Republic vs. Sandiganbayan

G.R. No. 142476
The Republic of the Philippines sought to release escrow funds from an unauthorized PCGG aircraft sale to settle a U.S. court judgment, with the Supreme Court ruling in favor of releasing funds to avoid unjust enrichment.
sale of aircraft unauthorized agreement void

Case Digest (G.R. No. 142476)

Facts:

Republic of the Philippines v. The Honorable Sandiganbayan (First Division), G.R. No. 142476, March 20, 2001, Supreme Court Third Division, Sandoval‑Gutierrez, J., writing for the Court.

Petitioner Republic of the Philippines (the Republic) sought review of two Resolutions of the Sandiganbayan dated September 3, 1999 and February 17, 2000 denying the release of funds held in escrow arising from the sale of a sequestered aircraft. The factual dispute centers on a 1982 Avions Dassault‑Breguet Falcon 50 (the Falcon jet) that had been sequestered in Civil Case No. 0033 (filed July 31, 1987) instituted by the Republic and the Presidential Commission on Good Government (PCGG) against Eduardo M. Cojuangco, Jr. and others.

The records show the Falcon was owned by Faysound Ltd., leased to United Coconut Chemicals, Inc. (Unichem), and the lease lapsed in 1987; neither Cojuangco nor any defendant in Civil Case No. 0033 claimed ownership. Although PCGG obtained sequestration orders, no owner or third party successfully contested the PCGG’s custody before the Sandiganbayan. On March 20, 1989 the PCGG moved the Sandiganbayan for authority to sell the deteriorating aircraft; the Sandiganbayan denied the motion by Resolution dated May 18, 1989. PCGG sought relief from this Court in G.R. No. 88336; this Court issued a TRO on June 6, 1989 enjoining enforcement of the Sandiganbayan’s May 18, 1989 Resolution.

Relying on the TRO, PCGG sold the Falcon on September 28, 1989 to Walter Fuller Aircraft, Inc. (Fuller Aircraft) for US$7,138,168.65 and deposited the proceeds in escrow with the Philippine National Bank (PNB) without Sandiganbayan approval. The Supreme Court en banc later dismissed PCGG’s petition in G.R. No. 88336 (reported at Republic v. Sandiganbayan, 192 SCRA 743 (1990)) and ordered the PCGG to deposit the proceeds “under a special time deposit ... for the account of the Sandiganbayan in escrow for the person or persons ... lawfully entitled thereto.”

Subsequently, a U.S. District Court in Arkansas (Oct. 29, 1990) ruled title to the Falcon vested in Faysound Ltd. Fuller, deprived of the aircraft, sued the Republic and PCGG in Texas and obtained a money judgment (Dec. 2, 1993) for US$14,928,457.29. To settle that judgment the PCGG entered an agreement with Fuller (Oct. 14, 1996) under which the Republic agreed to make payments. PCGG later moved the Sandiganbayan to release the escrowed funds to the Bureau of the Treasury for transmission to Fuller; the Sandiganbayan denied the motion Sept. 3, 1999 (and denied reconsideration Feb. 17, 2000), citing (inter alia) uncertainty as to who was lawfully entitled to the deposit and non‑authentication of foreign documents.

The Republic filed a petition for certiorari and mandamus under Section 65 of the 1997 Rules of Procedure, as amended, challenging the Sandiganbayan’s...(Pro-only)

Issues:

  • Did the Sandiganbayan gravely abuse its discretion in denying the release of the escrowed proceeds from the sale of the sequestered Falcon jet?
  • Can the Republic be held liable or bound by the PCGG’s agreement with Fuller Aircraft arising from an u...(Pro-only)

Ruling:

  • (Pro-only)

Ratio:

  • (Pro-only)

Doctrine:

  • (Pro-only)
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