SC Affirms Sandiganbayan Dismissal of Complaint for ill-Gotten Wealth Recovery Against Lucio Tan, et al.

As the party seeking recovery, the Republic has the burden of proving, through preponderance of evidence, allegations in civil cases filed to recover unlawfully acquired property or ill-gotten wealth.

Thus reiterated the Supreme Court En Banc, in a Decision penned by Associate Justice Rodil V. Zalameda, denying the consolidated petitions for review on certiorari filed by the Republic of the Philippines. The petitions challenged the rulings of the Sandiganbayan dismissing the complaint for recovery and reconveyance of ill-gotten wealth brought by the Presidential Commission on Good Government (PCGG) against Lucio Tan (Tan), former President Ferdinand   E.  Marcos (Marcos, Sr.), former   First   Lady   and   later   Senator Imelda R. Marcos (Imelda), and 23 other individuals (collectively, respondents).

The complaint sought to recover ill-gotten wealth alleged to have been acquired through schemes and abuse of power of Marcos, Sr., Imelda, and Tan, resulting in their unjust enrichment as allegedly demonstrated in: the liquidation of General Bank and Trust Company and Tan’s acquisition of its assets through Allied Banking Corporation without sufficient collateral and consideration; Tan’s delivery to Marcos, Sr. and Imelda of substantial beneficial interest in shares of stock in Asia Brewery Inc. beginning July 1977 in exchange for concessions and privileges for his business ventures; Tan’s delivery of improper gifts, bribes, concessions, and/or guaranteed “dividends” to Marcos, Sr. and Imelda, allegedly in consideration of their continued support for and/or their ownership of interests in his business ventures; the establishment of Shareholdings, Inc. to prevent the disclosure and recovery of their allegedly illegally-obtained assets; the sale of the  controlling  interest  of  Development  Bank  of  the Philippines  (DBP)  in  Century  Park  Sheraton  Hotel  owned by Maranaw  Hotels  and Resorts Corp. to Sipalay Trading Corporation (Sipalay Trading), a company controlled by Tan, resulting in losses to DBP amounting  to millions  of pesos because Sipalay Trading was grossly undercapitalized; the printing of Bureau of Internal Revenue strip stamps worth billions of pesos allegedly without legal authority, and affixing them on packs of cigarettes produced by Fortune Tobacco, in violation of Section 189 of the Internal Revenue Code of 1977, defrauding the Republic and the Filipino people of billions of pesos in tax receipts; and the establishment of Northern Redrying Co., Inc., a Virginia Tobacco Company, which on several instances, imported and purchased tobacco in excess of the ceilings allowed by law.

After reviewing the evidence, the Court found that the Republic failed to prove through preponderance of evidence that all the elements of ill-gotten wealth were present.

“When preponderance of evidence is required, the courts must necessarily weigh the evidence presented by the parties and determine who was able to adduce evidence more conclusive and credible than that of the other,” said the Court.

Under Executive Order Nos. 1 and 2, the PCGG Rules and Regulations, and relevant jurisprudence, the elements of ill-gotten wealth are: (1) assets and properties were acquired; (2) they were acquired by Marcos Sr., Imelda, their close relatives, subordinates, business associates, agents or nominees; (3) the manner of acquisition was either: (a) through or because of the improper or illegal use of funds or properties owned by the Government of the Philippines or any of its branches, instrumentalities, enterprises, banks, or financial institutions, or (b) by taking undue advantage of their office, authority, influence, connections, or relationship; and (4) the acquisition resulted in their unjust enrichment, and caused grave damage and prejudice to the Filipino people and the Republic of the Philippines.

To support its position that the subject properties were ill-gotten because they were obtained through the collaboration between Marcos, Sr. and respondents taking undue advantage of official position, relationship, and influence, which was allegedly demonstrated by the “60-40 business arrangement” between Marcos, Sr. and Tan, the Republic presented the following pieces of evidence: (a) Imelda’s Amended Answer; (b) Tan’s Written Disclosure; (c) Ferdinand Marcos, Jr.’s testimony; (d) Ronaldo Gapud’s affidavit; and (e) voluminous documentary evidence found by the PCGG in their investigations.

The Court, however, found that none of the above successfully established the manner by which respondents allegedly acquired ill-gotten wealth. “It was not shown, through these pieces of evidence, if and how respondents took undue advantage of their office, authority, influence, connections, or relationship,” held the Court.

The Court found that Imelda’s Amended Answer and Marcos, Jr.’s testimony, at most, merely provide unproven allegation of acquisition or ownership, while respondent Tan’s Written Disclosure and Gapud’s affidavit are inadmissible to prove any of the elements of ill-gotten wealth.

“With the dearth of evidence presented to prove ‘undue advantage,’ the existence of this element remains speculative at this point. Merely assuming its existence may lead to perpetuating an injustice where private property would now be transferred to the Republic,” the Court ruled.

The Court also clarified that ill-gotten wealth is not limited to assets that originated from the government: “Assets and properties may fall under the broad rubric of ill-gotten wealth even if they did not originate from the government. Private properties may likewise be considered ill-gotten if they were acquired by taking undue advantage of official position, authority, relationship, or influence.” [Courtesy of the Supreme Court Public Information Office]

Full text of G.R. Nos. 195837, 198221, 198974, and 203592 (Republic of the Philippines v. Sandiganbayan) at:

Full text of the Concurring and Dissenting Opinion of Senior Associate Justice Marvic M.V.F Leonen at:

Full text of the Concurring and Dissenting Opinion of Associate Justice Alfredo Benjamin S. Caguioa at:

Full text of the Separate Concurring Opinion of Associate Justice Antonio T. Kho, Jr. at:

Full text of the Separate Opinion of Associate Justice Maria Filomena D. Singh at: