GR 142476; (March, 2001) (Digest)
G.R. No. 142476 . March 20, 2001.
Republic of the Philippines, petitioner, vs. The Honorable Sandiganbayan (First Division), respondent.
FACTS
The Presidential Commission on Good Government (PCGG) sequestered a Falcon 50 jet aircraft in relation to Civil Case No. 0033 against Eduardo Cojuangco, Jr., et al. The aircraft was leased by United Coconut Chemicals Inc. (Unichem) from its owner, Faysound Ltd. The lease had expired, and no defendant claimed ownership. Despite the Sandiganbayan’s denial of its motion for authority to sell, the PCGG sold the aircraft to Walter Fuller Aircraft Sales, Inc. in 1989, relying on a Supreme Court temporary restraining order. The Supreme Court later dismissed the PCGG’s petition in G.R. No. 88336, declaring the sale unauthorized and void, and ordered the proceeds deposited in escrow with the Philippine National Bank for the benefit of the lawfully entitled party. Subsequently, a U.S. court vested title to the aircraft in Faysound Ltd., and Fuller Aircraft obtained a U.S. judgment against the Republic and PCGG for breach of warranty.
ISSUE
Whether the Republic may withdraw the escrowed funds from the Sandiganbayan for the purpose of satisfying the judgment in favor of Walter Fuller Aircraft Sales, Inc.
RULING
Yes. The Supreme Court granted the petition, reversing the Sandiganbayan’s resolutions which denied the withdrawal. The legal logic is anchored on the void nature of the original sale and the consequent obligation to prevent unjust enrichment. The Court had already ruled in G.R. No. 88336 that the PCGG’s sale was void for lack of judicial sanction. Since the sale was a nullity, the PCGG’s agreement with Fuller Aircraft was likewise void, and the Republic could not be bound by its terms under the principle that unauthorized acts of government officials are not acts of the State. However, the escrowed funds represent the purchase price paid by Fuller Aircraft. Having been deprived of the aircraft due to the PCGG’s invalid sale, Fuller Aircraft has a clear right to the return of its money. The Republic holds the funds in escrow as a trustee. To retain the funds indefinitely, despite Fuller Aircraft’s adjudicated claim and the absence of any competing claim from the defendants in Civil Case No. 0033, would constitute unjust enrichment at the expense of Fuller Aircraft. Therefore, the Republic has a legal duty to return the escrowed amount to Fuller Aircraft. The Sandiganbayan was directed to order the release of the escrow account to the PCGG for transmission to Fuller Aircraft.