PCGG vs. Sandiganbayan
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Riann BilbaoPCGG vs. Sandiganbayan
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Riann BilbaoTITLE PCGG v. Sandiganbayan* G.R. No.
124772, August 14, 2007 Prepared by:
DOCTRINE The Act of State Doctrine holds that a country's courts will not
question the validity of public acts performed by a foreign
sovereign within its own territory, out of respect for international
comity and state sovereignty. This doctrine is inapplicable when
the case involves the conduct of domestic government officials
(in this case, the conduct of PCGG and OSG) and not a challenge
to the actions of the foreign government (the Swiss government).
FACTS In 1986, the Office of the Solicitor General (OSG) requested assistance from
Swiss authorities to locate and freeze assets allegedly part of the ill-gotten wealth
of the Marcoses and their associates. Acting on this request, the Zurich District
Attorney issued an Order to Swiss banks to freeze accounts of the accused in
companies and foundations in a list provided by Presidential Commission on Good
Government (PCGG). In compliance with said Order, Bankers Trust A.G. (BTAG)
of Zurich froze the accounts of Officeco Holdings, N.V. (Officeco). Officeco
appealed but the Order was upheld by the Swiss Federal Court. In 1992, Officeco
asked the PCGG and OSG to advise Swiss authorities to unfreeze its assets. PCGG
required Officeco to submit countervailing evidence to support its request. Instead
of complying, Officeco filed Civil Case No. 0164 before the Sandiganbayan in
1994, seeking an order for the release of its frozen account. PCGG filed a motion
to dismiss the case but it was denied by the Sandiganbayan, prompting this
petition to the Supreme Court. The PCGG and OSG argued that the
Sandiganbayan lacked jurisdiction over the case, citing the Act of State Doctrine,
which prevents courts from reviewing sovereign acts of foreign states like
Switzerland. Officeco countered that the Sandiganbayan had proper jurisdiction
since the case involved Philippine government agencies and their obligations
under domestic law. They argued that the Act of State Doctrine did not apply
because the case did not challenge Swiss actions but rather sought accountability
from Philippine officials.
ISSUE Whether the act of state doctrine applies to this case? - NO
RULING The Supreme Court explained that the Act of State Doctrine is an avoidance technique
that is directly related to a State's obligation to respect the independence and equality of
other States by not requiring them to submit to adjudication in a national court or to settle
their disputes without their consent. It requires the forum court to exercise restraint in the
adjudication of disputes relating to legislative or other governmental acts which a foreign
State has performed within its territorial limits. In this case, the Court rejected the
PCGG’s argument that the Sandiganbayan would be sitting in judgment over Swiss
government actions by entertaining Officeco’s complaint. It clarified that the
Sandiganbayan was not being asked to review or invalidate the Swiss freeze orders, nor to
compel Swiss officials to act or submit to Philippine jurisdiction.
Even assuming that international law requires the application of the act of state doctrine,
the Court emphasized that the Sandiganbayan will not examine and review the freeze
orders of the concerned Swiss officials in Civil Case No. 0164. The Sandiganbayan will
not require the Swiss officials to submit to its adjudication nor will it settle a dispute
involving said officials. In fact, as prayed for in the complaint, the Sandiganbayan will
only review and examine the propriety of maintaining PCGG's position with respect to
Officeco's accounts with BTAG for the purpose of further determining the propriety of
issuing a writ against the PCGG and the OSG. Everything considered, the Court held that
the act of state doctrine finds no application in this case and petitioners' resort to it is
utterly mislaid.