MANILA, Philippines?The antigraft court Sandiganbayan on Friday acquitted of graft two former Presidential Commission on Good Government (PCGG) officials who were charged with graft for the botched sale in 1989 of a sequestered jet that?instead of recovering money?even cost the state more than $7 million.

In a decision promulgated Thursday, the Sandiganbayan First Division acquitted former PCGG operations director Zosimo Malabanan, senior executive assistant Ismael Sanchez and private broker Benito Cuevo.

They were accused of selling a sequestered Falcon 50 jet to an American company for $5 million, only to pay that company additional $7 million after the original owner of the jet surfaced.

The jet is among the properties the PCGG sequestered in connection with a civil case filed in July 1987 against businessman Eduardo Cojuangco Jr. and 60 others.

Official act

But in the decision, the First Division said selling the aircraft ?is an official act? of the PCGG which had ?legal basis.?

It added: ?After going over the evidence on record, the court finds that the prosecution failed to establish that (the accused) have acted with evident bad faith when they participated in the sale of the subject aircraft by the PCGG. Hence, the said accused are entitled to a verdict of acquittal.?

In September 1989, the PCGG sold the Falcon 50 jet to American company Walter Fuller Aircraft Sales Inc. for about $5 million. The sequestered jet had been leased to United Chemicals Inc. by its registered owner Faysound Limited, a US-based corporation.

The PCGG said it decided to sell the jet to save it from further deterioration. Malabanan was appointed as chair of the bidding committee the PCGG created for the sale.

But after the jet was delivered to Walter Fuller in October 1989, the Supreme Court ruled that the decision to sell the aircraft required the permission of the Sandiganbayan.

The Sandiganbayan, however, had earlier junked the PCGG?s motion to sell the jet.

But the PCGG faced even more legal problems over the sold jet: In October 1990, an Arkansas court ordered Walter Fuller to return the jet to Faysound after the latter surfaced to claim ownership of the jet.

Thus, Walter Fuller sued the Philippine government. In December 1993, a Texas court ordered the Philippine government to pay Walter Fuller $14 million in damages for breach of warranty.

Following a settlement and the reimbursement of the $5 million Walter Fuller had paid before, the government paid the American firm an additional $7 million, court records also showed.

Botched deal

The botched deal led to the filing of charges against four PCGG officials, a government auditor and a private individual with the Office of the Ombudsman in 2001.

But in acquitting Malabanan, Sanchez and Cuevo, the Sandiganbayan said the prosecution failed to overcome ?the presumption of regularity in the performance of their respective official duties.?

The court also noted that the PCGG had sought legal advice from the Office of the Solicitor General before it proceeded with the sale, which was a ?clear indication of good faith.?

Two of the accused, former PCGG chair Mateo Caparas and former Commission on Audit official Mario Galang, remain at large.

The case against former PCGG acting commissioner Maximo Maceren was dismissed following his death in November 2005.