Bataan Shipyard and Engineering Co.
(BASECO), v PCGG (Presidential Acts done by the PCGG
Commission on Good Government) (Narvasa, 1987)
Special civil action of certiorari and prohibition
SUMMARY: BASECO was alleged to acquire properties from NASSCO through
deeds of sale but with the intervention of Pres Marcos. Pres Cory Aquino
promulgated EOs 1 and 2, the former creates the PCGG which is tasked to recover
the ill-gotten wealth during Marcos’ time and is empowered to sequester, provisionally
take over and to enjoin or restrain and actual or threatened acts. PCGG aborted
some contracts of BASECO and put BASECO under the administration of a
management team designed by PCGG. BASECO was also required to produce
documents.
RELEVANT ISSUE: WON EOs were unconstitutional for violating one’s right against
self-incrimination in requiring the production such documents
HELD: NO. Juridical persons may not invoke the right against self incrimination. It
can make no contract not authorized by its charter. Its rights to act as a corporation
are only preserved to it so long as it obeys the laws of its creation. There is a reserve
right in the legislature to investigate its contracts and find out whether it has exceeded
its powers.
FACTS
Petitioner assails (1) Executive Orders Numbered 1 and 2, promulgated by
President Corazon Aquino and (2) the sequestration, takeover, and other
orders issued, and acts done, in accordance with said executive orders by
the Presidential Commission on Good Governance and/or its Commissioners
and agents, affecting such corporation.
The provisional Constitution was ordained by President Aquino’s Proclamation 3
which says that the President shall wield legislative power until a legislature is elected
and convened under a new Constitution and such power shall give priority to
measures to achieve the mandate of the people –such as recover the ill-gotten wealth
amassed by the leaders and supporters of the previous regime.
EO 1 created the PCGG which was charged with the task to recover the ill-gotten
wealth and had the power to sequester, provisionally take over and to enjoin or
restrain any actual or threatened commission of acts. EO 2 specifically freezes all
assets and properties in the Philippines which the Marcoses and their close relatives,
subordinates, etc were interested in or participated in. It also prohibited transferring,
conveying, etc of said assets and required all persons holding such properties to
make full disclosure of the same the Commission on Good Government.
EO 14 empowered the PCGG with the assistance of the OSG and other
governmental agencies to file and prosecute all cases investigated by it.
A sequestration order and letter was issued to petitioner to implement the
sequestration of the company and produce documents such as the stock
transfer book, articles of incorporation, by-laws, among others. If the
documents were not submitted within 5 days, the officers would be cited for
“contempt in pursuance with Presidential EO Nos 1 and 2”.
Petitioner’s security contract within Engineer Island was terminated by
Captain Zabala who was a member of the task force assigned to carry out
the sequestration order. Their contract for improvement of wharf at Engineer
Island was also aborted because the “new management is not in a position to
honor the said contract x x x and should be deemed unauthorized”
Commissioner Mary Bautista directed PCGG agent Mayor Buenaventura to
“plan and implement progress towards maximizing the continuous operation
of the BASECO Sesiman Rock Quarry x x by conventional methods”. Later
on, another party, A.T. Abesamis, was authorized to operate said quarry.
Commissioner Bautista also ordered Mayor Buenaventura to “clean and
beautify the Company’s compound” and in this connection, dispose of or sell
metal scraps and other materials.
Commissioner Ramon Diaz decreed the provisional takeover by the PCGG
of BASECO and other affiliated companies. He invoked the provisions of Sec
3(c) of EO 1, empowering the Commission to
“provisionally takeover in the public interest or to prevent its disposal or dissipation,
business enterprises and properties taken over by 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.”
A management team was given [by the PCGG] the power to conduct all
aspects of the operation of the subject companies, installs key officers, hire
and terminates personnel as necessary, etc. [has the right to administer
property…but not dispose of]. Certain officers were also terminated of their
service to the PCGG.
Petitioner’s argument
- Sequestration without resorting to judicial action might be made
before the promulgation of the Freedom Constitution because said
constitution adopts Art IV (Bill of Rights) of the 1973 Constitution
which provides the due process clause. Petitioner contends that:
 o They had no notice of hearing was accorded
o PCGG is not a court but a purely investigative agency and
therefore not competent to act as a prosecutor and judge in
the same cause
o The issuances fail to show any proceeding, process or
remedy by which petitioner may challenge the validity of the
takeover after the same has been effected
o Bill of Attainder because action is directed against specified
persons and disregards constitutional presumption of
innocence and general rules and procedures.
- Order to Produce Documents violates right against self-incrimination.
- PCGG had unduly interfered with its right of dominion and
management of its business affairs.
Why is BASECO being targeted by the PCGG? It acquired several lands
from NASSCO with the intervention of President Marcos.
6 of BASECO’s 15 incorporators ceased to be stockholders. Barely 6
months after its incorporation, BASECO acquired National Shipyard and
Steel Corporation (NASSCO), a GOCC the latter’s shipyard at Mariveles,
Bataane, all its structures, buildings, shops, quarters, houses, plants,
and others except for NASSCO’s Engineer Island Shops and certain
equipment of the Bataan National Shipyard. It acquired this through a
Contract of Purchase of Sale with Chattel Mortgage . The price was P 52
mill. Unaccountably, the price was reduced to more than half, around P
24 mill. A Memorandum Agreement for this was executed by NASSCO
and was approved by President Marcos.
BASECO also acquired 300 hectares of land in Mariveles from the
Export Processing Zone Authority for P 10 mill. P 2 mill would be paid
upon execution and the rest would be paid in installments. BASECO
acquired ownership over the rest of the assets of NASSCO with the
intervention of President Marcos. BASECO also obtained some loans.
What is the purpose of sequestration, provisional takeover and the other acts
of the PCGG? There is an obvious and imperative need for preliminary,
provisional measures to prevent the concealment, disappearance,
destruction, dissipation, or loss of the assets and properties subject of the
suits, or to restrain or foil acts that may render moot and academic, or
effectively hamper, delay, or negate efforts to recover the same.
ISSUES
WON EOs 1 and 2 and the sequestration, takeover and other orders in
accordance with the EOs are unconstitutional – NO – Does not violate any of
the constitutional doctrines raised by the petitioner.
[based on petitioner’s contentions]
 Were the requisites for attachment and receivership present
(procedural due process)? Yes – There must exist a prima facie
factual foundation. EO 2 declares that with respect to the alleged “ill-
gotten wealth”, it is the position of the new government and other
parties to be afforded fair opportunity to contest these claims before
the appropriate Philippine authorities. EO 14 says that there must be
due regard to the requirements of fairness and due process.
Opportunity to Contest – Secs 5 and 6 of the Rules and Regulations
lay down the procedure by which a party may seek to set aside a writ
of sequestration or freeze order. There is also a constitutional
sanction of remedies under Sec 26 Art XVIII of the 1987 Constitution.
These are premised upon the State’s inherent police power.
 Was PCGG intended as a judge? – No – Its general function is to
conduct investigations in order to collect evidence establishing
instances of “ill-gotten wealth” and as may be necessary to preserve
and conserve the assets of which it takes custody and control and
prevent the disappearance, loss or dissipitation. It does not try to
decide any issue.
 Are the EOs Bills of Attainder? – NO – A bill of attainder is a
legislative act which inflicts punishment without judicial trial. Its
essence is the substitution of a legislative for a judicial determination
of guilt. Nothing in the EOs can be reasonably construed as a
determination or declaration of guilt. The judgment of guilt is to be
handed down to a judicial tribunal which in this case would be the
Sandiganbayan. Also, no punishment is being inflicted by the EOs.
 Was there a violation of right against self-incrimination and
unreasonable searches and seizures? – NO – Provision does not
apply to juridical persons. While an individual may lawfully refuse to
answer incriminating questions unless protected by an immunity
statute, it does not follow that a corporation, vested with special
 privileges and franchises, may refuse to show its hand when charged
with an abuse of such privileges.
The corporation is a creature of the state. It is presumed to be
incorporated for the benefit of the public. It received certain special
privileges and franchises, and holds them subject to the laws of the
state and the limitations of its charter. Its powers are limited by law. It
can make no contract not authorized by its charter. Its rights to act as
a corporation are only preserved to it so long as it obeys the laws of
its creation. There is a reserve right in the legislature to investigate
its contracts and find out whether it has exceeded its powers.
There has been no court hearing, no trial, and no presentation of evidence.
All that we have is what the PCGG has given us. The petitioner has not even
been allowed to see the evidence, much less refute it.
CRUZ: I am convinced and so submit that the PCGG cannot at this time take
over the BASECO without any court order and exercise thereover acts of
ownership without court supervision. Voting the shares is an act of
ownership. Reorganizing the board of directors is an act of ownership. Such
acts are clearly unauthorized. As the majority opinion itself stresses, the
PCGG is merely an administrator whose authority is limited to preventing the
sequestered properties from being dissipated or clandestinely transferred.

The court action prescribed in the Constitution is not inadequate and is

EO 14-A amends Sec 4 of EO 14 and assures protection to
available to the PCGG. The advantage of this remedy is that, unlike the ad
individuals required to produce evidence before the PCGG against
libitum measures now being take it is authorized and at the same time also
any possible violation of his right against self-incrimination.
limited by the fundamental law. I see no reason why it should not now be
employed by the PCGG, to remove all doubts regarding the legality of its acts
 Has PCGG unduly interfered with BASECO’s right of dominion and
and all suspicions concerning its motives.
management of business affairs? – NO – PCGG cannot exercise
acts of dominion over property sequestered. It is a conservator, not
an owner. It merely has the powers of administration, much like a
court-appointed receiver.

The PCGG may properly exercise the prerogative to vote

sequestered stock of corporations, granted it be by the President of
the Philippines through a Memorandum. That Memorandum
authorizes such.

 The Court cannot pass upon other irregularities complained of by the

BASECO such as the cancellation or revision and the execution of
certain contracts because it should be left for initial determination in
the appropriate action.

PETITION DISMISSED.

DISSENTS

GUTTIEREZ, JR: Pages 21 to 33 of the majority opinion are dedicated to a

statement of facts which conclusively and indubitably shows that BASECO is
owned by President Marcos-and that it was acquired and vastly enlarged by
the former President's taking undue advantage of his public office and using
his powers, authority, or influence.