MANILA, Philippines — The Supreme Court (SC) has ruled that the Presidential Commission on Good Government (PCGG) serves strictly as a caretaker of sequestered assets suspected of being ill-gotten, with no legal obligation to invest them or guarantee that they earn interest.
In a decision made public Friday, September 25, the tribunal denied a petition filed by Palm Avenue Holding Company Inc. and Palm Avenue Realty Development Corporation. The ruling, penned by Associate Justice Ramon Paul Hernando, affirmed 2025 resolutions from the Sandiganbayan that rejected the firms’ demand for interest payments on their previously sequestered assets.
The case stems from 1986, when the PCGG sequestered Benguet Corporation shares registered under the Palm Companies. Proceeds from the sale and earnings of these shares were held in escrow before being transferred to a Comprehensive Agrarian Reform Program (CARP) account. While the funds generated interest while in escrow, they ceased accumulating interest after the transfer.
Following a court order to return the principal and earned interest to the Palm Companies pending a final determination on the assets’ status, the firms petitioned for 12 percent annual compounded interest for the period the funds were held in the CARP account.
The High Court clarified that the commission’s primary mandate is to preserve and safeguard assets from being depleted or hidden, rather than managing them for financial gain.
“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 held that the PCGG fulfilled its legal duty by keeping the principal intact and returning the funds in full. It further rejected claims that the government was unjustly enriched by transferring the money to the CARP account.
“In this case, petitioners’ (Palm Companies) bare conclusion that the State was unjustly enriched when it placed the sequestered funds in the CARP account, petitioners failed to explain how the State was benefited by such transfer.
“Again, the records are bereft of any evidence that the funds were appropriated or utilized by the government or created any benefits or profits for the government while it was sequestered and placed in the CARP account.
“The retention of the sequestered funds was based on a valid writ of sequestration and pursuant to the lawful exercise of police power of the State.
“All told, petitioners’ claim for interest, temperate damages, and exemplary damages must be denied for lack of legal or factual basis. It is paramount that any claim for damages must be anchored on sound legal and factual basis. Failure to comply with this threshold merits the denial of any such claim.”
Created in 1986, the PCGG currently operates under the supervision of the Department of Justice.