THE Presidential Commission on Good Government (PCGG) cannot be held liable for interest or damages on funds it sequestered since its mandate is only to preserve those assets, not grow them, the Supreme Court ruled.
Associate Justice Ramon Paul Hernando of the high court’s First Division denied the petition filed by Palm Avenue Holding Co. Inc. and Palm Avenue Realty Development Corp. (Palm Companies), which sought interest on funds sequestered from them by the PCGG.
In 1986, the PCGG sequestered Benguet Corp. shares registered under the Palm Companies as part of the government’s drive to recover alleged ill-gotten wealth, acting on a letter identifying Benjamin “Kokoy” Romualdez as the shares’ beneficial owner.
The shares later generated income and were partly sold. The PCGG deposited the proceeds in an escrow account and a Comprehensive Agrarian Reform Program (CARP) account.
The escrow funds earned over P273 million in interest, while the CARP funds earned over P4 million before being transferred to the CARP account, after which they ceased earning interest.
The Sandiganbayan later ordered the release of the funds, including interest earned, to the Palm Companies pending its ruling on whether the funds were ill-gotten.
Because the CARP account funds were returned without interest, the Palm Companies asked the anti-graft court to compel the PCGG to pay 12-percent annual interest, compounded until full payment, arguing that the commission should have kept the funds in escrow rather than transferring them.
The Sandiganbayan initially granted the request, ordering the PCGG to pay 6-percent interest, but later reversed itself, ruling that it had no duty to guarantee the funds would earn interest.
Agreeing with the Sandiganbayan, the high tribunal cited the law that created the PCGG, which allows sequestering assets suspected to be ill-gotten while the courts determine whether they were unlawfully acquired, preventing such assets from being hidden, destroyed or depleted while in government custody.
The Court said that the PCGG’s role over sequestered property is that of a caretaker, not an owner or manager.
”This duty is discharged once the sequestered assets are safeguarded, kept intact and returned without loss, including any actual profits and interest earned during sequestration,” read Hernando’s ruling.
The high court added that the PCGG has no obligation to increase the value of sequestered funds or generate profit for their owners.
”Imposing such a duty would needlessly strain State resources and distract the commission from its primary task of recovering ill-gotten wealth,” it said, noting that sequestration is a police power measure intended to aid the state in the recovery and preservation of properties that were stolen to the grave prejudice of the nation and the Filipino people.
”It was never intended to be a commercial or investment undertaking run by the government for the benefit of those suspected to have accumulated ill-gotten wealth,” the court added.
The Supreme Court said that the PCGG fulfilled its duty by keeping the Palm Companies’ funds intact and eventually returning them in full, even though the funds earned no interest while in the CARP account.
