G.R. No. L-75885 May 27, 1987
BATAAN SHIPYARD & ENGINEERING CO., INC. (BASECO), petitioner, vs. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, et al., respondents.

FACTS

The petitioner, Bataan Shipyard & Engineering Co., Inc. (BASECO), filed a special civil action for certiorari and prohibition challenging the validity of Executive Orders Nos. 1 and 2 issued by President Corazon C. Aquino, which created the Presidential Commission on Good Government (PCGG) and defined its powers to recover ill-gotten wealth. BASECO specifically assailed various orders and acts implemented by the PCGG against it, commencing with a sequestration order dated April 14, 1986. This order directed the sequestration of BASECO and several other companies allegedly affiliated with Alfredo “Bejo” Romualdez. Following the sequestration, the PCGG issued subsequent directives, including an order for the production of corporate documents, termination of existing security service contracts, changes in payment modes for entry charges, an attempted contract for wharf improvements, and an order authorizing a third party to operate BASECO’s rock quarry.

ISSUE

The core issue is whether the PCGG, acting under Executive Orders Nos. 1 and 2, acted without or in excess of its jurisdiction or with grave abuse of discretion in sequestering BASECO and subsequently issuing orders that effectively involved the exercise of acts of ownership and management over the corporation.

RULING

The Supreme Court dismissed the petition, upholding the validity of the PCGG’s actions. The legal logic rests on the extraordinary constitutional context of the 1986 Revolution, which established a new government and a new constitutional order. Executive Orders Nos. 1 and 2 were issued by the President pursuant to the revolutionary government’s sovereign power and the provisional “Freedom Constitution,” which expressly authorized the recovery of ill-gotten wealth. The Court ruled that the PCGG’s sequestration power is a provisional, preventive measure intended to preserve assets suspected to be ill-gotten, preventing their dissipation pending final judicial determination. The acts challenged by BASECO—such as demanding documents, changing security arrangements, and managing operations—were deemed within the PCGG’s ancillary powers necessary to effectively administer and preserve the sequestered property as a going concern. The Court emphasized that sequestration does not automatically transfer ownership; it merely places the property under the PCGG’s custodial stewardship. The ultimate issues of ownership and the ill-gotten nature of the assets remain subject to adjudication in the proper courts. The ruling balanced the government’s compelling interest in recovering plundered wealth against property rights, finding the PCGG’s initial and ancillary actions a valid exercise of state power under the unique historical and legal circumstances.