Sandigan orders Royal Traders to pay government P25 million damages

MANILA, Philippines — The Sandiganbayan has ordered the Royal Traders Holding Co. Inc. (RTHCI), formerly Traders Royal Bank (TRB), to pay the government P25 million in exemplary damages over its decades of “unjustified refusal” to pay the face value of peso- and dollar-denominated bank certificates, which form part of the ill-gotten wealth of the Marcos family.

In a 12-page resolution promulgated last Thursday, the anti-graft court’s Second Division found merit on the appeal of the Presidential Commission on Good Government (PCGG), represented by the Office of the Solicitor General (OSG), to partially reconsider its decision promulgated last Sept. 24.

In its original ruling, the Second Division ordered the TRB, now RTHCI, to pay the Philippine government P96.03 million and $5.435 million, representing the value of the TRB-issued bank certificates seized by the United States Customs Service from the Marcoses and their entourage when they fled to Honolulu, Hawaii on Feb. 26, 1986 after the late dictator Ferdinand Marcos Sr. was ousted through the EDSA Revolution.

Based on the prevailing peso-dollar exchange rate of $1: P50.96, the TRB will have to pay the government at least P373 million.

The total payment could go even higher as the Sandiganbayan, in its decision, also stated that it shall “include interest of 12 percent per annum reckoned from February 1993, until all the amounts are fully paid.”

The court, however, originally denied the PCGG’s plea for exemplary damages, attorney’s fees, as well as the transfer in favor of the government the ownership of 278,488 alleged shares of stocks of Marcos Sr. with the TRB registered in the name of the Royal Bank of Canada (RBC).

In its new ruling, the Second Division maintained that the government is not entitled to attorney’s fees as the OSG, which handled the case, is legally mandated to serve as the counsel of the republic while lawyers from the PCGG are mandated to run after the ill-gotten wealth of the Marcoses.

The anti-graft court also maintained that there was no sufficient evidence presented to prove that the shares under the name of RBC belonged to Marcos Sr. and was part of his ill-gotten wealth.

On the other hand, the court said that “after a meticulous review of the records,” it found that the government is entitled to payment of exemplary damages by TRB/RTHCI.

The Sandiganbayan cited the TRB’s continued refusal to pay the PCGG even if the US District Court of Hawaii already issued a judgement on Dec. 18, 1992 upholding the validity of the settlement deal that Marcos’ widow Imelda had entered into with the Philippine government, wherein she voluntarily assigned in favor of the state her interests, as well as the interests of her late husband in all the properties seized by US Customs Service, which included the TRB-issued bank certificates.

The court added that the TRB had even falsely claimed that the obligations sought to be enforced by the PCGG have all been paid.

Worse, the Second Division said that while the civil suit was still pending at the Sandiganbayan, the TRB had entered into a P10.41-billion purchase and sale agreement (PSA) with the Bank of Commerce (BanCom) in 2001.

The Second Division said this had put the government’s claim against TRB in “jeopardy” because while the latter had sold all its assets to BanCom, the PSA has an expressed stipulation that the buyer (BanCom) will be excluded from pending claims of the government.

The court noted that BanCom had even taken over the TRB operation’s even though the latter was able to retain its corporate existence by amending its Articles of Incorporation and changing its corporate name to RTHCI.

“Here, the Court holds that defendant RTHCI’s unjustified refusal to pay the plaintiff’s plainly valid claims for a period of 24 years now, in falsely claiming that the obligations have been paid, and in entering into a PSA with BanCom that jeopardized the claims of the Republic of the Philippines, are clear indicias of bad faith,” the Second Division’s resolution read.

“The Court rules that RTCI has acted in a wanton, fraudulent and malevolent manner for which it is liable to pay exemplary damages to the plaintiff,” it added.

The Second Division, however, maintained that it could not hold BanCom liable with TRB/RTHCI as the PSA did not result in the merger of the two corporate entities.

The Second Division also cited a previous Supreme Court ruling declaring that the execution of the PSA was valid.