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PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT v. SANDIGANBAYAN

FACTS:

Officeco filed a petition for mandamus with the Sandiganbayan seeking the release of frozen funds held in escrow. The freezing of the funds was based on a request from the Philippine government through the PCGG, and Officeco argued that it was justified under the MLAT between the Philippines and Switzerland.

The Sandiganbayan denied Officeco's motion to dismiss, which led Officeco to file a petition for certiorari with the Supreme Court, claiming that the Sandiganbayan acted with grave abuse of discretion.

The PCGG and the Philippine government questioned the competence of the PCGG lawyers to appear in the case. However, an agreement was reached allowing the PCGG lawyers to represent the PCGG or the Republic directly in ill-gotten wealth cases.

The Supreme Court ruled that res judicata did not apply to prevent the Sandiganbayan from proceeding with the case. While the first three elements of res judicata were present, the absence of absolute identity of parties and subject matter prevented its application. The interest of the Swiss court in the case was different from the Philippine government's interest.

The subject matter of the case before the Swiss Federal Court was temporary measures and bank information gathering, while the case before the Sandiganbayan involved a different cause of action. The Swiss court was concerned with settling the issues raised before it, including the legality of the legal assistance provided by Swiss authorities to the Philippine government.

ISSUES:

  1. Whether the petitioners have an interest identical to that of the Swiss courts.

  2. Whether there is an identity of causes of action between the case in the Swiss Federal Court and Civil Case No. 0164.

  3. Whether the act of state doctrine applies in this case.

  4. Whether the Sandiganbayan has jurisdiction to examine and review freeze orders issued by the government of another country.

  5. Whether Officeco's failure to exhaust administrative remedies provided by the PCGG Rules and Regulations Implementing Executive Orders No. 1 and No. 2 bars its claim.

  6. Whether Officeco's complaint before the Sandiganbayan states a cause of action.

  7. Whether there has been a violation of Officeco's right to equal protection under the 1987 Constitution due to the PCGG and OSG's refusal to release Officeco's frozen account while facilitating the release of two deposit accounts upon the request of SBTC.

RULING:

  1. The petitioners do not have an interest identical to that of the Swiss courts. The petitioners' interest is to recover ill-gotten wealth wherever it may be located, while the interest of the Swiss court is only to settle the issues raised before it, including the propriety of legal assistance extended by the Swiss authorities to the Philippine government.

  2. There is no identity of causes of action between the case in the Swiss Federal Court and Civil Case No. 0164. The subject matter before the Swiss court was the propriety of the legal assistance extended to the Philippine government, while the subject matter in Civil Case No. 0164 is the propriety of the PCGG's stance regarding Officeco's account with BTAG.

  3. The act of state doctrine does not apply in this case. The act of state doctrine is a doctrine by which states prevent their national courts from deciding disputes relating to the internal affairs of another state. However, the parameters of the use of the act of state doctrine were clarified, and it was held that international law does not require the application of this doctrine. Even if it did, the Sandiganbayan will not examine and review the freeze orders of the Swiss officials in Civil Case No. 0164.

  4. The Sandiganbayan does not have jurisdiction to examine and review freeze orders issued by the government of another country. Its jurisdiction is limited to reviewing and examining the propriety of maintaining PCGG's position with respect to Officeco's accounts with BTAG for the purpose of determining the propriety of issuing a writ against the PCGG and the OSG.

  5. Officeco's failure to exhaust administrative remedies under the PCGG's rules does not apply to the freeze orders involved in this case, which were issued by the government of another country. The PCGG cannot grant the remedy of lifting the freeze orders, and treating Officeco's request as one under the PCGG's rules would require a re-examination or review of the decision of the Swiss court, which is prohibited by the act of state doctrine.

  6. Officeco's complaint before the Sandiganbayan states a cause of action. The PCGG and the OSG failed to respond to Officeco's requests to advise the Swiss authorities to exclude Officeco's account with BTAG from the freeze order within the prescribed period, which is equivalent to a denial of these requests. The failure to exhaust administrative remedies and the form of the action (mandamus) are not determinative of the sufficiency of the complaint. The allegations in the complaint, if proven, would entitle Officeco to the main reliefs sought, as the PCGG and the OSG have no document or proof that Officeco's account belongs to the Marcoses or their cronies, and Officeco's requests to release the account from the freeze order remain unacted upon.

  7. The petition is dismissed. The Supreme Court held that there was no violation of Officeco's right to equal protection under the Constitution. The Court stated that the guarantee of equal protection means that no person or class of persons shall be deprived of the protection of laws enjoyed by others in the same place and circumstances. However, the Court found that Officeco's account was not similarly situated to the two deposit accounts requested by SBTC. The Court concluded that if Officeco's account was similarly situated, the operation of the equal protection clause would dictate its release. The Court also noted that the matter could be resolved in a separate civil case.

PRINCIPLES:

  • Identity of causes of action requires an identity in the facts essential to the maintenance of the two actions, or where the same evidence will sustain both actions. The test is whether the same facts or evidence would support and establish the former and present causes of action.

  • The act of state doctrine is an avoidance technique that prevents national courts from deciding disputes relating to the internal affairs of another state. It is directly related to a state's obligation to respect the independence and equality of other states. The act of state doctrine requires the forum court to exercise restraint in the adjudication of disputes relating to governmental acts performed by a foreign state within its territorial limits. However, international law does not require the application of this doctrine and allows individuals to seek relief through local remedies and executive authorities of their own state.

  • Sandiganbayan has limited jurisdiction to examine and review freeze orders issued by another country.

  • The PCGG's administrative remedies do not apply to freeze orders issued by another country.

  • Failure to respond to requests within the prescribed period is equivalent to a denial and can be the basis for judicial relief.

  • A motion to dismiss on the ground of failure to state a cause of action hypothetically admits the truth of the facts alleged in the complaint.

  • The sufficiency of a complaint is determined by whether it states a viable cause of action, regardless of the defense raised by the defendants.

  • The guarantee of equal protection under the Constitution means that no person or class of persons shall be deprived of the protection of laws enjoyed by others in the same place and circumstances.

  • Violation of the right to equal protection occurs when persons or classes of persons are treated differently under similar circumstances, without any rational basis.