SC Absolves BSP From Liability to Sugar Producers for Lack of a Sugar Restitution Fund

April 26, 2019

The Supreme Court recently ruled that because there is no Sugar Restitution Fund yet established, the Bangko Sentral ng Pilipinas (BSP) cannot compensate sugar producers under Republic Act No. 7202 or An Act Authorizing The Restitution Of Losses Suffered By Sugar Producers From Crop Year 1974-1975 To Crop Year 1984-1985 Due To The Actions Of Government-Owned And Controlled Agencies.

Under the Implementing Rules and Regulations (IRR) of RA 7202, the Sugar Restitution Fund shall refer to “the ill-gotten wealth recovered by the Government through the Presidential Commission on Good Government (PCGG) or any other agency from any other source within the Philippines or abroad, and whatever assets or funds that may be recovered, or already recovered, which have been determined by PCGG or any other competent agency of the Government to have been stolen or illegally acquired from the sugar industry whether such recovery be the result of a judicial proceeding or by a compromise agreement.” The IRR also provide that the foregoing ill-gotten wealth shall be turned over to the BSP to compensate sugar producers from Crop Years 1974-1975 up to and including Crop Year 1984-1985 on a pro rata basis pursuant to RA 7202. However, the Court found that neither the PCGG nor other government agencies have turned over funds to the BSP for the sugar producers’ compensation.

Thus, in a 12-page decision promulgated on February 6, 2019 penned by Justice Marvic M.V.F. Leonen, the Supreme Court Third Division affirmed the Regional Trial Court (RTC) Branch 46, Bacolod City’s dismissal of the complaint filed by Spouses Juanito and Victoria Ledesma against the BSP and the Philippine National Bank (PNB) for reason of prematurity and/or lack of cause of action against the BSP and PNB, without prejudice to its refiling once the Sugar Restitution Fund under RA 7202 or any fund for that purpose is already set up and ready for distribution.

In granting the two Petitions for Review on Certiorari filed by the BSP and PNB, and affirming the RTC decision, the High Court held that the complaint of the Ledesma Spouses states no cause of action against both the BSP and PNB. It highlighted that without the Sugar Restitution Fund, the BSP had no correlative duty to compensate the Ledesma Spouses for their losses. “Indeed, one cannot give what he does not have.” As for PNB, the Court ruled that it is not beholden to the Ledesma Spouses because PNB’s role was merely that of a lending bank. It cited RA 7202 and its IRR, which provide that lending banks are not obligated to compensate sugar producers for their losses. “Restitution falls under the BSP, upon the establishment of a Sugar Restitution Fund.”

The Ledesma Spouses obtained several crop loans from PNB and after full payment of their loans, as admitted by PNB and as certified by the Commission on Audit, there was an excess payment of Php353,529.67. In their complaint, the Ledesma Spouses argued that under RA 7202, the BSP and the PCGG should compensate them for their losses and refund the excess payment from the Sugar Restitution Fund.

On November 17, 2008, the RTC dismissed the Civil Case for Sum of Money/Refund of Excess Payments the Ledesma Spouses filed against the BSP and PNB. The Court of Appeals, however, reversed and set aside the RTC decision in its May 29, 2013 Decision and January 29, 2014 Resolution causing the BSP and PNB to appeal separately to the Court.

(G.R. No. 211176, BSP and PNB v. Spouses Juanito and Victoria Ledesma; G.R. No. 211583, PNB v. Spouses Juanito and Victoria Ledesma, February 6, 2019)

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