RULE 6
(KINDS OF PLEADINGS) Petitioner filed a Reply to Answer and Answer to
ALBA v. MALAPAJO
G.R. No. 198752, January 13, 2016
DOCTRINE:
Counterclaims. Compulsory or Permissive: A
counterclaim is any claim which a defending party
may have against an opposing party. A compulsory
counterclaim is one which, being cognizable by the
regular courts of justice, arises out of or is connected
with the transaction or occurrence constituting the
subject matter of the opposing party's claim and
does not require for its adjudication the presence of
third parties of whom the court cannot acquire
jurisdiction. Such a counterclaim must be within the
jurisdiction of the court both as to the amount and
the nature thereof, except that in an original action
before the Regional Trial Court, necessarily
connected with the subject matter of the opposing
party's claim or even where there is such a
connection, the Court has no jurisdiction to entertain
the claim or it requires for adjudication the presence
of third persons over whom the court acquire
jurisdiction. A compulsory counterclaim is barred if
not set up in the same action. On the other hand, a
counterclaim is permissive if it does not arise out of
or is not necessarily connected with the subject
matter of the opposing party's claim. It is essentially
an independent claim that may be filed separately in
another case
FACTS:
On October 19, 2009, petitioner Arturo C. Alba, Jr.,
duly represented by his attorneys-in-fact, Arnulfo B.
Alba and Alexander C. Alba, filed with the RTC of
Roxas City, a Complaint against respondents
Raymund D. Malapajo, Ramil D. Malapajo and the
Register of Deeds of Roxas City for recovery of
ownership and/or declaration of nullity or
cancellation of title and damages alleging, among
others, that he was the previous registered owner of
a parcel of land situated in Bolo, Roxas City, covered
by TCT No. T-22345; that his title was subsequently
canceled by virtue of a deed of sale he allegedly
executed in favor of respondents Malapajo for a
consideration of P500,000.00; that new TCT No. T-
56840 was issued in the name of respondents
Malapajo; that the deed of sale was a forged
document which respondents Malapajo were the co-
authors of.
Respondents Malapajo filed their Answer with
Counterclaim contending that they were innocent
purchasers for value and that the deed was a
unilateral document which was presented to them
already prepared and notarized; that before the sale,
petitioner had, on separate occasions, obtained
loans from them and their mother which were
secured by separate real estate mortgages covering
the subject property; that the two real estate
mortgages had never been discharged.
Respondents counterclaimed for damages and for
reimbursement of petitioner's loan from them plus
the agreed monthly interest in the event that the
deed of sale is declared null and void on the ground
of forgery.
(Permissive) Counterclaim stating, among others,
that the court had not acquired jurisdiction over the
nature of respondents' permissive counterclaim;
and, that assuming without admitting that the two
real estate mortgages are valid, the rate of 5% per
month uniformly stated therein is unconscionable
and must be reduced. Respondents filed their
Rejoinder thereto.
Petitioner filed a Motion to Set the Case for
Preliminary Hearing as if a Motion to Dismiss had
been Filed alleging that respondents’ counterclaims
are in the nature of a permissive counterclaim, thus,
there must be payment of docket fees and filing of a
certification against forum shopping; and, that the
supposed loan extended by respondents’ mother to
petitioner, must also be dismissed as respondents
are not the real parties-in-interest. Respondents filed
their Opposition thereto.
The RTC issued an Order denying petitioner's
motion finding that respondents’ counterclaims are
compulsory. Petitioner’s motion for reconsideration
was denied in an Order. Petitioner filed a petition
for certiorari with the CA which sought the annulment
of the RTC Orders.CA dismissed the petition
for certiorari. Motion for Reconsideration was
likewise dismissed.
ISSUE:
Whether or not respondents’ counterclaim, i.e.,
reimbursement of the loan obtained from them in
case the deed of absolute sale is declared null and
void on the ground of forgery, is permissive in nature
which requires the payment of docket fees and a
certification against forum shopping for the trial court
to acquire jurisdiction over the same?
HELD:
No. While the plaintiff claims that his signature on
the instrument is forged, he never questioned the
genuineness of the signatures of his instrumental
witnesses, his parents Arturo P. Alba, Sr. and Norma
C. Alba, who signed the said instrument below the
words "SIGNED IN THE PRESENCE OF" and
above the words "Father" and "Mother," respectively.
Furthermore, plaintiff acknowledged in par. 7 of his
Complaint that the stated consideration in the Deed
of Absolute Sale is P500,000.00 and he never
categorically denied having received the same.
Before the plaintiff sold the property to the
defendants, he secured a loan from them in the sum
of P600,000.00 payable on or before November 10,
2008. Prior to this, or as early as July 25, 2008, the
plaintiff also obtained a loan payable on or before
September 6, 2008 from defendants' mother, Alma
D. David. Both loans were evidenced by a
Promissory Note and a Real Estate Mortgage, both
of which were executed by plaintiff. Like the Deed of
Absolute Sale, the Real Estate Mortgage is a
unilateral instrument, was signed solely by the
plaintiff, and furthermore, his parents affixed their
signatures thereon under the heading "WITH MY
PARENTAL CONSENT", and above the words,
"Father" and "Mother," respectively.

The plaintiff's allegation that his signature on the
Deed of Absolute Sale was forged, and that the
defendants are the "co-authors" of the said forgery,
are absolutely false and baseless.
Petitioner seeks to recover the subject property by
assailing the validity of the deed of sale on the
subject property which he allegedly executed in
favor of respondents Malapajo on the ground of
forgery. Respondents counterclaimed that, in case
the deed of sale is declared null and void, they be
paid the loan petitioner obtained from them plus the
agreed monthly interest which was covered by a real
estate mortgage on the subject property executed by
petitioner in favor of respondents. There is a logical
relationship between the claim and the counterclaim,
as the counterclaim is connected with the
transaction or occurrence constituting the subject
matter of the opposing party's claim. Notably, the
same evidence to sustain respondents' counterclaim
would disprove petitioner's case. In the event that
respondents could convincingly establish that
petitioner actually executed the promissory note and
the real estate mortgage over the subject property in
their favor then petitioner's complaint might fail.
Petitioner's claim is so related logically to
respondents' counterclaim, such that conducting
separate trials for the claim and the counterclaim
would result in the substantial duplication of the time
and effort of the court and the parties.
Since respondents' counterclaim is compulsory, it
must be set up in the same action; otherwise, it
would be barred forever. If it is filed concurrently with
the main action but in a different proceeding, it would
be abated on the ground of litis pendentia; if filed
subsequently, it would meet the same fate on the
ground of res judicata. There is, therefore, no need
for respondents to pay docket fees and to file a
certification against forum shopping for the court to
acquire jurisdiction over the said counterclaim.
We agree with the RTC’s disquisition in finding that
respondents’ counterclaim is compulsory.
LIM TECK CHUAN, PETITIONER, VS. SERAFIN
UY, RESPONDENT.
G.R. NO. 155701, March 11, 2015, REYES, J.
KEY DOCTRINE: The dismissal of the complaint
does not necessarily result to the dismissal of the
counterclaim.
FACTS:
A piece of land in Lapu lapu City Cebu known as Lot
5357 is owned and registered under the name of
Antonio Lim Tanhu married to Dy Ochay. The said lot
was sold by Antonio to Spouses Cabansag but the
latter failed to transfer the title to their names. The
Spouses Cabansag later sold the lot to Serafin. The
Spouses Cabansag tried to transfer the property in
their names first in order to transfer title to Serafin
but the owner’s copy of TCT was lost. Serafin then
filed a petition before RTC praying for the issuance
of new owner’s duplicate TCT in his name. Serafin’s
petition was granted but was recalled and nullified
later on the ground that petitioner Chuan filed an
Opposition and/or Motion for Reconsideration with
Manifestation for Special Appearance alleging that
he is one of the 6 legitimate descendants of Antonio
and that the original owner’s copy of TCT was not
lost and has always been in his custody.
In the meantime, Henry Lim executed an
Affidavit of Sole Adjudication/Settlement of Estate of
Antonio Lim Tanhu with Deed of Sale claiming that
he is the only surviving heir of Antonio and Lot 5357
was sold by Henry to Leopolda.
Serafin then filed a complaint for quieting of
title and for the nullity of the affidavit of adjudication
and sale. Leopolda, filed her Answer with
counterclaim and cross – claim against Henry
asserting that she was a buyer in good faith and for
value. Petitioner Chuan averred in his Answer with
counterclaim and cross – claims against Leopolda
and Henry that lot 5357 was never transferred no
encumbered to any person during Antonios life.
During the pre tiral conference, the parties
agreed to the issue of whether or not defendants
Leopolda and Chuan have valid counterclaims
against the plaintiff. The initial trial of the case was
reset and then Serafin and Leopolda submitted a
Joint Motion to Dismiss where Leopolda has agreed
to waive her counterclaim for damages in the instant
case; Serafin has secured already a certificate of
title to lot 5357 in his name and that whatever claim
Chuan may have on said lot may be an appropriate
independent action.
Petitioner Chuan filed his Opposition praying
for the denial of the Joint Motion to Dismiss on the
ground of bad faith and claiming that he has valid
counterclaims against Serafin for moral and
exemplary damages including attorney’s fees.
Serafin filed his Reply to petitioner Chuan
and averred that by reason of the amicable
settlement between him and Leopolda, the latter
waived and abandoned all rights to the lot. Ergo, as
far as Leopolda is concerned, her waiver egated all
the legal consequences of Tax Declaration and
Henry’s affidavit of self-adjudication. Since the same
were the very documents that casrs clouds on
Serafin’s title, his main causes of action in the case
at bench had become moot and academic as the
title to the said lot had been quieted.
The petitioner filed a Motion to Implead
Indispensable parties (Spouses Cabansag) and
Supplemental Opposition to Joint Motion to Dismiss.
RTC granted only the motion to dismiss and ordered
the case dismissed so with the respective
counterclaims of the defendants.
The Motion for Reconsideration of petitioner
was denied so he filed a petition for review on
certiorari under Rule 45, faulting the RTC for
dismissing the case in its entirety in spite of his
counterclaim and cross – claim. He asserts that
within 15days from notice of the filing of the joint
motion to dismiss, he filed his opposition thereto and
expressed his preference to have his counterclaim
and cross – claim be resolved in the same action.
The court should have limited its action to the
dismissal of complaint.
upon foreclosing respondents' mortgaged properties
and ordered the bank, instead, to return to
respondent mortgagors the excess amount of PhP
722,602.22.
The Facts

ISSUE: The facts of the case, as culled from the records, are
as follows:
Whether or not the dismissal of the complaint
specifically upon motion of the plaintiff under Sec. 2 From February to October 1997, respondent CPR
of Rule 17 RoC also calls for the dismissal of the Promotions and Marketing, Inc. (CPR Promotions)
defendant’s counterclaim? obtained loans from petitioner MBTC. These loans
were covered by fifteen (15) promissory notes (PNs)
RULING: all signed by respondents, spouses Leoniza F.
Reynoso and Cornelio P. Reynoso, Jr. (spouses
Reynoso), as Treasurer and President of CPR
NO. The RTC granted the Joint Motion to
Promotions, respectively. The issued PNs are as
Dismiss upon the behest of Serafin, on the main
follows:
ground that the case had become moot and
academic since his title to lot 5357 had been
allegedly quieted and the reliefs prayed for were
obtained. The RTC interpreted that what is PN No. Date Amount
contemplated under the Rules authorizing the
hearing of defendant’s counterclaim is when the 277894 (BDS- February 7, P
dismissal is not at the instance of the plaintiff. 1.
143/97) 1997 6,50,0,000.00

The RTC erred when it dismissed the case 281728 (BD-

when the present rule state that the dismissal shall 2. July 21, 1997 P 959,034.20
216/97)
be limited only to the complaint. A dismissal of an
action is different from a mere dismissal of the 281735 (BD-
complaint. Since only the complaint and not the 3. July 31, 1997 P 508,580.83
222/97)
action is dismissed, the defendant in spite of said
dismissal may still prosecute his counterclaim in the
same action. 281736 (BD- August 12,
4. P 291,732.50
225/97) 1997
In the Opposition to the Joint Motion to
Dismiss, petitioner expressed his preference to have 281737 (BD- August 12,
5. P 157,173.12
his counterclaim and cross – claim prosecuted in the 226/97) 1997
same case. From the case’s inception, the
petitioner’s interest and that of his siblings over the 281745 (BD- August 22,
6. P 449,812.25
subject property were vigilantly defended as 229/97) 1997
evidenced by the numerous and exchange of
pleadings made by the parties. It cannot therefore be 281747 (BDS- September 3,
denied that the petitioner has certainly valid 7. P 105,000.00
94854.696.00.999)1997
defenses and enforceable claims against the
respondents for being dragged into this case. Thus, 281749 (BD- September 11,
petitioner’s manifestation of his preference to have 8. P 525,233.93
236/97) 1997
his counterclaim prosecuted in the same action is
valid and in accordance with Sec. 2 Rule 17 or RoC.
281750 (BD- September 12,
9. P 1,310,099.36
238/97) 1997
[ GR No. 200567, Jun 22, 2015 ]
473410 (BD- September 19,
METROPOLITAN BANK v. CPR PROMOTIONS 10. P 251,725.00
239/97) 1997

473414 (BD- September 19,

11. P 288,975.66
VELASCO JR., J.: 240/97) 1997

The Case 473412 (BD- September 26,

12. P 62,982.53
244/97) 1997
Before Us is a Petition for Review on Certiorari
under Rule 45 of the Rules of Court assailing the 473411 (BD- September 26,
13. P 156,038.85
September 28, 2011 Decision[1] and February 13, 245/97) 1997
2012 Resolution[2] of the Court of Appeals (CA)
rendered in CA-G.R. CV No. 91424. Said rulings 473413 (BD- October 3,
dismissed petitioner Metropolitan Banking and Trust 14. P 767,512.30
251/97) 1997
Company's (MBTC's) claim for deficiency payment

473431 (BD- October 6,
15. P 557,497.45
252/97) 1997
TOTAL PRINCIPAL AMOUNT 12,891,397.78
To secure the loans, the spouses Reynoso executed
two deeds of real estate mortgage on separate
dates. The first mortgage, securing the amount of
PhP 6,500,000, was executed on February 2, 1996
over real estate covered by Transfer Certificate of
Title (TCT) No. 624835;[3]the other was executed on
July 18, 1996 over properties covered by TCT Nos.
565381,[4] 263421,[5] and 274682[6] to secure the
amount of PhP 2,500,000. All of the mortgaged
properties are registered under the spouses
Reynoso's names, except for TCT No. 565381,
which is registered under CPR Promotions.[7]
Thereafter, on December 8, 1997, the spouses
Reynoso executed a continuing surety
agreement[8] binding themselves solidarity with CPR
Promotions to pay any and all loans CPR
Promotions may have obtained from petitioner
MBTC, including those covered by the said PNs, but
not to exceed PhP 13,000,000.
Upon maturity of the loans, respondents defaulted,
prompting MBTC to file a petition for extra-judicial
foreclosure of the real estate mortgages, pursuant to
Act No. 3135,[9] as amended. MBTC's request for
foreclosure,[10] dated March 6, 1998, pertinently
reads:
We have the honor to request your good Office to
conduct/undertake extra-judicial foreclosure sale
proceedings under Act No. 3135, as amended, and
other applicable laws on the properties covered by
two Real Estate Mortgages executed by CPR
PROMOTIONS & MARKETING INC., represented
by its President Mr. Cornelio P. Reynoso and
Treasurer Leoniza F. Reynoso and SPOUSES
CORNELIO P. REYNOSO, JR., AND LEONIZA F.
REYNOSO in favour of the mortgagee,
METROPOLITAN BANK AND TRUST COMPANY, to
secure fifteen (15) loans with a total principal amount
of TWELVE MILLION EIGHT HUNDRED NINETY
ONE THOUSAND THREE HUNDRED NINETY
SEVEN PESOS AND SEVENTY EIGHT
CENTAVOS (P12,891,397.78), for breach of the
terms of said mortgage.[11]
xxxx
As Annex "R", a copy of the Statement of Account,
showing that the total amount due on the loans of
the borrowers/mortgagers which remains unpaid and
outstanding as of February 10, 1998 was ELEVEN
MILLION TWO HUNDRED SIXTEEN THOUSAND
SEVEN HUNDRED EIGHTY TRHEE PESOS AND
NINETY NINE CENTAVOS (Pll,216,783.99) x x x.[12]
(emphasis in the original)
Subsequently, on May 5, 1998, the mortgaged
properties covered by TCT Nos. 624835 and 565381
were sold at a public auction sale. MBTC
participated therein and submitted the highest bid in
the amount of PhP 10,374,000. The day after, on
May 6, 1998, petitioner again participated and won
in the public auction sale of the remaining
mortgaged properties, having submitted the highest
bid amounting to PhP 3,240,000. As a result,
petitioner was issued the corresponding Certificates
of Sale on July 15 and 16, 1998, covering the
properties subjected to the first and second public
auctions, respectively.
Notwithstanding the foreclosure of the mortgaged
properties for the total amount of PhP 13,614,000,
petitioner MBTC alleged that there remained a
deficiency balance of PhP 2,628,520.73, plus
interest and charges as stipulated and agreed upon
in the PNs and deeds of real estate mortgages.
Despite petitioner's repeated demands, however,
respondents failed to settle the alleged deficiency.
Thus, petitioner filed an action for collection of sum
of money against respondents, docketed as Civil
Case No. 99-230, entitled Metropolitan Bank and
Trust Company v. CPR Promotions and Marketing,
Inc. and Spouses Cornelio Reynoso, Jr. and Leoniza
F. Reynoso.
Ruling of the Regional Trial Court
In its Decision[13] dated October 11, 2007, the
Regional Trial Court, Branch 59 in Makati City (RTC)
ruled in favor of petitioner that there, indeed, was a
balance of PhP 2,628,520.73, plus interest and
charges, as of September 18, 1998, and that
respondents are liable for the said amount, as part of
their contractual obligation.[14] The court disposed of
the case in this wise:
WHEREFORE, premises considered, judgment is
hereby rendered ordering [respondents], jointly and
severally, to pay [petitioner] Metro bank, as follows:
a] the amount of PhP 2,628,520.73 plus stipulated
interest and penalty charges stipulated in the
Promissory Notes marked as Exhibits A to O until full
payment thereof; and
b] the costs of the suit.
SO ORDERED.
Respondents timely moved for reconsideration of the
RTC's Decision, which was denied through the trial
court's February 7, 2008 Order. Aggrieved,
respondents elevated the case to the CA.
Ruling of the Court of Appeals
The appellate court, through the assailed Decision,
reversed the court a quo and ruled in favor of
respondents. The fallo of the said Decision reads:
Wherefore, in view of the foregoing, the decision
appealed from is reversed, and the plaintiff-appellee
Metrobank is ordered to refund or return to the
defendants-appellants Cornelio and Leoniza
Reynoso the amount of PhP 722,602.22
representing the remainder of the proceeds of the
foreclosure sale, with legal interest of six percent per
annum from the date of filing of the answer with
counterclaim on March 26, 1999, until paid.
SO ORDERED.[15]
Supporting the reversal is the CA's finding that there
was a sudden change in the terminology used, from
"total amount due" to "principal
amount."[16] According to the CA, from February to
May 1998, the amount sought to be collected
ballooned from PhP 11,216,783.99 to PhP
12,891,397.78. From this apparently unexplained
increase, the CA deduced that the increased amount
must mean the principal and interest and other
charges. Furthermore, the appellate court found that
petitioner failed to prove that there was a deficiency,
since the records failed to corroborate the claimed
amount. As noted by the CA, "[Petitioner] did not
even introduce the continuing surety agreement on
which the trial court gratuitously based its decision."
On October 24, 2011, petitioner filed a motion for
reconsideration of the assailed Decision, which the
appellate court denied in its assailed February 13,
2012 Resolution.
The Issues
Hence this recourse, on the following issues:
Whether or not the CA gravely abused its discretion
when it failed to consider the continuing surety
agreement presented in evidence and in ruling that
petitioner MBTC failed to prove that the spouses
Reynoso are solidarity liable with respondent CPR
Promotions.
Whether or not the CA gravely abused its discretion
when it grossly misappreciated the promissory
notes, real estate mortgages, petition for
extrajudicial foreclosure of mortgage, certificates of
sale and statement of account marked in evidence
and ruled that petitioner MBTC failed to prove that a
deficiency balance resulted after conducting the
extrajudicial foreclosure sales of the mortgaged
properties.
The Arguments
Anent the first issue, MBTC faults the appellate court
for finding that it did not introduce the continuing
surety agreement on which the RTC based its ruling
that respondent spouses are solidarity liable with
respondent CPR Promotions.[17]
As regards the second issue, petitioner asserts that
the CA's grant of a refund valued at PhP 722,602.22
plus legal interest of six percent (6%) in favor of
respondents is erroneous for two reasons: first,
respondents never set up a counterclaim for refund
of any amount;[18]and second, the total outstanding
obligation as of February 10, 1998, to which the full
amount of the bid prices was applied, is PhP
11,216,783.99 and not PhP 12,891,397.78, which
was used by the CA in its computation.[19]
Lastly, petitioner claims that respondents should be
made to answer for certain specific expenses
connected with the foreclosure, i.e., filing fees,
publication expense, Sheriffs Commission on Sale,
stipulated attorney's fee, registration fee for the
Certificate of Sale, insurance premium and other
miscellaneous expenses, in the amounts of PhP
1,373,238 and PhP 419,166.67 for the first and
second foreclosure sales, respectively. [20]
In their Comment,[21] respondents maintained the
propriety of the CA's grant of a refund, arguing that
in their Answer with Compulsory Counterclaim, they
laid-down in detail the excess of the prices of the
foreclosed properties over their obligation.
[22]
Respondents then went on and argued that "from
the beginning of the instant case in the trial court,
[they] have already raised in issue the fact of
[petitioner's] taking-over of [their] lands with values
over and above the latter's financial
liabilities."[23] Thus, they postulate that the CA did
right when it touched on the issue and ruled thereon.
[24]
Furthermore, respondents insist that there is actually
no difference between the PhP 12,891,397.78 and
the PhP 11,261,783.99 amounts except for the
accumulated interest, penalties, and other charges.
[25]
Too, according to them, this is the reason why
what respondent CPR owed petitioner at that time
increased substantially from that on February 10,
1998, when the amount was just PhP 11,216,783.99.
[26]
The Court's Ruling
We partially grant the petition. While We fully agree
with the CA that MBTC was not able to prove the
amount claimed, We however, find that neither were
respondents able to timely setup their claim for
refund.
Respondents belatedly raised their compulsory
counterclaim
Rule 6 of the Rules of Court defines a compulsory
counterclaim follows:
Section 7. Compulsory counterclaim. — A
compulsory counterclaim is one which, being
cognizable by the regular courts of justice, arises out
of or is connected with the transaction or occurrence
constituting the subject matter of the opposing
party's claim and does not require for its adjudication
the presence of third parties of whom the court
cannot acquire jurisdiction. Such a counterclaim
must be within the jurisdiction of the court both as to
the amount and the nature thereof, except that in an
original action before the Regional Trial Court, the
counterclaim may be considered compulsory
regardless of the amount.
Accordingly, a counterclaim is compulsory if: (a) it
arises out of or is necessarily connected with the
transaction or occurrence which is the subject matter
of the opposing party's claim; (b) it does not require
for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction; and (c)
the court has jurisdiction to entertain the claim both
as to its amount and nature, except that in an
original action before the RTC, the counterclaim may
be considered compulsory regardless of the amount.
[27]
In determining whether a counterclaim is compulsory
or permissive, We have, in several cases, utilized
the following tests:[28]
(1) Are the issues of fact or law raised by the claim
and the counterclaim largely the same?
(2) Would res judicata bar a subsequent suit on
defendant's claims, absent the compulsory
counterclaim rule?
(3) Will substantially the same evidence support or
refute plaintiffs claim as well as the defendant's
counterclaim?
(4) Is there any logical relation between the claim
and the counterclaim, such that the conduct of
separate trials of the respective claims of the parties
would entail a substantial duplication of effort and
time by the parties and the court? This test is the
"compelling test of compulsoriness."[29]
Based on the above tests, it is evident that a claim
for recovery of the excess in the bid price vis-a-vis
the amount due should be interposed as a
compulsory counterclaim in an action for recovery of
a deficiency filed by the mortgagee against the
debtor-mortgagor. First, in both cases, substantially
the same evidence is needed in order to prove their
respective claim. Second, adjudication in favor of
one will necessarily bar the other since these two
actions are absolutely incompatible with each other;
a debt cannot be fully paid and partially unpaid at the
same time. Third, these two opposing claims arose
from the same set of transactions. And finally, if
these two claims were to be the subject of separate
trials, it would definitely entail a substantial and
needless duplication of effort and time by the parties
and the court, for said actions would involve the
same parties, the same transaction, and the same
evidence. The only difference here would be in the
findings of the courts based on the evidence
presented with regard to the issue of whether or not
the bid prices substantially cover the amounts due.
Having determined that a claim for recovery of an
excess in the bid price should be set up in the action
for payment of a deficiency as a compulsory
counterclaim, We rule that respondents failed to
timely raise the same.
It is elementary that a defending party's compulsory
counterclaim should be interposed at the time he
files his Answer,[30] and that failure to do so shall
effectively bar such claim.[31] As it appears from the
records, what respondents initially claimed herein
were moral and exemplary damages, as well as
attorney's fees.[32] Then, realizing, based on its
computation, that it should have sought the recovery
of the excess bid price, respondents set up another
counterclaim, this time in their Appellant's Brief filed
before the CA.[33] Unfortunately, respondents' belated
(assertion proved fatal to their cause as it did not
cure their failure to timely raise such claim in their
Answer. Consequently, respondents' claim for the
excess, if any, is already barred. With this, We now
resolve the substantive issues of this case.
The CA erred in ruling that the total amount due
was PhP 12,891,397.78
Basic is the rule that a Petition for Review on
Certiorari under Rule 45 of the Rules of Court should
only cover questions of law.[34]Moreover, findings of
fact of the CA are generally final and conclusive and
this Court will not review them on appeal.[35] This
rule, however, admits of several exceptions,[36] such
as when the findings of fact are conflicting,
manifestly mistaken, unsupported by evidence or the
result of a misapprehension of acts, or when the
findings are contrary to that of the trial court, as in
this case.
To recall, the CA, in its assailed Decision, made the
following findings as regards the amount due on the
loan against which the proceeds from the auction
sales are to be applied:
In the application for extrajudicial foreclosure sale
dated March 6, 1998, the total amount due as of
February 10, 1998 was stated to be P11,216,783.99.
The plaintiff categorically declared that
P11,216,783.99 was the total amount due on
February 10, 1998. By the time the auction sales
were conducted, in May 1998, as reflected in the
certificate of Sale, the principal amount was said to
be P12,891,397.78. What is the meaning of the
change from total amount due to principal amount? If
from February to May 1998, a matter of three
months, the amount sought to be collected
ballooned to P12,891,397.78, the increase could
have resulted from no other source than the interest
and other charges under the promissory notes after
the defendants incurred in default. Thus, the
amount of P12,891,397.78 as of May 1998, must
mean the principal and interest and other
charges. The statement in the certificates of sale
that it is the principal amount is a subtle change in
language, a legerdemain to suggest that the amount
does not include the interest and other charges.
[37]
(emphasis added, citations omitted)
In short, the CA concluded that the amount of PhP
12,891,397.78 is actually comprised of the PhP
11,216,783.99 due as of February 10, 1998, plus
additional interest and other charges that became
due from February 10, 1998 until the date of
foreclosure on May 5, 1998.
The appellate court is mistaken.
By simply adding the figures stated in the PNs as
the principal sum, it can readily be seen that the
amount of PhP 12,891,397.78 actually pertains to
the aggregate value of the fifteen (15) PNs, viz:
 PN No. Amount Amt Outs.

277894 (BDS-143/97) 1 BD#216/97 489,219.20 54,808.77 49,166.53

1. [38] P 6,500,000.00
2 BD#222/97 167,289.35 18,613.61 16,310.71
2. 281728 (BD-216/97)[39] P 959,034.20
3 BD#225/97 291,732.50 32,683.72 27,422.86
3. 281735 (BD-222/97)[40] P 508,580.83
4 BD#226/97 44,694.50 5,007.24 4,201.28
4. 281736 (BD-225/97)[41] P 291,732.50
5 BD#229/97 435,229.25 48,760.10 44,393.38
5. 281737 (BD-226/97)[42] P 157,173.12
6 BD#238/97 365,238.55 40,918.83 33,236.71
6. 281745 (BD-229/97)[43] P 449,812.25
7 BD#233/97 105,000.00 11,763.50 9,082.50
281747 (BDS-
7. P 105,000.00
94854.696.00.999)[44] 8 BD#244/97 62,982.53 7,056.13 5,290.53

8. 281749(BD-236/97)[45] P 525,233.93 9 BD#236/97 497,649.70 56,135.10 38,070.20

9. 281750 (BD-238/97)[46] P 1,310,099.36 1

BD#240/97 145,950.00 16,463.20 11,165.18
0
[47]
10.473410 (BD-239/97) P 251,725.00
11BD#245/97 156,038.85 17,481.55 11,897.43
11.473414 (BD-240/97)[48] P 288,975.66
1
BD#239/97 210,421.50 22,605.52 15,360.77
12.473412 (BD-244/97)[49] P 62,982.53 2

13.473411 (BD-245/97)[50] P 156,038.85 1

BD#251/97 572,470.15 64,574.86 38,232.57
3
14.473413 (BD-251/97)[51] P 767,512.30
1
BD#252/97 557,497.45 47,896.46 31,110.63
15.473431 (BD-252/97) [52]
P 557,497.45 4

TOTAL PRINCIPAL 1 BDS#143/9 336,818.2

12,891,397.78 6,500,000.00 573,681.89
AMOUNT 6 7 8

This belies the findings of the CA that PhP 1 BDS#218/9

1,800,000.00 93,536.05 74,401.15
12,891,397.78 is the resulting value of PhP 7 7
11,216,783.99 plus interest and other charges.
Consequently, the CA's conclusion that there is an 1 Fire
49,238.69 0.00 1,698.73
excess of PhP 722,602.22, after deducting the 8 Insurance
amount of PhP 12,891,397.78 from the total bid
price of PhP 13,614,000, is erroneous. 12,450,652.2 1,111,986.5 747,859.4
TOTAL
2 3 4
Nevertheless, while the CA's factual finding as to the
amount due is flawed, petitioner, as discussed GRAND TOTAL 14,310,498.19
below, is still not entitled to the alleged deficiency
balance of PhP 2,628,520.73.
Applying the proceeds from the auction sales to the
MBTC failed to prove that there is a deficiency foregoing amount, according to petitioner, would
balance of PhP 2,628,520.73 result in a deficiency balance of PhP 2,443,143.43.
Afterwards, the said amount allegedly earned
To support its deficiency claim, petitioner presented interest for four (4) months in the amount of PhP
a Statement of Account,[53] which refers to the 185,377.30,[54] bringing petitioner's claim for
amounts due as of May 5, 1998, the date of the first deficiency judgment to a total of PhP 2,628,520.73.
[55]
foreclosure sale, to wit:
We are not convinced.

We have already ruled in several cases[56] that in

Statement of Account as of May 05, 1998 extrajudicial foreclosure of mortgage, where the
proceeds of the sale are insufficient to pay the debt,
PN No. Principal PDI Penalty the mortgagee has the right to recover the deficiency
from the debtor.[57] In ascertaining the deficit amount,
Sec. 4, Rule 68 of the Rules of Court is elucidating,
to wit:
Section 4. Disposition of proceeds of sale. — The
amount realized from the foreclosure sale of the
mortgaged property shall, after deducting the
costs of the sale, be paid to the person
foreclosing the mortgage, and when there shall be
any balance or residue, after paying off the
mortgage debt due, the same shall be paid to junior
encumbrancers in the order of their priority, to be
ascertained by the court, or if there be no such
encumbrancers or there be a balance or residue
after payment to them, then to the mortgagor or his
duly authorized agent, or to the person entitled to it.
(emphasis added)
Verily, there can only be a deficit when the proceeds
of the sale is not sufficient to cover (1) the costs of
foreclosure proceedings; and (2) the amount due to
the creditor, inclusive of interests and penalties, if
any, at the time of foreclosure.
a. Petitioner failed to prove the amount due at
the time of foreclosure
Having alleged the existence of a deficiency
balance, it behooved petitioner to prove, at the very
least, the amount due at the date of foreclosure
against which the proceeds from the auction sale
would be applied. Otherwise, there can be no basis
for awarding the claimed deficiency balance.
Unfortunately for petitioner, it failed to substantiate
the amount due as of May 5, 1998 as appearing in
its Statement of Account.
To recall, MBTC admitted that the amount due as
of February 10, 1998 is PhP 11,216,783.99,
inclusive of interests and charges. As alleged in
the petition:
57. Firstly, it should be noted that respondents' total
unpaid obligations inclusive of interest and penalties
as of 10 February 1998 amounted to Php
11,216,783.99. This amount was the subject of
petitioner Metrobank's Petitions for Extra]udicial
Foreclosure of Mortgage and NOT Php
12,891,397.78 which is the total principal amount of
respondents' loan obligations at the time when they
obtained said loans as shown in the Promissory
Notes and the Certificates of Sale. After the
execution of the Promissory Notes, payments were
made, although insufficient, which resulted in
the balance of PhP 11,216,783.99 as of February
1198 inclusive of interest and penalties.[58] xxx
If the total amount due as of February 10, 1998 is
PhP 11,216,783.99 is already inclusive of interests
and penalties, the principal amount, exclusive of
interests and charges, would naturally be lower than
the PhP 11,216,783.99 threshold. How petitioner
made the determination in its Statement of Account
that the principal amount due on the date of the
auction sale is PhP 12,450,652.22 is then
questionable, nay impossible, unless respondents
contracted another loan anew.
Moreover, the amounts petitioner itself supplied
would result in the following computation:
PhP Total outstanding obligation as of
11,216,783.99 February 10, 1998
Add: Alleged May 5, 1998 public
1,373,238.04
auction sale expenses
(no Add: Additional interests and
Consistent charges earned between February
data) 10, 1998 to May 5, 1998
(no
Subtotal: Amount due as of May 5,
consistent
1998
data)
Less: May 5 Bid Price to be applied to
10,374,000.00
the amount due
Add: Alleged May 6, 1998 public
419,166.67
auction sale expenses
(no
Add: Interests and charges earned
consisted
from May 5 to 6, 1998
data)
Less: May 6 Bid Price to be applied to
3,240,000.00
the amount due
Total: Deficiency reflected in the
PhP
Statement of Account from May 5 to
2,443,143.43
September 18, 1998
As can be gleaned, petitioner failed to sufficiently
explain during the proceedings how it came up with
the alleged "deficiency" in the amount of PhP
2,443,143.43, as per the Statement of Account.
Reversing the formula, petitioner's claim would
only be mathematically possible if the missing
interest and penalties for the three-month period
—from February 10, 1998 to May 6, 1998—
amounted to PhP 3,047,954,73,[59] which is
inconsistent with MBTC's declaration in its
Statement of Account as of May 5, 1998.
[60]
Needless to say, this amount is not only
unconscionable, it also finds no support from any of
the statement of accounts and loan stipulations
agreed upon by the parties.
Given MBTC's conflicting, if not irreconcilable,
allegations as to the amount due as of the date of
foreclosure—as noted in the statement of accounts,
the petition for foreclosure, and the promissory notes
—the computation offered by MBTC cannot be
accepted at face value. Consequently, there can
then be no basis for determining the value of the
additional interests and penalty charges that became
due, and, more importantly, whether or not there was
indeed a deficiency balance at the time the
mortgaged properties were foreclosed.
In addition, it is noticeable that petitioner's
presentation of the computation is circuitous and
needlessly lengthened. As a matter of fact, nowhere
in the petition, in its complaint,[61] reply,[62] pre-trial Registration
brief,[63] among others, did it make a simple fee and other
computation of respondents' obligation as well as 32,644.50
Miscellaneous
the amounts to be applied to it, or even a summary Expenses
thereof, when it could have easily done so.
Attorney's
b. Petitioner failed to prove the amount of Fees (10% of
expenses incurred in foreclosing the mortgaged 1,005,744.37
total amount
prop erties claimed)
Another obstacle against petitioner's claim for
deficiency balance is the burden of proving the Fire
50,937.42
amount of expenses incurred during the foreclosure Insurance
sales. To recall, petitioner alleged that it incurred
expenses totalling PhP 1,373,238.04 and PhP Sub-total PhP 1,373,238.04
419,166.67 for the first and second public auction
sales, respectively. However, in claiming that there is
a deficiency, petitioner only submitted the following
pieces of evidence, to wit: May 6, 1998
auction sale
1. The fifteen (15) promissory notes (Exhibits A to expenses
O);
Publication
2. Continuing Surety Agreement (Exhibit P); 24,267.75
Expenses
3. Real Estate Mortgage (Exhibits Q & R);
Sheriffs
Commission 64,880.00
4. Petition for Sale under Act. No. 3135, as amended
on Sale
(Exhibit S);

5. Notices of Sheriff s Sale (Exhibits T & U); Registration

fee and other
16,593.00
6. Affidavits of Publication (Exhibits V & W); Miscellaneous
Expenses
7. Certificates of Posting and a Xerox copy thereof
(Exhibits X & Y); Attorney's
Fees (10% of
313,425.92
8. Certificates of Sale (Exhibits Z & AA); total amount
claimed)
9. Demand Letters (Exhibits BB & CC); and
Sub-total PhP 419,166.67
10. Statement of Account (Exhibit DD).
Petitioner's argument is untenable.
Curiously, petitioner never offered as evidence
receipts proving payment of filing fees, publication First, the Court cannot take judicial notice of the
expenses, Sheriffs Commission on Sale, attorney's attorney's fees being claimed by petitioner because
fee, registration fee for the Certificate of Sale, although 10% was the rate agreed upon by the
insurance premium and other miscellaneous parties, We have, in a line of cases, held that the
expenses, all of which MBTC claims that it incurred. percentage to be charged can still be fixed by the
Instead, petitioner urges the Court to take judicial Court. For instance, in Mambulao Lumber Company
notice of the following expenses:[64] v. Philippine National Bank,[65] the Court held:

May 5, 1998 In determining the compensation of an attorney, the

auction sale following circumstances should be considered: the
expenses amount and character of the services rendered; the
responsibility imposed; the amount of money or the
Filing Fee PhP 52,084.00 value of the property affected by the controversy, or
involved in the employment; the skill and experience
Publication called for in the performance of the service; the
24,267.75 professional standing of the attorney; the results
Expenses
secured; and whether or not the fee is contingent or
absolute, it being a recognized rule that an attorney
Sheriffs
may properly charge a much larger fee when it is to
Commission 207,560.00
be contingent than when it is not. From the
on Sale
stipulation in the mortgage contract earlier quoted, it
appears that the agreed fee is 10% of the total
indebtedness, irrespective of the manner the
foreclosure of the mortgage is to be effected.
The agreement is perhaps fair enough in case the
foreclosure proceedings is prosecuted judicially but,
surely, it is unreasonable when, as in this case,
the mortgage was foreclosed extra-judicially, and
all that the attorney did was to file a petition for
foreclosure with the sheriff concerned. x x x
(emphasis added)
Similarly, in Bank of the Philippine Islands, Inc. v.
Spouses Norman and Angelina Yu,[66] the Court
reduced the claim for attorney's fees from 10% to
1% based on the following reasons: (1) attorney's
fee is not essential to the cost of borrowing, but a
mere incident of collection; (2) 1% is just and
adequate because the mortgagee bank had already
charged foreclosure expenses; (3) attorney's fee of
10% of the total amount due is onerous considering
the rote effort that goes into extrajudicial
foreclosures.
Second, the Court cannot also take judicial notice of
the expenses incurred by petitioner in causing the
publication of the notice of foreclosure and the cost
of insurance. This is so because there are no
standard rates cited or mentioned by petitioner that
would allow Us to take judicial notice of such
expenses. It is not unthinkable that the cost of
publication would vary from publisher to publisher,
and would depend on several factors, including the
size of the publication space. Insurance companies
also have their own computations on the insurance
premiums to be paid by the insurer, which the courts
cannot be expected to be knowledgeable of. To be
sure, in arguing for the Court to take judicial notice of
the alleged expenses, MBTC merely cited Sec. 3 of
Act 3135 requiring publication and the mortgage
agreement provision on the insurance requirement,
without more.[67] Said provisions never expressly
provided for the actual cost of publication and
insurance, nor any formulae for determining the
same. Thus, the claims for publication and insurance
expenses ought to be disallowed.
Third, the claims for registration fees and
miscellaneous expenses were also never
substantiated by receipts.
In sum, given petitioner's failure to establish the sum
due at the time the mortgaged properties were
foreclosed and sold via public auction, as well as the
expenses incurred in those foreclosure proceedings,
it would be impossible for the Court to determine
whether or not there is, indeed, a deficiency balance
petitioner would have been entitled to.
Conclusion
In demanding payment of a deficiency in an
extrajudicial foreclosure of mortgage, proving that
there is indeed one and what its exact amount is, is
naturally a precondition thereto. The same goes with
a claim for reimbursement of foreclosure expenses,
as here. In this regard, it is elementary that the
burden to prove a claim rests on the party asserting
such. Ei incumbit probatio qui dicit, non qui negat.
He who asserts, not he who denies, must prove.
[68]
For having failed to adequately substantiate its
claims, We cannot sustain the finding of the trial
court that respondents are liable for the claimed
deficiency, inclusive of foreclosure expenses.
Neither can We sustain the CA's finding that
respondents are entitled to the recovery of the
alleged excess payment.
In light of the foregoing, the Court need not belabor
the other assigned errors.
WHEREFORE, premises considered, the instant
petition is hereby PARTIALLY GRANTED.
Accordingly, the Decision of the Court of Appeals
dated September 28, 2011 in CA-G.R. CV No.
91424 and its February 13, 2012 Resolution are
hereby AFFIRMED withMODIFICATION. The award
of refund in favor of respondents in the amount of
P722,602.22 with legal interest of six percent (6%)
per annum is hereby DELETED.
No pronouncement as to costs.
SO ORDERED.
Peralta, Villarama, Jr., Reyes, and Jardeleza, JJ.,
concur.
Nelson Valdez vs Atty Dabon
Facts:
This is a case abpit gross immorality, gross violation
and falsification filed by Nelson Valdez against Atty.
Antolin Dabon who had an illicit relationship with
Sonia Valdez, Nelson’s wife.
June 8 2006, Process server Fernando Sia made a
report but failed to serve a copy upon respondent
because the house maid refused to receive the
same(Pandacan, Manila). Sia also went to the
provincial address at Greenfield Subd, Fernando
Pampanga but was not allowed to enter. He was
informed that respondent left for the US.
June 16, 2006 the investing Justice cancelled the
preliminary conference and directed respondent to
submit his Answer within 15 days or else case shall
be deemed submitted. Letter was submitted to
respondents address in the US.
June 23, 2006, Pamela Antonio informed Clerk Court
that Atty Dabon is always out thus failed delivery
attempts.
June 28, 2006 an ex parte motion to refer for
question documents and fingerprint examination
attached exhibits was filed due to nude photos his
wife, Sonia Valdez, was sent to hum from Nenita
Palupayon.
November 14, 2006, complaint filed ex-parte
manifestation and motion claiming that respondent
successfully held abeyance the proceedings by his
refusal to receive and comply with the process.
Nov 30, 2006, it was reported respondent no longer
lives in Pampanga and in Pandacan.
Sia then went to respondents house in Pandacan
and left the envelope underneath the door and went
to Greenfields, Pampanga and left the envelope to
the guards. Both envelopes were returned to the CA
via LBC and both opened.
Nelson alleged that his wife, Sonia, admitted to him
that she engaged in an adulterous and immoral
relationship with Atty. Dabon since Nov 2000. In
2006 she tried to end relationship but respondent
disagreed thus threatened and harassed Sonia.
Nelson alleged that one day after complaint was filed
the respondent fled to the US without a travel
authority from the SC. Respondent and his wife sent
text messages to apologise to petitioner and his
wife.
Issue:
WON respondent violated Adm. Matter No. 99-12-
08-SC when he left for the United States before his
travel authority could be issued and gross immoral
conduct.
Held:
Yes
There is no dispute that respondent engaged in an
unlawful, dishonest and immoral conduct. The illicit
relationship which spanned a period of five years
was committed under scandalous circumstances as
to shock the common sense of decency. As a
Division Clerk of Court of the Court of Appeals,
respondent occupied a position of great
responsibility.
Atty. Dabon left for theUnited States before the
approval of his application for leave by the
authorized official of the Personnel Division.
Moreover, respondents application for leave did not
indicate the type of leave he is taking, whether
vacation or sick leave, or whether the leave will be
spent here or abroad. Respondent likewise violated
the resolution in Adm. Matter No. 99-12-08-SC
requiring employees of the judiciary to obtain a travel
authority from this Court before traveling abroad
NELSON P. VALDEZ, A.M. No. CA-07-21-P
Complainant,
ATTY. ANTOLIN ALLYSON
M. DABON, Promulgated:
Respondent.
June 22, 2007
DECISION
YNARES-SANTIAGO, J.:
This is a complaint for Gross Immorality, Gross
Violation of Administrative Matter No. 99-12-08-SC
and falsification and/or misrepresentation, filed by
Nelson P. Valdez against Atty. Antolin Allyson M.
Dabon, Jr., then Division Clerk of Court of the Court
of Appeals. Complainant is the husband of Sonia
Valdez, then a Court Stenographer IV at the Court of
Appeals, with whom Atty. Dabon allegedly had an
illicit relationship.
The administrative case was subsequently assigned
to Court of Appeals Associate Justice Rosalinda
Asuncion-Vicente for investigation who issued an
Order dated June 5, 2006directing the parties to
attend a preliminary conference on June 28, 2006.
On June 8, 2006, Process Server Fernando Sia
made a report that he failed to serve a copy of the
Order upon the respondent because the housemaid
at respondents address in Pandacan, Manila refused
to receive the same. Sia proceeded to respondents
provincial address at Greenfields Subdivision in San
Fernando, Pampanga, but the guard did not allow
him to enter. In both instances, the housemaid and
the guard informed Sia that respondent had left for
the United States.
Thus, in an Amended Order dated June 16, 2006,
the Investigating Justice cancelled the scheduled
preliminary conference and directed the respondent
to submit his Answer within 15 days from notice,
otherwise, the case shall be deemed submitted for
resolution. A copy of the Amended Order was sent
by courier service to respondents address in
the United States.
On June 23, 2006, Pamela Ann B. Antonio, Trace
Services Manager of Federal Express, informed
Clerk of Court Tessie L. Gatmaitan that they failed to
deliver the documents to Atty. Dabon at his address
in the United States because he is always out during
delivery attempts.
Meanwhile, on June 28, 2006, complainant filed
an Ex Parte Motion to Refer for Question
Documents and Fingerprint Examination Attached
Exhibits. Complainant alleged that on June 24, 2006,
he received a parcel from a certain Nenita
Palupayon of Quezon City containing two computer
printed nude photos of his wife, Sonia Valdez,
together with a compact disk showing the same
photo. According to the complainant, this is a form of
harassment which should not be countenanced.
On November 14, 2006, complainant filed an Ex-
Parte Manifestation and Motion claiming that
respondent has successfully held in abeyance the
proceedings in the instant case by his stubborn
refusal to receive and comply with the processes of
the court.
On November 28, 2006, the Investigating Justice
again directed the respondent to file his answer
within 15 days from receipt of notice, failing which,
the case shall be deemed submitted for decision.
In his report, Process Server Sia narrated that
on November 30, 2006, he went to Pampanga but
was informed by the guards at Greenfields
Subdivision that Atty. Dabon is no longer residing
thereat. He then went to Pandacan but the
housemaid refused to receive the notices. She also
informed him that respondent is still in the United
States.
Thus, in an Order dated January 12, 2007, the
Investigating Justice directed Sia to re-serve the
envelope addressed to Atty. Dabon at his two
aforesaid addresses and in case of refusal, to leave
the same in the premises with a person of sufficient
age and discretion residing thereat.
That same day, Sia went to respondents Pandacan,
Manila address and noticed that the house was
locked. So he left the envelope underneath the door
in the presence of a certain Pamela, who lives next
door. On January 16, 2007, Sia went to Greenfields
Subdivision in San Fernando, Pampanga and left the
envelope with the guard on duty.
However, both envelopes were later returned to the
Court of Appeals via LBC. An examination of the
envelopes revealed that both had been opened.
Thereafter, the Investigating Justice deemed the
case submitted for resolution.
In his complaint, Nelson alleged that his wife, Sonia,
admitted to him that she engaged in an adulterous
and immoral relationship with Atty. Dabon since
November 2000. In March 2006, she decided to end
the relationship but respondent would not agree. He
started harassing and threatening Sonia. In one
instance, respondent brought Sonia to a motel
against her will. Their arrival caused a commotion
which forced Atty. Dabon to drive back to the Court
of Appeals. In another occasion, respondent forcibly
boarded Sonias car and refused to alight despite her
pleas. Respondent likewise used members of his
staff to deliver messages or packages to Sonia.
In his supplemental complaint, Nelson alleged that
on May 16, 2006, or one day after the complaint was
filed, respondent surreptitiously left for the Unites
States without securing a travel authority from the
Supreme Court. He likewise averred that in his
Embarkation Card, Atty. Dabon indicated that he is a
lawyer without disclosing that he is also a
government employee.
On the basis of the complaint and the evidence
submitted by the complainant, the Investigating
Justice found as follows:
In his sworn letter-complaint dated May 15, 2006,
complainant alleged that respondent had an
adulterous and immoral relationship with his wife,
Sonia Valdez, for a span of five years; that he only
came to know of the said adulterous relationship on
April 18, 2006 from an anonymous text message;
that Sonia admitted that the relationship started
sometime in November 2000 and continued until
March of 2006; that Sonia, bothered by her
conscience, decided to break off with respondent
who, however, persisted communicating with her,
threatening and harassing her through phone calls
and handwritten messages; that Sonia, in her effort
to stop said harassment, decided to speak with
respondent one last time aboard respondents car
somewhere along Roxas Boulevard, however,
respondent instead took her into a motel; and that
Sonia parried respondents advances by being
hysterical, which prompted respondent to drive her
back to the office.
In another incident on March 13, 2006, respondent
forcibly boarded his wifes car at the Court of Appeals
parking lot; and that it was only upon pleas of Sonias
officemates, Atty. Heiddi Barroso and Atty. Aileen
Ligot, that respondent alighted from the
car. Complainant also alleged that respondent
continuously made threats to reveal their illicit
relationship if Sonia would not reconcile with
respondent, thus, Sonia was forced to shun
respondents calls in her office and to change their
house phone number.
On May 4, 2006, complainant allegedly received text
messages from respondents wife, Atty. Joy Dabon
and from respondent himself, apologizing and asking
forgiveness for the incident. Said messages read as
follows:
A) Text message from Atty. Joy Dabon:
Nelson, Jun and I were separating I will file an
annulment anytime soon, although Im in great pain, I
ask for your apology and forgiveness for everything
he is leaving for US and I hope he evolves into a
strong and mature person there. D. cya masamang
tao, just emotional and easily
manipulated. Sana dont blame entirely bec. he is the
type that never initiate things. He is passive and
tame. He was honest with me and I hope Sonia
would find the courage to tell d truth to you. I just
pray for peace and a fresh start for all of us. I just
want to go on with my life and use above all of these
for my sons sake. I love jun and I appeal to you
na sana wala ka maisip sa atin lahat. Just as I have
accepted everything. Salamat sa panahon and
pangunawa. God bless.
B) Text message from respondent:
Nelson alam ko wala akong pwedeng sbhin at dis pt.
na makakagaan mo o makapagbabalik ng
nakaraan. I did the terrible n hurtful things. I did
thinking only of my selfish desire to hurt
Sonia. Naisip ko kasi nun she just used me for her
own personal reasons at nung nasa ere na ako,
bigla niya ako binitawan.
In his Supplemental Complaint-Affidavit dated May
19, 2006, complainant alleged that respondent
surreptitiously left the country on May 16, 2006 to
evade the administrative complaint filed against him;
and that respondent committed acts of falsification
and/or misrepresentation when respondent
deliberately omitted to disclose that he is a
government employee to avoid presenting the
required Authority to Travel, which he did not have at
that time, in violation of Administrative Matter No. 99-
12-08-SC.
Complainants allegations are corroborated by the
following:
1. Atty. Heiddi Venecia Barrozo and Atty. Aileen T.
Ligot, Court Attorney IV of this Court, who executed
a Joint Affidavit alleging that sometime in March
2006 at around 5:00 in the afternoon, Sonia asked
them to accompany her to the parking lot of the
Court of Appeals because respondent refused to
disembark from her car; that upon arriving at the
parking lot, they saw respondent sitting in front of
Sonias car; that Sonia shouted and demanded that
respondent get out of the car but the latter refused
and insisted on talking with Sonia; that the
commotion started drawing attention so they begged
respondent to alight from the car, who then obliged.
Atty. Barrozo and Atty. Ligot further alleged that they
received a text message from respondent the next
day requesting them to see him in his office; that
respondent told them that alam ko na malaki and
kasalanan ko kay son, at alam ko na imposible na
nya akong mapatawad and begged them to
convince Sonia to talk and settle things with him;
that respondent kept sending them text messages
such as: musta na sya?, nakakakain ba sya?,
pumunta ba sya sa gym ngaun?, Sana mapatawad
na nya ako, mahirap para sa akin ito., Hindi ko na
kaya, sana naman maconvince nyo sya na kausapin
na ako; that they told respondent that Sonia refused
to talk with him; and that on May 10, 2006 at 11:00 in
the morning, Atty. Ligot received another text
message from respondent which reads: Gud am
aileen. Alam ko na kahit papaano kapakanan pa rin
ni sonia nasa isip nyo, na gagamitin kayo to testify
against me. Pero kung talagang mahalaga pa rin si
sons sa inyo, isipin nyo twice if wat u wil do wud help
her or makakahirap pa sa kanya.
2. Virginia D. Ramos, Court Stenographer IV in the
Office of the Presiding Justice, who executed an
Affidavit alleging that sometime in the third week of
April 2006, she received some telephone calls at the
local line from respondent expressing his desire to
speak with Sonia but the latter refused to speak with
him; that sometime in the fourth week of April 2006,
respondent went to their office located at the third
floor of the Court of Appeals main building,
supposedly to inquire about some court matters from
her officemate, Mr. Raul Yumang; that respondent
also proceeded to Sonias working area who was
surprised and infuriated upon seeing respondent;
that Sonia asked respondent Ano kailangan mo dito?
and the latter replied May kukunin lang ako kay
Mang Raul., then Sonia said Dun ka lang sa labas,
huwag kang lumapit sa akin!; and that respondent
hurriedly left their office after the confrontation.
3. Marie Iris Magdalene Minerva, Executive
Assistant II at the Office of the Presiding Justice,
who alleged in her Affidavit that she received some
telephone calls from respondent requesting to speak
with Sonia who deliberately refused saying Pakisabi
na ayoko makipagusap sa kanya at pinagbabawalan
na ako ni Nelson.; that Sonia had been receiving
letters sealed in brown envelopes and hand carried
by some of respondents staff; that one time when
Sonia was not around, respondent himself
personally placed a sealed brown envelope on
Sonias table; and that upon her suggestion, Sonia
tore the letter into pieces to prevent anybody from
reading it.
4. Complainants allegation that respondent left the
country on May 16, 2006 for the United States way
ahead of his approved leave from June 3, 2006 up to
August 25, 2006 and without the requisite Authority
to Travel from the Supreme Court is supported by
complainants evidence, namely, (1) Northwest
Airlines, Inc.s Passenger Manifest which includes
the name DABON/ANTOLINAL; (2) Application for
Leave; (3) letter requesting permission to travel; (4)
Embarkation Card; and (5) Certification issued by
the Bureau of Immigration.
Based on the foregoing, the Investigating Justice
found substantial evidence showing that respondent
maintained an illicit relationship with complainants
wife, thus:
In the present case, this Investigating Justice finds
that there is substantial evidence showing an
amorous relationship between respondent and
complainants wife. Respondent failed to refute
complainants allegation that Sonia admitted having a
relationship with him sometime from November 2000
until March 2006. Complainants unrebutted evidence
consisting of the affidavits of Sonias officemates
lend credence to complainants allegation that such
amorous relationship existed between his wife and
respondent. Moreover, respondents abrupt and
unauthorized trip to the United States and eventual
resignation from office are telltale proofs of the
existence of such illicit relationship between
respondent and Sonia and of respondents desperate
attempt to avoid facing the consequences of his
indiscretion.
Clearly, respondents act of maintaining an illicit
relationship with Sonia, while being married to his
wife Atty. Joy Dabon, unmistakably constitutes gross
immoral conduct. Such act is in complete travesty of
the sacred and inviolable institution of marriage,
which definitely warrants an administrative sanction.
The Investigating Justice likewise noted that
respondent violated Adm. Matter No. 99-12-08-SC
when he left for the United States before his travel
authority could be issued.
Anent the charge of falsification, it was noted that
respondent did not act with malice when he
indicated in the embarkation card that he is a lawyer
without stating that he is also a government
employee.
In view of respondents resignation last August 12,
2006, the Investigating Justice recommended that
he be ordered to pay a fine equivalent to his salary
for six months, which may be taken from whatever
sums due him as accrued leaves or other benefits.
We adopt the factual findings of the Investigating
Justice; however, we find the recommended penalty
not commensurate with the offense committed.
There is no dispute that respondent engaged in an
unlawful, dishonest and immoral conduct. The illicit
relationship which spanned a period of five years
was committed under scandalous circumstances as
to shock the common sense of decency. As a
Division Clerk of Court of the Court of Appeals,
respondent occupied a position of great
responsibility.As such, he is expected and required
to comport himself with dignity and propriety at all
times. Unfortunately, respondent miserably failed to
comply with the demands of his office. Despite the
apparent refusal by Sonia Valdez to continue with
their illicit affair, respondent refused to let go and
even continued to harass the former. In one
instance, he forcibly boarded Sonias car which was
parked at the Court of Appeals parking lot and
insisted on talking with her. His refusal to alight from
the car elicited shouts from Sonia which in turn drew
the attention of other persons in the vicinity. Despite
being rejected in view of Sonias apparent intention
to end the affair, respondent persisted in his lustful
quest by bringing Sonia to a motel against her
will. Not only did he transgress the norms of decency
expected of every person but he failed to live up to
the high moral standard expected of a court
employee.[1] The exacting standards of ethics and
morality upon court employees are required to
maintain the peoples faith in the courts as
dispensers of justice, and whose image is mirrored
by their actuations. Thus, it becomes the imperative
sacred duty of everyone in the court to maintain its
good name and standing as a true temple of justice.
[2]
What further aggravates respondents offense is that
he took advantage of his official position in
continuing to harass Sonia. In one occasion, he
summoned lawyers Barrozo and Ligot to his office
and asked for their intervention in a purely personal
affair. At other times, he sent members of his staff to
Sonias office to deliver his messages.
It has not also escaped our attention that respondent
tried to evade and continue to defy the processes of
the court. After he was formally charged with a
complaint for gross immorality on May 15, 2006,
respondent immediately left the following day, May
16, 2006, for the United States. Although the
Personnel Division of the Court of Appeals certified
that he filed an application for leave of absence from
May 8 to June 2, 2006, the application however
remained unacted upon. This proves that Atty.
Dabon left for the United States before the approval
of his application for leave by the authorized official
of the Personnel Division. Moreover, respondents
application for leave did not indicate the type of
leave he is taking, whether vacation or sick leave, or
whether the leave will be spent here or abroad. In
short, respondents absence was unauthorized. As
correctly observed by the Investigating Justice:
Moreover, respondents abrupt and unauthorized trip
to the United States and eventual resignation from
office are telltale proofs of the existence of such illicit
relationship between respondent and Sonia and of
respondents desperate attempt to avoid facing the
consequences of his indiscretion.
Respondent likewise violated the resolution in Adm.
Matter No. 99-12-08-SC requiring employees of the
judiciary to obtain a travel authority from this Court
before traveling abroad. For such infraction,
respondent should be held administratively liable.
Finally, we agree with the Investigating Justice that
respondent cannot feign lack of knowledge about the
instant administrative case filed against him. He
abruptly left the country one day after the case was
filed. In his text messages sent to Atty. Barrozo and
Atty. Ligot, he acknowledged the possibility that the
former would be used to testify against
him. Respondents housemates or even the guards
stubbornly refused to receive any mail matter from
the Court of Appeals. But when the process server
eventually left the envelopes at respondents last two
known addresses in the Philippines, the envelopes
were sent back to the sender although they have
been opened. When the Court of Appeals sent
copies of the orders to respondents address in
the United States, the courier reported that
respondent was out during the several instances
when delivery was attempted.Furthermore, when
respondent resigned last August 12, 2006, there is
no way that he could not have known of the instant
administrative complaint. Yet, he continued to avoid
and defy the courts orders. This is reprehensible
considering respondents position as Division Clerk
of Court of the Court of Appeals.
Disgraceful and immoral conduct is a grave offense,
punishable by suspension of six months and one
day to one year for the first offense, and for the
second offense, by dismissal.[3] In this case,
respondents offense is aggravated by his continued
refusal to receive and comply with the court
processes. His leave was unauthorized and he went
abroad without the requisite travel authority.
In Re: Judge Cartagena,[4] the Court found
respondent judge guilty of gross misconduct when
he departed abroad without the knowledge and
permission of the Court and was ordered dismissed
from service with forfeiture of all benefits and with
prejudice to re-employment in any other branch,
instrumentality or agency of the government,
including government owned or controlled
corporations.[5]
In Reyes v. Bautista,[6] respondent Bautista was
found guilty of violation of Supreme Court
administrative circular for traveling abroad without
securing the necessary permission for foreign
travel. She was likewise found guilty of dishonesty
when she indicated in her application that her leave
would be spent in the Philippines, when in fact the
same was spent abroad. For those infractions,
Bautista was dismissed from service with forfeiture
of all benefits and privileges, except accrued leave
credits, with prejudice to re-employment in any
branch or instrumentality of the government,
including government owned or controlled
corporations.[7]
In Ansa v. Musa,[8] respondent judge was found
guilty of gross immorality and was dismissed from
the service with prejudice to re-employment.
In the instant case, respondent should have been
meted the penalty of dismissal from
service. However, he could no longer be dismissed
or suspended from service in view of his resignation
on August 12, 2006.
WHEREFORE, in view of the foregoing, we find Atty.
Antolin Alysson M. Dabon, Jr. GUILTY of Gross
Immoral Conduct and Violation of Adm. Matter No.
99-12-08-SC and is hereby ordered to PAY a fine
equivalent to his salaries for one year, which may be
taken from whatever sums due him as accrued
leaves, with forfeiture of all benefits.Further, he is
barred from any employment in all government
branches, including government owned or controlled
corporations.
SO ORDERED.
CONSUELO YNARES-SANTIAGO
Associate Justice
[G.R. No. 152154. July 15, 2003]
REPUBLIC OF THE PHILIPPINES, petitioner, vs.
HONORABLE SANDIGANBAYAN (SPECIAL
FIRST DIVISION), FERDINAND E. MARCOS
(REPRESENTED BY HIS ESTATE/HEIRS: IMELDA
R. MARCOS, MARIA IMELDA [IMEE] MARCOS-
MANOTOC, FERDINAND R. MARCOS, JR. AND
IRENE MARCOS-ARANETA) AND IMELDA
ROMUALDEZ MARCOS, respondents.
DECISION
CORONA, J.:
This is a petition for certiorari under Rule 65 of the
Rules of Court seeking to (1) set aside the
Resolution dated January 31, 2002 issued by the
Special First Division of the Sandiganbayan in Civil
Case No. 0141 entitled Republic of the Philippines
vs. Ferdinand E. Marcos, et. al., and (2) reinstate its
earlier decision dated September 19, 2000 which
forfeited in favor of petitioner Republic of the
Philippines (Republic) the amount held in escrow in
the Philippine National Bank (PNB) in the aggregate
amount of US$658,175,373.60 as of January 31,
2002.
BACKGROUND OF THE CASE
On December 17, 1991, petitioner Republic, through
the Presidential Commission on Good Government
(PCGG), represented by the Office of the Solicitor
General (OSG), filed a petition for forfeiture before
the Sandiganbayan, docketed as Civil Case No.
0141 entitled Republic of the Philippines vs.
Ferdinand E. Marcos, represented by his
Estate/Heirs and Imelda R. Marcos, pursuant to RA
1379[1] in relation to Executive Order Nos. 1,[2] 2,
[3]
14[4] and 14-A.[5]
In said case, petitioner sought the declaration of the
aggregate amount of US$356 million (now estimated
to be more than US$658 million inclusive of interest)
deposited in escrow in the PNB, as ill-gotten
wealth. The funds were previously held by the
following five account groups, using various foreign
foundations in certain Swiss banks:
(1) Azio-Verso-Vibur Foundation accounts;
(2) Xandy-Wintrop: Charis-Scolari-Valamo-
Spinus- Avertina Foundation accounts;
(3) Trinidad-Rayby-Palmy Foundation accounts;
(4) Rosalys-Aguamina Foundation accounts and
(5) Maler Foundation accounts.
In addition, the petition sought the forfeiture of
US$25 million and US$5 million in treasury notes
which exceeded the Marcos couples salaries, other
lawful income as well as income from legitimately
acquired property. The treasury
notes are frozen at the Central Bank of the
Philippines, now Bangko Sentral ng Pilipinas, by
virtue of the freeze order issued by the PCGG.
On October 18, 1993, respondents Imelda R.
Marcos, Maria Imelda M. Manotoc, Irene M. Araneta
and Ferdinand R. Marcos, Jr. filed their answer.
Before the case was set for pre-trial, a General
Agreement and the Supplemental
Agreements[6] dated December 28, 1993 were
executed by the Marcos children and then PCGG
Chairman Magtanggol Gunigundo for a global
settlement of the assets of the Marcos
family. Subsequently, respondent Marcos children
filed a motion dated December 7, 1995 for the
approval of said agreements and for the
enforcement thereof.
The General Agreement/Supplemental Agreements
sought to identify, collate, cause the inventory of and
distribute all assets presumed to be owned by the
Marcos family under the conditions contained
therein. The aforementioned General Agreement
specified in one of its premises or whereas clauses
the fact that petitioner obtained a judgment from the
Swiss Federal Tribunal on December 21, 1990, that
the Three Hundred Fifty-six Million U.S. dollars
(US$356 million) belongs in principle to the Republic
of the Philippines provided certain conditionalities
are met x x x. The said decision of the Swiss Federal
Supreme Court affirmed the decision of Zurich
District Attorney Peter Consandey, granting
petitioners request for legal assistance.[7] Consandey
declared the various deposits in the name of the
enumerated foundations to be of illegal provenance
and ordered that they be frozen to await the final
verdict in favor of the parties entitled to restitution.
Hearings were conducted by the Sandiganbayan on
the motion to approve the General/Supplemental
Agreements. Respondent Ferdinand, Jr. was
presented as witness for the purpose of establishing
the partial implementation of said agreements.
On October 18, 1996, petitioner filed a motion for
summary judgment and/or judgment on the
pleadings. Respondent Mrs. Marcos filed her
opposition thereto which was later adopted by
respondents Mrs. Manotoc, Mrs. Araneta and
Ferdinand, Jr.
In its resolution dated November 20, 1997, the
Sandiganbayan denied petitioners motion for
summary judgment and/or judgment on the
pleadings on the ground that the motion to approve
the compromise agreement (took) precedence over
the motion for summary judgment.
Respondent Mrs. Marcos filed a manifestation on
May 26, 1998 claiming she was not a party to the
motion for approval of the Compromise Agreement
and that she owned 90% of the funds with the
remaining 10% belonging to the Marcos estate.
Meanwhile, on August 10, 1995, petitioner filed with
the District Attorney in Zurich, Switzerland, an
additional request for the immediate transfer of the
deposits to an escrow account in the PNB. The
request was granted. On appeal by the Marcoses,
the Swiss Federal Supreme Court, in a decision
dated December 10, 1997, upheld the ruling of the
District Attorney of Zurich granting the request for
the transfer of the funds. In 1998, the funds were
remitted to the Philippines in escrow. Subsequently,
respondent Marcos children moved that the funds be
placed in custodia legis because the deposit in
escrow in the PNB was allegedly in danger of
dissipation by petitioner. The Sandiganbayan, in its
resolution dated September 8, 1998, granted the
motion.
After the pre-trial and the issuance of the pre-trial
order and supplemental pre-trial order dated October
28, 1999 and January 21, 2000, respectively, the
case was set for trial. After several resettings,
petitioner, on March 10, 2000, filed another motion
for summary judgment pertaining to the forfeiture of
the US$356 million, based on the following grounds:
I
THE ESSENTIAL FACTS WHICH WARRANT THE
FORFEITURE OF THE FUNDS SUBJECT OF THE
PETITION UNDER R.A. NO. 1379 ARE ADMITTED
BY RESPONDENTS IN THEIR PLEADINGS AND
OTHER SUBMISSIONS MADE IN THE COURSE
OF THE PROCEEDING.
II
RESPONDENTS ADMISSION MADE DURING THE
PRE-TRIAL THAT THEY DO NOT HAVE ANY
INTEREST OR OWNERSHIP OVER THE FUNDS
SUBJECT OF THE ACTION FOR FORFEITURE
TENDERS NO GENUINE ISSUE OR
CONTROVERSY AS TO ANY MATERIAL FACT IN
THE PRESENT ACTION, THUS WARRANTING
THE RENDITION OF SUMMARY JUDGMENT.[8]
Petitioner contended that, after the pre-trial
conference, certain facts were established,
warranting a summary judgment on the funds sought
to be forfeited.
Respondent Mrs. Marcos filed her opposition to the
petitioners motion for summary judgment, which
opposition was later adopted by her co-respondents
Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.
On March 24, 2000, a hearing on the motion for
summary judgment was conducted.
In a decision[9] dated September 19, 2000, the
Sandiganbayan granted petitioners motion for
summary judgment:
CONCLUSION
There is no issue of fact which calls for the
presentation of evidence.
The Motion for Summary Judgment is hereby
granted.
The Swiss deposits which were transmitted to and
now held in escrow at the PNB are deemed
unlawfully acquired as ill-gotten wealth.
DISPOSITION
WHEREFORE, judgment is hereby rendered in favor
of the Republic of the Philippines and against the
respondents, declaring the Swiss deposits which
were transferred to and now deposited in escrow at
the Philippine National Bank in the total aggregate
value equivalent to US$627,608,544.95 as of August
31, 2000 together with the increments thereof
forfeited in favor of the State.[10]
Respondent Mrs. Marcos filed a motion for
reconsideration dated September 26, 2000.
Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their
own motion for reconsideration dated October 5,
2000. Mrs. Araneta filed a manifestation dated
October 4, 2000 adopting the motion for
reconsideration of Mrs. Marcos, Mrs. Manotoc and
Ferdinand, Jr.
Subsequently, petitioner filed its opposition thereto.
In a resolution[11] dated January 31, 2002, the
Sandiganbayan reversed its September 19, 2000
decision, thus denying petitioners motion for
summary judgment:
CONCLUSION
In sum, the evidence offered for summary judgment
of the case did not prove that the money in the
Swiss Banks belonged to the Marcos spouses
because no legal proof exists in the record as to the
ownership by the Marcoses of the funds in escrow
from the Swiss Banks.
The basis for the forfeiture in favor of the
government cannot be deemed to have been
established and our judgment thereon, perforce,
must also have been without basis.
WHEREFORE, the decision of this Court dated
September 19, 2000 is reconsidered and set aside,
and this case is now being set for further
proceedings.[12]
Hence, the instant petition. In filing the same,
petitioner argues that the Sandiganbayan, in
reversing its September 19, 2000 decision,
committed grave abuse of discretion amounting to
lack or excess of jurisdiction considering that --
I THE FOREIGN FOUNDATIONS NEED NOT BE
PETITIONER WAS ABLE TO PROVE ITS CASE IN
ACCORDANCE WITH THE REQUISITES OF
SECTIONS 2 AND 3 OF R.A. NO. 1379:
A. PRIVATE RESPONDENTS CATEGORICALLY
ADMITTED NOT ONLY THE PERSONAL
CIRCUMSTANCES OF FERDINAND E. MARCOS
AND IMELDA R. MARCOS AS PUBLIC OFFICIALS
BUT ALSO THE EXTENT OF THEIR SALARIES AS
SUCH PUBLIC OFFICIALS, WHO UNDER THE
CONSTITUTION, WERE PROHIBITED FROM
ENGAGING IN THE MANAGEMENT OF
FOUNDATIONS.
B. PRIVATE RESPONDENTS ALSO ADMITTED
THE EXISTENCE OF THE SWISS DEPOSITS AND
THEIR OWNERSHIP THEREOF:
1. ADMISSIONS IN PRIVATE RESPONDENTS
ANSWER;
2. ADMISSION IN THE GENERAL /
SUPPLEMENTAL AGREEMENTS THEY SIGNED
AND SOUGHT TO IMPLEMENT;
3. ADMISSION IN A MANIFESTATION OF PRIVATE
RESPONDENT IMELDA R. MARCOS AND IN THE
MOTION TO PLACE THE RES IN CUSTODIA
LEGIS; AND
4. ADMISSION IN THE UNDERTAKING TO PAY
THE HUMAN RIGHTS VICTIMS.
C. PETITIONER HAS PROVED THE EXTENT OF
THE LEGITIMATE INCOME OF FERDINAND E.
MARCOS AND IMELDA R. MARCOS AS PUBLIC
OFFICIALS.
D. PETITIONER HAS ESTABLISHED A PRIMA
FACIE PRESUMPTION OF UNLAWFULLY
ACQUIRED WEALTH.
II
SUMMARY JUDGMENT IS PROPER SINCE
PRIVATE RESPONDENTS HAVE NOT RAISED
ANY GENUINE ISSUE OF FACT CONSIDERING
THAT:
A. PRIVATE RESPONDENTS DEFENSE THAT
SWISS DEPOSITS WERE LAWFULLY ACQUIRED
DOES NOT ONLY FAIL TO TENDER AN ISSUE
BUT IS CLEARLY A SHAM; AND
B. IN SUBSEQUENTLY DISCLAIMING
OWNERSHIP OF THE SWISS DEPOSITS,
PRIVATE RESPONDENTS ABANDONED THEIR
SHAM DEFENSE OF LEGITIMATE ACQUISITION,
AND THIS FURTHER JUSTIFIED THE RENDITION
OF A SUMMARY JUDGMENT.
III
IMPLEADED.
IV
THE HONORABLE PRESIDING JUSTICE
COMMITTED GRAVE ABUSE OF DISCRETION IN
REVERSING HIMSELF ON THE GROUND THAT
ORIGINAL COPIES OF THE AUTHENTICATED
SWISS DECISIONS AND THEIR AUTHENTICATED
TRANSLATIONS HAVE NOT BEEN SUBMITTED
TO THE COURT, WHEN EARLIER THE
SANDIGANBAYAN HAS QUOTED EXTENSIVELY A
PORTION OF THE TRANSLATION OF ONE OF
THESE SWISS DECISIONS IN HIS PONENCIA
DATED JULY 29, 1999 WHEN IT DENIED THE
MOTION TO RELEASE ONE HUNDRED FIFTY
MILLION US DOLLARS ($150,000,000.00) TO THE
HUMAN RIGHTS VICTIMS.
V
PRIVATE RESPONDENTS ARE DEEMED TO
HAVE WAIVED THEIR OBJECTION TO THE
AUTHENTICITY OF THE SWISS FEDERAL
SUPREME COURT DECISIONS.[13]
Petitioner, in the main, asserts that nowhere in the
respondents motions for reconsideration and
supplemental motion for reconsideration were the
authenticity, accuracy and admissibility of the Swiss
decisions ever challenged. Otherwise stated, it was
incorrect for the Sandiganbayan to use the issue of
lack of authenticated translations of the decisions of
the Swiss Federal Supreme Court as the basis for
reversing itself because respondents themselves
never raised this issue in their motions for
reconsideration and supplemental motion for
reconsideration. Furthermore, this particular issue
relating to the translation of the Swiss court
decisions could not be resurrected anymore
because said decisions had been previously utilized
by the Sandiganbayan itself in resolving a decisive
issue before it.
Petitioner faults the Sandiganbayan for questioning
the non-production of the authenticated translations
of the Swiss Federal Supreme Court decisions as
this was a marginal and technical matter that did not
diminish by any measure the conclusiveness and
strength of what had been proven and admitted
before the Sandiganbayan, that is, that the funds
deposited by the Marcoses constituted ill-gotten
wealth and thus belonged to the Filipino people.
In compliance with the order of this Court, Mrs.
Marcos filed her comment to the petition on May 22,
2002. After several motions for extension which were
all granted, the comment of Mrs. Manotoc and
Ferdinand, Jr. and the separate comment of Mrs.
Araneta were filed on May 27, 2002.
Mrs. Marcos asserts that the petition should be
denied on the following grounds:
A.
PETITIONER HAS A PLAIN, SPEEDY, AND
ADEQUATE REMEDY AT THE SANDIGANBAYAN.
B.
THE SANDIGANBAYAN DID NOT ABUSE ITS
DISCRETION IN SETTING THE CASE FOR
FURTHER PROCEEDINGS.[14]
Mrs. Marcos contends that petitioner has a plain,
speedy and adequate remedy in the ordinary course
of law in view of the resolution of the Sandiganbayan
dated January 31, 2000 directing petitioner to submit
the authenticated translations of the Swiss
decisions. Instead of availing of said remedy,
petitioner now elevates the matter to this Court.
According to Mrs. Marcos, a petition for certiorari
which does not comply with the requirements of the
rules may be dismissed. Since petitioner has a plain,
speedy and adequate remedy, that is, to proceed to
trial and submit authenticated translations of the
Swiss decisions, its petition before this Court must
be dismissed. Corollarily, the Sandiganbayans ruling
to set the case for further proceedings cannot and
should not be considered a capricious and whimsical
exercise of judgment.
Likewise, Mrs. Manotoc and Ferdinand, Jr., in their
comment, prayed for the dismissal of the petition on
the grounds that:
(A)
BY THE TIME PETITIONER FILED ITS MOTION
FOR SUMMARY JUDGMENT ON 10 MARCH 2000,
IT WAS ALREADY BARRED FROM DOING SO.
(1) The Motion for Summary Judgment was based
on private respondents Answer and other documents
that had long been in the records of the case. Thus,
by the time the Motion was filed on 10 March 2000,
estoppel by laches had already set in against
petitioner.
(2) By its positive acts and express admissions prior
to filing the Motion for Summary Judgment on 10
March 1990, petitioner had legally bound itself to go
to trial on the basis of existing issues. Thus, it clearly
waived whatever right it had to move for summary
judgment.
(B)
EVEN ASSUMING THAT PETITIONER WAS NOT
LEGALLY BARRED FROM FILING THE MOTION
FOR SUMMARY JUDGMENT, THE
SANDIGANBAYAN IS CORRECT IN RULING THAT
PETITIONER HAS NOT YET ESTABLISHED
A PRIMA FACIE CASE FOR THE FORFEITURE OF
THE SWISS FUNDS.
(1) Republic Act No. 1379, the applicable law, is a
penal statute. As such, its provisions, particularly the
essential elements stated in section 3 thereof, are
mandatory in nature. These should be strictly
construed against petitioner and liberally in favor of
private respondents.
(2) Petitioner has failed to establish the third and
fourth essential elements in Section 3 of R.A. 1379
with respect to the identification, ownership, and
approximate amount of the property which the
Marcos couple allegedly acquired during their
incumbency.
(a) Petitioner has failed to prove that the Marcos
couple acquired or own the Swiss funds.
(b) Even assuming, for the sake of argument, that
the fact of acquisition has been proven, petitioner
has categorically admitted that it has no evidence
showing how much of the Swiss funds was acquired
during the incumbency of the Marcos couple from 31
December 1965 to 25 February 1986.
(3) In contravention of the essential element stated
in Section 3 (e) of R.A. 1379, petitioner has failed to
establish the other proper earnings and income from
legitimately acquired property of the Marcos couple
over and above their government salaries.
(4) Since petitioner failed to prove the three essential
elements provided in paragraphs (c)[15] (d),[16] and (e)
[17]
of Section 3, R.A. 1379, the inescapable
conclusion is that the prima facie presumption of
unlawful acquisition of the Swiss funds has not yet
attached. There can, therefore, be no premature
forfeiture of the funds.
(C)
IT WAS ONLY BY ARBITRARILY ISOLATING AND
THEN TAKING CERTAIN STATEMENTS MADE BY
PRIVATE RESPONDENTS OUT OF CONTEXT
THAT PETITIONER WAS ABLE TO TREAT THESE
AS JUDICIAL ADMISSIONS SUFFICIENT TO
ESTABLISH A PRIMA FACIE AND THEREAFTER A
CONCLUSIVE CASE TO JUSTIFY THE
FORFEITURE OF THE SWISS FUNDS.
(1) Under Section 27, Rule 130 of the Rules of
Court, the General and Supplemental Agreements,
as well as the other written and testimonial
statements submitted in relation thereto, are
expressly barred from being admissible in evidence
against private respondents.
(2) Had petitioner bothered to weigh the alleged
admissions together with the other statements on
record, there would be a demonstrable showing that
no such judicial admissions were made by private
respondents.
(D)
SINCE PETITIONER HAS NOT (YET) PROVEN ALL
THE ESSENTIAL ELEMENTS TO ESTABLISH A
PRIMA FACIE CASE FOR FORFEITURE, AND
PRIVATE RESPONDENTS HAVE NOT MADE ANY
JUDICIAL ADMISSION THAT WOULD HAVE
FREED IT FROM ITS BURDEN OF PROOF, THE
SANDIGANBAYAN DID NOT COMMIT GRAVE
ABUSE OF DISCRETION IN DENYING THE
MOTION FOR SUMMARY JUDGMENT.
CERTIORARI, THEREFORE, DOES NOT LIE,
ESPECIALLY AS THIS COURT IS NOT A TRIER OF
FACTS.[18]
For her part, Mrs. Araneta, in her comment to the
petition, claims that obviously petitioner is unable to
comply with a very plain requirement of respondent
Sandiganbayan. The instant petition is allegedly an
attempt to elevate to this Court matters, issues and
incidents which should be properly threshed out at
the Sandiganbayan. To respondent Mrs. Araneta, all
other matters, save that pertaining to the
authentication of the translated Swiss Court
decisions, are irrelevant and impertinent as far as
this Court is concerned. Respondent Mrs. Araneta
manifests that she is as eager as respondent
Sandiganbayan or any interested person to have the
Swiss Court decisions officially translated in our
known language. She says the authenticated official
English version of the Swiss Court decisions should
be presented. This should stop all speculations on
what indeed is contained therein. Thus, respondent
Mrs. Araneta prays that the petition be denied for
lack of merit and for raising matters which, in
elaborated fashion, are impertinent and improper
before this Court.
PROPRIETY OF PETITIONERS
ACTION FOR CERTIORARI
But before this Court discusses the more relevant
issues, the question regarding the propriety of
petitioner Republic's action for certiorari under Rule
65[19] of the 1997 Rules of Civil Procedure assailing
the Sandiganbayan Resolution dated January 21,
2002 should be threshed out.
At the outset, we would like to stress that we are
treating this case as an exception to the general rule
governing petitions for certiorari. Normally, decisions
of the Sandiganbayan are brought before this Court
under Rule 45, not Rule 65.[20] But where the case is
undeniably ingrained with immense public interest,
public policy and deep historical repercussions,
certiorari is allowed notwithstanding the existence
and availability of the remedy of appeal.[21]
One of the foremost concerns of the Aquino
Government in February 1986 was the recovery of
the unexplained or ill-gotten wealth reputedly
amassed by former President and Mrs. Ferdinand E.
Marcos, their relatives, friends and business
associates. Thus, the very first Executive Order (EO)
issued by then President Corazon Aquino upon her
assumption to office after the ouster of the Marcoses
was EO No. 1, issued on February 28, 1986. It
created the Presidential Commission on Good
Government (PCGG) and charged it with the task of
assisting the President in the "recovery of all ill-
gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, whether located
in the Philippines or abroad, including the takeover
or sequestration of all business enterprises and
entities owned or controlled by them during his
administration, directly or through nominees, by
taking undue advantage of their public office and/or
using their powers, authority, influence, connections
or relationship." The urgency of this undertaking was
tersely described by this Court in Republic vs.
Lobregat[22]:
surely x x x an enterprise "of great pith and
moment"; it was attended by "great expectations"; it
was initiated not only out of considerations of simple
justice but also out of sheer necessity - the national
coffers were empty, or nearly so.
In all the alleged ill-gotten wealth cases filed by the
PCGG, this Court has seen fit to set aside
technicalities and formalities that merely serve to
delay or impede judicious resolution. This Court
prefers to have such cases resolved on the merits at
the Sandiganbayan. But substantial justice to the
Filipino people and to all parties concerned, not
mere legalisms or perfection of form, should now be
relentlessly and firmly pursued. Almost two decades
have passed since the government initiated its
search for and reversion of such ill-gotten wealth.
The definitive resolution of such cases on the merits
is thus long overdue. If there is proof of illegal
acquisition, accumulation, misappropriation, fraud or
illicit conduct, let it be brought out now. Let the
ownership of these funds and other assets be finally
determined and resolved with dispatch, free from all
the delaying technicalities and annoying procedural
sidetracks.[23]
We thus take cognizance of this case and settle with
finality all the issues therein.
ISSUES BEFORE THIS COURT
The crucial issues which this Court must resolve are:
(1) whether or not respondents raised any genuine
issue of fact which would either justify or negate
summary judgment; and (2) whether or not petitioner
Republic was able to prove its case for forfeiture in
accordance with Sections 2 and 3 of RA 1379.
(1) THE PROPRIETY OF SUMMARY JUDGMENT
We hold that respondent Marcoses failed to raise
any genuine issue of fact in their pleadings. Thus, on
motion of petitioner Republic, summary judgment
should take place as a matter of right.
In the early case of Auman vs. Estenzo[24], summary
judgment was described as a judgment which a
court may render before trial but after both parties
have pleaded. It is ordered by the court upon
application by one party, supported by affidavits,
depositions or other documents, with notice upon the
adverse party who may in turn file an opposition
supported also by affidavits, depositions or other
documents. This is after the court summarily hears
both parties with their respective proofs and finds
that there is no genuine issue between them.
Summary judgment is sanctioned in this jurisdiction
by Section 1, Rule 35 of the 1997 Rules of Civil
Procedure:
SECTION 1. Summary judgment for claimant.- A
party seeking to recover upon a claim, counterclaim,
or cross-claim or to obtain a declaratory relief may,
at any time after the pleading in answer thereto has
been served, move with supporting affidavits,
depositions or admissions for a summary judgment
in his favor upon all or any part thereof.[25]
Summary judgment is proper when there is clearly
no genuine issue as to any material fact in the
action.[26] The theory of summary judgment is that,
although an answer may on its face appear to tender
issues requiring trial, if it is demonstrated by
affidavits, depositions or admissions that those
issues are not genuine but sham or fictitious, the
Court is justified in dispensing with the trial and
rendering summary judgment for petitioner Republic.
The Solicitor General made a very thorough
presentation of its case for forfeiture:
xxx
4. Respondent Ferdinand E. Marcos (now deceased
and represented by his Estate/Heirs) was a public
officer for several decades continuously and without
interruption as Congressman, Senator, Senate
President and President of the Republic of the
Philippines from December 31, 1965 up to his ouster
by direct action of the people of EDSA on February
22-25, 1986.
5. Respondent Imelda Romualdez Marcos (Imelda,
for short) the former First Lady who ruled with FM
during the 14-year martial law regime, occupied the
position of Minister of Human Settlements from June
1976 up to the peaceful revolution in February 22-
25, 1986. She likewise served once as a member of
the Interim Batasang Pambansa during the early
years of martial law from 1978 to 1984 and as Metro
Manila Governor in concurrent capacity as Minister
of Human Settlements. x x x
xxx xxx xxx
11. At the outset, however, it must be pointed out
that based on the Official Report of the Minister of
Budget, the total salaries of former President Marcos
as President form 1966 to 1976 was P60,000 a year
and from 1977 to 1985, P100,000 a year; while
that of the former First Lady, Imelda R. Marcos, as
Minister of Human Settlements from June 1976 to
February 22-25, 1986 was P75,000 a year xxx.
ANALYSIS OF RESPONDENTS
LEGITIMATE INCOME
xxx
12. Based on available documents, the ITRs of the
Marcoses for the years 1965-1975 were filed under
Tax Identification No. 1365-055-1. For the years
1976 until 1984, the returns were filed under Tax
Identification No. M 6221-J 1117-A-9.
13. The data contained in the ITRs and Balance
Sheet filed by the Marcoses are summarized and
attached to the reports in the following schedules:
Schedule A:
Schedule of Income (Annex T hereof);
Schedule B:
Schedule of Income Tax Paid (Annex T-1 hereof);
Schedule C:
Schedule of Net Disposable Income (Annex T-2
hereof);
Schedule D:
Schedule of Networth Analysis (Annex T-3 hereof).
14. As summarized in Schedule A (Annex T hereof),
the Marcoses reported P16,408,442.00 or
US$2,414,484.91 in total income over a period of 20
years from 1965 to 1984. The sources of income are
as follows:
Official Salaries - P 2,627,581.00 - 16.01%
Legal Practice - 11,109,836.00 - 67.71%
Farm Income - 149,700.00 - .91%
Others - 2,521,325.00 - 15.37%
Total P16,408,442.00 - 100.00%
15. FMs official salary pertains to his compensation
as Senate President in 1965 in the amount
of P15,935.00 and P1,420,000.00 as President of
the Philippines during the period 1966 until 1984. On
the other hand, Imelda reported salaries and
allowances only for the years 1979 to 1984 in the
amount of P1,191,646.00. The records indicate that
the reported income came from her salary from the
Ministry of Human Settlements and allowances from
Food Terminal, Inc., National Home Mortgage
Finance Corporation, National Food Authority
Council, Light Rail Transit Authority and Home
Development Mutual Fund.
16. Of the P11,109,836.00 in reported income from
legal practice, the amount of P10,649,836.00 or 96%
represents receivables from prior years during the
period 1967 up to 1984.
17. In the guise of reporting income using the cash
method under Section 38 of the National Internal
Revenue Code, FM made it appear that he had an
extremely profitable legal practice before he became
a President (FM being barred by law from practicing
his law profession during his entire presidency) and
that, incredibly, he was still receiving payments
almost 20 years after. The only problem is that in his
Balance Sheet attached to his 1965 ITR immediately
preceeding his ascendancy to the presidency he did
not show any Receivables from client at all, much
less the P10,65-M that he decided to later recognize
as income. There are no documents showing any
withholding tax certificates. Likewise, there is
nothing on record that will show any known Marcos
client as he has no known law office. As previously
stated, his networth was a mere P120,000.00 in
December, 1965. The joint income tax returns of FM
and Imelda cannot, therefore, conceal the skeletons
of their kleptocracy.
18. FM reported a total of P2,521,325.00 as Other
Income for the years 1972 up to 1976 which he
referred to in his return as Miscellaneous Items and
Various Corporations. There is no indication of any
payor of the dividends or earnings.
19. Spouses Ferdinand and Imelda did not declare
any income from any deposits and placements
which are subject to a 5% withholding tax. The
Bureau of Internal Revenue attested that after a
diligent search of pertinent records on file with the
Records Division, they did not find any records
involving the tax transactions of spouses Ferdinand
and Imelda in Revenue Region No. 1, Baguio City,
Revenue Region No.4A, Manila, Revenue Region
No. 4B1, Quezon City and Revenue No. 8, Tacloban,
Leyte. Likewise, the Office of the Revenue Collector
of Batac. Further, BIR attested that no records were
found on any filing of capital gains tax return
involving spouses FM and Imelda covering the years
1960 to 1965.
20. In Schedule B, the taxable reported income over
the twenty-year period was P14,463,595.00 which
represents 88% of the gross income. The Marcoses
paid income taxes totaling P8,233,296.00 or
US$1,220,667.59. The business expenses in the
amount of P861,748.00 represent expenses incurred
for subscription, postage, stationeries and
contributions while the other deductions in the
amount of P567,097.00 represents interest charges,
medicare fees, taxes and licenses. The total
deductions in the amount of P1,994,845.00
represents 12% of the total gross income.
21. In Schedule C, the net cumulative disposable
income amounts to P6,756,301.00 or
US$980,709.77. This is the amount that represents
that portion of the Marcoses income that is free for
consumption, savings and investments. The amount
is arrived at by adding back to the net income after
tax the personal and additional exemptions for the
years 1965-1984, as well as the tax-exempt salary of
the President for the years 1966 until 1972.
22. Finally, the networth analysis in Schedule D,
represents the total accumulated networth of
spouses, Ferdinand and Imelda. Respondents
Balance Sheet attached to their 1965 ITR, covering
the year immediately preceding their ascendancy to
the presidency, indicates an ending networth
of P120,000.00 which FM declared as Library and
Miscellaneous assets. In computing for the networth,
the income approach was utilized. Under this
approach, the beginning capital is increased or
decreased, as the case may be, depending upon the
income earned or loss incurred. Computations
establish the total networth of spouses Ferdinand
and Imelda, for the years 1965 until 1984 in the total
amount of US$957,487.75, assuming the income
from legal practice is real and valid x x x.
G. THE SECRET MARCOS DEPOSITS
IN SWISS BANKS
23. The following presentation very clearly and
overwhelmingly show in detail how both respondents
clandestinely stashed away the countrys wealth to
Switzerland and hid the same under layers upon
layers of foundations and other corporate entities to
prevent its detection. Through their
dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened
and maintained numerous bank accounts. But due to
the difficulty if not the impossibility of detecting and
documenting all those secret accounts as well as the
enormity of the deposits therein hidden, the following
presentation is confined to five identified accounts
groups, with balances amounting to about $356-
M with a reservation for the filing of a supplemental
or separate forfeiture complaint should the need
arise.
H. THE AZIO-VERSO-VIBUR
FOUNDATION ACCOUNTS
24. On June 11, 1971, Ferdinand Marcos issued a
written order to Dr. Theo Bertheau, legal counsel of
Schweizeresche Kreditanstalt or SKA, also known
as Swiss Credit Bank, for him to establish the AZIO
Foundation. On the same date, Marcos executed a
power of attorney in favor of Roberto S. Benedicto
empowering him to transact business in behalf of the
said foundation. Pursuant to the said Marcos
mandate, AZIO Foundation was formed on June 21,
1971 in Vaduz. Walter Fessler and Ernst Scheller,
also of SKA Legal Service, and Dr. Helmuth Merling
from Schaan were designated as members of the
Board of Trustees of the said foundation. Ferdinand
Marcos was named first beneficiary and the Marcos
Foundation, Inc. was second beneficiary. On
November 12, 1971, FM again issued another
written order naming Austrahil PTY Ltd. In Sydney,
Australia, as the foundations first and sole
beneficiary. This was recorded on December 14,
1971.
25. In an undated instrument, Marcos changed the
first and sole beneficiary to CHARIS
FOUNDATION. This change was recorded on
December 4, 1972.
26. On August 29, 1978, the AZIO FOUNDATION
was renamed to VERSO FOUNDATION. The Board
of Trustees remained the same. On March 11, 1981,
Marcos issued a written directive to liquidated
VERSO FOUNDATION and to transfer all its assets
to account of FIDES TRUST COMPANY at Bank
Hofman in Zurich under the account Reference
OSER. The Board of Trustees decided to dissolve
the foundation on June 25, 1981.
27. In an apparent maneuver to bury further the
secret deposits beneath the thick layers of corporate
entities, FM effected the establishment of VIBUR
FOUNDATION on May 13, 1981 in Vaduz. Atty. Ivo
Beck and Limag Management, a wholly-owned
subsidiary of Fides Trust, were designated as
members of the Board of Trustees. The account was
officially opened with SKA on September 10,
1981. The beneficial owner was not made known to
the bank since Fides Trust Company acted as
fiduciary. However, comparison of the listing of the
securities in the safe deposit register of the VERSO
FOUNDATIONas of February 27, 1981 with that of
VIBUR FOUNDATION as of December 31, 1981
readily reveals that exactly the same securities were
listed.
28. Under the foregoing circumstances, it is certain
that the VIBUR FOUNDATION is the beneficial
successor of VERSO FOUNDATION.
29. On March 18, 1986, the Marcos-designated
Board of Trustees decided to liquidate VIBUR
FOUNDATION. A notice of such liquidation was sent
to the Office of the Public Register on March 21,
1986.However, the bank accounts and respective
balances of the said VIBUR FOUNDATION
remained with SKA. Apparently, the liquidation was
an attempt by the Marcoses to transfer the
foundations funds to another account or bank but
this was prevented by the timely freeze order issued
by the Swiss authorities. One of the latest
documents obtained by the PCGG from the Swiss
authorities is a declaration signed by Dr. Ivo Beck
(the trustee) stating that the beneficial owner of
VIBUR FOUNDATION is Ferdinand E.
Marcos. Another document signed by G. Raber of
SKA shows that VIBUR FOUNDATION is owned by
the Marcos Familie
30. As of December 31, 1989, the balance of the
bank accounts of VIBUR FOUNDATION with SKA,
Zurich, under the General Account No. 469857
totaled $3,597,544.00
I. XANDY-WINTROP: CHARIS-SCOLARI-
VALAMO-SPINUS-AVERTINA
FOUNDATION ACCOUNTS
31. This is the most intricate and complicated
account group. As the Flow Chart hereof shows, two
(2) groups under the foundation organized by
Marcos dummies/nominees for FMs benefit,
eventually joined together and became one (1)
account group under the AVERTINA FOUNDATION
for the benefit of both FM and Imelda. This is the
biggest group from where the $50-M investment
fund of the Marcoses was drawn when they bought
the Central Banks dollar-denominated treasury notes
with high-yielding interests.
32. On March 20, 1968, after his second year in the
presidency, Marcos opened bank accounts with SKA
using an alias or pseudonym WILLIAM SAUNDERS,
apparently to hide his true identity. The next day,
March 21, 1968, his First Lady, Mrs. Imelda Marcos
also opened her own bank accounts with the same
bank using an American-sounding alias, JANE
RYAN. Found among the voluminous documents in
Malacaang shortly after they fled to Hawaii in haste
that fateful night of February 25, 1986, were
accomplished forms for Declaration/Specimen
Signatures submitted by the Marcos couple. Under
the caption signature(s) Ferdinand and Imelda
signed their real names as well as their respective
aliases underneath. These accounts were actively
operated and maintained by the Marcoses for about
two (2) years until their closure sometime in
February, 1970 and the balances transferred to
XANDY FOUNDATION.
33. The XANDY FOUNDATION was established on
March 3, 1970 in Vaduz. C.W. Fessler, C. Souviron
and E. Scheller were named as members of the
Board of Trustees.
34. FM and Imelda issued the written mandate to
establish the foundation to Markus Geel of SKA on
March 3, 1970. In the handwritten Regulations
signed by the Marcos couple as well as in the type-
written Regulations signed by Markus Geel both
dated February 13, 1970, the Marcos spouses were
named the first beneficiaries, the surviving spouse
as the second beneficiary and the Marcos children
Imee, Ferdinand, Jr. (Bongbong) and Irene as equal
third beneficiaries.
35. The XANDY FOUNDATION was renamed
WINTROP FOUNDATION on August 29, 1978. The
Board of Trustees remained the same at the
outset. However, on March 27, 1980, Souviron was
replaced by Dr. Peter Ritter. On March 10. 1981,
Ferdinand and Imelda Marcos issued a written order
to the Board of Wintrop to liquidate the foundation
and transfer all its assets to Bank Hofmann in Zurich
in favor of FIDES TRUST COMPANY. Later,
WINTROP FOUNDATION was dissolved.
36. The AVERTINA FOUNDATION was established
on May 13, 1981 in Vaduz with Atty. Ivo Beck and
Limag Management, a wholly-owned subsidiary of
FIDES TRUST CO., as members of the Board of
Trustees. Two (2) account categories, namely: CAR
and NES, were opened on September 10, 1981. The
beneficial owner of AVERTINA was not made known
to the bank since the FIDES TRUST CO. acted as
fiduciary. However, the securities listed in the safe
deposit register of WINTROP FOUNDATION
Category R as of December 31, 1980 were the same
as those listed in the register of AVERTINA
FOUNDATION Category CAR as of December 31,
1981. Likewise, the securities listed in the safe
deposit register of WINTROP
FOUNDATION Category S as of December 31, 1980
were the same as those listed in the register of
Avertina Category NES as of December 31,
1981.Under the circumstances, it is certain that the
beneficial successor of WINTROP FOUNDATION is
AVERTINA FOUNDATION. The balance of Category
CAR as of December 31, 1989 amounted to
US$231,366,894.00 while that of Category NES as
of 12-31-83 was US$8,647,190.00. Latest
documents received from Swiss authorities included
a declaration signed by IVO Beck stating that the
beneficial owners of AVERTINA FOUNDATION are
FM and Imelda. Another document signed by G.
Raber of SKA indicates that Avertina Foundation is
owned by the Marcos Families.
37. The other groups of foundations that eventually
joined AVERTINA were also established by FM
through his dummies, which started with the
CHARIS FOUNDATION.
38. The CHARIS FOUNDATION was established in
VADUZ on December 27, 1971. Walter Fessler and
Ernst Scheller of SKA and Dr. Peter Ritter were
named as directors. Dr. Theo Bertheau, SKA legal
counsel, acted as founding director in behalf of FM
by virtue of the mandate and agreement dated
November 12, 1971. FM himself was named the first
beneficiary and Xandy Foundation as second
beneficiary in accordance with the handwritten
instructions of FM on November 12, 1971 and the
Regulations. FM gave a power of attorney to
Roberto S. Benedicto on February 15, 1972 to act in
his behalf with regard to Charis Foundation.
39. On December 13, 1974, Charis Foundation was
renamed Scolari Foundation but the directors
remained the same. On March 11, 1981 FM ordered
in writing that the Valamo Foundation be liquidated
and all its assets be transferred to Bank Hofmann,
AG in favor of Fides Trust Company under the
account Reference OMAL. The Board of Directors
decided on the immediate dissolution of Valamo
Foundation on June 25, 1981.
40 The SPINUS FOUNDATION was established on
May 13, 1981 in Vaduz with Atty. Ivo Beck and
Limag Management, a wholly-owned subsidiary of
Fides Trust Co., as members of the Foundations
Board of Directors. The account was officially
opened with SKA on September 10, 1981. The
beneficial owner of the foundation was not made
known to the bank since Fides Trust Co. acted as
fiduciary. However, the list of securities in the safe
deposit register of Valamo Foundation as of
December 31, 1980 are practically the same with
those listed in the safe deposit register of Spinus
Foundation as of December 31, 1981. Under the
circumstances, it is certain that the Spinus
Foundation is the beneficial successor of the Valamo
Foundation.
41. On September 6, 1982, there was a written
instruction from Spinus Foundation to SKA to close
its Swiss Franc account and transfer the balance to
Avertina Foundation. In July/August, 1982, several
transfers from the foundations German marks and
US dollar accounts were made to Avertina Category
CAR totaling DM 29.5-M and $58-M,
respectively. Moreover, a comparison of the list of
securities of the Spinus Foundation as of February
3, 1982 with the safe deposit slips of the Avertina
Foundation Category CAR as of August 19, 1982
shows that all the securities of Spinus were
transferred to Avertina.
J. TRINIDAD-RAYBY-PALMY
FOUNDATION ACCOUNTS
42. The Trinidad Foundation was organized on
August 26, 1970 in Vaduz with C.W. Fessler and E.
Scheller of SKA and Dr. Otto Tondury as the
foundations directors. Imelda issued a written
mandate to establish the foundation to Markus Geel
on August 26, 1970. The regulations as well as the
agreement, both dated August 28, 1970 were
likewise signed by Imelda. Imelda was named the
first beneficiary and her children Imelda (Imee),
Ferdinand, Jr. (Bongbong) and, Irene were named
as equal second beneficiaries.
43. Rayby Foundation was established on June 22,
1973 in Vaduz with Fessler, Scheller and Ritter as
members of the board of directors. Imelda issued a
written mandate to Dr. Theo Bertheau to establish
the foundation with a note that the foundations
capitalization as well as the cost of establishing it be
debited against the account of Trinidad
Foundation. Imelda was named the first and only
beneficiary of Rayby foundation. According to written
information from SKA dated November 28, 1988,
Imelda apparently had the intention in 1973 to
transfer part of the assets of Trinidad Foundation to
another foundation, thus the establishment of Rayby
Foundation. However, transfer of assets never took
place. On March 10, 1981, Imelda issued a written
order to transfer all the assets of Rayby Foundation
to Trinidad Foundation and to subsequently liquidate
Rayby. On the same date, she issued a written order
to the board of Trinidad to dissolve the foundation
and transfer all its assets to Bank Hofmann in favor
of Fides Trust Co. Under the account Reference
Dido, Rayby was dissolved on April 6, 1981 and
Trinidad was liquidated on August 3, 1981.
44. The PALMY FOUNDATION was established on
May 13, 1981 in Vaduz with Dr. Ivo Beck and Limag
Management, a wholly-owned subsidiary of Fides
Trust Co, as members of the Foundations Board of
Directors. The account was officially opened with the
SKA on September 10, 1981. The beneficial owner
was not made known to the bank since Fides Trust
Co. acted as fiduciary. However, when one
compares the listing of securities in the safe deposit
register of Trinidad Foundation as of December
31,1980 with that of the Palmy Foundation as of
December 31, 1980, one can clearly see that
practically the same securities were listed. Under the
circumstances, it is certain that the Palmy
Foundation is the beneficial successor of the
Trinidad Foundation.
45. As of December 31, 1989, the ending balance of
the bank accounts of Palmy Foundation under
General Account No. 391528 is $17,214,432.00.
46. Latest documents received from Swiss
Authorities included a declaration signed by Dr. Ivo
Beck stating that the beneficial owner of Palmy
Foundation is Imelda. Another document signed by
Raber shows that the said Palmy Foundation is
owned by Marcos Familie.
K. ROSALYS-AGUAMINA
FOUNDATION ACCOUNTS
47. Rosalys Foundation was established in 1971
with FM as the beneficiary. Its Articles of
Incorporation was executed on September 24, 1971
and its By-Laws on October 3, 1971. This foundation
maintained several accounts with Swiss Bank
Corporation (SBC) under the general account 51960
where most of the bribe monies from Japanese
suppliers were hidden.
48. On December 19, 1985, Rosalys Foundation
was liquidated and all its assets were transferred to
Aguamina Corporations (Panama) Account No.
53300 with SBC. The ownership by Aguamina
Corporation of Account No. 53300 is evidenced by
an opening account documents from the bank. J.
Christinaz and R.L. Rossier, First Vice-President and
Senior Vice President, respectively, of SBC, Geneva
issued a declaration dated September 3, 1991
stating that the by-laws dated October 3, 1971
governing Rosalys Foundation was the same by-law
applied to Aguamina Corporation Account No.
53300. They further confirmed that no change of
beneficial owner was involved while transferring the
assets of Rosalys to Aguamina. Hence, FM remains
the beneficiary of Aguamina Corporation Account
No. 53300.
As of August 30, 1991, the ending balance of
Account No. 53300 amounted to $80,566,483.00.
L. MALER FOUNDATION ACCOUNTS
49. Maler was first created as an establishment. A
statement of its rules and regulations was found
among Malacaang documents. It stated, among
others, that 50% of the Companys assets will be for
sole and full right disposal of FM and Imelda during
their lifetime, which the remaining 50% will be
divided in equal parts among their children. Another
Malacaang document dated October 19,1968 and
signed by Ferdinand and Imelda pertains to the
appointment of Dr. Andre Barbey and Jean Louis
Sunier as attorneys of the company and as
administrator and manager of all assets held by the
company. The Marcos couple, also mentioned in the
said document that they bought the Maler
Establishment from SBC, Geneva. On the same
date, FM and Imelda issued a letter addressed to
Maler Establishment, stating that all instructions to
be transmitted with regard to Maler will be signed
with the word JOHN LEWIS. This word will have the
same value as the couples own personal signature.
The letter was signed by FM and Imelda in their
signatures and as John Lewis.
50. Maler Establishment opened and maintained
bank accounts with SBC, Geneva. The opening
bank documents were signed by Dr. Barbey and Mr.
Sunnier as authorized signatories.
51. On November 17, 1981, it became necessary to
transform Maler Establishment into a foundation.
Likewise, the attorneys were changed to Michael
Amaudruz, et. al. However, administration of the
assets was left to SBC. The articles of incorporation
of Maler Foundation registered on November 17,
1981 appear to be the same articles applied to Maler
Establishment. On February 28, 1984, Maler
Foundation cancelled the power of attorney for the
management of its assets in favor of SBC and
transferred such power to Sustrust Investment Co.,
S.A.
52. As of June 6, 1991, the ending balance of Maler
Foundations Account Nos. 254,508 BT and 98,929
NY amount SF 9,083,567 and SG 16,195,258,
respectively, for a total of SF 25,278,825.00. GM
only until December 31, 1980. This account was
opened by Maler when it was still an establishment
which was subsequently transformed into a
foundation.
53. All the five (5) group accounts in the over-all flow
chart have a total balance of about Three Hundred
Fifty Six Million Dollars ($356,000,000.00) as shown
by Annex R-5 hereto attached as integral part
hereof.
x x x x x x.[27]
Respondents Imelda R. Marcos, Maria Imelda M.
Manotoc, Irene M. Araneta and Ferdinand Marcos,
Jr., in their answer, stated the following:
xxx xxx xxx
4. Respondents ADMIT paragraphs 3 and 4 of the
Petition.
5. Respondents specifically deny paragraph 5 of the
Petition in so far as it states that summons and other
court processes may be served on Respondent
Imelda R. Marcos at the stated address the truth of
the matter being that Respondent Imelda R. Marcos
may be served with summons and other processes
at No. 10-B Bel Air Condominium 5022 P. Burgos
Street, Makati, Metro Manila, and ADMIT the rest.
xxx xxx xxx
10. Respondents ADMIT paragraph 11 of the
Petition.
11. Respondents specifically DENY paragraph 12 of
the Petition for lack of knowledge sufficient to form a
belief as to the truth of the allegation since
Respondents were not privy to the transactions and
that they cannot remember exactly the truth as to the
matters alleged.
12. Respondents specifically DENY paragraph 13 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs and
Balance Sheet.
13. Respondents specifically DENY paragraph 14 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
14. Respondents specifically DENY paragraph 15 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
15. Respondents specifically DENY paragraph 16 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
16. Respondents specifically DENY paragraph 17 of
the Petition insofar as it attributes willful duplicity on
the part of the late President Marcos, for being false,
the same being pure conclusions based on pure
assumption and not allegations of fact; and
specifically DENY the rest for lack of knowledge or
information sufficient to form a belief as to the truth
of the allegation since Respondents cannot
remember with exactitude the contents of the
alleged ITRs or the attachments thereto.
17. Respondents specifically DENY paragraph 18 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
18. Respondents specifically DENY paragraph 19 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs and that
they are not privy to the activities of the BIR.
19. Respondents specifically DENY paragraph 20 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
20. Respondents specifically DENY paragraph 21 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
21. Respondents specifically DENY paragraph 22 of
the Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegation since Respondents cannot remember with
exactitude the contents of the alleged ITRs.
22. Respondents specifically DENY paragraph 23
insofar as it alleges that Respondents clandestinely
stashed the countrys wealth in Switzerland and hid
the same under layers and layers of foundation and
corporate entities for being false, the truth being that
Respondents aforesaid properties were lawfully
acquired.
23. Respondents specifically DENY paragraphs 24,
25, 26, 27, 28, 29 and 30 of the Petition for lack of
knowledge or information sufficient to form a belief
as to the truth of the allegation since Respondents
were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts,
except that as to Respondent Imelda R. Marcos she
specifically remembers that the funds involved were
lawfully acquired.
24. Respondents specifically DENY paragraphs 31,
32, 33, 34, 35, 36,37, 38, 39, 40, and 41 of the
Petition for lack of knowledge or information
sufficient to form a belief as to the truth of the
allegations since Respondents are not privy to the
transactions and as to such transaction they were
privy to they cannot remember with exactitude the
same having occurred a long time ago, except that
as to Respondent Imelda R. Marcos she specifically
remembers that the funds involved were lawfully
acquired.
25. Respondents specifically DENY paragraphs 42,
43, 44, 45, and 46, of the Petition for lack of
knowledge or information sufficient to form a belief
as to the truth of the allegations since Respondents
were not privy to the transactions and as to such
transaction they were privy to they cannot remember
with exactitude the same having occurred a long
time ago, except that as to Respondent Imelda R.
Marcos she specifically remembers that the funds
involved were lawfully acquired.
26. Respondents specifically DENY paragraphs 49,
50, 51 and 52, of the Petition for lack of knowledge
or information sufficient to form a belief as to the
truth of the allegations since Respondents were not
privy to the transactions and as to such transaction
they were privy to they cannot remember with
exactitude the same having occurred a long time
ago, except that as to Respondent Imelda R. Marcos
she specifically remembers that the funds involved
were lawfully acquired.
Upon careful perusal of the foregoing, the Court
finds that respondent Mrs. Marcos and the Marcos
children indubitably failed to tender genuine issues
in their answer to the petition for forfeiture. A
genuine issue is an issue of fact which calls for the
presentation of evidence as distinguished from an
issue which is fictitious and contrived, set up in bad
faith or patently lacking in substance so as not to
constitute a genuine issue for trial. Respondents
defenses of lack of knowledge for lack of privity or
(inability to) recall because it happened a long time
ago or, on the part of Mrs. Marcos, that the funds
were lawfully acquired are fully insufficient to tender
genuine issues. Respondent Marcoses defenses
were a sham and evidently calibrated to compound
and confuse the issues.
The following pleadings filed by respondent
Marcoses are replete with indications of a spurious
defense:
(a) Respondents' Answer dated October 18, 1993;
(b) Pre-trial Brief dated October 4, 1999 of Mrs.
Marcos, Supplemental Pre-trial Brief dated October
19, 1999 of Ferdinand, Jr. and Mrs. Imee Marcos-
Manotoc adopting the pre-trial brief of Mrs. Marcos,
and Manifestation dated October 19, 1999 of Irene
Marcos-Araneta adopting the pre-trial briefs of her
co- respondents;
(c) Opposition to Motion for Summary Judgment
dated March 21, 2000, filed by Mrs. Marcos which
the other respondents (Marcos children) adopted;
(d) Demurrer to Evidence dated May 2, 2000 filed by
Mrs. Marcos and adopted by the Marcos children;
(e) Motion for Reconsideration dated September 26,
2000 filed by Mrs. Marcos; Motion for
Reconsideration dated October 5, 2000 jointly filed
by Mrs. Manotoc and Ferdinand, Jr., and
Supplemental Motion for Reconsideration dated
October 9, 2000 likewise jointly filed by Mrs.
Manotoc and Ferdinand, Jr.;
(f) Memorandum dated December 12, 2000 of Mrs.
Marcos and Memorandum dated December 17,
2000 of the Marcos children;
(g) Manifestation dated May 26, 1998; and
(h) General/Supplemental Agreement dated
December 23, 1993.
An examination of the foregoing pleadings is in
order.
Respondents Answer dated October 18, 1993.
In their answer, respondents failed to specifically
deny each and every allegation contained in the
petition for forfeiture in the manner required by the
rules. All they gave were stock answers like they
have no sufficient knowledge or they could not recall
because it happened a long time ago, and, as to
Mrs. Marcos, the funds were lawfully acquired,
without stating the basis of such assertions.
Section 10, Rule 8 of the 1997 Rules of Civil
Procedure, provides:
A defendant must specify each material allegation of
fact the truth of which he does not admit and,
whenever practicable, shall set forth the substance
of the matters upon which he relies to support his
denial. Where a defendant desires to deny only a
part of an averment, he shall specify so much of it as
is true and material and shall deny the remainder.
Where a defendant is without knowledge or
information sufficient to form a belief as to the truth
of a material averment made in the complaint, he
shall so state, and this shall have the effect of a
denial.[28]
The purpose of requiring respondents to make a
specific denial is to make them disclose facts which
will disprove the allegations of petitioner at the trial,
together with the matters they rely upon in support of
such denial. Our jurisdiction adheres to this rule to
avoid and prevent unnecessary expenses and waste
of time by compelling both parties to lay their cards
on the table, thus reducing the controversy to its true
terms. As explained in Alonso vs. Villamor,[29]
A litigation is not a game of technicalities in which
one, more deeply schooled and skilled in the subtle
art of movement and position, entraps and destroys
the other. It is rather a contest in which each
contending party fully and fairly lays before the court
the facts in issue and then, brushing aside as wholly
trivial and indecisive all imperfections of form and
technicalities of procedure, asks that justice be done
upon the merits. Lawsuits, unlike duels, are not to be
won by a rapiers thrust.
On the part of Mrs. Marcos, she claimed that the
funds were lawfully acquired. However, she failed to
particularly state the ultimate facts surrounding the
lawful manner or mode of acquisition of the subject
funds. Simply put, she merely stated in her answer
with the other respondents that the funds were
lawfully acquired without detailing how exactly these
funds were supposedly acquired legally by them.
Even in this case before us, her assertion that the
funds were lawfully acquired remains bare and
unaccompanied by any factual support which can
prove, by the presentation of evidence at a hearing,
that indeed the funds were acquired legitimately by
the Marcos family.
Respondents denials in their answer at the
Sandiganbayan were based on their alleged lack of
knowledge or information sufficient to form a belief
as to the truth of the allegations of the petition.
It is true that one of the modes of specific denial
under the rules is a denial through a statement that
the defendant is without knowledge or information
sufficient to form a belief as to the truth of the
material averment in the complaint. The question,
however, is whether the kind of denial in
respondents answer qualifies as the specific denial
called for by the rules. We do not think
so. In Morales vs. Court of Appeals,[30] this Court
ruled that if an allegation directly and specifically
charges a party with having done, performed or
committed a particular act which the latter did not in
fact do, perform or commit, a categorical and
express denial must be made.
Here, despite the serious and specific allegations
against them, the Marcoses responded by simply
saying that they had no knowledge or information
sufficient to form a belief as to the truth of such
allegations. Such a general, self-serving claim of
ignorance of the facts alleged in the petition for
forfeiture was insufficient to raise an issue.
Respondent Marcoses should have positively stated
how it was that they were supposedly ignorant of the
facts alleged.[31]
To elucidate, the allegation of petitioner Republic in
paragraph 23 of the petition for forfeiture stated:
23. The following presentation very clearly and
overwhelmingly show in detail how both respondents
clandestinely stashed away the countrys wealth to
Switzerland and hid the same under layers upon
layers of foundations and other corporate entities to
prevent its detection. Through their
dummies/nominees, fronts or agents who formed
those foundations or corporate entities, they opened
and maintained numerous bank accounts. But due to
the difficulty if not the impossibility of detecting and
documenting all those secret accounts as well as the
enormity of the deposits therein hidden, the following
presentation is confined to five identified accounts
groups, with balances amounting to about $356-
M with a reservation for the filing of a supplemental
or separate forfeiture complaint should the need
arise.[32]
Respondents lame denial of the aforesaid allegation
was:
22. Respondents specifically DENY paragraph 23
insofar as it alleges that Respondents clandestinely
stashed the countrys wealth in Switzerland and hid
the same under layers and layers of foundations and
corporate entities for being false, the truth being that
Respondents aforesaid properties were lawfully
acquired.[33]
Evidently, this particular denial had the earmark of
what is called in the law on pleadings as a negative
pregnant, that is, a denial pregnant with the
admission of the substantial facts in the pleading
responded to which are not squarely denied. It was
in effect an admission of the averments it was
directed at.[34] Stated otherwise, a negative pregnant
is a form of negative expression which carries with it
an affirmation or at least an implication of some kind
favorable to the adverse party. It is a denial pregnant
with an admission of the substantial facts alleged in
the pleading. Where a fact is alleged with qualifying
or modifying language and the words of the
allegation as so qualified or modified are literally
denied, has been held that the qualifying
circumstances alone are denied while the fact itself
is admitted.[35]
In the instant case, the material allegations in
paragraph 23 of the said petition were not
specifically denied by respondents in paragraph 22
of their answer. The denial contained in paragraph
22 of the answer was focused on the averment in
paragraph 23 of the petition for forfeiture that
Respondents clandestinely stashed the countrys
wealth in Switzerland and hid the same under layers
and layers of foundations and corporate entities.
Paragraph 22 of the respondents answer was thus a
denial pregnant with admissions of the following
substantial facts:
(1) the Swiss bank deposits existed and
(2) that the estimated sum thereof was US$356
million as of December, 1990.
Therefore, the allegations in the petition for forfeiture
on the existence of the Swiss bank deposits in the
sum of about US$356 million, not having been
specifically denied by respondents in their answer,
were deemed admitted by them pursuant to Section
11, Rule 8 of the 1997 Revised Rules on Civil
Procedure:
Material averment in the complaint, xxx shall be
deemed admitted when not specifically denied. xxx.
[36]
By the same token, the following unsupported
denials of respondents in their answer were
pregnant with admissions of the substantial facts
alleged in the Republics petition for forfeiture:
23. Respondents specifically DENY paragraphs 24,
25, 26, 27, 28, 29 and 30 of the Petition for lack of
knowledge or information sufficient to form a belief
as to the truth of the allegation since respondents
were not privy to the transactions regarding the
alleged Azio-Verso-Vibur Foundation accounts,
except that, as to respondent Imelda R. Marcos, she
specifically remembers that the funds involved were
lawfully acquired.
24. Respondents specifically DENY paragraphs 31,
32, 33, 34, 35, 36, 37, 38, 39, 40, 41 of the Petition
for lack of knowledge or information sufficient to form
a belief as to the truth of the allegations since
respondents were not privy to the transactions and
as to such transactions they were privy to, they
cannot remember with exactitude the same having
occurred a long time ago, except as to respondent
Imelda R. Marcos, she specifically remembers that
the funds involved were lawfully acquired.
25. Respondents specifically DENY paragraphs 42,
43, 45, and 46 of the petition for lack of knowledge
or information sufficient to from a belief as to the
truth of the allegations since respondents were not
privy to the transactions and as to such transaction
they were privy to, they cannot remember with
exactitude, the same having occurred a long time
ago, except that as to respondent Imelda R. Marcos,
she specifically remembers that the funds involved
were lawfully acquired.
26. Respondents specifically DENY paragraphs 49,
50, 51 and 52 of the petition for lack of knowledge
and information sufficient to form a belief as to the
truth of the allegations since respondents were not
privy to the transactions and as to such transaction
they were privy to they cannot remember with
exactitude the same having occurred a long time
ago, except that as to respondent Imelda R. Marcos,
she specifically remembers that the funds involved
were lawfully acquired.
The matters referred to in paragraphs 23 to 26 of the
respondents answer pertained to the creation of five
groups of accounts as well as their respective
ending balances and attached documents alleged in
paragraphs 24 to 52 of the Republics petition for
forfeiture. Respondent Imelda R. Marcos never
specifically denied the existence of the Swiss funds.
Her claim that the funds involved were lawfully
acquired was an acknowledgment on her part of the
existence of said deposits. This only reinforced her
earlier admission of the allegation in paragraph 23 of
the petition for forfeiture regarding the existence of
the US$356 million Swiss bank deposits.
The allegations in paragraphs 47[37] and 48[38] of the
petition for forfeiture referring to the creation and
amount of the deposits of the Rosalys-Aguamina
Foundation as well as the averment in paragraph 52-
a[39] of the said petition with respect to the sum of the
Swiss bank deposits estimated to be US$356 million
were again not specifically denied by respondents in
their answer. The respondents did not at all respond
to the issues raised in these paragraphs and the
existence, nature and amount of the Swiss funds
were therefore deemed admitted by them. As held
in Galofa vs. Nee Bon Sing,[40] if a defendants denial
is a negative pregnant, it is equivalent to an
admission.
Moreover, respondents denial of the allegations in
the petition for forfeiture for lack of knowledge or
information sufficient to form a belief as to the truth
of the allegations since respondents were not privy
to the transactions was just a pretense. Mrs. Marcos
privity to the transactions was in fact evident from
her signatures on some of the vital
documents[41]attached to the petition for forfeiture
which Mrs. Marcos failed to specifically deny as
required by the rules.[42]
It is worthy to note that the pertinent documents
attached to the petition for forfeiture were even
signed personally by respondent Mrs. Marcos and
her late husband, Ferdinand E. Marcos, indicating
that said documents were within their knowledge. As
correctly pointed out by Sandiganbayan Justice
Francisco Villaruz, Jr. in his dissenting opinion:
The pattern of: 1) creating foundations, 2) use of
pseudonyms and dummies, 3) approving regulations
of the Foundations for the distribution of capital and
income of the Foundations to the First and Second
beneficiary (who are no other than FM and his
family), 4) opening of bank accounts for the
Foundations, 5) changing the names of the
Foundations, 6) transferring funds and assets of the
Foundations to other Foundations or Fides Trust, 7)
liquidation of the Foundations as substantiated by
the Annexes U to U-168, Petition [for forfeiture]
strongly indicate that FM and/or Imelda were the real
owners of the assets deposited in the Swiss banks,
using the Foundations as dummies.[43]
How could respondents therefore claim lack of
sufficient knowledge or information regarding the
existence of the Swiss bank deposits and the
creation of five groups of accounts when Mrs.
Marcos and her late husband personally
masterminded and participated in the formation and
control of said foundations? This is a fact respondent
Marcoses were never able to explain.
Not only that. Respondents' answer also technically
admitted the genuineness and due execution of the
Income Tax Returns (ITRs) and the balance sheets
of the late Ferdinand E. Marcos and Imelda R.
Marcos attached to the petition for forfeiture, as well
as the veracity of the contents thereof.
The answer again premised its denials of said ITRs
and balance sheets on the ground of lack of
knowledge or information sufficient to form a belief
as to the truth of the contents thereof. Petitioner
correctly points out that respondents' denial was not
really grounded on lack of knowledge or information
sufficient to form a belief but was based on lack of
recollection. By reviewing their own records,
respondent Marcoses could have easily determined
the genuineness and due execution of the ITRs and
the balance sheets. They also had the means and
opportunity of verifying the same from the records of
the BIR and the Office of the President. They did
not.
When matters regarding which respondents claim to
have no knowledge or information sufficient to form
a belief are plainly and necessarily within their
knowledge, their alleged ignorance or lack of
information will not be considered a specific denial.
[44]
An unexplained denial of information within the
control of the pleader, or is readily accessible to him,
is evasive and is insufficient to constitute an effective
denial.[45]
The form of denial adopted by respondents must be
availed of with sincerity and in good faith, and
certainly not for the purpose of confusing the
adverse party as to what allegations of the petition
are really being challenged; nor should it be made
for the purpose of delay.[46] In the instant case, the
Marcoses did not only present unsubstantiated
assertions but in truth attempted to mislead and
deceive this Court by presenting an obviously
contrived defense.
Simply put, a profession of ignorance about a fact
which is patently and necessarily within the pleaders
knowledge or means of knowing is as ineffective as
no denial at all.[47]Respondents ineffective denial
thus failed to properly tender an issue and the
averments contained in the petition for forfeiture
were deemed judicially admitted by them.
As held in J.P. Juan & Sons, Inc. vs. Lianga
Industries, Inc.:
Its specific denial of the material allegation of the
petition without setting forth the substance of the
matters relied upon to support its general denial,
when such matters were plainly within its knowledge
and it could not logically pretend ignorance as to the
same, therefore, failed to properly tender on issue.[48]
Thus, the general denial of the Marcos children of
the allegations in the petition for forfeiture for lack of
knowledge or information sufficient to form a belief
as to the truth of the allegations since they were not
privy to the transactions cannot rightfully be
accepted as a defense because they are the legal
heirs and successors-in-interest of Ferdinand E.
Marcos and are therefore bound by the acts of their
father vis-a-vis the Swiss funds.
PRE-TRIAL BRIEF DATED OCTOBER 18, 1993
The pre-trial brief of Mrs. Marcos was adopted by
the three Marcos children. In said brief, Mrs. Marcos
stressed that the funds involved were lawfully
acquired. But, as in their answer, they failed to state
and substantiate how these funds were acquired
lawfully. They failed to present and attach even
a single document that would show and prove the tr
uth of their allegations. Section 6, Rule 18 of the
1997 Rules of Civil Procedure provides:
The parties shall file with the court and serve on the
adverse party, x x x their respective pre-trial briefs
which shall contain, among others:
xxx
(d) the documents or exhibits to be presented,
stating the purpose thereof;
xxx
(f) the number and names of the witnesses, and the
substance of their respective testimonies.[49]
It is unquestionably within the courts power to
require the parties to submit their pre-trial briefs and
to state the number of witnesses intended to be
called to the stand, and a brief summary of the
evidence each of them is expected to give as well as
to disclose the number of documents to be
submitted with a description of the nature of
each. The tenor and character of the testimony of
the witnesses and of the documents to be deduced
at the trial thus made known, in addition to the
particular issues of fact and law, it becomes
apparent if genuine issues are being put forward
necessitating the holding of a trial. Likewise, the
parties are obliged not only to make a formal
identification and specification of the issues and their
proofs, and to put these matters in writing and
submit them to the court within the specified period
for the prompt disposition of the action.[50]
The pre-trial brief of Mrs. Marcos, as subsequently
adopted by respondent Marcos children, merely
stated:
xxx
WITNESSES
4.1 Respondent Imelda will present herself as a
witness and reserves the right to present additional
witnesses as may be necessary in the course of the
trial.
xxx
DOCUMENTARY EVIDENCE
5.1 Respondent Imelda reserves the right to present
and introduce in evidence documents as may be
necessary in the course of the trial.
Mrs. Marcos did not enumerate and describe the
documents constituting her evidence. Neither the
names of witnesses nor the nature of their testimony
was stated. What alone appeared certain was the
testimony of Mrs. Marcos only who in fact had
previously claimed ignorance and lack of
knowledge. And even then, the substance of her
testimony, as required by the rules, was not made
known either. Such cunning tactics of respondents
are totally unacceptable to this Court. We hold that,
since no genuine issue was raised, the case became
ripe for summary judgment.
OPPOSITION TO MOTION FOR SUMMARY
JUDGMENT
DATED MARCH 21, 2000
The opposition filed by Mrs. Marcos to the motion for
summary judgment dated March 21, 2000 of
petitioner Republic was merely adopted by the
Marcos children as their own opposition to the said
motion. However, it was again not accompanied by
affidavits, depositions or admissions as required by Marcos own anything of the $360 million subject of
Section 3, Rule 35 of the 1997 Rules on Civil this case.
Procedure:
Atty. TECSON:
x x x The adverse party may serve opposing
affidavits, depositions, or admissions at least three We joined the Manifestation of Counsel.
(3) days before hearing. After hearing, the judgment
sought shall be rendered forthwith if the pleadings, PJ Garchitorena:
supporting affidavits, depositions, and admissions on
file, show that, except as to the amount of damages,
there is no genuine issue as to any material fact and You do not own anything?
that the moving party is entitled to a judgment as a
matter of law.[51] Atty. TECSON:

The absence of opposing affidavits, depositions and Yes, Your Honor.

admissions to contradict the sworn declarations in
the Republics motion only demonstrated that the PJ Garchitorena:
averments of such opposition were not genuine and
therefore unworthy of belief. Counsel for Irene Araneta?

Demurrer to Evidence dated May 2, 2000;[52] Atty. SISON:

Motions for Reconsideration;[53] and Memoranda I join the position taken by my other compaeros
here, Your Honor.
of Mrs. Marcos and the Marcos children[54]
xxx
All these pleadings again contained no allegations of
facts showing their lawful acquisition of the funds. Atty. SISON:
Once more, respondents merely made general
denials without alleging facts which would have been
Irene Araneta as heir do (sic) not own any of the
admissible in evidence at the hearing, thereby failing
amount, Your Honor.[55]
to raise genuine issues of fact.

We are convinced that the strategy of respondent

Mrs. Marcos insists in her memorandum dated
October 21, 2002 that, during the pre-trial, her
counsel stated that his client was just a beneficiary
of the funds, contrary to petitioner Republics
allegation that Mrs. Marcos disclaimed ownership of
or interest in the funds.
This is yet another indication that respondents
presented a fictitious defense because, during the
pre-trial, Mrs. Marcos and the Marcos
children denied ownership of or interest in the Swiss
funds:
PJ Garchitorena:
Make of record that as far as Imelda Marcos is
concerned through the statement of Atty. Armando
M. Marcelo that the US$360 million more or less
subject matter of the instant lawsuit as allegedly
obtained from the various Swiss Foundations do not
belong to the estate of Marcos or to Imelda Marcos
herself. Thats your statement of facts?
Atty. MARCELO:
Marcoses was to confuse petitioner Republic as to
what facts they would prove or what issues they
intended to pose for the court's resolution. There is
no doubt in our mind that they were leading
petitioner Republic, and now this Court, to perplexity,
if not trying to drag this forfeiture case to eternity.
Manifestation dated May 26, 1998 filed by MRS.
Marcos; General/Supplemental Compromise
Agreement dated December 28, 1993
These pleadings of respondent Marcoses presented
nothing but feigned defenses. In their earlier
pleadings, respondents alleged either that they had
no knowledge of the existence of the Swiss deposits
or that they could no longer remember anything as it
happened a long time ago. As to Mrs. Marcos, she
remembered that it was lawfully acquired.
In her Manifestation dated May 26, 1998, Mrs.
Marcos stated that:

Yes, Your Honor. COMES NOW undersigned counsel for respondent

Imelda R. Marcos, and before this Honorable Court,
most respectfully manifests:
PJ Garchitorena:

That respondent Imelda R, Marcos owns 90% of the

Thats it. Okay. Counsel for Manotoc and Manotoc,
subject matter of the above-entitled case, being the
Jr. What is your point here? Does the estate of
sole beneficiary of the dollar deposits in the name of
the various foundations alleged in the case;
That in fact only 10% of the subject matter in the
above-entitled case belongs to the estate of the late
President Ferdinand E. Marcos.
In the Compromise/Supplemental Agreements,
respondent Marcoses sought to implement the
agreed distribution of the Marcos assets, including
the Swiss deposits. This was, to us, an unequivocal
admission of ownership by the Marcoses of the said
deposits.
But, as already pointed out, during the pre-trial
conference, respondent Marcoses denied
knowledge as well as ownership of the Swiss funds.
Anyway we look at it, respondent Marcoses have put
forth no real defense. The facts pleaded by
respondents, while ostensibly raising important
questions or issues of fact, in reality comprised mere
verbiage that was evidently wanting in substance
and constituted no genuine issues for trial.
We therefore rule that, under the circumstances,
summary judgment is proper.
In fact, it is the law itself which determines when
summary judgment is called for. Under the rules,
summary judgment is appropriate when there are no
genuine issues of fact requiring the presentation of
evidence in a full-blown trial. Even if on their face the
pleadings appear to raise issue, if the affidavits,
depositions and admissions show that such issues
are not genuine, then summary judgment as
prescribed by the rules must ensue as a matter of
law.[56]
In sum, mere denials, if unaccompanied by any fact
which will be admissible in evidence at a hearing,
are not sufficient to raise genuine issues of fact and
will not defeat a motion for summary judgment.[57] A
summary judgment is one granted upon motion of a
party for an expeditious settlement of the case, it
appearing from the pleadings, depositions,
admissions and affidavits that there are no important
questions or issues of fact posed and, therefore, the
movant is entitled to a judgment as a matter of law. A
motion for summary judgment is premised on the
assumption that the issues presented need not be
tried either because these are patently devoid of
substance or that there is no genuine issue as to any
pertinent fact. It is a method sanctioned by the Rules
of Court for the prompt disposition of a civil action
where there exists no serious controversy.
[58]
Summary judgment is a procedural device for the
prompt disposition of actions in which the pleadings
raise only a legal issue, not a genuine issue as to
any material fact. The theory of summary judgment
is that, although an answer may on its face appear
to tender issues requiring trial, if it is established by
affidavits, depositions or admissions that those
issues are not genuine but fictitious, the Court is
justified in dispensing with the trial and rendering
summary judgment for petitioner.[59]
In the various annexes to the petition for forfeiture,
petitioner Republic attached sworn statements of
witnesses who had personal knowledge of the
Marcoses' participation in the illegal acquisition of
funds deposited in the Swiss accounts under the
names of five groups or foundations. These sworn
statements substantiated the ill-gotten nature of the
Swiss bank deposits. In their answer and other
subsequent pleadings, however, the Marcoses
merely made general denials of the allegations
against them without stating facts admissible in
evidence at the hearing, thereby failing to raise any
genuine issues of fact.
Under these circumstances, a trial would have
served no purpose at all and would have been totally
unnecessary, thus justifying a summary judgment on
the petition for forfeiture. There were no opposing
affidavits to contradict the sworn declarations of the
witnesses of petitioner Republic, leading to the
inescapable conclusion that the matters raised in the
Marcoses answer were false.
Time and again, this Court has encountered cases
like this which are either only half-heartedly
defended or, if the semblance of a defense is
interposed at all, it is only to delay disposition and
gain time. It is certainly not in the interest of justice
to allow respondent Marcoses to avail of the
appellate remedies accorded by the Rules of Court
to litigants in good faith, to the prejudice of the
Republic and ultimately of the Filipino people. From
the beginning, a candid demonstration of
respondents good faith should have been made to
the court below.Without the deceptive reasoning and
argumentation, this protracted litigation could have
ended a long time ago.
Since 1991, when the petition for forfeiture was first
filed, up to the present, all respondents have offered
are foxy responses like lack of sufficient knowledge
or lack of privity or they cannot recall because it
happened a long time ago or, as to Mrs. Marcos, the
funds were lawfully acquired. But, whenever it suits
them, they also claim ownership of 90% of the funds
and allege that only 10% belongs to the Marcos
estate. It has been an incredible charade from
beginning to end.
In the hope of convincing this Court to rule
otherwise, respondents Maria Imelda Marcos-
Manotoc and Ferdinand R. Marcos Jr. contend that
"by its positive acts and express admissions prior to
filing the motion for summary judgment on March 10,
2000, petitioner Republic had bound itself to go to
trial on the basis of existing issues. Thus, it had
legally waived whatever right it had to move for
summary judgment."[60]
We do not think so. The alleged positive acts and
express admissions of the petitioner did not preclude
it from filing a motion for summary judgment.
Rule 35 of the 1997 Rules of Civil Procedure
provides:
Rule 35
Summary Judgment
Section 1. Summary judgment for claimant. - A party
seeking to recover upon a claim, counterclaim, or
cross-claim or to obtain a declaratory relief may, at
any time after the pleading in answer thereto has
been served, move with supporting affidavits,
depositions or admissions for a summary judgment
in his favor upon all or any part thereof.
Section 2. Summary judgment for defending party. -
A party against whom a claim, counterclaim, or
cross-claim is asserted or a declaratory relief is
sought may, at any time, move with supporting
affidavits, depositions or admissions for a summary
judgment in his favor as to all or any part thereof.
(Emphasis ours)[61]
Under the rule, the plaintiff can move for summary
judgment at any time after the pleading in answer
thereto (i.e., in answer to the claim, counterclaim or
cross-claim) has been served."No fixed
reglementary period is provided by the Rules. How
else does one construe the phrase "any time after
the answer has been served?
This issue is actually one of first impression. No local
jurisprudence or authoritative work has touched
upon this matter. This being so, an examination of
foreign laws and jurisprudence, particularly those of
the United States where many of our laws and rules
were copied, is in order.
Rule 56 of the Federal Rules of Civil Procedure
provides that a party seeking to recover upon a
claim, counterclaim or cross-claim may move for
summary judgment at any time after the expiration
of 20 days from the commencement of the action or
after service of a motion for summary judgment by
the adverse party, and that a party against whom a
claim, counterclaim or cross-claim is asserted may
move for summary judgment at any time.
However, some rules, particularly Rule 113 of the
Rules of Civil Practice of New York, specifically
provide that a motion for summary judgment may not
be made until issues have been joined, that is, only
after an answer has been served.[62] Under said rule,
after issues have been joined, the motion for
summary judgment may be made at any stage of
the litigation.[63] No fixed prescriptive period is
provided.
Like Rule 113 of the Rules of Civil Practice of New
York, our rules also provide that a motion for
summary judgment may not be made until issues
have been joined, meaning, the plaintiff has to wait
for the answer before he can move for summary
judgment.[64] And like the New York rules, ours do not
provide for a fixed reglementary period within which
to move for summary judgment.
This being so, the New York Supreme Court's
interpretation of Rule 113 of the Rules of Civil
Practice can be applied by analogy to the
interpretation of Section 1, Rule 35, of our 1997
Rules of Civil Procedure.
Under the New York rule, after the issues have been
joined, the motion for summary judgment may be
made at any stage of the litigation. And what exactly
does the phrase "at any stage of the litigation"
mean? In Ecker vs. Muzysh,[65] the New York
Supreme Court ruled:
"PER CURIAM.
Plaintiff introduced her evidence and the defendants
rested on the case made by the plaintiff. The case
was submitted. Owing to the serious illness of the
trial justice, a decision was not rendered within sixty
days after the final adjournment of the term at which
the case was tried. With the approval of the trial
justice, the plaintiff moved for a new trial under
Section 442 of the Civil Practice Act. The plaintiff
also moved for summary judgment under Rule 113
of the Rules of Civil Practice. The motion was
opposed mainly on the ground that, by
proceeding to trial, the plaintiff had waived her
right to summary judgment and that the answer
and the opposing affidavits raised triable issues. The
amount due and unpaid under the contract is not in
dispute. The Special Term granted both motions and
the defendants have appealed.
The Special Term properly held that the answer and
the opposing affidavits raised no triable issue. Rule
113 of the Rules of Civil Practice and the Civil
Practice Act prescribe no limitation as to the
time when a motion for summary judgment must
be made. The object of Rule 113 is to empower
the court to summarily determine whether or not
a bona fide issue exists between the parties, and
there is no limitation on the power of the court to
make such a determination at any stage of the
litigation." (emphasis ours)
On the basis of the aforequoted disquisition, "any
stage of the litigation" means that "even if the
plaintiff has proceeded to trial, this does not preclude
him from thereafter moving for summary
judgment."[66]
In the case at bar, petitioner moved for summary
judgment after pre-trial and before its scheduled
date for presentation of evidence. Respondent
Marcoses argue that, by agreeing to proceed to trial
during the pre-trial conference, petitioner "waived" its
right to summary judgment.
This argument must fail in the light of the New York
Supreme Court ruling which we apply by analogy to
this case. In Ecker,[67] the defendant opposed the
motion for summary judgment on a ground similar to
that raised by the Marcoses, that is, "that plaintiff
had waived her right to summary judgment" by her
act of proceeding to trial. If, as correctly ruled by the
New York court, plaintiff was allowed to move for
summary judgment even after trial and submission
of the case for resolution, more so should we permit
it in the present case where petitioner moved for
summary judgment before trial.
Therefore, the phrase "anytime after the pleading in
answer thereto has been served" in Section 1, Rule
35 of our Rules of Civil Procedure means "at any
stage of the litigation." Whenever it becomes evident
at any stage of the litigation that no triable issue
exists, or that the defenses raised by the
defendant(s) are sham or frivolous, plaintiff may
move for summary judgment. A contrary
interpretation would go against the very objective of
the Rule on Summary Judgment which is to "weed
out sham claims or defenses thereby avoiding the
expense and loss of time involved in a trial." [68]
In cases with political undertones like the one at bar,
adverse parties will often do almost anything to
delay the proceedings in the hope that a future
administration sympathetic to them might be able to
influence the outcome of the case in their favor. This
is rank injustice we cannot tolerate.
The law looks with disfavor on long, protracted and
expensive litigation and encourages the speedy and
prompt disposition of cases. That is why the law and
the rules provide for a number of devices to ensure
the speedy disposition of cases. Summary judgment
is one of them.
Faithful therefore to the spirit of the law on summary
judgment which seeks to avoid unnecessary
expense and loss of time in a trial, we hereby rule
that petitioner Republic could validly move for
summary judgment any time after the respondents
answer was filed or, for that matter, at any
subsequent stage of the litigation. The fact that
petitioner agreed to proceed to trial did not in any
way prevent it from moving for summary judgment,
as indeed no genuine issue of fact was ever validly
raised by respondent Marcoses.
This interpretation conforms with the guiding
principle enshrined in Section 6, Rule 1 of the 1997
Rules of Civil Procedure that the "[r]ules should be
liberally construed in order to promote their objective
of securing a just, speedy and inexpensive
disposition of every action and proceeding."[69]
Respondents further allege that the motion for
summary judgment was based on respondents'
answer and other documents that had long been in
the records of the case. Thus, by the time the motion
was filed on March 10, 2000, estoppel by laches had
already set in against petitioner.
We disagree. Estoppel by laches is the failure or
neglect for an unreasonable or unexplained length of
time to do that which, by exercising due diligence,
could or should have been done earlier, warranting a
presumption that the person has abandoned his right
or declined to assert it.[70] In effect, therefore, the
principle of laches is one of estoppel because "it
prevents people who have slept on their rights from
prejudicing the rights of third parties who have
placed reliance on the inaction of the original parties
and their successors-in-interest".[71]
A careful examination of the records, however,
reveals that petitioner was in fact never remiss in
pursuing its case against respondent Marcoses
through every remedy available to it, including the
motion for summary judgment.
Petitioner Republic initially filed its motion for
summary judgment on October 18, 1996. The
motion was denied because of the pending
compromise agreement between the Marcoses and
petitioner. But during the pre-trial conference, the
Marcoses denied ownership of the Swiss funds,
prompting petitioner to file another motion for
summary judgment now under consideration by this
Court. It was the subsequent events that transpired
after the answer was filed, therefore, which
prevented petitioner from filing the questioned
motion. It was definitely not because of neglect or
inaction that petitioner filed the (second) motion for
summary judgment years after respondents' answer
to the petition for forfeiture.
In invoking the doctrine of estoppel by laches,
respondents must show not only unjustified inaction
but also that some unfair injury to them might result
unless the action is barred.[72]
This, respondents failed to bear out. In fact, during
the pre-trial conference, the Marcoses disclaimed
ownership of the Swiss deposits. Not being the
owners, as they claimed, respondents did not have
any vested right or interest which could be adversely
affected by petitioner's alleged inaction.
But even assuming for the sake of argument that
laches had already set in, the doctrine of estoppel or
laches does not apply when the government sues as
a sovereign or asserts governmental rights.[73] Nor
can estoppel validate an act that contravenes law or
public policy.[74]
As a final point, it must be emphasized that laches is
not a mere question of time but is principally a
question of the inequity or unfairness of permitting a
right or claim to be enforced or asserted.[75] Equity
demands that petitioner Republic should not be
barred from pursuing the people's case against the
Marcoses.
(2) The Propriety of Forfeiture
The matter of summary judgment having been thus
settled, the issue of whether or not petitioner
Republic was able to prove its case for forfeiture in
accordance with the requisites of Sections 2 and 3 of
RA 1379 now takes center stage.
The law raises the prima facie presumption that a
property is unlawfully acquired, hence subject to
forfeiture, if its amount or value is manifestly
disproportionate to the official salary and other lawful
income of the public officer who owns it. Hence,
Sections 2 and 6 of RA 1379[76] provide:
xxxxxx
Section 2. Filing of petition. Whenever any public
officer or employee has acquired during his
incumbency an amount or property which is
manifestly out of proportion to his salary as such
public officer or employee and to his other lawful
income and the income from legitimately acquired
property, said property shall be presumed prima
facie to have been unlawfully acquired.
xxxxxx
Sec. 6. Judgment If the respondent is unable to
show to the satisfaction of the court that he has
lawfully acquired the property in question, then the
court shall declare such property in question,
forfeited in favor of the State, and by virtue of such
judgment the property aforesaid shall become the
property of the State. Provided, That no judgment
shall be rendered within six months before any
general election or within three months before any
special election. The Court may, in addition, refer
this case to the corresponding Executive
Department for administrative or criminal action, or
both.
From the above-quoted provisions of the law, the
following facts must be established in order that
forfeiture or seizure of the Swiss deposits may be
effected:
(1) ownership by the public officer of money or
property acquired during his incumbency, whether it
be in his name or otherwise, and
(2) the extent to which the amount of that money or
property exceeds, i. e., is grossly disproportionate to,
the legitimate income of the public officer.
That spouses Ferdinand and Imelda Marcos were
public officials during the time material to the instant
case was never in dispute. Paragraph 4 of
respondent Marcoses' answer categorically admitted
the allegations in paragraph 4 of the petition for
forfeiture as to the personal circumstances of
Ferdinand E. Marcos as a public official who served
without interruption as Congressman, Senator,
Senate President and President of the Republic of
the Philippines from December 1, 1965 to February
25, 1986.[77] Likewise, respondents admitted in their
answer the contents of paragraph 5 of the petition as
to the personal circumstances of Imelda R. Marcos
who once served as a member of the Interim
Batasang Pambansa from 1978 to 1984 and as
Metro Manila Governor, concurrently Minister of
Human Settlements, from June 1976 to February
1986.[78]
Respondent Mrs. Marcos also admitted in paragraph
10 of her answer the allegations of paragraph 11 of
the petition for forfeiture which referred to the
accumulated salaries of respondents Ferdinand E.
Marcos and Imelda R. Marcos.[79] The combined
accumulated salaries of the Marcos couple were
reflected in the Certification dated May 27, 1986
issued by then Minister of Budget and Management
Alberto Romulo.[80] The Certification showed that,
from 1966 to 1985, Ferdinand E. Marcos and Imelda
R. Marcos had accumulated salaries in the amount
of P1,570,000 and P718,750, respectively, or a total
of P2,288,750:
Ferdinand E. Marcos, as President
1966-1976 at P60,000/year P660,000
1977-1984 at P100,000/year 800,000
1985 at P110,000/year 110,000
P1,570,00
Imelda R. Marcos, as Minister
June 1976-1985 at P75,000/year P718,000
In addition to their accumulated salaries from 1966
to 1985 are the Marcos couples combined salaries
from January to February 1986 in the amount
of P30,833.33. Hence, their total accumulated
salaries amounted to P2,319,583.33. Converted to
U.S. dollars on the basis of the corresponding peso-
dollar exchange rates prevailing during the
applicable period when said salaries were received,
the total amount had an equivalent value of
$304,372.43.
The dollar equivalent was arrived at by using the
official annual rates of exchange of the Philippine
peso and the US dollar from 1965 to 1985 as well as
the official monthly rates of exchange in January and
February 1986 issued by the Center for Statistical
Information of the Bangko Sentral ng Pilipinas.
Prescinding from the aforesaid admissions, Section
4, Rule 129 of the Rules of Court provides that:
Section 4. Judicial admissions An admission, verbal
or written, made by a party in the course of the
proceedings in the same case does not require
proof. The admission may be contradicted only by
showing that it was made through palpable mistake
or that no such admission was made.[81]
It is settled that judicial admissions may be
made: (a) in the pleadings filed by the parties; (b) in
the course of the trial either by verbal or written
manifestations or stipulations; or (c) in other stages
of judicial proceedings, as in the pre-trial of the case.
[82]
Thus, facts pleaded in the petition and answer, as
in the case at bar, are deemed admissions of
petitioner and respondents, respectively, who are not
permitted to contradict them or subsequently take a
position contrary to or inconsistent with such
admissions.[83]
The sum of $304,372.43 should be held as the only
known lawful income of respondents since they did
not file any Statement of Assets and Liabilities
(SAL), as required by law, from which their net worth
could be determined. Besides, under the 1935
Constitution, Ferdinand E. Marcos as President
could not receive any other emolument from the
Government or any of its subdivisions and
instrumentalities.[84] Likewise, under the 1973
Constitution, Ferdinand E. Marcos as President
could not receive during his tenure any other
emolument from the Government or any other
source.[85] In fact, his management of businesses,
like the administration of foundations to accumulate
funds, was expressly prohibited under the 1973
Constitution:
Article VII, Sec. 4(2) The President and the Vice-
President shall not, during their tenure, hold any
other office except when otherwise provided in this
Constitution, nor may they practice any profession,
participate directly or indirectly in the management of
any business, or be financially interested directly or
indirectly in any contract with, or in any franchise or
special privilege granted by the Government or any
other subdivision, agency, or instrumentality thereof,
including any government owned or controlled
corporation.
Article VII, Sec. 11 No Member of the National
Assembly shall appear as counsel before any court
inferior to a court with appellate jurisdiction, x x
x. Neither shall he, directly or indirectly, be interested
financially in any contract with, or in any franchise or
special privilege granted by the Government, or any
subdivision, agency, or instrumentality thereof
including any government owned or controlled
corporation during his term of office. He shall not
intervene in any matter before any office of the
government for his pecuniary benefit.
Article IX, Sec. 7 The Prime Minister and Members
of the Cabinet shall be subject to the provision of
Section 11, Article VIII hereof and may not appear as
counsel before any court or administrative body, or
manage any business, or practice any profession,
and shall also be subject to such other
disqualification as may be provided by law.
Their only known lawful income of $304,372.43 can
therefore legally and fairly serve as basis for
determining the existence of a prima facie case of
forfeiture of the Swiss funds.
Respondents argue that petitioner was not able to
establish a prima facie case for the forfeiture of the
Swiss funds since it failed to prove the essential
elements under Section 3, paragraphs (c), (d) and
(e) of RA 1379. As the Act is a penal statute, its
provisions are mandatory and should thus be
construed strictly against the petitioner and liberally
in favor of respondent Marcoses.
We hold that it was not for petitioner to establish the
Marcoses other lawful income or income from
legitimately acquired property for the presumption to
apply because, as between petitioner and
respondents, the latter were in a better position to
know if there were such other sources of lawful
income. And if indeed there was such other lawful
income, respondents should have specifically stated
the same in their answer. Insofar as petitioner
Republic was concerned, it was enough to specify
the known lawful income of respondents.
Section 9 of the PCGG Rules and Regulations
provides that, in determining prima facie evidence of
ill-gotten wealth, the value of the accumulated
assets, properties and other material possessions of
those covered by Executive Order Nos. 1 and 2
must be out of proportion to the known lawful incom
e of such persons. The respondent Marcos couple
did not file any Statement of Assets and Liabilities
(SAL) from which their net worth could be
determined. Their failure to file their SAL was in itself
a violation of law and to allow them to successfully
assail the Republic for not presenting their SAL
would reward them for their violation of the law.
Further, contrary to the claim of respondents, the
admissions made by them in their various pleadings
and documents were valid. It is of record that
respondents judicially admitted that the money
deposited with the Swiss banks belonged to them.
We agree with petitioner that respondent Marcoses
made judicial admissions of their ownership of the
subject Swiss bank deposits in their answer, the
General/Supplemental Agreements, Mrs. Marcos'
Manifestation and Constancia dated May 5, 1999,
and the Undertaking dated February 10, 1999. We
take note of the fact that the Associate Justices of
the Sandiganbayan were unanimous in holding that
respondents had made judicial admissions of their
ownership of the Swiss funds.
In their answer, aside from admitting the existence of
the subject funds, respondents likewise
admitted ownership thereof. Paragraph 22 of
respondents' answer stated:
22. Respondents specifically DENY PARAGRAPH
23 insofar as it alleges that respondents
clandestinely stashed the country's wealth in
Switzerland and hid the same under layers and
layers of foundations and corporate entities for being
false, the truth being that respondents' aforesaid
properties were lawfully acquired. (emphasis
supplied)
By qualifying their acquisition of the Swiss bank
deposits as lawful, respondents unwittingly admitted
their ownership thereof.
Respondent Mrs. Marcos also admitted ownership of
the Swiss bank deposits by failing to deny under
oath the genuineness and due execution of certain
actionable documents bearing her signature
attached to the petition. As discussed earlier, Section
11, Rule 8[86] of the 1997 Rules of Civil Procedure
provides that material averments in the complaint
shall be deemed admitted when not specifically
denied.
The General[87] and Supplemental[88] Agreements
executed by petitioner and respondents on
December 28, 1993 further bolstered the claim of
petitioner Republic that its case for forfeiture was
proven in accordance with the requisites of Sections
2 and 3 of RA 1379. The whereas clause in the
General Agreement declared that:
WHEREAS, the FIRST PARTY has obtained a
judgment from the Swiss Federal Tribunal on
December 21, 1990, that the $356 million belongs in
principle to the Republic of the Philippines provided
certain conditionalities are met, but even after 7
years, the FIRST PARTY has not been able to
procure a final judgment of conviction against the
PRIVATE PARTY.
While the Supplemental Agreement warranted, inter
alia, that:
In consideration of the foregoing, the parties hereby
agree that the PRIVATE PARTY shall be entitled to
the equivalent of 25% of the amount that may be
eventually withdrawn from said $356 million Swiss
deposits.
The stipulations set forth in the General and
Supplemental Agreements undeniably indicated the
manifest intent of respondents to enter into a
compromise with petitioner. Corollarily, respondents
willingness to agree to an amicable settlement with
the Republic only affirmed their ownership of the
Swiss deposits for the simple reason that no person
would acquiesce to any concession over such huge
dollar deposits if he did not in fact own them.
Respondents make much capital of the
pronouncement by this Court that the General and
Supplemental Agreements were null and void.
[89]
They insist that nothing in those agreements
could thus be admitted in evidence against them
because they stood on the same ground as an
accepted offer which, under Section 27, Rule
130[90] of the 1997 Rules of Civil Procedure, provides
that in civil cases, an offer of compromise is not an
admission of any liability and is not admissible in
evidence against the offeror.
We find no merit in this contention. The declaration
of nullity of said agreements was premised on the
following constitutional and statutory infirmities: (1)
the grant of criminal immunityto the Marcos heirs
was against the law; (2) the PCGGs commitment to
exempt from all forms of taxes the properties to be
retained by the Marcos heirs was against the
Constitution; and (3) the governments undertaking to
cause the dismissal of all cases filed against the
Marcoses pending before the Sandiganbayan and
other courts encroached on the powers of the
judiciary. The reasons relied upon by the Court
never in the least bit even touched on the veracity
and truthfulness of respondents admission with
respect to their ownership of the Swiss
funds. Besides, having made certain admissions in
those agreements, respondents cannot now deny
that they voluntarily admitted owning the subject
Swiss funds, notwithstanding the fact that the
agreements themselves were later declared null and
void.
The following observation of Sandiganbayan Justice
Catalino Castaeda, Jr. in the decision dated
September 19, 2000 could not have been better
said:
x x x The declaration of nullity of the two agreements
rendered the same without legal effects but it did not
detract from the admissions of the respondents
contained therein. Otherwise stated, the admissions
made in said agreements, as quoted above, remain
binding on the respondents.[91]
A written statement is nonetheless competent as an
admission even if it is contained in a document
which is not itself effective for the purpose for which
it is made, either by reason of illegality, or
incompetency of a party thereto, or by reason of not
being signed, executed or delivered. Accordingly,
contracts have been held as competent evidence of
admissions, although they may be unenforceable.[92]
The testimony of respondent Ferdinand Marcos, Jr.
during the hearing on the motion for the approval of
the Compromise Agreement on April 29,
1998 also lent credence to the allegations of
petitioner Republic that respondents admitted
ownership of the Swiss bank accounts. We quote
the salient portions of Ferdinand Jr.s formal
declarations in open court:
ATTY. FERNANDO:
Mr. Marcos, did you ever have any meetings with
PCGG Chairman Magtanggol C. Gunigundo?
F. MARCOS, JR.:
Yes. I have had very many meetings in fact with
Chairman.
ATTY. FERNANDO:
Would you recall when the first meeting occurred?
PJ GARCHITORENA:
In connection with what?
ATTY. FERNANDO:
In connection with the ongoing talks to compromise
the various cases initiated by PCGG against your
family?
F. MARCOS, JR.:
The nature of our meetings was solely concerned
with negotiations towards achieving some kind of
agreement between the Philippine government and
the Marcos family. The discussions that led up to the
compromise agreement were initiated by our then
counsel Atty. Simeon Mesina x x x.[93]
xxx xxx xxx
ATTY. FERNANDO:
What was your reaction when Atty. Mesina informed
you of this possibility?
F. MARCOS, JR.:
My reaction to all of these approaches is that I am
always open, we are always open, we are very much
always in search of resolution to the problem of the
family and any approach that has been made us, we
have entertained. And so my reaction was the same
as what I have always why not? Maybe this is the
one that will finally put an end to this problem.[94]
xxx xxx xxx
ATTY. FERNANDO:
Basically, what were the true amounts of the assets
in the bank?
PJ GARCHITORENA:
So, we are talking about liquid assets here? Just
Cash?
F. MARCOS, JR.:
Well, basically, any assets. Anything that was under
the Marcos name in any of the banks in Switzerland
which may necessarily be not cash.[95]
xxx xxx xxx
PJ GARCHITORENA:
x x x What did you do in other words, after being
apprised of this contract in connection herewith?
F. MARCOS, JR.:
I assumed that we are beginning to implement the
agreement because this was forwarded through the
Philippine government lawyers through our lawyers
and then, subsequently, to me.I was a little surprised
because we hadnt really discussed the details of the
transfer of the funds, what the bank accounts, what
the mechanism would be. But nevertheless, I was
happy to see that as far as the PCGG is concerned,
that the agreement was perfected and that we were
beginning to implement it and that was a source of
satisfaction to me because I thought that finally it will
be the end.[96]
Ferdinand Jr.'s pronouncements, taken in context
and in their entirety, were a confirmation of
respondents recognition of their ownership of the
Swiss bank deposits. Admissions of a party in his
testimony are receivable against him. If a party, as a
witness, deliberately concedes a fact, such
concession has the force of a judicial admission.
[97]
It is apparent from Ferdinand Jr.s testimony that
the Marcos family agreed to negotiate with the
Philippine government in the hope of finally putting
an end to the problems besetting the Marcos family
regarding the Swiss accounts. This was doubtlessly
an acknowledgment of ownership on their part. The
rule is that the testimony on the witness stand
partakes of the nature of a formal judicial admission
when a party testifies clearly and unequivocally to a
fact which is peculiarly within his own knowledge. [98]
In her Manifestation[99] dated May 26, 1998,
respondent Imelda Marcos furthermore revealed the
following:
That respondent Imelda R. Marcos owns 90% of the
subject matter of the above-entitled case, being the
sole beneficiary of the dollar deposits in the name of
the various foundations alleged in the case;
That in fact only 10% of the subject matter in the
above-entitled case belongs to the estate of the late
President Ferdinand E. Marcos;
xxx xxx xxx
Respondents ownership of the Swiss bank accounts
as borne out by Mrs. Marcos' manifestation is as
bright as sunlight. And her claim that she is merely a
beneficiary of the Swiss deposits is belied by her
own signatures on the appended copies of the
documents substantiating her ownership of the funds
in the name of the foundations. As already
mentioned, she failed to specifically deny under oath
the authenticity of such documents, especially those
involving William Saunders and Jane Ryan which
actually referred to Ferdinand Marcos and Imelda
Marcos, respectively. That failure of Imelda Marcos
to specifically deny the existence, much less the
genuineness and due execution, of the instruments
bearing her signature, was tantamount to a judicial
admission of the genuineness and due execution of
said instruments, in accordance with Section 8, Rule
8[100] of the 1997 Rules of Civil Procedure.
Likewise, in her Constancia[101] dated May 6, 1999,
Imelda Marcos prayed for the approval of the
Compromise Agreement and the subsequent release
and transfer of the $150 million to the rightful
owner. She further made the following
manifestations:
xxx xxx xxx
2. The Republics cause of action over the full
amount is its forfeiture in favor of the government if
found to be ill-gotten. On the other hand, the
Marcoses defend that it is a legitimate
asset. Therefore, both parties have an inchoate right
of ownership over the account. If it turns out that the
account is of lawful origin, the Republic may yield to
the Marcoses. Conversely, the Marcoses must yield
to the Republic. (underscoring supplied)
xxx xxx xxx
3. Consistent with the foregoing, and the Marcoses
having committed themselves to helping the less
fortunate, in the interest of peace, reconciliation and
unity, defendant MADAM IMELDA ROMUALDEZ
MARCOS, in firm abidance thereby, hereby affirms
her agreement with the Republic for the release and
transfer of the US Dollar 150 million for proper
disposition, without prejudice to the final outcome of
the litigation respecting the ownership of the
remainder.
Again, the above statements were indicative of
Imeldas admission of the Marcoses ownership of the
Swiss deposits as in fact the Marcoses defend that it
(Swiss deposits) is a legitimate (Marcos) asset.
On the other hand, respondents Maria Imelda
Marcos-Manotoc, Ferdinand Marcos, Jr. and Maria
Irene Marcos-Araneta filed a motion[102] on May 4,
1998 asking the Sandiganbayan to place
the res (Swiss deposits) in custodia legis:
7. Indeed, the prevailing situation is fraught with
danger! Unless the aforesaid Swiss deposits are
placed in custodia legis or within the Courts
protective mantle, its dissipation or misappropriation
by the petitioner looms as a distinct possibility.
Such display of deep, personal interest can only
come from someone who believes that he has a
marked and intimate right over the considerable
dollar deposits. Truly, by filing said motion, the
Marcos children revealed their ownership of the said
deposits.
Lastly, the Undertaking[103] entered into by the
PCGG, the PNB and the Marcos foundations on
February 10, 1999, confirmed the Marcoses
ownership of the Swiss bank deposits. The subject
Undertaking brought to light their readiness to pay
the human rights victims out of the funds held in
escrow in the PNB. It stated:
WHEREAS, the Republic of the Philippines
sympathizes with the plight of the human rights
victims-plaintiffs in the aforementioned litigation
through the Second Party, desires to assist in the
satisfaction of the judgment awards of said human
rights victims-plaintiffs, by releasing, assigning and
or waiving US$150 million of the funds held in
escrow under the Escrow Agreements dated August
14, 1995, although the Republic is not obligated to
do so under final judgments of the Swiss courts
dated December 10 and 19, 1997, and January 8,
1998;
WHEREAS, the Third Party is likewise willing to
release, assign and/or waive all its rights and
interests over said US$150 million to the
aforementioned human rights victims-plaintiffs.
All told, the foregoing disquisition negates the claim
of respondents that petitioner failed to prove that
they acquired or own the Swiss funds and that it was
only by arbitrarily isolating and taking certain
statements made by private respondents out of
context that petitioner was able to treat these as
judicial admissions. The Court is fully aware of the
relevance, materiality and implications of every
pleading and document submitted in this case. This
Court carefully scrutinized the proofs presented by
the parties. We analyzed, assessed and weighed
them to ascertain if each piece of evidence rightfully
qualified as an admission. Owing to the far-reaching
historical and political implications of this case, we
considered and examined, individually and totally,
the evidence of the parties, even if it might have
bordered on factual adjudication which, by authority
of the rules and jurisprudence, is not usually done by
this Court. There is no doubt in our mind that
respondent Marcoses admitted ownership of the
Swiss bank deposits.
We have always adhered to the familiar doctrine that
an admission made in the pleadings cannot be
controverted by the party making such admission
and becomes conclusive on him, and that all proofs
submitted by him contrary thereto or inconsistent
therewith should be ignored, whether an objection is
interposed by the adverse party or not.[104] This
doctrine is embodied in Section 4, Rule 129 of the
Rules of Court:
SEC. 4. Judicial admissions. ─ An admission, verbal
or written, made by a party in the course of the
proceedings in the same case, does not require
proof. The admission may be contradicted only by
showing that it was made through palpable mistake
or that no such admission was made.[105]
In the absence of a compelling reason to the
contrary, respondents judicial admission of
ownership of the Swiss deposits is definitely binding
on them.
The individual and separate admissions of each
respondent bind all of them pursuant to Sections 29
and 31, Rule 130 of the Rules of Court:
SEC. 29. Admission by co-partner or agent. ─ The
act or declaration of a partner or agent of the party
within the scope of his authority and during the
existence of the partnership or agency, may be given
in evidence against such party after the partnership
or agency is shown by evidence other than such act
or declaration. The same rule applies to the act or
declaration of a joint owner, joint debtor, or other
person jointly interested with the party. [106]
SEC. 31. Admission by privies. ─ Where one derives
title to property from another, the act, declaration, or
omission of the latter, while holding the title, in
relation to the property, is evidence against the
former.[107]
The declarations of a person are admissible against
a party whenever a privity of estate exists between
the declarant and the party, the term privity of estate
generally denoting a succession in rights.
[108]
Consequently, an admission of one in privity with
a party to the record is competent.[109] Without doubt,
privity exists among the respondents in this
case. And where several co-parties to the record are
jointly interested in the subject matter of the
controversy, the admission of one is competent
against all.[110]
Respondents insist that the Sandiganbayan is
correct in ruling that petitioner Republic has failed to
establish a prima facie case for the forfeiture of the
Swiss deposits.
We disagree. The sudden turn-around of the
Sandiganbayan was really strange, to say the least,
as its findings and conclusions were not borne out
by the voluminous records of this case.
Section 2 of RA 1379 explicitly states that whenever
any public officer or employee has acquired during
his incumbency an amount of property which is
manifestly out of proportion to his salary as such
public officer or employee and to his other lawful
income and the income from legitimately acquired
property, said property shall be presumed prima
facie to have been unlawfully acquired. x x x
The elements which must concur for this prima
facie presumption to apply are:
(1) the offender is a public officer or employee;
(2) he must have acquired a considerable amount of
money or property during his incumbency; and
(3) said amount is manifestly out of proportion to his
salary as such public officer or employee and to his
other lawful income and the income from legitimately
acquired property.
It is undisputed that spouses Ferdinand and Imelda
Marcos were former public officers. Hence, the first
element is clearly extant.
The second element deals with the amount of
money or property acquired by the public officer
during his incumbency. The Marcos couple
indubitably acquired and owned properties during
their term of office. In fact, the five groups of Swiss
accounts were admittedly owned by them. There is
proof of the existence and ownership of these assets
and properties and it suffices to comply with the
second element.
The third requirement is met if it can be shown that
such assets, money or property is manifestly out of
proportion to the public officers salary and his other
lawful income. It is the proof of this third element that
is crucial in determining whether a prima
facie presumption has been established in this case.
Petitioner Republic presented not only a schedule
indicating the lawful income of the Marcos spouses
during their incumbency but also evidence that they
had huge deposits beyond such lawful income in
Swiss banks under the names of five different
foundations. We believe petitioner was able to
establish the prima facie presumption that the assets
and properties acquired by the Marcoses
were manifestly and patently disproportionate to
their aggregate salaries as public officials. Otherwise
stated, petitioner presented enough evidence to
convince us that the Marcoses had dollar deposits
amounting to US $356 million representing the
balance of the Swiss accounts of the five
foundations, an amount way, way beyond their
aggregate legitimate income of only US$304,372.43
during their incumbency as government officials.
Considering, therefore, that the total amount of the
Swiss deposits was considerably out of proportion to
the known lawful income of the Marcoses, the
presumption that said dollar deposits were unlawfully
acquired was duly established. It was sufficient for
the petition for forfeiture to state the approximate
amount of money and property acquired by the
respondents, and their total government
salaries. Section 9 of the PCGG Rules and
Regulations states:
Prima Facie Evidence. Any accumulation of assets,
properties, and other material possessions of those
persons covered by Executive Orders No. 1 and No.
2, whose value is out of proportion to their known
lawful income is prima facie deemed ill-gotten
wealth.
Indeed, the burden of proof was on the respondents
to dispute this presumption and show by clear and
convincing evidence that the Swiss deposits were
lawfully acquired and that they had other legitimate
sources of income. A presumption is prima
facie proof of the fact presumed and, unless the fact
thus prima facie established by legal presumption is
disproved, it must stand as proved.[111]
Respondent Mrs. Marcos argues that the foreign
foundations should have been impleaded as they
were indispensable parties without whom no
complete determination of the issues could be made.
She asserts that the failure of petitioner Republic to
implead the foundations rendered the judgment void
as the joinder of indispensable parties was a sine
qua non exercise of judicial power. Furthermore, the
non-inclusion of the foreign foundations violated the
conditions prescribed by the Swiss government
regarding the deposit of the funds in escrow,
deprived them of their day in court and denied them
their rights under the Swiss constitution and
international law.[112]
The Court finds that petitioner Republic did not err in
not impleading the foreign foundations. Section 7,
Rule 3 of the 1997 Rules of Civil Procedure,
[113]
taken from Rule 19b of the American Federal
Rules of Civil Procedure, provides for the
compulsory joinder of indispensable parties.
Generally, an indispensable party must be
impleaded for the complete determination of the suit.
However, failure to join an indispensable party does
not divest the court of jurisdiction since the rule
regarding indispensable parties is founded on
equitable considerations and is not jurisdictional.
Thus, the court is not divested of its power to render
a decision even in the absence of indispensable
parties, though such judgment is not binding on the
non-joined party.[114]
An indispensable party[115] has been defined as one:
[who] must have a direct interest in the litigation; and
if this interest is such that it cannot be separated
from that of the parties to the suit, if the court cannot
render justice between the parties in his absence, if
the decree will have an injurious effect upon his
interest, or if the final determination of the
controversy in his absence will be inconsistent with
equity and good conscience.
There are two essential tests of an indispensable
party: (1) can relief be afforded the plaintiff without
the presence of the other party? and (2) can the
case be decided on its merits without prejudicing the
rights of the other party?[116] There is, however, no
fixed formula for determining who is an
indispensable party; this can only be determined in
the context and by the facts of the particular suit or
litigation.
In the present case, there was an admission by
respondent Imelda Marcos in her May 26, 1998
Manifestation before the Sandiganbayan that she
was the sole beneficiary of 90% of the subject matter
in controversy with the remaining 10% belonging to
the estate of Ferdinand Marcos.[117] Viewed against
this admission, the foreign foundations
were not indispensable parties. Their non-
participation in the proceedings did not prevent the
court from deciding the case on its merits and
according full relief to petitioner Republic. The
judgment ordering the return of the $356 million was
neither inimical to the foundations interests nor
inconsistent with equity and good conscience. The
admission of respondent Imelda Marcos only
confirmed what was already generally known: that
the foundations were established precisely to hide
the money stolen by the Marcos spouses from
petitioner Republic. It negated whatever illusion
there was, if any, that the foreign foundations owned
even a nominal part of the assets in question.
The rulings of the Swiss court that the foundations,
as formal owners, must be given an opportunity to
participate in the proceedings hinged on the
assumption that they owned a nominal share of the
assets.[118] But this was already refuted by no less
than Mrs. Marcos herself. Thus, she cannot now
argue that the ruling of the Sandiganbayan violated
the conditions set by the Swiss court. The directive
given by the Swiss court for the foundations to
participate in the proceedings was for the purpose of
protecting whatever nominal interest they might have
had in the assets as formal owners. But inasmuch as
their ownership was subsequently repudiated by
Imelda Marcos, they could no longer be considered
as indispensable parties and their participation in the
proceedings became unnecessary.
In Republic vs. Sandiganbayan,[119] this Court ruled
that impleading the firms which are the res of the
action was unnecessary:
And as to corporations organized with ill-gotten
wealth, but are not themselves guilty of
misappropriation, fraud or other illicit conduct in
other words, the companies themselves are not the
object or thing involved in the action, the res thereof
there is no need to implead them either. Indeed, their
impleading is not proper on the strength alone of
their having been formed with ill-gotten funds,
absent any other particular wrongdoing on their part
Such showing of having been formed with, or having
received ill-gotten funds, however strong or
convincing, does not, without more, warrant
identifying the corporations in question with the
person who formed or made use of them to give the
color or appearance of lawful, innocent acquisition to
illegally amassed wealth at the least, not so as place
on the Government the onus of impleading the
former with the latter in actions to recover such
wealth. Distinguished in terms of juridical personality
and legal culpability from their erring members or
stockholders, said corporations are not themselves
guilty of the sins of the latter, of the embezzlement,
asportation, etc., that gave rise to the Governments
cause of action for recovery; their creation or
organization was merely the result of their members
(or stockholders) manipulations and maneuvers to
conceal the illegal origins of the assets or monies
invested therein. In this light, they are simply
the res in the actions for the recovery of illegally
acquired wealth, and there is, in principle, no cause
of action against them and no ground to implead
them as defendants in said actions.
Just like the corporations in the aforementioned
case, the foreign foundations here were set up to
conceal the illegally acquired funds of the Marcos
spouses. Thus, they were simply the res in the
action for recovery of ill-gotten wealth and did not
have to be impleaded for lack of cause of action or
ground to implead them.
Assuming arguendo, however, that the foundations
were indispensable parties, the failure of petitioner to
implead them was a curable error, as held in the
previously cited case of Republic vs.
Sandiganbayan:[120]
Even in those cases where it might reasonably be
argued that the failure of the Government to implead
the sequestered corporations as defendants is
indeed a procedural abberation, as where said firms
were allegedly used, and actively cooperated with
the defendants, as instruments or conduits for
conversion of public funds and property or illicit or
fraudulent obtention of favored government
contracts, etc., slight reflection would nevertheless
lead to the conclusion that the defect is not fatal, but
one correctible under applicable adjective rules e.g.,
Section 10, Rule 5 of the Rules of Court [specifying
the remedy of amendment during trial to authorize or
to conform to the evidence]; Section 1, Rule 20
[governing amendments before trial], in relation to
the rule respecting omission of so-called necessary
or indispensable parties, set out in Section 11, Rule
3 of the Rules of Court. It is relevant in this context
to advert to the old familiar doctrines that the
omission to implead such parties is a mere technical
defect which can be cured at any stage of the
proceedings even after judgment; and that,
particularly in the case of indispensable parties,
since their presence and participation is essential to
the very life of the action, for without them no
judgment may be rendered, amendments of the
complaint in order to implead them should be freely
allowed, even on appeal, in fact even after rendition
of judgment by this Court, where it appears that the
complaint otherwise indicates their identity and
character as such indispensable parties.[121]
Although there are decided cases wherein the non-
joinder of indispensable parties in fact led to the
dismissal of the suit or the annulment of judgment,
such cases do not jibe with the matter at hand. The
better view is that non-joinder is not a ground to
dismiss the suit or annul the judgment. The rule on
joinder of indispensable parties is founded on
equity. And the spirit of the law is reflected in Section
11, Rule 3[122] of the 1997 Rules of Civil Procedure. It
prohibits the dismissal of a suit on the ground of
non-joinder or misjoinder of parties and allows the
amendment of the complaint at any stage of the
proceedings, through motion or on order of the court
on its own initiative.[123]
Likewise, jurisprudence on the Federal Rules of
Procedure, from which our Section 7, Rule 3[124] on
indispensable parties was copied, allows the joinder
of indispensable parties even after judgment has
been entered if such is needed to afford the moving
party full relief.[125] Mere delay in filing the joinder
motion does not necessarily result in the waiver of
the right as long as the delay is excusable.[126] Thus,
respondent Mrs. Marcos cannot correctly argue that
the judgment rendered by the Sandiganbayan was
void due to the non-joinder of the foreign
foundations. The court had jurisdiction to render
judgment which, even in the absence of
indispensable parties, was binding on all the parties
before it though not on the absent party.[127] If she
really felt that she could not be granted full relief due
to the absence of the foreign foundations, she
should have moved for their inclusion, which was
allowable at any stage of the proceedings. She
never did. Instead she assailed the judgment
rendered.
In the face of undeniable circumstances and the
avalanche of documentary evidence against them,
respondent Marcoses failed to justify the lawful
nature of their acquisition of the said assets. Hence,
the Swiss deposits should be considered ill-gotten
wealth and forfeited in favor of the State in
accordance with Section 6 of RA 1379:
SEC. 6. Judgment.─ If the respondent is unable to
show to the satisfaction of the court that he has
lawfully acquired the property in question, then the
court shall declare such property forfeited in favor of
the State, and by virtue of such judgment the
property aforesaid shall become property of the
State x x x.
THE FAILURE TO PRESENT AUTHENTICATED
TRANSLATIONS OF THE SWISS DECISIONS
Finally, petitioner Republic contends that the
Honorable Sandiganbayan Presiding Justice Francis
Garchitorena committed grave abuse of discretion in
reversing himself on the ground that the original
copies of the authenticated Swiss decisions and
their authenticated translations were not submitted
to the court a quo. Earlier PJ Garchitorena had
quoted extensively from the unofficial translation of
one of these Swiss decisions in his ponencia dated
July 29, 1999 when he denied the motion to release
US$150 Million to the human rights victims.
While we are in reality perplexed by such an
incomprehensible change of heart, there might
nevertheless not be any real need to belabor the
issue. The presentation of the authenticated
translations of the original copies of the Swiss
decision was not de rigueur for the public
respondent to make findings of fact and reach its
conclusions. In short, the Sandiganbayans decision
was not dependent on the determination of the
Swiss courts. For that matter, neither is this Courts.
The release of the Swiss funds held in escrow in the
PNB is dependent solely on the decision of this
jurisdiction that said funds belong to the petitioner
Republic. What is important is our own assessment
of the sufficiency of the evidence to rule in favor of
either petitioner Republic or respondent Marcoses.
In this instance, despite the absence of the
authenticated translations of the Swiss decisions,
the evidence on hand tilts convincingly in favor of
petitioner Republic.
WHEREFORE, the petition is hereby GRANTED.
The assailed Resolution of the Sandiganbayan
dated January 31, 2002 is SET ASIDE. The Swiss
deposits which were transferred to and are now
deposited in escrow at the Philippine National Bank
in the estimated aggregate amount of
US$658,175,373.60 as of January 31, 2002, plus
interest, are hereby forfeited in favor of petitioner
Republic of the Philippines.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Panganiban, Ynares-
Santiago, Austria-Martinez, Carpio-Morales, Callejo,
Sr., Azcuna, and Tinga, JJ., concur.
Puno, and Vitug, JJ., in the result
Quisumbing, Sandoval-Gutierrez, J., on official
leave.
Carpio, J., no part.
CANELAND SUGAR G.R. No. 142896
CORPORATION,
Petitioner, Present:
YNARES-SANTIAGO,
J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
HON. REYNALDO M. NACHURA, and

ALON,
LAND BANK OF THE REYES, JJ.
PHILIPPINES, and
ERIC B. DE VERA, Promulgated:
Respondents. September 12, 2007
x------------------------------------x
DECISION
AUSTRIA-MARTINEZ, J.:
On July 15, 1999, Caneland Sugar Corporation
(petitioner) filed with the Regional Trial Court (RTC)
of Silay City, Branch 40, a complaint for damages,
injunction, and nullity of mortgage against the Land
Bank of the Philippines (respondent) and Sheriff Eric
B. de Vera, docketed as Civil Case No. 2067-40,
praying for the following reliefs: issuance of a
temporary restraining order enjoining respondent
and the Sheriff from proceeding with the auction sale
of petitioners property; declaration of nullity of any
foreclosure sale to be held; declaration of nullity of
the mortgage constituted over petitioners property
covered by TCT No. T-11292 in favor of respondent;
and award of damages.[1]
On July 21, 1999, the RTC issued an Order holding
in abeyance the auction sale set on July 23, 1999,
as agreed upon by the parties.[2] Notwithstanding
said directive, another foreclosure sale was
scheduled on October 15, 1999. Per RTC Order
dated October 14, 1999, the October 15 scheduled
sale was held in abeyance; but re-scheduled the
sale on November 15, 1999, for the following
reasons:
However, P.D. 385 provides that it shall be
mandatory for government financial institution to
foreclose collaterals and/or securities for any loan,
credit accommodations and/or guarantees granted
by them whenever the arrearages on such account,
including accrued interest and other charges amount
to at least 20% of the total outstanding obligation as
appearing in the books of the financial
institution. Moreover, no restraining order, temporary
or permanent injunction shall be issued by the court
against any government financial institution in any
action taken by such institution in compliance with
the mandatory foreclosure provided by said
law. x x x The defendant Land Bank of the
Philippines and Eric B. De Vera, Sheriff of this Court,
are hereby authorized to proceed with the
extrajudicial foreclosure sale on November 15, 1999.
[3]
Petitioner filed a Motion for Reconsideration of the
trial courts Order, but this was denied per Order
dated November 8, 1999.[4]
Petitioner then filed with the Court of Appeals (CA) a
Petition for Certiorari and Prohibition with Injunction,
docketed as CA-G.R. SP No. 56137. In a
Decision[5] dated March 22, 2000, the CA, finding
that the RTC did not commit any grave abuse of
discretion, denied due course and dismissed the
petition for lack of merit.[6] Petitioner sought
reconsideration of the Decision, which was
eventually denied by the CA in a Resolution
dated April 17, 2000.[7]
Hence, the present Petition for Review
on Certiorari under Rule 45 of the Rules of Court.
Petitioner contends in the main that the RTCs act of
authorizing the foreclosure of its property amounts to
a prejudgment of the case since it amounts to a
ruling that respondent has a valid mortgage in its
favor. Petitioner also argues, among others, that
Presidential Decree (P.D.) No. 385 is not applicable
inasmuch as at the time of the lease to Sunnix, Inc.,
the management and control of its operations has
already been virtually taken over by respondent.
On the other hand, respondent maintains that: P.D.
No. 385 prohibits the issuance of an injunctive order
against government financial institutions; the CA did
not commit any grave abuse of discretion; the RTC
Order merely dealt with the propriety of the injunctive
order and not the validity of the mortgage; and the
issue of the propriety of the injunctive order has
been rendered moot and academic by the
foreclosure sale conducted and the issuance of a
certificate of sale by the sheriff.[8]
Based on the arguments of the parties, the principal
issue is whether the CA erred in finding that the RTC
did not commit grave abuse of discretion in not
enjoining the extrajudicial foreclosure of the
properties subject of this case.
Without first resolving the foregoing issue, the Court
finds that the petition should be denied for the sole
reason that the act sought to be enjoined by
petitioner is already fait
accompli. In Transfield Philippines, Inc. v. Luzon
Hydro Corporation,[9] the Court held that
[I]njunction would not lie where the acts sought to be
enjoined have already become fait accompli or an
accomplished or consummated act. In Ticzon v.
Video Post Manila, Inc. this Court ruled that where
the period within which the former employees were
prohibited from engaging in or working for an
enterprise that competed with their former employer
the very purpose of the preliminary injunction has
expired, any declaration upholding the propriety of
the writ would be entirely useless as there would be
no actual case or controversy between the parties
insofar as the preliminary injunction is concerned.[10]
Records show that the foreclosure sale which
petitioner sought to be enjoined by the RTC has
already been carried out by the Sheriff, and in fact, a
Certificate of Sale dated June 26, 2000 was issued
to respondent.[11] There is, therefore, no more actual
case or controversy between the parties insofar as
the RTCs refusal to enjoin the sale is concerned,
and any resolution by the Court of the impropriety or
propriety of the RTCs refusal to issue any restraining
or injunctive relief against the foreclosure sale will
serve no purpose but merely lend further addle to
Civil Case No. 2067-40 pending before the RTC.
Nevertheless, even if petitioners quest for the
issuance of an injunctive relief has been
rendered moot and academic by the holding of the
foreclosure sale and issuance of Certificate of Sale,
the Court finds it necessary to resolve the merits of
the principal issue raised for the future guidance of
both bench and bar. As the Court stated
in Acop v. Guingona, Jr.,[12] courts will decide a
question otherwise moot and academic if it is
capable of repetition, yet evading review.
Petitioner does not dispute its loan obligation with
respondent. Petitioners bone of contention before
the RTC is that the promissory notes are silent as to
whether they were covered by the Mortgage Trust
Indenture and Mortgage Participation on its property
covered by TCT No. T-11292.[13] It does not
categorically deny that these promissory notes are
covered by the security documents. These vague
assertions are, in fact,
negative pregnants, i.e., denials pregnant with the
admission of the substantial facts in the pleading
responded to which are not squarely denied. As
defined in Republic of the Philippines
v. Sandiganbayan,[14] a negative pregnant is a form
of negative expression which carries with it an
affirmation or at least an implication of some kind
favorable to the adverse party. It is a denial pregnant
with an admission of the substantial facts alleged in
the pleading. Where a fact is alleged with qualifying
or modifying language and the words of the
allegation as so qualified or modified are literally
denied, has been held that the qualifying
circumstances alone are denied while the fact itself
is admitted.
Petitioners allegations do not make out any
justifiable basis for the granting of any injunctive
relief. Even when the mortgagors were disputing the
amount being sought from them, upon the non-
payment of the loan, which was secured by the
mortgage, the mortgaged property is properly
subject to a foreclosure sale. This is in consonance
with the doctrine that to authorize a
temporary injunction, the plaintiff must show, at
least prima facie, a right to the final relief.[15]
The foregoing conclusion finds greater force in light
of the provisions of P.D. No. 385,[16] Section 1
of which, provides for a mandatory foreclosure, viz.:
Section 1. It shall be mandatory for government
financial institutions, after the lapse of sixty (60) days
from the issuance of this Decree, to foreclose the
collaterals and/or securities for any loan, credit,
accommodation, and/or guarantees granted by them
whenever the arrearages on such account, including
accrued interest and other charges, amount to at
least twenty (20%) of the total outstanding
obligations, including interest and other charges, as
appearing in the books of account and/or related
records of the financial institution concerned. This
shall be without prejudice to the exercise by the
government financial institution of such rights and/or
remedies available to them under their respective
contracts with their debtors, including the right to
foreclose on loans, credits, accommodations, and or
guarantees on which the arrearages are less than
twenty percent (20%).
while Section 2 prohibits the issuance of restraining
orders or injunctions against government financial
institutions in any foreclosure action taken by such
institutions, to wit:
Section 2. No restraining order, temporary or
permanent injunction shall be issued by the court
against any government financial institution in any
action taken by such institution in compliance with
the mandatory foreclosure provided in Section 1
hereof whether such restraining order, temporary or
permanent injunction is sought by the borrower(s) or
any third party or parties, except after due hearing in
which it is established by the borrower and admitted
by the government financial institution concerned
that twenty percent (20%) of the outstanding
arrearages had been paid after the filing of
foreclosure proceedings.
Petitioner cannot find any solace in its contention
that the case of Filipinas Marble Corporation v.
Intermediate Appellate Court[17] is applicable to the
present case. In Filipinas Marble, it was the DBP-
imposed management of FMC that brought the
corporation to ruin, not to mention that there
were prima facie findings of mismanagement and
misappropriation of the loan proceeds by DBP
and Bancom. Moreover, the liability of FMC for the
loan, which was the basis of the mortgage being
foreclosed, was not yet settled. These
circumstances prompted the Court to grant an
injunction against the foreclosure sale. The Court
ruled
x x x P.D. 385 was never meant to protect officials of
government lending institutions who take over the
management of a borrower corporation, lead that
corporation to bankruptcy through mismanagement
or misappropriation of its funds, and who, after
ruining it, use the mandatory provisions of the
decree to avoid the consequences of their misdeeds.
The designated officers of the government financing
institution cannot simply walk away and then state
that since the loans were obtained in the
corporations name, then P.D. 385 must be
peremptorily applied and that there is no way the
borrower corporation can prevent the automatic
foreclosure of the mortgage on its properties once
the arrearages reach twenty percent (20%) of the
total obligation no matter who was responsible.[18]
In the case at bench, petitioner does not deny its
liability. While petitioner alleged that the
management and control of its operations has
already been virtually taken over by respondent,
thus, implying that it was respondent that caused
petitioner's present miserable financial state, this
allegation is obviously merely an attempt to place
itself under theFilipinas Marble situation in order to
preempt the operation of P.D. No. 385. Petitioners
claim is more appropriately threshed out and
determined after trial on the merits.

The Court likewise cannot sustain petitioner's

argument that the RTCs refusal to grant any
injunctive relief amounts to a prejudgment of the
issues before it. The RTCs sole basis for allowing
the foreclosure sale to proceed is P.D. No. 385. It did
not make any finding or disposition on the issue of
the validity of the mortgage.

In any event, such issue of the validity of the

mortgage, not to mention the issue of the nullity of
the foreclosure sale as well as petitioners prayer for
damages, still has to be resolved in the trial court.

As ruled in Philippine National Bank v. Court of

Appeals,[19] to wit:

In the instant case, aside from the principal action for

damages, private respondent sought the issuance of
a temporary restraining order and writ of preliminary
injunction to enjoin the foreclosure sale in order to
prevent an alleged irreparable injury to private
respondent. It is settled that these
injunctive reliefs are preservative remedies for the
protection of substantive rights and
interests. Injunction is not a cause of action in
itself but merely a provisional remedy, an
adjunct to a main suit. When the act sought to be
enjoined ha[d] become fait accompli, only the
prayer for provisional remedy should be denied.
However, the trial court should still proceed with
the determination of the principal action so that
an adjudication of the rights of the parties can be
had.[20] (Emphasis supplied)

WHEREFORE, the petition is DENIED.

Costs against petitioner.

SO ORDERED.