Tuesday, October 21, 2008

The Presidential Commission on Good Government: A critical review

I.

Introduction


The Philippines’ criminal justice system has five pillars namely, law enforcement; prosecution, courts, correctional system, and the community. The High Court in the case of People vs. Briones noted that, “Our commitment to the criminal justice system is not only to convict and punish violators of our laws. We are equally committed to the ideal that the process of detection, apprehension, conviction and incarceration of criminals should be accomplished with fairness, and without impinging on the dignity of the individual.”

The PCGG is a component of two pillars of the criminal justice system in our jurisdiction. It belongs to both the investigation and prosecution pillar. Twenty years has passed since this agency was created and arguments on its relevance and continuing existence have hounded it ever since.

II.

Statement of the Problem

The principal issues that this paper will attempt to resolve is whether or not the agency should really be allowed to continue its existence. Does this agency really serve its purpose in the ambit of our criminal justice system.


III.

Objectives

In resolving the issue presented, this term paper aims to achieve the following objectives:

1. To present the relevant laws and jurisprudence of the PCGG;
2. To discuss its achievements and accomplishments for the past twenty years; and
3. To determine the value of its continuing existence within the Philippines’ criminal justice system.


III.

Discussion of the subject

(A.) Relevant Laws

The PCGG is an offspring of a bloodless revolution. Created in 1986 by President Corazon Aquino through Executive Order no.1 s. 1986, its powers and authority include the following:

(a.) To conduct investigation as may be necessary in order to accomplish and carry out the purposes of this order.
(b) To sequester or place or cause to be placed under its control or possession any building or office wherein any ill-gotten wealth or properties may be found, and any records pertaining thereto, in order to prevent their destruction, concealment or disappearance which would frustrate or hamper the investigation or otherwise prevent the Commission from accomplishing its task.
(c) To provisionally take over in the public interest or to prevent its disposal or dissipation, business enterprises and properties taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos, until the transactions leading to such acquisition by the latter can be disposed of by the appropriate authorities.
(d) To enjoin or restrain any actual or threatened commission of acts by any person or entity that may render moot and academic, or frustrate, or otherwise make ineffectual the efforts of the Commission to carry out its tasks under this order.
(e) To administer oaths, and issue subpoenas requiring the attendance and testimony of witnesses and/or the production of such books, papers, contracts, records, statement of accounts and other documents as may be material to the investigation conducted by the Commission.
(f) To hold any person in direct or indirect contempt and impose the appropriate penalties, following the same procedures and penalties provided in the Rules of Court.
(g) To seek and secure the assistance of any office, agency or instrumentality of the government.
(h) To promulgate such rules and regulations as may be necessary to carry out the purposes of this order.


Its powers were further expanded by Executive Order no. 2 s. 1986 with the authority to request and appeal to foreign governments to freeze and prevent the transfer, conveyance, encumbrance, concealment or liquidation of ill- gotten wealth or properties found within their respective jurisdictions pending the outcome or the appropriate proceedings in the Philippines, to wit:

(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.
(2) Prohibit any person from transferring, conveying, encumbering or otherwise depleting or concealing such assets and properties or from assisting or taking part in their transfer, encumbrance, concealment, or dissipation under pain of such penalties as are prescribed by law.
(3) Require all persons in the Philippines holding such assets or properties, whether located in the Philippines or abroad, in their names as nominees, agents or trustees, to make full disclosure of the same to the Commission on Good Government within (30) days from publication of this Executive Order, or the substance thereof, in at least two (2) newspapers of general circulation in the Philippines.
(4) Prohibit former President Ferdinand Marcos and/or his wife, Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents, or nominees from transferring, conveying, encumbering, concealing or dissipating said assets or properties in the Philippines and abroad, pending the outcome of appropriate proceedings in the Philippines to determine whether any such assets or properties were acquired by them through or as a result of improper or illegal use of or the conversion of funds belonging to the Government of the Philippines or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of their official position, authority, relationship, connection or influence to unjustly enrich themselves at the expense and to the grave damage and prejudice of the Filipino people and the Republic of the Philippines.

The Commission on Good Government is hereby authorized to request and appeal to foreign governments wherein any such assets or properties may be found to freeze them and otherwise prevent their transfer, conveyance, encumbrance, concealment or liquidation by former President Ferdinand E. Marcos and Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business associates, dummies, agents, or nominees, pending the outcome of appropriate proceedings in the Philippines to determine whether such assets or properties were acquired by such persons through improper or illegal use of funds belonging to the Government of the Philippines or any of its branches, instrumentalities, enterprises, banks, or financial institutions or by taking undue advantage of their office, authority, influence, connections or relationship

Its role as a catalyst to enhance the recovery of ill-gotten wealth was strengthened further by the issuance of Executive Order no. 13 on April 23, 1986 and Executive Order no. 14 and 14-A on May 7, 1986.


The PCGG’s powers and duties were further expanded in 2005 through the issuance of Executive Order no. 242 s. 2005 which transferred the powers, functions of the defunct ad hoc fact finding Committee on Behest Loans to the PCGG. The PCGG by virtue of Executive Order no. 643 series of 2007 is now under the supervision of the Department of Justice.


(b.) Jurisprudence on the PCGG

There are many cases decided by the Supreme Court involving the PCGG. For purposes of this report, I have identified only the following which resolved on the powers and duties exercised by the agency.

In the case of PCGG vs. Pena , the High Court thru its ponente Chief Justice Teehankee ruled that:

The main issue is whether regional trial courts have jurisdiction over the petitioner Presidential Commission on Good Government (hereinafter referred to as the Commission) and properties sequestered and placed in its custodia legis in the exercise of its powers under Executive Orders Nos. 1, 2 and 14, as amended, and whether said regional trial courts may interfere with and restrain or set aside the orders and actions of the Commission. The Court holds that regional trial courts do not have such jurisdiction over the Commission and accordingly grants the petition. To eliminate all doubts, the Court upholds the primacy of administrative jurisdiction as vested in the Commission and holds that jurisdiction over all sequestration cases of ill-gotten wealth, assets and properties under the past discredited regime fall within the exclusive and original jurisdiction of the Sandiganbayan, subject to review exclusively by this Court.

In the same case, Justice Feliciano in his concurring opinion wrote that:

It seems to me that PCGG can be regarded as exercising quasi-judicial functions only in a loose and non-technical sense. The PCGG is not a quasi-judicial body in the same sense that the National Labor Relations Commission (NLRC), the Securities and Exchange Commission (SEC) and the Office of the Insurance Commissioner (OIC) exercise quasi-judicial functions. The PCGG in issuing sequestration or take over orders is not properly regarded as determining private rights, even though subject to judicial review in a proper case. All that the PCGG is really doing in so issuing such orders is determining that there exist prima facie basis for filing the appropriate proceedings before the Sandiganbayan to seek recovery and reconveyance, etc., of the sequestered assets as probably belonging to the category of "ill-gotten wealth."

In the case of GSIS vs. Sandiganbayan , the Court ruled that with respect to the jurisdiction of the Sandiganbayan, a foreclosure order will not divest it of jurisdiction over sequestered properties and they remain under custodia legis subject to the resolution of the court as to whether or they constitute ill-gotten wealth.

In the case of Cojuangco vs. Roxas , the High Court thru Justice Gancayco ruled that:

Nothing is more settled than the ruling of this Court in BASECO VS. PCGG, that the PCGG cannot exercise acts of dominion over property sequestered. It may not vote sequestered shares of stock or elect the members of the board of directors of the corporation concerned —

a. PCGG May Not Exercise Acts of Ownership.

One thing is certain, and should be stated at the outset: the PCGG cannot exercise acts of dominion over property sequestered, frozen or provisionally taken over. As already earlier stressed with no little insistence, the act of sequestration, freezing or provisional takeover of property does not import or bring about a divestment of title over said property; does not make the PCGG the owner thereof. In relation to the property sequestered, frozen or provisionally taken over, the PCGG is a conservator, not an owner. Therefore, it can not perform acts of strict ownership; and this is specially true in the situations contemplated by the sequestration roles where, unlike cases of receivership, for example, no court exercises effective supervision or can upon due application and hearing, grant authority for the performance of acts of dominion.

"Equally evident is that the resort to the provisional remedies in question should entail the least possible interference with business operations or activities so that, in the event that the accusation of the business enterprise being 'ill-gotten' be not proven, it may be returned to its rightful owner as far as possible in the same condition as it was at the time of sequestration.

b. PCGG Has Only Powers of Administration

The PCGG may thus exercise only powers of administration over the property or business sequestered or provisionally taken over, much like a court-appointed receiver, such as to bring and defend actions in its own name; receive rents; collect debts due; pay outstanding debts; and generally do such other acts and things as may be necessary to fulfill its mission as conservator and administrator. In this context, It may in addition enjoin or restrain any actual or threatened commission of acts by any person or entity that may render moot and academic, or frustrate or otherwise make ineffectual its efforts to carry out its task; punish for direct or indirect contempt in accordance with the Rules of Court; and seek and secure the assistance of any office, agency or instrumentality of the government. In the case of sequestered businesses generally, (i.e., going concerns, businesses in current operation), as in the case of sequestered objects, its essential role, as already discussed, is that of conservator, caretaker, 'watchdog' or overseer, it is not that of manager, or innovator, much less an owner.

c. Powers over Business Enterprises Taken Over by Marcos or Entities or Persons Close to him; Limitations Thereon.

Now, in the special instance of a business enterprise shown by evidence to have been 'taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos,' the PCGG is given power and authority, as already adverted to, to 'provisionally take (it) over in the public interest or to prevent . . (its) disposal or dissipation;' and since the term is obviously employed in reference to going concerns, or business enterprises in operation, something more than mere physical custody is connoted; the PCGG may in this case exercise some measure of control in the operation, running, or management of the business itself. But even in this special situation, the intrusion into management should be restricted to the minimum degree necessary to accomplish the legislative will, which is 'to prevent the disposal or dissipation' of the business enterprise. There should be no hasty, indiscriminate, unreasoned replacement or substitution of management officials, or change of policies, particularly in respect of viable establishments. In fact, such a replacement or substitution should be avoided if at all possible, and undertaken only when justified by demonstrably tenable grounds and in line with the stated objectives of the PCGG. And it goes without saying that where replacement of management officers may be called for, the greatest prudence, circumspection, care and attention should accompany that undertaking to the end that truly competent, experienced and honest managers may be recruited. There should be no role to be played in this area by rank amateurs, no matter how well meaning. The road to hell, it has been said, is paved with good intentions. The business is not to be experimented or played around with, not run into the ground, not driven to the bankruptcy, not fleeced, not ruined. Sight should never be lost sight of the ultimate objective of the whole exercise, which is to turn over the business to the Republic, once judicially established to be 'ill gotten.' Reason dictates that it is only under these conditions and circumstances that the supervision, administration and control of business enterprises provisionally taken over may legitimately be exercised.

d. Voting of Sequestered Stock; Conditions Therefor

So, too, it is within the parameters of these conditions and circumstances that the PCGG may properly exercise the prerogative to vote sequestered stock of corporations, granted to it by the President of the Philippines through a memorandum dated June 26, 1986. That memorandum authorizes the PCGG, 'pending the outcome of proceedings to determine the ownership of . . (sequestered) shares of stock,' 'to vote such shares of stock as it may have sequestered in corporations at all stockholders' meetings called for the election of directors, declaration of dividends, amendment of the Articles of Incorporation, etc.' The Memorandum should be construed in such a manner as to be consistent with, and not contradictory of the Executive Orders earlier promulgated on the same matter. There should be no exercise of the right to vote simply because the right exists, or because the stocks sequestered constitute the controlling or a substantial part of the corporate voting power. The stock is not to be voted to replace directors, or revise the articles or by-laws, or otherwise bring about substantial changes in policy, program or practice of the corporation except for demonstrably weighty and defensible grounds, and always in the context of the stated purposes of sequestration or provisional takeover, i.e., to prevent the dispersion or undue disposal of the corporate assets. Directors are not to be voted out simply because the power to do so exists. Substitution of directors is not to be done without reason or rhyme, should indeed be shunned if at all possible, and undertaken only when essential to prevent disappearance or wastage of corporate property, and always under such circumstances as to assure that the replacements are truly possessed of competence, experience and probity.

In the case at bar, there was adequate justification to vote the incumbent directors out of office and elect others in their stead because the evidence showed prima facie that the former were just tools of President Marcos and were no longer owners of any stock in the firm, if they ever were at all. This is why, in its Resolution of October 28, 1986; this Court declared that —

'Petitioner has failed to make out a case of grave abuse or excess of jurisdiction in respondents' calling and holding of a stockholders' meeting for the election of directors as authorized by the Memorandum of the President . . (to the PCGG) dated June 26, 1986, particularly, where as in this case, the government can, through its designated directors, properly exercise control and management over what appear to be properties and assets owned and belonging to the government itself and over which the persons who appear in this case on behalf of BASECO have failed to show any right or even any shareholding in said corporation.'

It must however be emphasized that the conduct of the PCGG nominees in the BASECO Board in the management of the company's affairs should henceforth be guided and governed by the norms herein laid down. They should never for a moment allow themselves to forget that they are conservators, not owners of the business; they are fiduciaries, trustees, of whom the highest degree of diligence and rectitude is, in the premises, required."

In COCOFED vs. PCGG , the High Court reiterated its ruling in n BASECO vs. PCGG, (150 SCRA 181, 182 (1987), whereby sequestration was defined as the process, which may be employed as a conservatory writ whenever the right of the property is involved, to preserve, pending litigation, specific property subject to conflicting claims of ownership or liens and privileges.

In Cojuangco vs. PCGG , the Court holds that a “just and fair administration of justice can be promoted if the PCGG would be prohibited from conducting the preliminary investigation of the complaints subject of this petition and the petition for intervention and that the records of the same should be forwarded to the Ombudsman, who as an independent constitutional officer has primary jurisdiction over cases of this nature, to conduct such preliminary investigation and take appropriate action. All violators of the law must be brought before the bar of justice. However, they must be afforded due process and equal protection of the law, whoever they may be.”

In the case of Chavez vs. Sandiganbayan involving the counter-claim suit filed by Senator Enrile against former Solicitor General Frank Chavez, the Court ruled that:

Under the circumstances of this case, we rule that the charges pressed by respondent Enrile for damages under Article 32 of the Civil Code arising from the filing of an alleged harassment suit with malice and evident bad faith do not constitute a compulsory counterclaim. To vindicate his rights, Senator Enrile has to file a separate and distinct civil action for damages against the Solicitor General.

In the case of Tiu Po v. Bautista, (103 SCRA 388 [1981]), we ruled that damages claimed to have been suffered as a consequence of an action filed against the petitioner must be pleaded in the same action as a compulsory counterclaim. We were referring, however, to a case filed by the private respondent against the petitioners or parties in the litigation. In the present case, the counterclaim was filed against the lawyer, not against the party plaintiff itself.
To allow a counterclaim against a lawyer who files a complaint for his clients, who is merely their representative in court and not a plaintiff or complainant in the case would lead to mischievous consequences.

A lawyer owes his client entire devotion to his genuine interest, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability. (See Agpalo, Legal Ethics [1980] p. 147 citing Javier v. Cornejo, 63 Phil. 293 [1936]; In re Tionko, 43 Phil. 191 [1922]; In re: Atty. C. T. Oliva, 103 Phil. 312 [1958]; Lualhati v. Albert, 57 Phil. 86 [1932]; Toguib v. Tomol, Jr., G.R. Adm. Case No. 554, Jan. 3, 1969; People v. Macellones, 49 SCRA 529 [1973]; Tan Kui v. Court of Appeals, 54 SCRA 199 [1973] A lawyer cannot properly attend to his duties towards his client if, in the same case, he is kept busy defending himself.

The problem is particularly perplexing for the Solicitor General. As counsel of the Republic, the Solicitor General has to appear in controversial and politically charged cases. It is not unusual for high officials of the Government to unwittingly use shortcuts in the zealous desire to expedite executive programs or reforms. The Solicitor General cannot look at these cases with indifferent neutrality. His perception of national interest and obedience to instructions from above may compel him to take a stance which to a respondent may appear too personal and biased. It is likewise unreasonable to require Government Prosecutors to defend themselves against counterclaims in the very same cases they are prosecuting.

As earlier stated, we do not suggest that a lawyer enjoys a special immunity from damage suits. However, when he acts in the name of a client, he should not be sued on a counterclaim in the very same case he has filed only as counsel and not as a party. Any claim for alleged damages or other causes of action should be filed in an entirely separate and distinct civil action.

In the case of Republic vs. Sandiganbayan , the High Court thru Justice Corona ruled that the PCGG was able to establish thru prima facie evidence that the assets and properties acquired by the Marcoses were manifestly and patently disproportionate to their aggregate salaries as public officials.

The High Court ruled as follows:

Section 2 of RA 1379 explicitly states that "whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. . . ."

The elements which must concur for this prima facie presumption to apply are:

(1) the offender is a public officer or employee;

(2) the must have acquired a considerable amount of money or property during his incumbency; and

(3) said amount is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property.
It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers. Hence, the first element is clearly extant.

The second element deals with the amount of money or property acquired by the public officer during his incumbency. The Marcos couple indubitably acquired and owned properties during their term of office. In fact, the five groups of Swiss accounts were admittedly owned by them. There is proof of the existence and ownership of these assets and properties and it suffices to comply with the second element.

The third requirement is met if it can be shown that such assets, money or property is manifestly out of proportion to the public officer’s salary and his other lawful income. It is the proof of this third element that is crucial in determining whether a prima facie presumption has been established in this case.

Petitioner Republic presented not only a schedule indicating the lawful income of the Marcos spouses during their incumbency but also evidence that they had huge deposits beyond such lawful income in Swiss banks under the names of five different foundations. We believe petitioner was able to establish the prima facie presumption that the assets and properties acquired by the Marcoses were manifestly and patently disproportionate to their aggregate salaries as public officials.

Otherwise stated, petitioner presented enough evidence to convince us that the Marcoses had dollar deposits amounting to US $356 million representing the balance of the Swiss accounts of the five foundations, an amount way, way beyond their aggregate legitimate income of only US$304,372.43 during their incumbency as government officials.

Considering, therefore, that the total amount of the Swiss deposits was considerably out of proportion to the known lawful income of the Marcoses, the presumption that said dollar deposits were unlawfully acquired was duly established. It was sufficient for the petition for forfeiture to state the approximate amount of money and property acquired by the respondents, and their total government salaries. Section 9 of the PCGG Rules and Regulations states:

Prima Facie Evidence. – Any accumulation of assets, properties, and other material possessions of those persons covered by Executive Orders No. 1 and No. 2, whose value is out of proportion to their known lawful income is prima facie deemed ill-gotten wealth.

Indeed, the burden of proof was on the respondents to dispute this presumption and show by clear and convincing evidence that the Swiss deposits were lawfully acquired and that they had other legitimate sources of income. A presumption is prima facie proof of the fact presumed and, unless the fact thus prima facie established by legal presumption is disproved, it must stand as proved









(c.) Accomplishments of the PCGG

PCGG has sequestered and prepared the privatization of more than P24-billion assets and pursuing litigation of some P180-billion worth more assets of Marcos family and cronies.
In its 21 years of existence, the Presidential Commission on Good Government (PCGG) has recovered around P60 billion in "net cash recoveries" from the heirs and cronies of the late strongman Ferdinand Marcos, the agency said in its accomplishment report for 2006.
The PCGG’s research department said in its report that the agency directly remitted P57 billion of its net cash recoveries to "the Bureau of Treasury for the account of the Agrarian Reform Fund (ARF) of the Comprehensive Agrarian Reform Program (CARP) of the government."
Moreover, the PCGG also stands to recover P213 billion more in cash and assets based on the value of the funds and properties involved in more than 500 cases still pending before the Sandiganbayan and the Supreme Court.
The pending cases include about 24 civil suits against the various heirs of Marcos and many of his close associates, such as Eduardo "Danding" Cojuangco Jr., Geronimo Velasco, Lucio Tan, Bienvenido Tantoco, Rodolfo Cuenca and Benjamin Romualdez.
In its report, the PCGG pointed out that the P60 billion it has recovered since 1986 proves that the commission is an efficient and effective organization.
"PCGG has attained a cost to recovery ratio of 1:52, which means that for every P1 million budget, PCGG was able to recover P52 million worth of cash and properties, or a recovery rate of 5,200 percent," the report said. "The agency, therefore, is economical, efficient, and effective in its operations."
The PCGG was earlier criticized for its poor performance in recovering the so-called ill-gotten wealth of the Marcoses and their associates.
PCGG officials, however, stressed that the agency can only do its best in following up the hundreds of cases pending before the court, but the speed by which these cases will be resolved rests solely on the judges hearing these cases.
Hereunder is a summary of the agency’s purported cash recoveries for the last twenty one years:
Pres. Aquino(4%)Pres. Ramos(20%)Pres. Estrada(1%)Pres. Arroyo(75%) Administration
Pres. Aquino 3.122B
Pres. Ramos 16.632B
Pres. Estrada 1.636B
Pres. Arroyo 61.528B



(D.) Calls for its abolition


With respect to the PCGG, there are now calls for its abolition in the light of its so-called failure to fulfill its mandate. Senator Pimentel has filed Senate Bill no. 292 calling for the abolition of the PCGG. Pimentel argues:

This legislative measure seeks to abolish the Presidential Commission on Good Government (PCGG) created under Executive Order No. 1 issued by former President Corazon C. Aquino on February 28, 1986.

Twenty (20) years after its creation, PCGG has not produced significant accomplishments that would justify its continued existence.

Under this bill, the powers and functions of investigations and prosecution of criminal and civil cases exercised by the PCGG shall be transferred to the Office of the Special Prosecutor, Ombudsman of the Philippines, while the management and the disposition of the assets and properties vested in the PCGG shall be transferred to, and shall be exercised by the Department of Finance through its Privatization Office. Furthermore, all sequestered real and personal assets and properties previously under the control and management of the PCGG, as well as all contracts, records and documents relating to the operation of the PCGG are transferred to the Privatization Office.


IV.

Conclusion and Recommendation

The continuing existence of the PCGG should not be argued merely on the cost recovery value as its defenders and opponents have advanced. There should be a framework developed to determine its true value in the criminal justice system.

If there is value though beyond the monetary consideration and accomplishment of the agency, it is how our jurisprudence has been enriched by the varied decisions of the Supreme Court on the powers, functions and limitations of the PCGG. But this is not to argue that, this alone is sufficient basis to justify its existence.

One critical link that is missing in the debate on its existence is the issue on whether this agency has indeed bought the perpetrators subject of its powers to the bar of justice. Clearly there is none. Perhaps this is one basic flaw of the agency that needs to be resolved.

For the last twenty one years, its focus is on asset recovery when clearly under its mandate under Executive Orders 1 and 2 in 1986, the agency is not just an asset recovery team. It should serve as a mechanism to administer of the ends of justice.

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