCGG followed the proper procedures in issuing what was, in essence, a sequestration order.

The Republic argued that the notice was merely a lis pendens, intended to inform the public that the properties were subject to litigation. They contended that the phrase “deemed sequestered” was simply a way of indicating the properties’ involvement in Civil Case No. 0004. On the other hand, BLMMM Ventures, Inc. (BVI), the current owner of the properties, asserted that the notice was unequivocally a sequestration order, given its language and practical effect. BVI pointed out that the notice explicitly stated the properties “are deemed sequestered” and restricted any transactions involving them. Furthermore, the annotation on the titles was labeled as a “Notice of Sequestration.”

The Supreme Court sided with BVI, emphasizing that the substance of the notice, rather than its title, determined its true nature. The Court highlighted that the notice went beyond a mere advisory; it contained a directive to the Register of Deeds to prevent any transfer or encumbrance of the properties. This, the Court reasoned, was akin to a sequestration or freeze order, requiring strict compliance with constitutional and procedural safeguards.

The legal concept of lis pendens serves a specific purpose. J. Casim Construction Supplies, Inc. v. Registrar of Deeds of Las Piñas defines it as:

the jurisdiction, power, or control which a court acquires over the property involved in a suit, pending the continuance of the action, and until final judgment. It is an announcement to the whole world that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over said property.

Thus, a notice of lis pendens merely alerts potential buyers that the property is subject to a pending legal dispute. However, in this case, the notice went further, imposing a restriction on the property’s disposition, thus functioning as a sequestration order.

The power of the PCGG to issue sequestration orders is rooted in Executive Orders Nos. 1 and 2, issued shortly after the ouster of President Marcos. These orders aimed to recover ill-gotten wealth amassed by the Marcos family and their associates. However, this power is not without limits. Section 26, Article XVIII of the 1987 Constitution placed a time limit on the authority to issue sequestration orders:

Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3 dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative for not more than eighteen months after the ratification of this Constitution. However, in the national interest, as certified by the President, the Congress may extend such period.

The Constitution was ratified on February 2, 1987, meaning the PCGG’s power to issue sequestration orders expired on August 2, 1988, unless extended by Congress. In this case, the PCGG issued the contested notice on February 22, 2001, well beyond the constitutional deadline.

Furthermore, the PCGG’s own rules require that a sequestration order be authorized by at least two Commissioners. This requirement ensures a level of deliberation and scrutiny before such a powerful remedy is invoked. The Court emphasized in PCGG v. Judge Peña 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.

In this case, the notice was issued by Director Manuel Parras of the PCGG’s Legal Department, without the required authorization from at least two Commissioners. This constituted a violation of the PCGG’s own rules and further undermined the validity of the notice.

In conclusion, the Supreme Court’s decision underscores the importance of adhering to due process and respecting property rights, even in cases involving the recovery of ill-gotten wealth. The government cannot circumvent constitutional and procedural safeguards by simply mislabeling a sequestration order as a notice of lis pendens. The Court’s ruling ensures that the PCGG’s actions are subject to judicial review and that individuals are protected from arbitrary or excessive government action. It emphasizes that the pursuit of justice must be balanced with the protection of fundamental rights. The ruling highlights how crucial it is to follow legal rules when the government tries to recover assets, reinforcing the idea that everyone, including the state, must respect the law.

FAQs

What was the key issue in this case?	The central issue was whether a notice issued by the PCGG, labeled as a notice of lis pendens, was in substance a notice of sequestration and therefore subject to the requirements for such orders. The Court had to determine if the notice was valid despite not meeting sequestration requirements.
What is a notice of lis pendens?	A notice of lis pendens is a warning to the public that a property is subject to ongoing litigation, and any interest acquired in the property is subject to the outcome of the lawsuit. It serves to put potential buyers on notice of the legal dispute.
What is a sequestration order?	A sequestration order is a legal order that allows the government to take control of assets or properties to prevent their concealment, destruction, or dissipation, especially in cases involving alleged ill-gotten wealth. It’s a tool to preserve assets during legal proceedings.
Why did the Sandiganbayan and the Supreme Court rule against the PCGG?	The courts ruled against the PCGG because the notice, although labeled as lis pendens, acted as a sequestration order without complying with the constitutional and procedural requirements for such orders. The notice was issued beyond the period allowed for sequestration and without proper authorization.
What is the significance of the date February 2, 1987, in this case?	February 2, 1987, is the date of the ratification of the 1987 Constitution. The Constitution limited the PCGG’s authority to issue sequestration orders to 18 months after this date, unless extended by Congress, which was not done in this case.
What is the “two-Commissioner rule” in PCGG cases?	The “two-Commissioner rule” requires that a writ of sequestration or a freeze order be authorized by at least two Commissioners of the PCGG. This requirement ensures a level of scrutiny and deliberation before issuing such orders.
Who is Director Manuel Parras, and what was his role in this case?	Director Manuel Parras was the Director of the Legal Department of the PCGG. He issued the notice in question, but as he was not a PCGG Commissioner, he lacked the authority to issue a sequestration order without the concurrence of at least two Commissioners.
What was the effect of the Supreme Court’s decision on BLMMM Ventures, Inc.?	The Supreme Court’s decision favored BLMMM Ventures, Inc. by affirming the cancellation of the “Notice of Sequestration” annotated on their property titles. This freed their properties from the legal encumbrance imposed by the PCGG.

This case serves as a reminder that the government’s power to pursue ill-gotten wealth is not unlimited. It must be exercised within the bounds of the Constitution and the law, with due regard for the rights of individuals and entities. The Supreme Court’s decision safeguards property rights and ensures that the PCGG adheres to established legal procedures.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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: Republic of the Philippines vs. Sandiganbayan (Second Division) and BLMMM Ventures, Inc., G.R. No. 222364, September 05, 2018