G.R. No.

75713 October 2, 1989

PHILIPPINE COCONUT PRODUCERS FEDERATION, INC., (COCOFED), MARIA CLARA L. LOBREGAT, BIENVENIDO A.
MARQUEZ, SR., MANUEL J. LASERNA, JR., DOMINGO P. ESPINA, CELESTINO B. SABATE, JOSE A. GOMEZ, EDUARDO
U. ESCUETA, MANUEL V. DEL ROSARIO, SULPICIO G. GRANADA, INAKI R. MENDEZONA, JOSE R. ELEAZER, JR., JOSE
REYNALDO V. MORENTE, ELADIO I. CHATTO, COCONUT INVESTMENT COMPANY, INC., SERGIO R. RIGODON,
SPOUSES MANUEL AND CONCEPCION UTZURRUM, represented by MANUEL M. UTZURRUM, JR., MAXIMO M.
PEREZ, RAUL ANTONIO Z. UNSON, JUSTO C. RUBI, RODOLFO Z. SALVACION, PAZ F. ABILA, JESUS 0. SALVAN,
TEODORICO R. RANERA, CRISPULO M. PIONILLA, ROSARIO P. MERTO, ISABEL R. ALVAREZ, GREGORIO L. ANTENOR,
EDILBERTO CONTRERAS, REYNALDO R. LADLAD, VENANCIO R. PINON, LUIS A. NEGRE, ANASTACIO S. NIERE,
FRANCISCO R. BINABAY, JAMITO A. DAPULA, ROSENDO M. ABARRENTOS, RAUL M. ALEGRE, AGUSTIN C. IBAL,
ROGELIO A. DELA CRUZ, GREGORIO V. MERCADO, and All other coconut farmers similarly situated, petitioners,
vs.
PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, HON. JOVITO R. SALONGA, HON. RAMON DIAZ, HON. RAUL
DAZA, HON. MARY CONCEPCION BAUTISTA and HON. QUINTIN DOROMAL, respondents, THE PHILIPPINE
COCONUT AUTHORITY, intervenor.

Jose D. Valmores, Reynaldo A. Ruiz, Manuel J. Laserna, Jr. and Ramon C. Malinao for petitioners.

Agcaoili and Associates for movant.

NARVASA, J.:

The petition for certiorari and prohibition with preliminary injunction at bar seeks the annulment of the
sequestration and other orders issued by the Presidential Commission on Good Government PCGG)1 against
petitioner Philippine Coconut Producers Federation, Inc. (COCOFED) and various other industrial and commercial
enterprises set up ostensibly for purposes concerned with the development of the coconut industry and the
welfare of those involved in or served by it. These agencies or enterprises were organized and financed with
revenues derived from coconut levies imposed under a succession of laws of the late dictatorship and are alleged
to have been thereafter used as conduits to perpetrate "the most stupendous malversation of public funds in the
annals of our history," as the PCGG puts it, 2 with deposed President Ferdinand Marcos and his cronies as the
suspected authors and chief beneficiaries of the resulting "coconut industry monopoly.

The action is denominated a class suit of the COCOFED, a private national association of coconut producers which
by legal mandate receives allocations from the coconut levy funds to finance its operating expenses and projects;
the Coconut Investment Company (CIC), the first government corporation created to administer the coconut levy
funds (as will later be explained in some detail); and individual petitioners Maria Clara Lobregat and some 37 other
persons, all claiming to be either coconut farmers, coconut workers or stockholders of the sequestered companies,
bringing suit for themselves and in representation of "the more than one million coconut farmers who are similarly
situated" upon a claim of private interest in the sequestered assets and properties.

The COCONUT LEVY FUNDS:

The sequestration of the corporations and the other acts complained of were undertaken by the PCGG preparatory
to the filing of suit in the Sandiganbayan against Marcos and his associates for the illicit conversion of the coconut
levy funds, purportedly channeled through the COCOFED and the other sequestered businesses, into private pelf.
These funds fall into four general classes, viz.: (a) the Coconut Investment Fund created under R.A. 6260 (effective
June 19, 1971); (b) the Coconut Consumers Stabilization Fund created under PD 276 (effective August 20, 1973); (c)
the Coconut Industry Development Fund created under PD 582 (effective November 14,1974); and (d) the Coconut
Industry Stabilization Fund created under P.D. 1841 (effective October 2, 1981).

The Coconut Investment Fund (CIF):

The Coconut Investment Fund, or CIF, was put up in 1971 by R.A. 6260 which declared it to be the national policy
to accelerate the development of the coconut industry through the provision of adequate medium and long term
financing for capital investment in the industry.3 A levy of P 0.55 was imposed on the first domestic sale of every
100 kilograms of copra or equivalent coconut product,4 fifty centavos (P 0. 50) of which accrued to the CIF. The
Philippine Coconut Administration (or PHILCOA), 5 received three centavos (P 0.03)6 of the five remaining, and the
balance was placed "at the disposition of the recognized national association of coconut producers with the largest
x x membership"7- which association was declared by PHILCOA 8 to be petitioner COCOFED.

The CIF was to be used exclusively to pay for the Philippine Government's subscription to the capital stock 9 of the
Coconut Investment Company (CIC), a corporation with a capitalization of P 100,000,000.00 created by the statute
to administer the Fund, as has already been stated, and to invest its capital in financing "agricultural, industrial or
other productive (coconut) enterprises" qualified under the terms of the statute to apply for loans with the CIC.10
The State was to initially subscribe to CIC's capital stock "for and on behalf of the coconut farmers," to whom such
shares were supposed to be transferred "upon full payment (with the collections on the levy) of the authorized
capital stock x x or upon termination of a ten-year period from the start of the collection of the levy x x, whichever
comes first."11 The scheme, in short, called for the use of the CIF-funds collected mainly from coconut farmers-to
pay for the CIC shares of stock to be subscribed by the Government and held by it until the levy was lifted,
whereupon the Government was to "convert" the receipts issued to the farmers (as evidence of payment of the
levy) "into shares of stock"-this time in the farmers' names in the new, private corporation to be formed by them
at such time, conformably with the provisions of the law. 12

The levy imposed by R.A. 6260 was collected from 1972 to 1982.

The Coconut Consumers Stabilization Fund (CCSF)

P.D. 276 established a second fund on August 20,1973, barely a year after the creation of the CIF. The decree
imposed a "Stabilization Fund Levy" of fifteen pesos (P 15.00) on the first sale of every 100 kilograms of copra
resecada or equivalent product.13 The revenues were to be credited to the Coconut Stabilization Fund (CCSF)14
Which was to be used to subsidize the sale of coconut-based products at prices set by the Price Control Council, in
order to stabilize the price of edible oil and other coconut oil-based products for the benefit of consumers 15 The
levy was to be collected for only one year.16 The CCSF however became a permanent fund under PD 414.17

The Coconut Industry Development Fund (CIDF):

On November 14, 1974, PD 582 was promulgated setting up yet another "permanent fund ... (this time to) finance
the establishment, operation and maintenance of a hybrid coconut seednut farm ... (and the implementation of) a
nationwide coconut replanting program" "using precocious high-yielding hybrid seednuts x x to (be) distribute(d),
... free, to coconut farmers." 18 The fund was denominated the Coconut Industry Development Fund, or the CIDF.
Its initial capital of P100 million was to be paid from the CCSF, and in addition to this, the PCA was directed to
thereafter remit to the fund "an amount equal to at least twenty centavos (PO.20) per kilogram of copra resecada
or its equivalent out of its current collections of the coconut consumers stabilization levy." 19 The CIDF was
assured of continued contribution from the permanent levy in the same amount deemed to be "automatically
imposed" in the event of the lifting of the Stabilization Fund Levy.20
The Coconut Industry Investment Fund (CIIF)

The various laws relating to the coconut industry were codified in 1976; promulgated on October 21 of that year
was PD 961 or the "Coconut Industry Code," which later came to be known as the "Revised Coconut Industry Code"
upon its amendment by PD 1468, effective June 11, 1978. The Code provided for the continued enforcement of the
Stabilization Fund Levy imposed by PD 276 and for the use of the CCSF and the CIDF for substantially the same
purposes specified by the enactments ordaining their creation.

A new provision was however inserted in the Code, authorizing the use of the balance of the CIDF not needed to
finance the replanting program and other authorized projects, for the acquisition of "shares of stock in
corporations organized for the purpose of engaging in the establishment and operation of industries, .. commercial
activities and other allied business undertakings relating to coconut and other palm oil indust(ries)."21 From this
fund thus created, the Coconut Industry Investment Fund or the CIIF, were purchased the shares of stock in what
have come to be known as the "CIIF companies the sequestered corporations into which said CIIF (Coconut
Industry Investment Fund) was heavily invested after its creation.

The Coconut Industry Stabilization Fund (CISF): (Formerly CCSF)

The collection of the CCSF and the CIDF was suspended for a time in virtue of PD 1699.22 However, on October 2,
1981, PD 1841 was issued reviving the levies and renaming the CCSF the Coconut Industry Stabilization Fund, or
the CISF, to which accrued the new collections. The impost was in the amount of P50.00 for every 100 kilos of
copra resecada or equivalent product delivered to exporters and other copra users. The funds collected were to be
apportioned among the CIDF,23 the COCOFED,24 the PCA,25 and the "bank acquired for the benefit of the coconut
farmers under PD 755" referring to the United Coconut Planters Bank or the UCPB.26

The AGENCIES INVOLVED:

As may be observed, three agencies played key roles in the collection, management, investment and use of the
coconut levy funds: (a) the Philippine Coconut Authority (PCA), formerly the Philippine Coconut Administration or
the PHILCOA; (b) the COCOFED; and (c) the UCPB. Charged with the duty to "receive and administer the funds
provided by law,"27 the Philippine Coconut Authority or the PCA was created on June 30, 1973 by P.D. 232 to
replace and assume the functions of (1) the Philippine Coconut Administration or PHILCOA (which had been
established in 1954), (2) the Coconut Coordinating Council (CCC), and (3) the Philippine Coconut Research
Institute(PHILCORIN). By virtue of the Decree, the PCA took over the collection of the CIF Levy under RA 6260 in
1973, while subsequent statutes, to wit, PD 276 (in relation to PD 414), PD 582, and PD 1841, empowered it
specifically to manage the CCSF, the CIDF, and the CISF, from the time of their creation. Under the laws just
mentioned, the PCA, as the government arm that "formulate(s) x x (the) general program of development for the
coconut x x and palm oil indust(ries)" 28 is allotted a share in the funds kept in its trust. Its governing board is
composed of members coming from the public and private sectors, among them representatives of COCOFED.29

The Philippine Coconut Producers Federation, Inc. or the COCOFED, as the private national association of coconut
producers certified in 1971 by the PHILCOA as having the largest membership among such producers,30 receives
substantial portions of the coconut funds to finance its operating expenses and socio-economic projects. R.A. 6260
entrusted it with the task of maintaining "continuing liaison with the different sectors of the industry, the
government and its own mass base." 31 Its president sits on the governing board of the PCA and on the Philippine
Coconut Consumers Stabilization Committee, the agency assisting the PCA in the administration of the CCSF. It is
also represented in the Board of Directors of the CIC and of two (2) CIIF companies COCOMARK (the COCOFED
Marketing Corporation) and COCOLIFE (the United Coconut Planters' Life Insurance Co.).
The United Coconut Planters Bank (or the UCPB) is a commercial bank acquired "for the benefit of the coconut
farmers" 32 with the use of the Coconut Consumers Stabilization Fund (CCSF) in virtue of P.D. 755, promulgated on
July 29,1975. The Decree authorized the Bank to provide the intended beneficiaries with "readily available credit
facilities at preferential rates." 33 It also authorized the distribution of the Bank's shares of stock, free, to the
coconut farmers; and some 1,405,366 purported recipients have been listed as UCPB stockholders as of April 10,
1986.34

The UCPB was thereafter empowered by PD 1468 to "(make) investments for the benefit of the coconut
farmers"35 using that part of the CIDF referred to as the CIIF. Thus were organized the "CIIF companies" subject of
the sequestration orders herein assailed.36 As in the case of the shares of stock in the UCPB, the law provided for
the "equitable distribution" to the coconut farmers, free, of the investments made in the CIIF companies.37
Among the corporations in which the UCPB has come to have substantial shareholdings are the COCOFED
Marketing Corporation (COCOMARK), United Coconut Planters' Life Insurance (COCOLIFE) GRANEX, ILICOCO,
Southern Island Oil Mill, Legaspi Oil of Davao City and of Cagayan de Oro City, Anchor Insurance Brokerage, Inc.,
Southern Luzon Coconut Oil Mills, and San Pablo Oil Manufacturing Co., Inc. Some of these corporations in turn
acquired UCPB shares of stock as well as shareholdings in the San Miguel Corporation.

The SEQUESTRATION PROCEEDINGS:

On March 19, 1986, the Presidential Commission on Good Government (PCGG) sequestered CIIF companies
GRANEX, ILICOCO, Southern Island Oil Mill, Legaspi Oil of Davao City, and Legaspi Oil of Cagayan de Oro City. Also
sequestered shortly thereafter, on April 21, 1986, were Anchor Insurance Brokerage, Inc., Southern Luzon Coconut
Oil Mills and the San Pablo Oil Manufacturing Co., Inc. Shares of stock in the UCPB registered in the names of these
and other CIIF companies, and later those issued to 1,405,366 purported coconut farmers-stockholders were
likewise sequestered, as were the 33.1 million shares of stock held by fourteen (14) CIIF companies in the San
Miguel Corporation.

Next placed under sequestration on July 8,1986 was the COCOFED. Its bank accounts as well as those of CIIF
companies COCOLIFE and COCOMARK, of COCOFED president Maria Clara Lobregat, and of COCOFED directors
Inaki Mendezona and Eladio Chatto, were frozen. On May 30, 1988, PCGG appointed a 15-man Board of Directors
for COCOFED, replacing the incumbents. Management teams for the CIC and COCOMARK were deputized the day
after, relieving Maria Clara Lobregat and Manuel Agcaoili as president and vice-president, respectively, of both
corporations, and Vicente Valmores as corporate secretary of the CIC. Various other orders pertaining to the CIC,
the CIIF companies, COCOFED, and the UCPB were also afterwards issued and implemented, with a view to
conserving their assets pending the government's investigation into the suspected plunder of the coconut levy
funds by former President Ferdinand Marcos and his associates and cronies.

PETITIONERS' SUBMITTALS

The instant petition was filed on September 3, 1986 to assail the foregoing directives and acts. The petitioners
posit that:

1) the PCGG has no jurisdiction over the sequestered properties as the powersconferred upon it by
Executive Orders Numbered 1, 2 and 14 extend only to ill-gotten wealth of "former President Ferdinand E. Marcos
and/or his wife, Imelda Romualdez Marcos" or "their close relatives, subordinates, business associates, dummies,
agents, or nominees," 38 and not to the private properties of the coconut farmers and the petitioners, who do not
fall under any of the classes of persons specified under the Orders;
2) the sequestered properties are not ill-gotten wealth of the petitioners whose ownership of the shares of
stock in the COCOFED, the CIIF companies, and the UCPB resulted from lawful disbursements of the coconut levy
fund; and

3) the sequestration of the petitioners' private properties is a gross abuse of prosecutorial discretion on the
part of PCGG and, corollarily, rendered enforcement of E.O.'s 1, 2 and 14 as against them unconstitutional and
violative of the Bill of Rights.

PCA INTERVENTION

A petition-in-intervention presented by the PCA was admitted by the Court by Resolution dated May 24, 1988.

THE PCGG POSITION

The Solicitor General, for the PCGG, submits that the funds collected from the coconut levy are public funds which
no amount of pronouncements to the contrary-by decree or any other presidential issuance can convert into
private money; that in the light of the report of the Commission on Audit of its examination of the funds made
after the unceremonious deposal of President Marcos, to the effect that the funds were misappropriated and
squandered by the latter, his cronies and the leaders of the coconut industry, it is the duty of PCGG to recover the
same and, pending recovery proceedings, to make use of its power of sequestration and other remedies conferred
by Executive Orders 1, 2 and 14. In his view, the so-called "more than one million coconut farmers" do not own the
coconut levy funds or the assets acquired therewith.

1. The question of the validity of PCGG sequestration and freeze orders as provisional measures to collect
and conserve the assets believed to be ill-gotten wealth has been laid to rest in BASECO vs. PCGG (150 SCRA 181)
where this Court held that such orders are not confiscatory but only preservative in character, not designed to
effect a confiscation of, but only to conserve properties believed to be ill-gotten wealth of the ex-president, his
family and associates, and to prevent their concealment, dissipation, or transfer, pending the determination of
their true ownership.

Nor may it be gainsaid that pending the institution of the suits for the recovery of such ill-gotten wealth as the
evidence at hand may reveal, there is an obvious and imperative need for preliminary provisional measures to
prevent the concealment, disappearance, destruction, dissipation, or loss of the assets and properties subject of
the suits, or to restrain or foil acts that may render moot and academic, or effectively hamper, delay, or negate
efforts to recover the same.

xxx

To answer this need, the law has prescribed three (3) provisional remedies. These are: (1) sequestration; (2) freeze
orders; and (3) provisional takeover. (at p. 208)

The PCGG exercised the powers conferred upon it by Executive Orders Numbered 1, 2 and 14 on the basis of
evidence in its possession which it deemed sufficient to show, prima facie, that former President Marcos, Mr.
Eduardo Cojuangco, Jr., the COCOFED and its national leaders, collaborated with each other to perpetrate the
"systematic plunder" of the funds generated by the coconut levy. That preliminary determination finds support in
the documents and evidence relative thereto. Reports, for example, from the Commission on Audit (COA) which
audited the funds after the February 1986 Revolution tend to show that:
(1) of the funds allocated to COCOFED, some P20 million were delivered to Mrs. Imelda R. Marcos for the
Imelda Romualdez Marcos Scholarship Program of which no accounting has been made;

(2) COCOFED purchased an aircraft at a total cost of P 11,849,071.29;

(3) a COCOFED disbursement of P 23 million for the account of the Census Committee which undertook the
survey of coconut farmers to determine other farmers entitled to the unissued shares of UCPB, was under-
reimbursed by P 3,584,826.36;

(4) cash advances in hundreds of thousands of pesos granted by COCOMARK to COCOFED officials Jose
Reynaldo Morente, Inaki Mendezona, Bienvenido Marquez and Maria Clara Lobregat were unliquidated;

(5) COCOMARK made disbursements for cash advances for travel and transportation expenses to its directors
who are also directors of COCOFED without supporting documents.

The investigation by the PCGG of the funds supposed to havebeen invested in the UCPB on behalf of the coconut
farmers, also reveal that UCPB shares appearing in the UCPB books as issued to 1,405,366 coconut farmers are not
in fact owned by the said persons because a large number of them sold their stock to national and local officials of
COCOFED at the latter's initiative; and documents found in Malacanang in the wake of the February 1986 people's
revolution tend to show that Eduardo Cojuangco, Jr., apart from owning his own shares in UCPB, also "fronted" for
the shares of Mr. Marcos in that bank.

As to the coconut levy funds invested in the CIIF companies for the benefit of coconut farmers, COA findings
adverted to by the PCGG disclose that said funds were invested in companies most of which were or became
vehicles to effectuate their misuse. The United Coconut Oil Mills, Inc. (UNICOM), a CIIF funded company, for
example, appears to have spent millions of pesos to acquire non-operating and unprofitable coconut oil mills
owned by persons close to the Marcoses that P840 million of the CIDF were siphoned off to Agricultural Investors,
Inc., a corporation owned and controlled by Eduardo Cojuangco, Jr., which has a paid-up capital of only P100,000;
and that P41.9 million worth of seednuts equivalent to 24.48% of the total purchases of UCPB using CIDF from
1979 to 1982 had not been accounted for. Reports were also cited showing that only 75.52% of the total seednuts
purchased had been distributed to the participants of the replanting program. The PCGG also claims to have in its
possession evidence of other instances of misuse or misappropriation of the coconut levy funds attributable to the
petitioners.

The petitioners deny the PCGG's postulations and assertions.

It is of course not for this Court to pass upon the factual issues thus raised. That function pertains to the
Sandiganbayan in the first instance. For purposes of this proceeding, all that the Court needs to determine is
whether or not there is prima facie justification for the sequestration ordered by the PCGG. The Court is satisfied
that there is. The cited incidents, given the public character of the coconut levy funds, place petitioners COCOFED
and its leaders and officials, at least prima facie, squarely within the purview of Executive Orders Nos. 1, 2 and 14,
as construed and applied in BASECO, to wit:

1. that ill-gotten properties (were) amassed by the leaders and supporters of the previous regime;

a. more particularly, that (i)ll-gotten wealth was accumulated by former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close associates, x x located in the Philippines or abroad, x x (and)
business enterprises and entities (came to be) owned or controlled by them, during x x (the Marcos)
administration, directly or through nominees, by taking undue advantage of their public office and using their
powers, authority, influence, connections or relationships

b. otherwise stated, that 'there are assets and properties purportedly pertaining to former President
Ferdinand E. Marcos, and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives, subordinates, business
associates, dummies, agents or nominees which had been or were acquired by them directly or indirectly, through
or as a result of the improper or illegal use of funds or properties owned by the Government of the Philippines or
any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of
their office, authority, influence, connections or relationship, resulting in their unjust enrichment and causing
grave damage and prejudice to the Filipino people and the Republic of the Philippines';

c. that 'said assets and properties are in the form of bank accounts, deposits, trust accounts, shares of
stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and other kinds of real and
personal properties in the Philippines and in various countries of the world' ...39

2. The petitioners' claim that the assets acquired with the coconut levy funds are privately owned by the
coconut farmers is founded on certain provisions of law, to wit:

Sec. 7. Incorporation as a private entity under Act Numbered One Thousand Four Hundred Fifty-Nine, as
amended. -Upon full payment of the authorized capital stock, as evidenced by receipts issued for levies paid, or
upon termination of a ten-year period from the start of the collection of the levy as provided in Section eight
hereof, whichever comes first, the shares of stock held by the Philippine Government for and in behalf of the
coconut farmers shall be transferred, in accordance with such rules, regulations and procedures as the Company
shall prescribe and promulgate, to and in the name of the coconut farmers who shall then incorporate as a private
entity under Act Numbered One Thousand Four Hundred Fifty-Nine, as amended.... (Sec. 7, Republic Act 6260)

and

The Coconut Consumers Stabilization Fund and the Coconut Industry Development Fund as well as all
disbursements of said Funds for the benefit of the coconut farmers x x shall not be construed or interpreted .. as
special and/or fiduciary funds, or as part of the general funds of the national government within the contemplation
of P.D. 711; nor as subsidy, donation, levy government funded investment, or government share within the
contemplation of PD 898, the intention being that said fund and the disbursements thereof as herein authorized
for the benefit of the coconut farmers shall be owned by them in their private capacities .... (Section 5, Article III,
P.D. 1468)

The proposition is open to question, to say the least. Indeed, the Solicitor General suggests quite strongly that the
laws operating or purporting to convert the coconut levy funds into private funds, are a transgression of the basic
limitations for the licit exercise of the state's taxing and police powers, and that certain provisions of said laws are
merely clever strategems to keep away government audit in order to facilitate misappropriation of the funds in
question.
The utilization and proper management of the coconut levy funds, raised as they were by the State's police and
taxing powers, are certainly the concern of the Government. It cannot be denied that it was the welfare of the
entire nation that provided the prime moving factor for the imposition of the levy. It cannot be denied that the
coconut industry is one of the major industries supporting the national economy. It is, therefore, the State's
concern to make it a strong and secure source not only of the livelihood of a significant segment of the population
but also of export earnings the sustained growth of which is one of the imperatives of economic stability. The
coconut levy funds are clearly affected with public interest. Until it is demonstrated satisfactorily that they have
legitimately become private funds, they must prima facie and by reason of the circumstances in which they were
raised and accumulated be accounted subject to the measures prescribed in E.O. Nos. 1, 2, and 14 to prevent their
concealment, dissipation, etc., which measures include the sequestration and other orders of the PCGG
complained of.
3. The incidents concerning the voting of the sequestered shares, the COCOFED elections, and the
replacement of directors, being matters incidental to the sequestration, should be addressed to the
Sandiganbayan in accordance with the doctrine laid down in PCGG vs. Pena, 159 SCRA 556, reiterated in G.R. No.
74910, Andres Soriano III vs. Hon. Manuel Yuzon; G.R. No. 75075, Eduardo Cojuangco, Jr. vs. Securities and
Exchange Commission; G.R. No. 75094, Clifton Ganay vs. Presidential Commission on Good Government; G.R. No.
76397, Board of Directors of San Miguel Corporation vs. Securities and Exchange Commission; G.R. No. 79459,
Eduardo Cojuangco, Jr. vs. Hon. Pedro N. Laggui; G.R. No. 79520, Neptunia Corporation, Ltd. vs. Presidential
Commission on Good Government, August 10, 1988.
In view of the foregoing, the petition and the petition-in-intervention are hereby DISMISSED. Costs against
petitioners.
SO ORDERED.
G.R. No. 132120 February 10, 2003

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioner,

vs.
Hon. ANIANO A. DESIERTO as Ombudsman, HERMINIO T. DISINI, PACIENCIA ESCOLIN-DISINI, ANGEL E. DISINI,
LILIANA L. DISINI and LEA E. DISINI, respondents.

DECISION

PANGANIBAN, J.:

The Office of the Ombudsman is endowed with a wide latitude of investigatory and prosecutory prerogatives in the
exercise of its power to pass upon criminal complaints. However, such power is not absolute; it cannot be
exercised arbitrarily or capriciously. Verily, when it is gravely abused through a gross misappreciation of evidence
and a whimsical dismissal of a complaint, this Court has the constitutional duty to reverse the ombudsman. The
present Petition is one such exception, involving serious allegations of multimillion-dollar bribes and unlawful
commissions. At the center of all these is the non-performing, billion-dollar Bataan nuclear power plant -- a virtual
white elephant -- which our impoverished people are still paying for, even if they have not benefited from it at all!

The Case

Before this Court is a Petition for Certiorari under Rule 65 of the Rules of Court, seeking to reverse the May 31,
1997 Resolution1 and the October 24, 1997 Order2 of then Ombudsman Aniano A. Desierto who, in OMB-0-91-
0800, exonerated Herminio T. Disini of the crimes of corruption of public officials in relation to bribery and of
violation of the Anti-Graft Law.3 The assailed Resolution dismissed the charges against Disini "for lack of prima
facie evidence,"4 while the assailed Order denied petitioner’s Motion for Reconsideration.5

The Antecedents6

The Presidential Commission on Good Government (PCGG), herein petitioner, charged Disini with "bribing the late
President Ferdinand E. Marcos as a means to induce him to assist and favor individuals and corporate entities."7
The charge pertained to the "negotiation, award, signing, amendment and implementation of the main and related
contracts for the Philippine Nuclear Power Plant (PNPP) project of the National Power Corporation (NPC), as a
result of which the afore-mentioned public official x x x accumulated and benefited from unlawful acquisition of
income or profits."8
The Petition alleges that sometime in August 1973, then President Marcos instructed the NPC to pursue, supervise
and undertake the construction and the eventual operation of the nuclear power plant in Morong, Bataan.
Because of its lack of expertise in designing and constructing commercial nuclear power plants, the NPC needed a
qualified engineering firm to act as consultant to assist it in selecting a plant site, preparing equipment
specifications, soliciting bids, and evaluating proposals from prospective contractors.

A number of companies, including Westinghouse Electric Corporation (hereinafter, "Westinghouse") and Burns &
Roe, a New York-based company,9 manifested their interest in the PNPP project. The former was interested in the
construction of the main PNPP project; and the latter, in the architectural and engineering contract. Burns & Roe
had initially offered its services to be NPC’s consultant; once so appointed, it later used that position as a
springboard to obtain the "more lucrative contracts" of the nuclear power plant project.

Petitioner further avers that in early 1974, a Westinghouse representative approached Disini to act as their go-
between with Marcos. Disini was known to be the late President’s close personal associate, whose wife was then
First Lady Imelda R. Marcos’ first cousin and the Marcos family’s personal physician. Disini relayed his acceptance
of the offer to Lea10 Sabol, the resident agent of Westinghouse in the Philippines.

Meanwhile, NPC General Manager Ramon Ravanzo informed Ebasco Services, Inc. (hereinafter, "Ebasco") that it
had been chosen by the NPC Board as consultant for the PNPP project.11 This move prompted Westinghouse and
Burns & Roe to send Marcos, through Disini, an Aide-Memoire strongly recommending that the consulting contract
given to Ebasco be awarded instead to Burns & Roe.12 Westinghouse wanted Burns & Roe to get the consultancy
contract, in order to place the latter in a position to recommend that the main contract for the construction of the
PNPP project be awarded to the former.

The Petition further alleges that the foregoing development was discussed by Samuel P. Hull Jr. and Kenneth E.
Roe -- the international operations director, and the chairman and chief executive officer, respectively, of Burns
and Roe. As a result, Hull enplaned for Manila and met with Disini at the Intercontinental Hotel in Makati. This
time, Disini not only assured Hull that he could influence Marcos to cause the reversal of the Decision awarding the
consulting contract to Ebasco, but he also made a commitment to Hull that the former would obtain for
Westinghouse the prime contract for the entire nuclear power plant project on a turn-key basis; and for Burns &
Roe, the award of the main architectural and engineering subcontract for the same project.13

Hull agreed to grant Disini a "commission" based on a percentage of the amounts paid to Burns & Roe under the
architectural and engineering contract and to pay up front $1 million dollars in four installments of $250,000
each.14

Sent to Marcos was another Aide-Memoire15 further stressing the need for awarding the consulting contract to
Burns & Roe. On February 22, 1974, Mr. L. C. Saunders of Westinghouse also wrote him a letter offering to submit
a "turn-key" proposal for the nuclear power plant project.16 In a handwritten note, Marcos instructed then
Executive Secretary Alejandro Melchor and Ravanzo to wait for Westinghouse’s offer and, "in the meantime, enter
into the contract for the consultant Burns and Roe."17 Consequently, NPC was constrained to rescind the letter of
intent issued to Ebasco and to award the consulting contract to Burns & Roe instead.18

Petitioner also states that in the early part of March 1974, Disini departed for San Francisco, California, USA, and
met with six (6) officials of Westinghouse. Convinced that Disini could surely influence Marcos to award the PNPP
prime contract to it, Westinghouse finally decided to retain him formally as its special sales representative (SSR).
On April 24, 1974, Westinghouse sent Marcos, through Disini, a letter containing its turn-key proposal.19 Upon
receipt of the letter, Marcos informed Melchor and Ravanzo of his preference for Westinghouse as shown by the
following handwritten notation: "I am calling them, Westinghouse, to brief me on their offer."20 Disini furnished
Westinghouse a copy of the letter containing Marcos’ marginal note as proof that he could effectively persuade
the late President to directly intervene and to conform to its goal of finally getting the award of the prime
construction contract for the PNPP project.

On May 7, 1974, a delegation sent by Westinghouse and headed by James M. Wallace, vice president and general
manager of its Power Systems Projects Division, briefed Marcos on its proposal.

On the same occasion, Burns & Roe also succeeded in obtaining the main architectural and engineering
subcontract, when Marcos directed Westinghouse to hire it for such purpose. However, in view of the apparent
conflict of interest, Burns & Roe gave up the consulting contract and retained only the architectural and
engineering contract, which it considered to be far more lucrative. Thereafter, it worked for the termination of its
consulting agreement with NPC and was subsequently replaced by Ebasco.21

In a cabinet meeting held on June 6, 1974, Marcos categorically stated his choice of Westinghouse.22 On the
following day, he formally authorized Ravanzo "to sign for and in behalf of the Republic of the Philippines, the
letter of commitment with Westinghouse Electric Corporation to negotiate for and formulate a signed and
effective contract between the two parties for the supply, installation, construction and start up of two 626-
megawatt nuclear power plants."23

In compliance with the Marcos directive, the NPC negotiated with Westinghouse. A draft of the turn-key contract
was submitted by the latter sometime in November 1974. During the negotiations, Westinghouse was apparently
annoyed at Ebasco’s consultancy role. Hence, John F. Doyle, its commercial manager for the PNPP project,
prepared another Aide-Memoire, allegedly sent to Marcos through Disini, denouncing "the expansion of Ebasco’s
influence and the possibility that the knowledge it gained during said negotiations could be used against
Westinghouse to promote Ebasco’s own interest as a potential competitor and an ally of GE."24 Marcos took
prompt action by directing Ravanzo, Melchor and NPC Chairman Manuel Barreto "to leave the whole construction
(civil and erection) to Westinghouse since the concept is totally turn-key."25 Marcos also ordered them to "keep
Ebasco strictly to its role as a consultant."26

In a Memorandum Report dated May 5, 1975,27 Ravanzo pointed out that many provisions in the Westinghouse
contract were extremely onerous, unacceptable or inconsistent with the turn-key approach to project
implementation. Melchor endorsed Ravanzo’s Report to Marcos, opining that the problems being encountered
with Westinghouse "may be attributed to the absence of competitive pressure."28 Melchor thus proposed that
alternative suppliers be considered.29 But Marcos overruled their recommendations and directed the NPC to
"finalize negotiations with Westinghouse and to submit to me for approval your recommendations."30

By November 1975, the final draft of the Westinghouse contract was referred to then Solicitor General Estelito P.
Mendoza for review. Noting that the proposed contract was extremely onerous and unfavorable to the
government, he recommended that NPC should reject it.31 However, notwithstanding the foregoing adverse
observations and unfavorable recommendation, Marcos directed the NPC to sign the contract with Westinghouse.
That contract was finally executed on February 9, 1976.

Aside from alleging that illegal commissions in terms of millions of dollars were remitted to Disini and Marcos, the
Petition further avers that other material benefits from the two contractors were given to both men. Such benefits
were allegedly in the form of subcontracts awarded to companies which Marcos and Disini owned, or in which
they had beneficial interests.
One of these companies was Power Contractors Inc. (hereinafter, "PCI"), which had been organized by Disini to
undertake the civil/structural construction work for the nuclear power plant.32 Despite NPC’s strong objections to
the hiring of a company that lacked a track record that would justify its selection, PCI was nonetheless retained as
a subcontractor.

Similarly, against the advice of NPC, Westinghouse hired the services of the Engineering and Construction
Company of Asia (hereinafter, "Ecco-Asia") as mechanical and electrical subcontractor for the project.

Following the signing of the contract and the finalization of the project financing, NPC opened letters of credit in
favor of Westinghouse to cover progress payments, pursuant to the contract.

After Mrs. Corazon C. Aquino took over the Presidency of the Republic, petitioner filed the previously mentioned
charges against Disini before the Office of the Ombudsman which, as already stated, dismissed the charges. Hence,
the instant Petition.33

Issue

The present Petition for Certiorari under Rule 6534 contends that the Presidential Commission on Good
Government has submitted sufficient evidence to engender a well-grounded belief that an offense has been
committed and that Disini is probably guilty thereof, but that public respondent -- in grave abuse of discretion
amounting to lack or excess of jurisdiction -- capriciously and arbitrarily dismissed the charges.

This Court’s Ruling

The Petition is meritorious.

Main Issue
Sufficiency of Evidence

As a general rule, the Office of the Ombudsman is endowed with a wide latitude of investigatory and prosecutory
prerogatives in the exercise of its power to pass upon criminal complaints. However, such authority is not
absolute; it cannot be exercised arbitrarily or capriciously. Verily, the Constitution has tasked this Court "to
determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government,"35 including the Office of the Ombudsman.
Specifically, this Court is mandated to review and reverse the ombudsman’s evaluation of the existence of
probable cause, if it has been made with grave abuse of discretion.36

More categorical was our ruling in Nava v. Commission on Audit,37 in which we held:

"An aggrieved party is not left without any recourse. Where the findings of the Ombudsman as to the existence of
probable cause [are] tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the
aggrieved party may file a petition for certiorari under Rule 65 of the Rules of Court."38

Grave abuse of discretion refers not merely to palpable errors of jurisdiction; or to violations of the Constitution,
the law and jurisprudence.39 It refers also to cases in which, for various reasons, there has been a gross
misapprehension of facts.40 The present Petition is one such exception, involving serious allegations of
multimillion-dollar bribes and unlawful commissions.
The Ombudsman’s Grounds

for Disini’s Exoneration

The ombudsman decided in favor of Disini and ordered the dismissal of the Complaint against the latter, on the
basis of the following:

1. There was no testimonial evidence (a) that Disini was interested in the proposal of Westinghouse to be its
special sales representative during negotiations for the award of the PNPP project, or (b) that he intervened for
Burns and Roe to stop the hiring of Ebasco as NPC consultant for the project.

2. There was neither documentary evidence nor corroborating affidavit showing how Disini had actually met with
Hull to assure the latter that the former could influence Marcos to overturn the award of the consulting contract
to Ebasco and to eventually award the PNPP contracts to Westinghouse and to Burns & Roe.

3. Neither the Aides-Memoire allegedly sent to Marcos through Disini nor the telexes and the correspondences
between the officials of Westinghouse and Burns & Roe indicated the author, the addressee, or the dates on which
they were drafted or sent.

4. All the negotiations for the unlawful commissions and the actual payments thereof were based on
unauthenticated documents.

5. There was no testimonial evidence that the bank transactions or the remittances questioned by the PCGG had
actually been sourced from commission payments by Westinghouse and Burns & Roe.

6. There was insufficient supporting evidence for the fact that certain corporations owned or headed by Disini --
like PPI and ECCO-Asia -- were organized specifically for the PNPP project, or that Marcos had business interests in
those corporations.

To be sure, the nullity of a resolution may be shown not only by what patently appears on its face, but also by the
documentary and the testimonial evidence found in the records of the case, upon which such ruling is based.41
From these pieces of evidence on record, we will now show why the ombudsman gravely abused his discretion in
dismissing the Complaint against Disini.

Testimonial Evidence Showing That Disini Intervened for Westinghouse

First. The ombudsman ruled that there was no testimonial evidence on record showing that Disini had actually
intervened for Westinghouse as its special sales representative in negotiations for the PNPP project.

This finding is completely belied by the records of this case. Complainant PCGG, through its Security and
Investigation Department, submitted Hull’s Affidavit42 dated September 28, 1988. This document detailed how
Hull had met and communicated with Disini to discuss matters leading to (1) the revocation of the consulting
contract with Ebasco and (2) the eventual award of the PNPP project to Westinghouse and Burns & Roe.

The 44-page Supplemental Affidavit43 executed by Hull on November 28, 1988 was even more detailed and
damning. It elaborated on his communications and negotiations with, and payments of commissions to, Disini in
exchange for the selection of Westinghouse and Burns & Roe over other corporations vying for the PNPP project.
The communications between Hull and the other officials of Westinghouse and Burns & Roe clearly show that
negotiations involving Disini and these two companies indeed took place. We do not see how the ombudsman
could have simply closed his eyes to Hull’s positive, direct and categorical statements to that effect:

"12. In the same conversation, Disini indicated that he could arrange award of the entire nuclear power plant
contract to Westinghouse on a turnkey basis, in which case he would see to it that Burns & Roe was awarded the
Architect/Engineer assignment as subcontractor to Westinghouse. I took notes of our conversation on an
Intercontinental Hotel coffee shop placemat, which I took with me and saved.

"13. Following this meeting, Jesus Vergara assured me repeatedly that Disini would take the matter up with
President Marcos and that everything would come out all right for Burns & Roe and Westinghouse. He said he was
in constant touch with Disini, and knew that Disini would come through.

"14. I learned a day or two after my meeting with Disini that NPC’s negotiations with Ebasco on the consulting
contract had ceased, and NPC was ready to enter into a consulting contract with Burns & Roe. I learned of this
decision in a telephone message from either Mr. Ravanzo or Mr. Del Rosario of NPC. Jesus Vergara later explained
to me at a meeting in his office that Burns & Roe was replacing Ebasco because Herminio Disini had spoken to
President Marcos, and Marcos had ordered NPC to hire Burns & Roe. To prove this, Vergara gave me a copy of a
letter from Westinghouse to Marcos dated February 22, 1974 bearing a handwritten notation in the margin, which
I was told was written by Marcos, and which instructed NPC’s general manager to ‘enter into the contract for the
consultants Burns & Roe.’ A copy of the letter is attached to this Affidavit as Exhibit A. Vergara said he was giving
me this letter as proof that Disini could ‘deliver.’

"15. Len Sabol, Jesus Vergara, and others in Manila told me at that time that Westinghouse was in the process of
negotiating a similar SSR agreement with Disini whereby he would secure the prime PNPP contract on a turnkey
basis for Westinghouse. The replacement of Ebasco by Burns & Roe was also being used by Westinghouse as a test
of Disini’s influence with President Marcos. I understood that it was only after he passed this test that
Westinghouse finalized its deal with him."44

xxxxxxxxx

"20. I also subsequently learned, through documents received in my trip to the Philippines in February 1974, that
Herminio Disini, Vergara and Sabol had been working behind the scenes to have the award of the Phase I contract
to Ebasco vacated. Their intent then was not so much to benefit Burns & Roe, as to prevent Ebasco from receiving
the contract. Ebasco was known to be close to General Electric Company (‘GE’), a competitor of Westinghouse.
Sabol, Vergara and Disini feared that selection of Ebasco would give GE an advantage over Westinghouse."45
1awphi1.nét

In the face of the Affidavit and the Supplemental Affidavit, it is indeed strange how the ombudsman could have
ruled that there was no testimonial evidence on the said matters. That he ruled thus clearly shows that he
whimsically opted to disregard those pieces of evidence and thereby demonstrated his capricious and arbitrary
exercise of judgment.

The complainant is required to file affidavits "as well as other supporting documents to establish probable cause,"
as stated in the Rules of Court:

"(a) The complaint shall state the address of the respondent and shall be accompanied by the affidavits of the
complainant and his witnesses, as well as other supporting documents to establish probable cause."46
This requirement was fulfilled by the PCGG. The Supplemental Complaint47 was accompanied by the Affidavits of
witnesses as well as by a host of other supporting documents, all of which -- taken together -- established probable
cause.

It should be noted that the Rules on Evidence recognizes different forms of evidence -- object, documentary or
testimonial48 -- without preference for any of them in particular. What should really matter are the weight and
the sufficiency of the evidence presented.

Meetings with Disini

Second. As mentioned earlier, the ombudsman found no evidence that Disini had actually met with and assured
Hull that the former could influence Marcos to overturn the award of the consulting contract to Ebasco and the
eventual award of the PNPP project to Westinghouse and Burns & Roe. The aforesaid Affidavits completely
controvert his finding. Hull’s statements on the matter are clear, specific and categorical:

"10. x x x I met Disini at the Intercontinental Hotel. We discussed the basic terms of a Special Sales Representative
(SSR) agreement between Disini and Burns & Roe, whereby he would assist us in obtaining PNPP business in return
for commission payments. Disini flaunted his close relationship with President Marcos. He represented that he had
the authority to arrange the entire nuclear power plant project in any way he wished. Specifically, Disini told me
that he could get the Architect/Engineering contract to Burns & Roe. He stated that overturning the award of the
consulting contract to Ebasco was ‘no problem,’ and in fact was only a small part of what he could do for Burns &
Roe. In fact, he offered to stop the award of the consulting contract to Ebasco and have it awarded to Burns & Roe
as a test of his ability to deliver.

"11. Disini asked for commission payments once the Architect/Engineer contract was awarded to Burns & Roe. He
wanted the payments to be made up front, and I offered payment on a pari passu basis. We ended up
compromising on an agreement under which Burns & Roe would pay Disini commissions based on a percentage of
the payments for Burns & Roe’s services under the Architect/Engineer contract. One million dollars would be paid
up front over a period of something like 18 months or two years, in four installments of $250,000 each. Any
remaining commissions would be paid over the life of the contract. The $1 million dollar figure was based on our
assumption that the Architect/Engineer contract would generate at least $20 million in revenue to Burns & Roe.

"12. In the same conversation, Disini indicated that he could arrange award of the entire nuclear power plant
contract to Westinghouse on a turnkey basis, in which case he would see to it that Burns & Roe was awarded the
Architect/Engineer assignment as subcontractor to Westinghouse. I took notes of our conversation on an
Intercontinental Hotel coffee shop placemat, which I took with me and saved."49

xxxxxxxxx

"16. In April 1974 Kenneth Roe visited Manila and met with Disini. Roe called me and another Burns & Roe
executive, Lawton Hammett, from Manila on April 23 and explained that he had confirmed in his meeting with
Disini the SSR relationship I had worked out in my February trip. Roe reported that Westinghouse also had a deal
with Disini and that Westinghouse’s commissions were to be paid to President Marcos. Hammett took notes on
this telephone call.

"17. The Burns & Roe SSR agreement with Disini was put in writing. I believe it was between Burns & Roe and one
of Disini’s companies. While I do not recall the exact formula for the commissions to be paid under the contract, I
believe that we were to pay at least $1 million in four equal installments, plus additional amounts calculated under
the formula, to be paid through the life of our Architect/Engineer subcontract. I know that the amount we agreed
to pay Disini was far higher than would have been justified by the services Disini was to render pursuant to the SSR
agreement (such as providing advice and counsel to us, secretarial help, or telex services). The real purpose of our
agreement with Disini was simply for him to influence President Marcos to award Burns & Roe the
Architect/Engineer subcontract on the PNPP project."50

In later negotiations and communications, there were also references to this meeting between Hull and Disini. Hull
absolutely had personal knowledge of the above statements. This meeting -- taken with the whole series of acts,
transactions, correspondences, meetings and documents -- is sufficient ground to determine the existence of
probable cause and to sustain a finding that Disini was probably guilty of the crime charged.

Aides-Memoire and Telexes

Third. The PCGG presented Aides-Memoire and telexes showing Disini’s complicity in the crimes charged.
However, the ombudsman declared that these could not stand, because the authors and the addressees as well as
the dates of drafting and sending had not been indicated.

Again, such findings cannot be sustained. The PCGG presented, as corroborative evidence of the questioned Aides-
Memoire and telexes between the officials of Westinghouse and Burns and Roe, the Affidavits of Samuel Hull Jr.51
and Angelo Manahan52 -- the executive vice president of Herdis Management and Investment Corporation
(HMIC),53 of which Disini was chairman. The prosecution argued thus:

"The import of witness Manahan’s Affidavit dated January 26, 1989, attached as Annex ‘A’ to petitioner’s Motion
for Reconsideration, is not to provide proof of commission payments to respondent Herminio T. Disini but to
explain how the ‘Aide Memoires’ were used by private respondents to perpetrate the acts complained of
constituting violation of the Revised Penal Code and the Anti-Graft and Corrupt Practices Act."54

Declared Manahan:

"7. Aide memoires were confidential memoranda from Mr. Disini to President Marcos (who was addressed as ‘Sir’),
in which Mr. Disini provided information to the President or requested that the President take specified actions in
favor of HMIC/HGI, or of Disini personally. Typically, Mr. Federico E. Navera (HGI’s controller, and my direct
subordinate) would provide any financial information that went into an aide memoire. Mr. Jacob would prepare an
initial draft of the aide memoire, and Mr. Padre would provide the final drafting, editing and reorganization of the
document. Mr. Disini would then approve and sign the document, and either he or his wife Paciencia Disini
(President Marcos’ personal physician, who according to rumors visited the President daily) would deliver the aide
memoire to President Marcos. Mr. Disini’s main contribution to HGI’s business was, in fact, preparing the aide
memoires and influencing President Marcos to act favorably on the requests for action they contained. Mr. Disini
was extremely successful in this; I estimate that 85% of the aide memoires he submitted to President Marcos
resulted in the President taking the action solicited by Mr. Disini."55

The Affidavits of Hull likewise confirmed the telexes between Westinghouse and Burns & Roe officials, including
himself, in connection with the PNPP transactions. He specifically identified the existence of these documents,
which positively linked Disini and Marcos to the dealings of these two corporations. In fact, Hull attested to their
use of codes, which he sufficiently explained, in matters that they considered sensitive in relation to the PNPP
project. He stressed this point in his Supplemental Affidavit as follows:

"37. On February 26, 1974, Ketterer and I travelled to Hongkong, he to return to his post and I on my way back to
the U.S. That evening, as we reflected on the events of the prior two weeks, we decided it would be prudent to
develop a secret code that would permit rapid communication by telex while maintaining confidentiality. We
agreed on code names for key individuals (e.g., President Marcos was ‘Lester’, Ravanzo was ‘Bozo’), parties (e.g.,
Westinghouse was ‘Willy’, Ebasco was ‘Seagull’, Burns & Roe was ‘Home’, NPC was ‘Charlie’), and terms (e.g.,
contract was ‘lucky’, negotiation was ‘festival’, turnkey was ‘door’), etc. I marked up a copy of my February 20,
1974 telex (Exhibit 11) with the codes, as an example of how an encoded communication would be read. Exhibit 15
hereto is a copy of the marked up telex, with my handwritten notations identifying the various code names.
Subsequently, we used some of these codes (or modifications to them) to communicate between the U.S. and
Manila."56

Given the foregoing clarification, the ombudsman’s cavalier disregard of the aforementioned documents and
attestations was arbitrary, whimsical and capricious, to say the least.

Further showing his grave abuse of discretion, the ombudsman even questioned how the PCGG could prove that
the persons referred to in the said coded communications were Marcos and Disini, when the supposed senders
and addressees had never signified their willingness to testify against respondents.

This fact reveals the faulty approach taken by public respondent. During the stage of preliminary investigation, he
was vainly looking for evidence that was understandably not there yet, being suited to a trial proper; but was
closing his eyes to evidence that was already there, sufficient to determine probable cause -- his task at hand.

Negotiations for and Actual Payments of Commissions

Fourth. The ombudsman argued that none of the documents evidencing the negotiations for and the actual
payment of commissions had been authenticated.

While it may be true that the documents were not signed (for telexes are not signed), they were nonetheless
identified and their sources authenticated. Often have we ruled that the validity and the merits of a party's
defense or accusation, as well as the admissibility of testimonies and pieces of evidence, are better ventilated
during the trial than during the preliminary investigation.57 Neither can the ombudsman rule on the presence or
the absence of the elements of the crime, for these are by nature evidentiary and defense matters, the truth of
which can be best passed upon after a full-blown trial on the merits.58

It must here be stressed that a preliminary investigation is essentially inquisitorial. It is often the only means of
discovering the identities of the persons who may be reasonably charged with a crime, in order to enable the
prosecutor to prepare the complaint or information.59 Such investigation is not part of the trial of the case on the
merits and has no purpose other than to determine whether a crime has been committed, and whether there is
probable cause to believe that the accused is guilty thereof. Furthermore, a preliminary investigation does not
place in jeopardy the persons who are subjected to it.60 It is not the occasion for the full and exhaustive display of
both parties’ evidence, but for the presentation only of such evidence as may engender a well-grounded belief that
an offense has been committed and that the accused is probably guilty thereof.61

Nonetheless, corroborative proof of the negotiations for and the actual payment of commissions was also
provided by the Affidavit of Hull:

"18. I understand the first payment of $250,000 to Disini was made through an advance from Westinghouse,
because Burns & Roe had not done enough work on the project to generate this amount. The first check for
$250,000 was cut by the Treasurer of the Burns & Roe and made out to a Disini bank account in Switzerland. I was
asked to carry this check with me on a trip I was planning to make to Europe. When my trip was cancelled, the
payment to Disini was made through a wire transfer. I am not certain how many payments were made to Disini in
all, but I believe that at least two payments of $250,000 were made."62
Such arrangements were expounded in Hull’s Supplemental Affidavit, which we quote:

"70. Once the arrangement between Burns & Roe and Disini was formalized in April 1974, we began to discuss with
Disini the mechanism for the transfer of the SSR payments to him from Burns & Roe. Disini insisted that the funds
be secretly conveyed to a bank account in Switzerland. Starting with my May 16, 1974 telex to Disini, we worked
on the details of the transfer (Exhibit 22)."63

Commission Payments Through Bank Transactions and Remittances

Fifth. The ombudsman also faulted the PCGG for failing to present testimonial evidence from a responsible officer
or a duly authorized representative of the concerned local and foreign banks. Such evidence could have attested to
the fact that the bank remittances questioned by the PCGG had actually been sourced from the commissions paid
to Disini by Westinghouse and Burns & Roe. The ombudsman held that the documents presented to prove
commission payments were mere scraps of paper.

Again, such finding wantonly disregarded the Affidavits of Hull, who confirmed that Disini had actually received
commission payments from Westinghouse and Burns & Roe.

The ombudsman should have followed through with clarificatory questions on the information given by Manahan.
According to this information, although the latter was the chief financial officer of Herdis Group, Inc. (HGI) -- a
Disini company -- he was not informed of the details of the commission payments made to that company by
Westinghouse. He declared thus:

"16. Exhibit 9 (Document 00727) is a one-page tabulation of nuclear power plant commissions, typed in Mr. Disini’s
stationery. Although I was HGI’s chief financial officer, I was not informed of the details of the arrangement under
which HGI rec[e]ived commissions from Westinghouse Electric Corporation (‘Westinghouse’) in connection with
the Philippine Nuclear Power Plant (‘PNPP’). Anything that related to PNPP was treated as secret by Mr. Disini and
his close advisors. The Westinghouse commission payments were handled by Mr. Jerry Orlina, who was Mr. Disini’s
personal finance officer.l^vvphi1.net The Westinghouse commission payments were never received by HGI in the
Philippines, and my understanding is that they were paid directly into foreign bank accounts. The funds from the
commissions never entered HGI’s treasury.

"17. The only payments received by HGI in the Philippines relating to PNPP were a number of checks amounting to
millions of pesos that were remitted by Power Contractors, Inc. (‘PCI’), the civil construction contractor for the job,
in the nature of dividends. HGI was 40% owner of PCI and shared in whatever profits PCI realized from its role on
the plant’s construction."64

Hull, on the other hand, confirmed in his Affidavit that Burns & Roe was to pay at least $1 million in four equal
installments plus additional amounts calculated under the formula, to be paid throughout the life of their
architectural and engineering subcontract.65

Besides, the ombudsman was grievously mistaken in insisting on testimonial evidence from bank representatives
to show conclusively that commissions had indeed been paid. The PCGG had already presented numerous
documents; coupled with Affidavits evidencing agreements on commission payments, correspondences, and the
flow of commission payments from Westinghouse to Disini’s Interbank Foreign Currency Deposit (FCD) and on to
Swiss bank accounts.
In requiring testimonial evidence, the public respondent brushed aside all the other forms of evidence presented
by the prosecution. In short, he disregarded them capriciously without passing upon their weight and sufficiency. It
seems that he was preoccupied with requiring the presentation of evidence that was not there, while closing his
eyes to evidence actually presented by the PCGG for his consideration.

The Disini Corporations and the PNPP Projects

Sixth. The ombudsman opined that the evidence of the PCGG failed to substantiate its claim that the corporations
owned or headed by Disini had been organized mainly to benefit from the PNPP project. Further, the ombudsman
found no proof that Marcos had business interests in the said corporations, such that any commission paid to
them would redound to the latter’s benefit.

A painstaking examination of the documents submitted by the PCGG sufficiently contradicts these findings. Disini’s
control over Power Contractors, Inc. is evidenced by an Assignment of Shares Without Stock Certificates66 dated
March 6, 1975. Unquestionably, this company was organized67 to undertake for Westinghouse subcontracts for
the PNPP project.

Argued the PCGG:

"Aside from the commissions in terms of millions of dollars remitted to them by Westinghouse and Burns and Roe,
it is further averred that H. Disini and Marcos also received other material benefits from these two contractors in
the course of the implementation of said project. As part of the overall plan to plunder the nuclear project funds,
subcontracts pertaining to the project were awarded to companies in which Marcos and H. Disini held ownership
or beneficial interests.

"One of these companies is the Power Contractors, Inc. organized by H. Disini to undertake the civil/structural
construction work for the nuclear power plant. Despite strong objections by the NPC against hiring of PCI’s services
due to its lack of previous track record that would justify its selection, said company was retained as a
subcontractor due to Marcos’ direct intervention.

"Similarly, Westinghouse hired the services of the Engineering and Construction Company of Asia (Ecco-Asia) as
the mechanical and electrical subcontractor for the project against the advice of NPC because of Ecco-Asia’s lack of
technical competence. Although not qualified, Westinghouse awarded the subcontract to Ecco-Asia, known to be a
subsidiary of the Meralco conglomerate, which was then controlled by Marcos through Benjamin Romualdez, the
brother of Imelda Marcos."68 (Citations omitted)

In addition, Hull stated:

"19. I was informed that Disini received many millions of dollars in connection with this project. It is inconceivable
that an amount in the millions of dollars would not have been shared with President Marcos. In those days,
Marcos received a share in virtually every major profitable enterprise in the Philippines. My understanding was
that Marcos gave Disini the ‘hunting license’ on the PNPP project - that is, the authorization to strike deals
generating the largest possible commissions. Disini struck these deals, for the benefit of himself and Marcos, with
Westinghouse and Burns & Roe."69

He further expounded on the benefits obtained by the Disini corporations as follows:

"86. Another demand coming from Disini was that we pay additional commissions to Asia Industries, Inc., which
had been acquired by Disini. Disini was essentially asking for a $200,000 gratuity to be paid to Asia Industries, Inc.
for ‘services rendered.’ We did not feel it was fair or necessary for us to pay this additional commission.

"87. Our strategy in response to these new demands was to delay giving a direct answer to Disini until the prime
contract was signed, in order to avoid antagonizing Vergara and Disini. We would, however, promise to give Asia
Industries, Inc. a commission of ½% of the total contract price of any additional work that Burns & Roe was
awarded. This strategy was summarized in my handwritten notes on a March 20, 1975 telex we received from
Ketterer, a copy of which is included as Exhibit 32 hereto.

"88. Disini was not pleased with the deferral in receiving his commission payments. As the signing of the prime
contract into 1976, I began to exchange increasingly terse telexes with Rodolfo (‘Jake’) Jacob, one of Disini’s
subordinates, regarding the ‘shipments’ (commission payments). The mechanics of the payments had been easily
worked out: we would issue Citicorp bank drafts in dollars in favor of Technosphere, and would send them by
registered mail to Mr. Disini’s designated contact in Switzerland (Mr. Rene Pasche in Lausanne). However, the
initial ‘shipment’ continued to be postponed, since it was due only when Westinghouse received acknowledgment
from NPC that the contract commencement date had occurred. Disini pressed us, nonetheless, for payment of his
commissions. On April 19, 1976, I telexed Disini and indicated that neither Westinghouse nor Burns & Roe had any
funds to initiate the scheduled payments until the first letter of credit making funds available to Westinghouse was
opened. I emphasized to Disini that Burns & Roe’s subcontract with Westinghouse had made full provision for a
schedule of commission payments to Disini, but the schedule could only be implemented upon activation of the
prime contract.

"89. Disini took matters up directly with Mr. Roe. Exhibit 33 hereto contains a copy of an April 26, 1976 telex from
Disini to Mr. Roe, in which Disini quoted from my previous exchanges with Jacob on the schedule of commission
payments. Disini demanded that Burns & Roe make the initial commission payment during April 1976, either by
actually issuing a bank draft or by giving Disini a promissory note. Exhibit 33 also includes Mr. Roe’s April 28, 1976
response telex to Disini. In his response, Mr. Roe reaffirmed our position that we could not pay the Phase II
commissions to Disini until the prime contract officially commenced. Mr. Roe also declined to issue a promissory
note, since it would leave Burns & Roe open to liability for the note without recourse if the contract was
terminated without having officially commenced. Mr. Roe ended his telex to Disini as follows (Exhibit 33):

‘It is complicated, confusing and unfortunate to all parties that delay in project implementation thru opening of
true LC has delayed shipments by both PC [Westinghouse] and ourselves. We have discussed this situation at
highest levels of prime contractor and have no other course of action open to us.’"70

Allegations of Hearsay

In a final attempt to shoot down the evidence of the PCGG, the ombudsman also capriciously dismissed some
statements in the Affidavits of Hull as mere hearsay and conjecture. We do not agree. Hull made clear and
categorical statements in his Affidavits regarding the communications and negotiations, of which he absolutely had
personal knowledge. He positively identified the exchanges of communication between himself and the other
officials of Westinghouse and Burns & Roe, the main beneficiaries in this case. Such evidence cannot be hearsay.
As clarified earlier, a preliminary investigation is not the occasion for the full and exhaustive display of the parties’
respective sets of evidence.71 Thus, the relative validity and merits of the defense and the accusation, as well as
the admissibility of testimonies and pieces of evidence, are better ventilated during the trial than during the
preliminary investigation.72
Other statements or documents alleged to be hearsay were testified to by Hull as independently relevant
statements. Hull was competent to testify on those matters, because he had heard them or seen the execution of
the pertinent documents. These were therefore matters of fact derived from his own perception.73 The purpose
of such testimony was merely to prove either that the statement or the tenor thereof was made.74 Also, granting
that there were other statements that could be considered hearsay, these were on minor and incidental matters.
What should be significant is the fact that Hull attested to the actual negotiations with Disini to show the latter’s
involvement in the crimes charged by the PCGG. The former’s testimony was further strengthened by a multitude
of other documents that validated the questionable transactions.

Neither does this Court subscribe to the contention that Hull’s statements in his Affidavit are based on conjectures
and speculations, simply because they were prefaced with words like "I understand" and "I believe."

The ombudsman’s finding seems to oversimplify the weight and the sufficiency of the statements attested to in the
Affidavit. We do not peremptorily dismiss as incompetent statements attested to in a sworn affidavit, simply
because of such introductory phrases. We cannot fault Hull for using them, if he felt that they would appropriately
convey what he was to testify to. Besides, he was expressing only his own involvement in the chain of transactions
in this case. His testimony should thus be evaluated based on its merit. In fact, such phraseology only strengthens
the veracity and cogency of the Affidavits, for it shows that they were spontaneous and unrehearsed.1a\^/phi1.net

All told, to arrive at the conclusion that there was no sufficient ground to engender a well-founded belief that a
crime has been committed, it would be erroneous to take each piece of evidence or sentence in a long affidavit
singly or independently. It is clear that the totality of the evidence presented in this case was more than enough to
sustain a finding that Disini was probably guilty of the crime charged.

Finding of Probable Cause

Indeed, during the preliminary investigation, the PCGG was not obliged to prove its cause beyond reasonable
doubt. It would be unfair to expect the Commission to present the entire evidence needed to secure the conviction
of the accused prior to the filing of the information.75 The reason lies in the nature and the purpose of a
preliminary investigation. At this stage, the prosecutor does not decide whether the guilt of the person charged is
backed by evidence beyond reasonable doubt. The former merely determines whether there is sufficient basis to
believe that a crime has been committed, and whether the latter is guilty of it and should be held for trial.76

The established rule is that a preliminary investigation is not the occasion for the full and exhaustive display of the
parties’ respective sets of evidence. It is for the presentation only of such evidence as may engender a well-
grounded belief that an offense has been committed, and that the accused is probably guilty thereof.77

During the preliminary investigation, the main function of the government prosecutor -- the ombudsman in this
case -- is merely to determine the existence of probable cause and, if it does exist, to file the corresponding
information. Probable cause has been defined as the existence of such facts and circumstances as would excite in a
reasonable mind -- acting on the facts within the prosecutor’s knowledge -- the belief that the person charged is
probably guilty of the crime for which he or she is being prosecuted.78

Probable cause is a reasonable ground for presuming that a matter is or may be well-founded on such state of
facts in the prosecutor’s mind as would lead a person of ordinary caution and prudence to believe -- or entertain
an honest or strong suspicion -- that it is so.79 The term does not mean "actual and positive cause"; neither does it
import absolute certainty. It is based merely on opinion and reasonable belief. Thus, a finding of probable cause
does not require an inquiry into whether there is sufficient evidence to secure a conviction. It is enough that the
act or the omission complained of is believed to constitute the offense charged. Precisely, there is a trial to allow
the reception of evidence for the prosecution in support of the charge.80

It ought to be emphasized that in determining probable cause, the average person weighs facts and circumstances
without resorting to the calibrations of technical rules of evidence, of which such person’s knowledge is nil. Rather,
the lay person usually relies on the calculus of common sense, of which all reasonable persons have an
abundance.81

Effect on the Principal of the Dismissal of Charges Against Accomplices and Accessories

Finally, we are not unmindful of our prior ruling in Republic v. Vasquez.82 In that case, we agreed with the
ombudsman’s Resolution dismissing, for lack of evidence, the criminal charges against Respondents Paciencia E.
Disini, Angel E. Disini, Liliana L. Disini and Lea E. Disini.

There should be no disagreement with the Court’s Resolution in Vasquez. As we have stressed at the beginning of
this Decision, the present Petition should be granted as an exception to the doctrine of non-interference in the
ombudsman’s investigatory and prosecutory powers. In the previous Resolution in GR No. 114377, no grave abuse
of discretion was found in the dismissal of the indictment against Disini’s relatives. In the case before us, however,
it is clear that the ombudsman gravely abused his discretion in disregarding the evidence on record, as well as
some settled principles and rulings laid down by this Court.

Verily, there should be a divergence of results between the present Petition and the previous one, which
distinguished the charge against the other respondents. They were classified therein as mere accomplices or
accessories. In the present case, Herminio T. Disini is being charged as the principal. Because respondents have
been charged with different degrees of participation, the evidence needed to sustain an indictment for each of
them would necessarily also differ. In turn, this evidentiary difference would translate to one of degree, sufficiency
and appreciation thereof. Not finding any grave abuse of discretion in the preceding Petition will not ipso facto
lead to the same conclusion in this Petition.

While the dismissal of a charge against the principal accused would carry the charges against the accomplices and
the accessories, the discharge of the latter would not necessarily benefit the former. The responsibility of an
accessory or an accomplice is subordinate to that of the principal.83 Indeed, an accessory or an accomplice is like a
shadow that follows the principal,84 not the other way around.

PCGG Evidence Against Disini

In sum, the PCGG presented sufficient evidence to engender a well-founded belief that at least one crime had
been committed, and that Disini was probably guilty thereof and should be held for trial. An inventory of the
evidence offered would include:

1. The twelve-page Affidavit of Angelo V. Manahan

2. The ten-page Affidavit of Samuel P. Hull Jr.

3. The more extensive 90-paragraph, 44-page Supplemental Affidavit of Samuel P. Hull Jr.

4. At least six telexes dated November 1973 to April 1975, which were exchanged amongst Ketterer, Hull, Disini
and other Westinghouse and Burns & Roe officials, detailing the negotiations for the PNPP project, including all the
transactions leading to the payment of bribes and the unlawful commissions received by Disini and/or his
representatives

5. At least three Aides-Memoire demonstrating how Westinghouse and Burns & Roe were "preferred" and given
special treatment at the expense of other corporations involved in or competing for the PNPP project

6. The handwritten notations of Marcos expressing his preference for Westinghouse and Burns & Roe

7. A number of letters, correspondences and notes between Westinghouse and Burns & Roe officials -- specifically
Ketterer, Hull and Hammett -- narrating their transactions involving the PNPP project and the corresponding
commission payments to Disini

8. Three separate documents showing that at least three members of the Marcos administration -- NPC General
Manager Ravanzo, Executive Secretary Alejandro Melchor and Solicitor General Estelito P. Mendoza -- disapproved
the Westinghouse and Burns & Roe proposals and objected to the government’s PNPP contract with Westinghouse
for being highly onerous and disadvantageous to the government

9. A host of documents showing Disini’s Interbank Foreign Currency Deposit Account with a corresponding flow of
commission payments into and out of Swiss bank accounts

10. Documents detailing the formation and the financial transactions of Disini’s corporations including Power
Contractors, Inc.; Herdis Group, Inc.; and Vulcan Industrial & Mining Corporation.

To our mind, the whole gamut of evidence presented is more than sufficient to support a criminal complaint for
the crimes of corruption of public officials in relation to bribery, and violation of the Anti-Graft Law. The evidence
on record has engendered the reasonable belief that Disini had offered, promised or actually given to a public
officer (Marcos) gifts or presents that made the latter liable for bribery.

Also, the PCGG has sufficiently established probable cause to show that Disini had capitalized, exploited and taken
advantage of his close personal relations with the former President, who was to decide ultimately which
corporation would undertake the PNPP project. In so doing, Disini requested and received pecuniary
considerations from Westinghouse and Burns & Roe, which were endeavoring to close the PNPP contract with the
Philippine government. All these things happened in violation of the Revised Penal Code and/or the Anti-Graft and
Corrupt Practices Act.

Should the appropriate information(s) be filed, nothing should prevent the ombudsman from presenting other
pieces of evidence to buttress the prosecution’s case and to prove beyond reasonable doubt the offense(s)
charged.

Parenthetically, the Republic of the Philippines and the NPC brought action against Westinghouse and Burns & Roe
before the US District Court of New Jersey. Ironically, after evaluating the foregoing documents, District Judge
Dickinson R. Debevoise concluded in his Decision dated September 19, 1991,85 that "there [was] sufficient
evidence of bribery." It behooves the Philippine government, especially the respondent ombudsman as the directly
affected authority, to review the facts carefully and to let the ax fall where it should.

Judge Debevoise rendered the Decision when the defendants therein moved for summary judgment. They alleged,
among others, that no genuine issue as to the charge of bribery was shown by the plaintiff’s pleadings,
depositions, answers to interrogatories, admissions or affidavits on record.
Indeed, the Bataan nuclear power plant is a monumental, billion-dollar, non-performing white elephant, which our
impoverished people are still paying for even if they have not benefited from it at all. Justice is long overdue. Let
those who appear to be responsible for this humongous mess be brought to account for their participation. Let
justice be done!

WHEREFORE, the Petition is GRANTED. The Resolution and the Order of the Office of the Ombudsman dismissing
the charges against Herminio T. Disini are SET ASIDE and the ombudsman is DIRECTED to file in the proper court
the appropriate criminal charge(s) against him. No costs.

SO OREDERED.

G.R. No. 132120 February 10, 2003

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioner,

vs.
Hon. ANIANO A. DESIERTO as Ombudsman, HERMINIO T. DISINI, PACIENCIA ESCOLIN-DISINI, ANGEL E. DISINI,
LILIANA L. DISINI and LEA E. DISINI, respondents.

DECISION

PANGANIBAN, J.:

The Office of the Ombudsman is endowed with a wide latitude of investigatory and prosecutory prerogatives in the
exercise of its power to pass upon criminal complaints. However, such power is not absolute; it cannot be
exercised arbitrarily or capriciously. Verily, when it is gravely abused through a gross misappreciation of evidence
and a whimsical dismissal of a complaint, this Court has the constitutional duty to reverse the ombudsman. The
present Petition is one such exception, involving serious allegations of multimillion-dollar bribes and unlawful
commissions. At the center of all these is the non-performing, billion-dollar Bataan nuclear power plant -- a virtual
white elephant -- which our impoverished people are still paying for, even if they have not benefited from it at all!

The Case

Before this Court is a Petition for Certiorari under Rule 65 of the Rules of Court, seeking to reverse the May 31,
1997 Resolution1 and the October 24, 1997 Order2 of then Ombudsman Aniano A. Desierto who, in OMB-0-91-
0800, exonerated Herminio T. Disini of the crimes of corruption of public officials in relation to bribery and of
violation of the Anti-Graft Law.3 The assailed Resolution dismissed the charges against Disini "for lack of prima
facie evidence,"4 while the assailed Order denied petitioner’s Motion for Reconsideration.5

The Antecedents6

The Presidential Commission on Good Government (PCGG), herein petitioner, charged Disini with "bribing the late
President Ferdinand E. Marcos as a means to induce him to assist and favor individuals and corporate entities."7
The charge pertained to the "negotiation, award, signing, amendment and implementation of the main and related
contracts for the Philippine Nuclear Power Plant (PNPP) project of the National Power Corporation (NPC), as a
result of which the afore-mentioned public official x x x accumulated and benefited from unlawful acquisition of
income or profits."8

The Petition alleges that sometime in August 1973, then President Marcos instructed the NPC to pursue, supervise
and undertake the construction and the eventual operation of the nuclear power plant in Morong, Bataan.
Because of its lack of expertise in designing and constructing commercial nuclear power plants, the NPC needed a
qualified engineering firm to act as consultant to assist it in selecting a plant site, preparing equipment
specifications, soliciting bids, and evaluating proposals from prospective contractors.

A number of companies, including Westinghouse Electric Corporation (hereinafter, "Westinghouse") and Burns &
Roe, a New York-based company,9 manifested their interest in the PNPP project. The former was interested in the
construction of the main PNPP project; and the latter, in the architectural and engineering contract. Burns & Roe
had initially offered its services to be NPC’s consultant; once so appointed, it later used that position as a
springboard to obtain the "more lucrative contracts" of the nuclear power plant project.

Petitioner further avers that in early 1974, a Westinghouse representative approached Disini to act as their go-
between with Marcos. Disini was known to be the late President’s close personal associate, whose wife was then
First Lady Imelda R. Marcos’ first cousin and the Marcos family’s personal physician. Disini relayed his acceptance
of the offer to Lea10 Sabol, the resident agent of Westinghouse in the Philippines.

Meanwhile, NPC General Manager Ramon Ravanzo informed Ebasco Services, Inc. (hereinafter, "Ebasco") that it
had been chosen by the NPC Board as consultant for the PNPP project.11 This move prompted Westinghouse and
Burns & Roe to send Marcos, through Disini, an Aide-Memoire strongly recommending that the consulting contract
given to Ebasco be awarded instead to Burns & Roe.12 Westinghouse wanted Burns & Roe to get the consultancy
contract, in order to place the latter in a position to recommend that the main contract for the construction of the
PNPP project be awarded to the former.

The Petition further alleges that the foregoing development was discussed by Samuel P. Hull Jr. and Kenneth E.
Roe -- the international operations director, and the chairman and chief executive officer, respectively, of Burns
and Roe. As a result, Hull enplaned for Manila and met with Disini at the Intercontinental Hotel in Makati. This
time, Disini not only assured Hull that he could influence Marcos to cause the reversal of the Decision awarding the
consulting contract to Ebasco, but he also made a commitment to Hull that the former would obtain for
Westinghouse the prime contract for the entire nuclear power plant project on a turn-key basis; and for Burns &
Roe, the award of the main architectural and engineering subcontract for the same project.13

Hull agreed to grant Disini a "commission" based on a percentage of the amounts paid to Burns & Roe under the
architectural and engineering contract and to pay up front $1 million dollars in four installments of $250,000
each.14

Sent to Marcos was another Aide-Memoire15 further stressing the need for awarding the consulting contract to
Burns & Roe. On February 22, 1974, Mr. L. C. Saunders of Westinghouse also wrote him a letter offering to submit
a "turn-key" proposal for the nuclear power plant project.16 In a handwritten note, Marcos instructed then
Executive Secretary Alejandro Melchor and Ravanzo to wait for Westinghouse’s offer and, "in the meantime, enter
into the contract for the consultant Burns and Roe."17 Consequently, NPC was constrained to rescind the letter of
intent issued to Ebasco and to award the consulting contract to Burns & Roe instead.18

Petitioner also states that in the early part of March 1974, Disini departed for San Francisco, California, USA, and
met with six (6) officials of Westinghouse. Convinced that Disini could surely influence Marcos to award the PNPP
prime contract to it, Westinghouse finally decided to retain him formally as its special sales representative (SSR).

On April 24, 1974, Westinghouse sent Marcos, through Disini, a letter containing its turn-key proposal.19 Upon
receipt of the letter, Marcos informed Melchor and Ravanzo of his preference for Westinghouse as shown by the
following handwritten notation: "I am calling them, Westinghouse, to brief me on their offer."20 Disini furnished
Westinghouse a copy of the letter containing Marcos’ marginal note as proof that he could effectively persuade
the late President to directly intervene and to conform to its goal of finally getting the award of the prime
construction contract for the PNPP project.

On May 7, 1974, a delegation sent by Westinghouse and headed by James M. Wallace, vice president and general
manager of its Power Systems Projects Division, briefed Marcos on its proposal.

On the same occasion, Burns & Roe also succeeded in obtaining the main architectural and engineering
subcontract, when Marcos directed Westinghouse to hire it for such purpose. However, in view of the apparent
conflict of interest, Burns & Roe gave up the consulting contract and retained only the architectural and
engineering contract, which it considered to be far more lucrative. Thereafter, it worked for the termination of its
consulting agreement with NPC and was subsequently replaced by Ebasco.21

In a cabinet meeting held on June 6, 1974, Marcos categorically stated his choice of Westinghouse.22 On the
following day, he formally authorized Ravanzo "to sign for and in behalf of the Republic of the Philippines, the
letter of commitment with Westinghouse Electric Corporation to negotiate for and formulate a signed and
effective contract between the two parties for the supply, installation, construction and start up of two 626-
megawatt nuclear power plants."23

In compliance with the Marcos directive, the NPC negotiated with Westinghouse. A draft of the turn-key contract
was submitted by the latter sometime in November 1974. During the negotiations, Westinghouse was apparently
annoyed at Ebasco’s consultancy role. Hence, John F. Doyle, its commercial manager for the PNPP project,
prepared another Aide-Memoire, allegedly sent to Marcos through Disini, denouncing "the expansion of Ebasco’s
influence and the possibility that the knowledge it gained during said negotiations could be used against
Westinghouse to promote Ebasco’s own interest as a potential competitor and an ally of GE."24 Marcos took
prompt action by directing Ravanzo, Melchor and NPC Chairman Manuel Barreto "to leave the whole construction
(civil and erection) to Westinghouse since the concept is totally turn-key."25 Marcos also ordered them to "keep
Ebasco strictly to its role as a consultant."26

In a Memorandum Report dated May 5, 1975,27 Ravanzo pointed out that many provisions in the Westinghouse
contract were extremely onerous, unacceptable or inconsistent with the turn-key approach to project
implementation. Melchor endorsed Ravanzo’s Report to Marcos, opining that the problems being encountered
with Westinghouse "may be attributed to the absence of competitive pressure."28 Melchor thus proposed that
alternative suppliers be considered.29 But Marcos overruled their recommendations and directed the NPC to
"finalize negotiations with Westinghouse and to submit to me for approval your recommendations."30

By November 1975, the final draft of the Westinghouse contract was referred to then Solicitor General Estelito P.
Mendoza for review. Noting that the proposed contract was extremely onerous and unfavorable to the
government, he recommended that NPC should reject it.31 However, notwithstanding the foregoing adverse
observations and unfavorable recommendation, Marcos directed the NPC to sign the contract with Westinghouse.
That contract was finally executed on February 9, 1976.

Aside from alleging that illegal commissions in terms of millions of dollars were remitted to Disini and Marcos, the
Petition further avers that other material benefits from the two contractors were given to both men. Such benefits
were allegedly in the form of subcontracts awarded to companies which Marcos and Disini owned, or in which
they had beneficial interests.

One of these companies was Power Contractors Inc. (hereinafter, "PCI"), which had been organized by Disini to
undertake the civil/structural construction work for the nuclear power plant.32 Despite NPC’s strong objections to
the hiring of a company that lacked a track record that would justify its selection, PCI was nonetheless retained as
a subcontractor.

Similarly, against the advice of NPC, Westinghouse hired the services of the Engineering and Construction
Company of Asia (hereinafter, "Ecco-Asia") as mechanical and electrical subcontractor for the project.

Following the signing of the contract and the finalization of the project financing, NPC opened letters of credit in
favor of Westinghouse to cover progress payments, pursuant to the contract.

After Mrs. Corazon C. Aquino took over the Presidency of the Republic, petitioner filed the previously mentioned
charges against Disini before the Office of the Ombudsman which, as already stated, dismissed the charges. Hence,
the instant Petition.33

Issue

The present Petition for Certiorari under Rule 6534 contends that the Presidential Commission on Good
Government has submitted sufficient evidence to engender a well-grounded belief that an offense has been
committed and that Disini is probably guilty thereof, but that public respondent -- in grave abuse of discretion
amounting to lack or excess of jurisdiction -- capriciously and arbitrarily dismissed the charges.

This Court’s Ruling

The Petition is meritorious.

Main Issue
Sufficiency of Evidence

As a general rule, the Office of the Ombudsman is endowed with a wide latitude of investigatory and prosecutory
prerogatives in the exercise of its power to pass upon criminal complaints. However, such authority is not
absolute; it cannot be exercised arbitrarily or capriciously. Verily, the Constitution has tasked this Court "to
determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of any branch or instrumentality of the Government,"35 including the Office of the Ombudsman.
Specifically, this Court is mandated to review and reverse the ombudsman’s evaluation of the existence of
probable cause, if it has been made with grave abuse of discretion.36

More categorical was our ruling in Nava v. Commission on Audit,37 in which we held:

"An aggrieved party is not left without any recourse. Where the findings of the Ombudsman as to the existence of
probable cause [are] tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the
aggrieved party may file a petition for certiorari under Rule 65 of the Rules of Court."38

Grave abuse of discretion refers not merely to palpable errors of jurisdiction; or to violations of the Constitution,
the law and jurisprudence.39 It refers also to cases in which, for various reasons, there has been a gross
misapprehension of facts.40 The present Petition is one such exception, involving serious allegations of
multimillion-dollar bribes and unlawful commissions.

The Ombudsman’s Grounds

for Disini’s Exoneration

The ombudsman decided in favor of Disini and ordered the dismissal of the Complaint against the latter, on the
basis of the following:

1. There was no testimonial evidence (a) that Disini was interested in the proposal of Westinghouse to be its
special sales representative during negotiations for the award of the PNPP project, or (b) that he intervened for
Burns and Roe to stop the hiring of Ebasco as NPC consultant for the project.

2. There was neither documentary evidence nor corroborating affidavit showing how Disini had actually met with
Hull to assure the latter that the former could influence Marcos to overturn the award of the consulting contract
to Ebasco and to eventually award the PNPP contracts to Westinghouse and to Burns & Roe.

3. Neither the Aides-Memoire allegedly sent to Marcos through Disini nor the telexes and the correspondences
between the officials of Westinghouse and Burns & Roe indicated the author, the addressee, or the dates on which
they were drafted or sent.

4. All the negotiations for the unlawful commissions and the actual payments thereof were based on
unauthenticated documents.

5. There was no testimonial evidence that the bank transactions or the remittances questioned by the PCGG had
actually been sourced from commission payments by Westinghouse and Burns & Roe.

6. There was insufficient supporting evidence for the fact that certain corporations owned or headed by Disini --
like PPI and ECCO-Asia -- were organized specifically for the PNPP project, or that Marcos had business interests in
those corporations.

To be sure, the nullity of a resolution may be shown not only by what patently appears on its face, but also by the
documentary and the testimonial evidence found in the records of the case, upon which such ruling is based.41
From these pieces of evidence on record, we will now show why the ombudsman gravely abused his discretion in
dismissing the Complaint against Disini.

Testimonial Evidence Showing That Disini Intervened for Westinghouse

First. The ombudsman ruled that there was no testimonial evidence on record showing that Disini had actually
intervened for Westinghouse as its special sales representative in negotiations for the PNPP project.

This finding is completely belied by the records of this case. Complainant PCGG, through its Security and
Investigation Department, submitted Hull’s Affidavit42 dated September 28, 1988. This document detailed how
Hull had met and communicated with Disini to discuss matters leading to (1) the revocation of the consulting
contract with Ebasco and (2) the eventual award of the PNPP project to Westinghouse and Burns & Roe.

The 44-page Supplemental Affidavit43 executed by Hull on November 28, 1988 was even more detailed and
damning. It elaborated on his communications and negotiations with, and payments of commissions to, Disini in
exchange for the selection of Westinghouse and Burns & Roe over other corporations vying for the PNPP project.

The communications between Hull and the other officials of Westinghouse and Burns & Roe clearly show that
negotiations involving Disini and these two companies indeed took place. We do not see how the ombudsman
could have simply closed his eyes to Hull’s positive, direct and categorical statements to that effect:
"12. In the same conversation, Disini indicated that he could arrange award of the entire nuclear power plant
contract to Westinghouse on a turnkey basis, in which case he would see to it that Burns & Roe was awarded the
Architect/Engineer assignment as subcontractor to Westinghouse. I took notes of our conversation on an
Intercontinental Hotel coffee shop placemat, which I took with me and saved.

"13. Following this meeting, Jesus Vergara assured me repeatedly that Disini would take the matter up with
President Marcos and that everything would come out all right for Burns & Roe and Westinghouse. He said he was
in constant touch with Disini, and knew that Disini would come through.

"14. I learned a day or two after my meeting with Disini that NPC’s negotiations with Ebasco on the consulting
contract had ceased, and NPC was ready to enter into a consulting contract with Burns & Roe. I learned of this
decision in a telephone message from either Mr. Ravanzo or Mr. Del Rosario of NPC. Jesus Vergara later explained
to me at a meeting in his office that Burns & Roe was replacing Ebasco because Herminio Disini had spoken to
President Marcos, and Marcos had ordered NPC to hire Burns & Roe. To prove this, Vergara gave me a copy of a
letter from Westinghouse to Marcos dated February 22, 1974 bearing a handwritten notation in the margin, which
I was told was written by Marcos, and which instructed NPC’s general manager to ‘enter into the contract for the
consultants Burns & Roe.’ A copy of the letter is attached to this Affidavit as Exhibit A. Vergara said he was giving
me this letter as proof that Disini could ‘deliver.’

"15. Len Sabol, Jesus Vergara, and others in Manila told me at that time that Westinghouse was in the process of
negotiating a similar SSR agreement with Disini whereby he would secure the prime PNPP contract on a turnkey
basis for Westinghouse. The replacement of Ebasco by Burns & Roe was also being used by Westinghouse as a test
of Disini’s influence with President Marcos. I understood that it was only after he passed this test that
Westinghouse finalized its deal with him."44

xxxxxxxxx

"20. I also subsequently learned, through documents received in my trip to the Philippines in February 1974, that
Herminio Disini, Vergara and Sabol had been working behind the scenes to have the award of the Phase I contract
to Ebasco vacated. Their intent then was not so much to benefit Burns & Roe, as to prevent Ebasco from receiving
the contract. Ebasco was known to be close to General Electric Company (‘GE’), a competitor of Westinghouse.
Sabol, Vergara and Disini feared that selection of Ebasco would give GE an advantage over Westinghouse."45
1awphi1.nét

In the face of the Affidavit and the Supplemental Affidavit, it is indeed strange how the ombudsman could have
ruled that there was no testimonial evidence on the said matters. That he ruled thus clearly shows that he
whimsically opted to disregard those pieces of evidence and thereby demonstrated his capricious and arbitrary
exercise of judgment.

The complainant is required to file affidavits "as well as other supporting documents to establish probable cause,"
as stated in the Rules of Court:

"(a) The complaint shall state the address of the respondent and shall be accompanied by the affidavits of the
complainant and his witnesses, as well as other supporting documents to establish probable cause."46

This requirement was fulfilled by the PCGG. The Supplemental Complaint47 was accompanied by the Affidavits of
witnesses as well as by a host of other supporting documents, all of which -- taken together -- established probable
cause.
It should be noted that the Rules on Evidence recognizes different forms of evidence -- object, documentary or
testimonial48 -- without preference for any of them in particular. What should really matter are the weight and
the sufficiency of the evidence presented.

Meetings with Disini

Second. As mentioned earlier, the ombudsman found no evidence that Disini had actually met with and assured
Hull that the former could influence Marcos to overturn the award of the consulting contract to Ebasco and the
eventual award of the PNPP project to Westinghouse and Burns & Roe. The aforesaid Affidavits completely
controvert his finding. Hull’s statements on the matter are clear, specific and categorical:

"10. x x x I met Disini at the Intercontinental Hotel. We discussed the basic terms of a Special Sales Representative
(SSR) agreement between Disini and Burns & Roe, whereby he would assist us in obtaining PNPP business in return
for commission payments. Disini flaunted his close relationship with President Marcos. He represented that he had
the authority to arrange the entire nuclear power plant project in any way he wished. Specifically, Disini told me
that he could get the Architect/Engineering contract to Burns & Roe. He stated that overturning the award of the
consulting contract to Ebasco was ‘no problem,’ and in fact was only a small part of what he could do for Burns &
Roe. In fact, he offered to stop the award of the consulting contract to Ebasco and have it awarded to Burns & Roe
as a test of his ability to deliver.

"11. Disini asked for commission payments once the Architect/Engineer contract was awarded to Burns & Roe. He
wanted the payments to be made up front, and I offered payment on a pari passu basis. We ended up
compromising on an agreement under which Burns & Roe would pay Disini commissions based on a percentage of
the payments for Burns & Roe’s services under the Architect/Engineer contract. One million dollars would be paid
up front over a period of something like 18 months or two years, in four installments of $250,000 each. Any
remaining commissions would be paid over the life of the contract. The $1 million dollar figure was based on our
assumption that the Architect/Engineer contract would generate at least $20 million in revenue to Burns & Roe.

"12. In the same conversation, Disini indicated that he could arrange award of the entire nuclear power plant
contract to Westinghouse on a turnkey basis, in which case he would see to it that Burns & Roe was awarded the
Architect/Engineer assignment as subcontractor to Westinghouse. I took notes of our conversation on an
Intercontinental Hotel coffee shop placemat, which I took with me and saved."49

xxxxxxxxx

"16. In April 1974 Kenneth Roe visited Manila and met with Disini. Roe called me and another Burns & Roe
executive, Lawton Hammett, from Manila on April 23 and explained that he had confirmed in his meeting with
Disini the SSR relationship I had worked out in my February trip. Roe reported that Westinghouse also had a deal
with Disini and that Westinghouse’s commissions were to be paid to President Marcos. Hammett took notes on
this telephone call.

"17. The Burns & Roe SSR agreement with Disini was put in writing. I believe it was between Burns & Roe and one
of Disini’s companies. While I do not recall the exact formula for the commissions to be paid under the contract, I
believe that we were to pay at least $1 million in four equal installments, plus additional amounts calculated under
the formula, to be paid through the life of our Architect/Engineer subcontract. I know that the amount we agreed
to pay Disini was far higher than would have been justified by the services Disini was to render pursuant to the SSR
agreement (such as providing advice and counsel to us, secretarial help, or telex services). The real purpose of our
agreement with Disini was simply for him to influence President Marcos to award Burns & Roe the
Architect/Engineer subcontract on the PNPP project."50
In later negotiations and communications, there were also references to this meeting between Hull and Disini. Hull
absolutely had personal knowledge of the above statements. This meeting -- taken with the whole series of acts,
transactions, correspondences, meetings and documents -- is sufficient ground to determine the existence of
probable cause and to sustain a finding that Disini was probably guilty of the crime charged.

Aides-Memoire and Telexes

Third. The PCGG presented Aides-Memoire and telexes showing Disini’s complicity in the crimes charged.
However, the ombudsman declared that these could not stand, because the authors and the addressees as well as
the dates of drafting and sending had not been indicated.

Again, such findings cannot be sustained. The PCGG presented, as corroborative evidence of the questioned Aides-
Memoire and telexes between the officials of Westinghouse and Burns and Roe, the Affidavits of Samuel Hull Jr.51
and Angelo Manahan52 -- the executive vice president of Herdis Management and Investment Corporation
(HMIC),53 of which Disini was chairman. The prosecution argued thus:

"The import of witness Manahan’s Affidavit dated January 26, 1989, attached as Annex ‘A’ to petitioner’s Motion
for Reconsideration, is not to provide proof of commission payments to respondent Herminio T. Disini but to
explain how the ‘Aide Memoires’ were used by private respondents to perpetrate the acts complained of
constituting violation of the Revised Penal Code and the Anti-Graft and Corrupt Practices Act."54

Declared Manahan:

"7. Aide memoires were confidential memoranda from Mr. Disini to President Marcos (who was addressed as ‘Sir’),
in which Mr. Disini provided information to the President or requested that the President take specified actions in
favor of HMIC/HGI, or of Disini personally. Typically, Mr. Federico E. Navera (HGI’s controller, and my direct
subordinate) would provide any financial information that went into an aide memoire. Mr. Jacob would prepare an
initial draft of the aide memoire, and Mr. Padre would provide the final drafting, editing and reorganization of the
document. Mr. Disini would then approve and sign the document, and either he or his wife Paciencia Disini
(President Marcos’ personal physician, who according to rumors visited the President daily) would deliver the aide
memoire to President Marcos. Mr. Disini’s main contribution to HGI’s business was, in fact, preparing the aide
memoires and influencing President Marcos to act favorably on the requests for action they contained. Mr. Disini
was extremely successful in this; I estimate that 85% of the aide memoires he submitted to President Marcos
resulted in the President taking the action solicited by Mr. Disini."55

The Affidavits of Hull likewise confirmed the telexes between Westinghouse and Burns & Roe officials, including
himself, in connection with the PNPP transactions. He specifically identified the existence of these documents,
which positively linked Disini and Marcos to the dealings of these two corporations. In fact, Hull attested to their
use of codes, which he sufficiently explained, in matters that they considered sensitive in relation to the PNPP
project. He stressed this point in his Supplemental Affidavit as follows:

"37. On February 26, 1974, Ketterer and I travelled to Hongkong, he to return to his post and I on my way back to
the U.S. That evening, as we reflected on the events of the prior two weeks, we decided it would be prudent to
develop a secret code that would permit rapid communication by telex while maintaining confidentiality. We
agreed on code names for key individuals (e.g., President Marcos was ‘Lester’, Ravanzo was ‘Bozo’), parties (e.g.,
Westinghouse was ‘Willy’, Ebasco was ‘Seagull’, Burns & Roe was ‘Home’, NPC was ‘Charlie’), and terms (e.g.,
contract was ‘lucky’, negotiation was ‘festival’, turnkey was ‘door’), etc. I marked up a copy of my February 20,
1974 telex (Exhibit 11) with the codes, as an example of how an encoded communication would be read. Exhibit 15
hereto is a copy of the marked up telex, with my handwritten notations identifying the various code names.
Subsequently, we used some of these codes (or modifications to them) to communicate between the U.S. and
Manila."56

Given the foregoing clarification, the ombudsman’s cavalier disregard of the aforementioned documents and
attestations was arbitrary, whimsical and capricious, to say the least.

Further showing his grave abuse of discretion, the ombudsman even questioned how the PCGG could prove that
the persons referred to in the said coded communications were Marcos and Disini, when the supposed senders
and addressees had never signified their willingness to testify against respondents.

This fact reveals the faulty approach taken by public respondent. During the stage of preliminary investigation, he
was vainly looking for evidence that was understandably not there yet, being suited to a trial proper; but was
closing his eyes to evidence that was already there, sufficient to determine probable cause -- his task at hand.

Negotiations for and Actual Payments of Commissions

Fourth. The ombudsman argued that none of the documents evidencing the negotiations for and the actual
payment of commissions had been authenticated.

While it may be true that the documents were not signed (for telexes are not signed), they were nonetheless
identified and their sources authenticated. Often have we ruled that the validity and the merits of a party's
defense or accusation, as well as the admissibility of testimonies and pieces of evidence, are better ventilated
during the trial than during the preliminary investigation.57 Neither can the ombudsman rule on the presence or
the absence of the elements of the crime, for these are by nature evidentiary and defense matters, the truth of
which can be best passed upon after a full-blown trial on the merits.58

It must here be stressed that a preliminary investigation is essentially inquisitorial. It is often the only means of
discovering the identities of the persons who may be reasonably charged with a crime, in order to enable the
prosecutor to prepare the complaint or information.59 Such investigation is not part of the trial of the case on the
merits and has no purpose other than to determine whether a crime has been committed, and whether there is
probable cause to believe that the accused is guilty thereof. Furthermore, a preliminary investigation does not
place in jeopardy the persons who are subjected to it.60 It is not the occasion for the full and exhaustive display of
both parties’ evidence, but for the presentation only of such evidence as may engender a well-grounded belief that
an offense has been committed and that the accused is probably guilty thereof.61

Nonetheless, corroborative proof of the negotiations for and the actual payment of commissions was also
provided by the Affidavit of Hull:

"18. I understand the first payment of $250,000 to Disini was made through an advance from Westinghouse,
because Burns & Roe had not done enough work on the project to generate this amount. The first check for
$250,000 was cut by the Treasurer of the Burns & Roe and made out to a Disini bank account in Switzerland. I was
asked to carry this check with me on a trip I was planning to make to Europe. When my trip was cancelled, the
payment to Disini was made through a wire transfer. I am not certain how many payments were made to Disini in
all, but I believe that at least two payments of $250,000 were made."62

Such arrangements were expounded in Hull’s Supplemental Affidavit, which we quote:

"70. Once the arrangement between Burns & Roe and Disini was formalized in April 1974, we began to discuss with
Disini the mechanism for the transfer of the SSR payments to him from Burns & Roe. Disini insisted that the funds
be secretly conveyed to a bank account in Switzerland. Starting with my May 16, 1974 telex to Disini, we worked
on the details of the transfer (Exhibit 22)."63

Commission Payments Through Bank Transactions and Remittances

Fifth. The ombudsman also faulted the PCGG for failing to present testimonial evidence from a responsible officer
or a duly authorized representative of the concerned local and foreign banks. Such evidence could have attested to
the fact that the bank remittances questioned by the PCGG had actually been sourced from the commissions paid
to Disini by Westinghouse and Burns & Roe. The ombudsman held that the documents presented to prove
commission payments were mere scraps of paper.

Again, such finding wantonly disregarded the Affidavits of Hull, who confirmed that Disini had actually received
commission payments from Westinghouse and Burns & Roe.

The ombudsman should have followed through with clarificatory questions on the information given by Manahan.
According to this information, although the latter was the chief financial officer of Herdis Group, Inc. (HGI) -- a
Disini company -- he was not informed of the details of the commission payments made to that company by
Westinghouse. He declared thus:

"16. Exhibit 9 (Document 00727) is a one-page tabulation of nuclear power plant commissions, typed in Mr. Disini’s
stationery. Although I was HGI’s chief financial officer, I was not informed of the details of the arrangement under
which HGI rec[e]ived commissions from Westinghouse Electric Corporation (‘Westinghouse’) in connection with
the Philippine Nuclear Power Plant (‘PNPP’). Anything that related to PNPP was treated as secret by Mr. Disini and
his close advisors. The Westinghouse commission payments were handled by Mr. Jerry Orlina, who was Mr. Disini’s
personal finance officer.l^vvphi1.net The Westinghouse commission payments were never received by HGI in the
Philippines, and my understanding is that they were paid directly into foreign bank accounts. The funds from the
commissions never entered HGI’s treasury.

"17. The only payments received by HGI in the Philippines relating to PNPP were a number of checks amounting to
millions of pesos that were remitted by Power Contractors, Inc. (‘PCI’), the civil construction contractor for the job,
in the nature of dividends. HGI was 40% owner of PCI and shared in whatever profits PCI realized from its role on
the plant’s construction."64

Hull, on the other hand, confirmed in his Affidavit that Burns & Roe was to pay at least $1 million in four equal
installments plus additional amounts calculated under the formula, to be paid throughout the life of their
architectural and engineering subcontract.65

Besides, the ombudsman was grievously mistaken in insisting on testimonial evidence from bank representatives
to show conclusively that commissions had indeed been paid. The PCGG had already presented numerous
documents; coupled with Affidavits evidencing agreements on commission payments, correspondences, and the
flow of commission payments from Westinghouse to Disini’s Interbank Foreign Currency Deposit (FCD) and on to
Swiss bank accounts.

In requiring testimonial evidence, the public respondent brushed aside all the other forms of evidence presented
by the prosecution. In short, he disregarded them capriciously without passing upon their weight and sufficiency. It
seems that he was preoccupied with requiring the presentation of evidence that was not there, while closing his
eyes to evidence actually presented by the PCGG for his consideration.
The Disini Corporations and the PNPP Projects

Sixth. The ombudsman opined that the evidence of the PCGG failed to substantiate its claim that the corporations
owned or headed by Disini had been organized mainly to benefit from the PNPP project. Further, the ombudsman
found no proof that Marcos had business interests in the said corporations, such that any commission paid to
them would redound to the latter’s benefit.

A painstaking examination of the documents submitted by the PCGG sufficiently contradicts these findings. Disini’s
control over Power Contractors, Inc. is evidenced by an Assignment of Shares Without Stock Certificates66 dated
March 6, 1975. Unquestionably, this company was organized67 to undertake for Westinghouse subcontracts for
the PNPP project.

Argued the PCGG:

"Aside from the commissions in terms of millions of dollars remitted to them by Westinghouse and Burns and Roe,
it is further averred that H. Disini and Marcos also received other material benefits from these two contractors in
the course of the implementation of said project. As part of the overall plan to plunder the nuclear project funds,
subcontracts pertaining to the project were awarded to companies in which Marcos and H. Disini held ownership
or beneficial interests.

"One of these companies is the Power Contractors, Inc. organized by H. Disini to undertake the civil/structural
construction work for the nuclear power plant. Despite strong objections by the NPC against hiring of PCI’s services
due to its lack of previous track record that would justify its selection, said company was retained as a
subcontractor due to Marcos’ direct intervention.

"Similarly, Westinghouse hired the services of the Engineering and Construction Company of Asia (Ecco-Asia) as
the mechanical and electrical subcontractor for the project against the advice of NPC because of Ecco-Asia’s lack of
technical competence. Although not qualified, Westinghouse awarded the subcontract to Ecco-Asia, known to be a
subsidiary of the Meralco conglomerate, which was then controlled by Marcos through Benjamin Romualdez, the
brother of Imelda Marcos."68 (Citations omitted)

In addition, Hull stated:

"19. I was informed that Disini received many millions of dollars in connection with this project. It is inconceivable
that an amount in the millions of dollars would not have been shared with President Marcos. In those days,
Marcos received a share in virtually every major profitable enterprise in the Philippines. My understanding was
that Marcos gave Disini the ‘hunting license’ on the PNPP project - that is, the authorization to strike deals
generating the largest possible commissions. Disini struck these deals, for the benefit of himself and Marcos, with
Westinghouse and Burns & Roe."69

He further expounded on the benefits obtained by the Disini corporations as follows:

"86. Another demand coming from Disini was that we pay additional commissions to Asia Industries, Inc., which
had been acquired by Disini. Disini was essentially asking for a $200,000 gratuity to be paid to Asia Industries, Inc.
for ‘services rendered.’ We did not feel it was fair or necessary for us to pay this additional commission.

"87. Our strategy in response to these new demands was to delay giving a direct answer to Disini until the prime
contract was signed, in order to avoid antagonizing Vergara and Disini. We would, however, promise to give Asia
Industries, Inc. a commission of ½% of the total contract price of any additional work that Burns & Roe was
awarded. This strategy was summarized in my handwritten notes on a March 20, 1975 telex we received from
Ketterer, a copy of which is included as Exhibit 32 hereto.

"88. Disini was not pleased with the deferral in receiving his commission payments. As the signing of the prime
contract into 1976, I began to exchange increasingly terse telexes with Rodolfo (‘Jake’) Jacob, one of Disini’s
subordinates, regarding the ‘shipments’ (commission payments). The mechanics of the payments had been easily
worked out: we would issue Citicorp bank drafts in dollars in favor of Technosphere, and would send them by
registered mail to Mr. Disini’s designated contact in Switzerland (Mr. Rene Pasche in Lausanne). However, the
initial ‘shipment’ continued to be postponed, since it was due only when Westinghouse received acknowledgment
from NPC that the contract commencement date had occurred. Disini pressed us, nonetheless, for payment of his
commissions. On April 19, 1976, I telexed Disini and indicated that neither Westinghouse nor Burns & Roe had any
funds to initiate the scheduled payments until the first letter of credit making funds available to Westinghouse was
opened. I emphasized to Disini that Burns & Roe’s subcontract with Westinghouse had made full provision for a
schedule of commission payments to Disini, but the schedule could only be implemented upon activation of the
prime contract.

"89. Disini took matters up directly with Mr. Roe. Exhibit 33 hereto contains a copy of an April 26, 1976 telex from
Disini to Mr. Roe, in which Disini quoted from my previous exchanges with Jacob on the schedule of commission
payments. Disini demanded that Burns & Roe make the initial commission payment during April 1976, either by
actually issuing a bank draft or by giving Disini a promissory note. Exhibit 33 also includes Mr. Roe’s April 28, 1976
response telex to Disini. In his response, Mr. Roe reaffirmed our position that we could not pay the Phase II
commissions to Disini until the prime contract officially commenced. Mr. Roe also declined to issue a promissory
note, since it would leave Burns & Roe open to liability for the note without recourse if the contract was
terminated without having officially commenced. Mr. Roe ended his telex to Disini as follows (Exhibit 33):

‘It is complicated, confusing and unfortunate to all parties that delay in project implementation thru opening of
true LC has delayed shipments by both PC [Westinghouse] and ourselves. We have discussed this situation at
highest levels of prime contractor and have no other course of action open to us.’"70

Allegations of Hearsay

In a final attempt to shoot down the evidence of the PCGG, the ombudsman also capriciously dismissed some
statements in the Affidavits of Hull as mere hearsay and conjecture. We do not agree. Hull made clear and
categorical statements in his Affidavits regarding the communications and negotiations, of which he absolutely had
personal knowledge. He positively identified the exchanges of communication between himself and the other
officials of Westinghouse and Burns & Roe, the main beneficiaries in this case. Such evidence cannot be hearsay.
As clarified earlier, a preliminary investigation is not the occasion for the full and exhaustive display of the parties’
respective sets of evidence.71 Thus, the relative validity and merits of the defense and the accusation, as well as
the admissibility of testimonies and pieces of evidence, are better ventilated during the trial than during the
preliminary investigation.72

Other statements or documents alleged to be hearsay were testified to by Hull as independently relevant
statements. Hull was competent to testify on those matters, because he had heard them or seen the execution of
the pertinent documents. These were therefore matters of fact derived from his own perception.73 The purpose
of such testimony was merely to prove either that the statement or the tenor thereof was made.74 Also, granting
that there were other statements that could be considered hearsay, these were on minor and incidental matters.
What should be significant is the fact that Hull attested to the actual negotiations with Disini to show the latter’s
involvement in the crimes charged by the PCGG. The former’s testimony was further strengthened by a multitude
of other documents that validated the questionable transactions.

Neither does this Court subscribe to the contention that Hull’s statements in his Affidavit are based on conjectures
and speculations, simply because they were prefaced with words like "I understand" and "I believe."

The ombudsman’s finding seems to oversimplify the weight and the sufficiency of the statements attested to in the
Affidavit. We do not peremptorily dismiss as incompetent statements attested to in a sworn affidavit, simply
because of such introductory phrases. We cannot fault Hull for using them, if he felt that they would appropriately
convey what he was to testify to. Besides, he was expressing only his own involvement in the chain of transactions
in this case. His testimony should thus be evaluated based on its merit. In fact, such phraseology only strengthens
the veracity and cogency of the Affidavits, for it shows that they were spontaneous and unrehearsed.1a\^/phi1.net

All told, to arrive at the conclusion that there was no sufficient ground to engender a well-founded belief that a
crime has been committed, it would be erroneous to take each piece of evidence or sentence in a long affidavit
singly or independently. It is clear that the totality of the evidence presented in this case was more than enough to
sustain a finding that Disini was probably guilty of the crime charged.

Finding of Probable Cause

Indeed, during the preliminary investigation, the PCGG was not obliged to prove its cause beyond reasonable
doubt. It would be unfair to expect the Commission to present the entire evidence needed to secure the conviction
of the accused prior to the filing of the information.75 The reason lies in the nature and the purpose of a
preliminary investigation. At this stage, the prosecutor does not decide whether the guilt of the person charged is
backed by evidence beyond reasonable doubt. The former merely determines whether there is sufficient basis to
believe that a crime has been committed, and whether the latter is guilty of it and should be held for trial.76

The established rule is that a preliminary investigation is not the occasion for the full and exhaustive display of the
parties’ respective sets of evidence. It is for the presentation only of such evidence as may engender a well-
grounded belief that an offense has been committed, and that the accused is probably guilty thereof.77

During the preliminary investigation, the main function of the government prosecutor -- the ombudsman in this
case -- is merely to determine the existence of probable cause and, if it does exist, to file the corresponding
information. Probable cause has been defined as the existence of such facts and circumstances as would excite in a
reasonable mind -- acting on the facts within the prosecutor’s knowledge -- the belief that the person charged is
probably guilty of the crime for which he or she is being prosecuted.78

Probable cause is a reasonable ground for presuming that a matter is or may be well-founded on such state of
facts in the prosecutor’s mind as would lead a person of ordinary caution and prudence to believe -- or entertain
an honest or strong suspicion -- that it is so.79 The term does not mean "actual and positive cause"; neither does it
import absolute certainty. It is based merely on opinion and reasonable belief. Thus, a finding of probable cause
does not require an inquiry into whether there is sufficient evidence to secure a conviction. It is enough that the
act or the omission complained of is believed to constitute the offense charged. Precisely, there is a trial to allow
the reception of evidence for the prosecution in support of the charge.80

It ought to be emphasized that in determining probable cause, the average person weighs facts and circumstances
without resorting to the calibrations of technical rules of evidence, of which such person’s knowledge is nil. Rather,
the lay person usually relies on the calculus of common sense, of which all reasonable persons have an
abundance.81
Effect on the Principal of the Dismissal of Charges Against Accomplices and Accessories

Finally, we are not unmindful of our prior ruling in Republic v. Vasquez.82 In that case, we agreed with the
ombudsman’s Resolution dismissing, for lack of evidence, the criminal charges against Respondents Paciencia E.
Disini, Angel E. Disini, Liliana L. Disini and Lea E. Disini.

There should be no disagreement with the Court’s Resolution in Vasquez. As we have stressed at the beginning of
this Decision, the present Petition should be granted as an exception to the doctrine of non-interference in the
ombudsman’s investigatory and prosecutory powers. In the previous Resolution in GR No. 114377, no grave abuse
of discretion was found in the dismissal of the indictment against Disini’s relatives. In the case before us, however,
it is clear that the ombudsman gravely abused his discretion in disregarding the evidence on record, as well as
some settled principles and rulings laid down by this Court.

Verily, there should be a divergence of results between the present Petition and the previous one, which
distinguished the charge against the other respondents. They were classified therein as mere accomplices or
accessories. In the present case, Herminio T. Disini is being charged as the principal. Because respondents have
been charged with different degrees of participation, the evidence needed to sustain an indictment for each of
them would necessarily also differ. In turn, this evidentiary difference would translate to one of degree, sufficiency
and appreciation thereof. Not finding any grave abuse of discretion in the preceding Petition will not ipso facto
lead to the same conclusion in this Petition.

While the dismissal of a charge against the principal accused would carry the charges against the accomplices and
the accessories, the discharge of the latter would not necessarily benefit the former. The responsibility of an
accessory or an accomplice is subordinate to that of the principal.83 Indeed, an accessory or an accomplice is like a
shadow that follows the principal,84 not the other way around.

PCGG Evidence Against Disini

In sum, the PCGG presented sufficient evidence to engender a well-founded belief that at least one crime had
been committed, and that Disini was probably guilty thereof and should be held for trial. An inventory of the
evidence offered would include:

1. The twelve-page Affidavit of Angelo V. Manahan

2. The ten-page Affidavit of Samuel P. Hull Jr.

3. The more extensive 90-paragraph, 44-page Supplemental Affidavit of Samuel P. Hull Jr.

4. At least six telexes dated November 1973 to April 1975, which were exchanged amongst Ketterer, Hull, Disini
and other Westinghouse and Burns & Roe officials, detailing the negotiations for the PNPP project, including all the
transactions leading to the payment of bribes and the unlawful commissions received by Disini and/or his
representatives

5. At least three Aides-Memoire demonstrating how Westinghouse and Burns & Roe were "preferred" and given
special treatment at the expense of other corporations involved in or competing for the PNPP project

6. The handwritten notations of Marcos expressing his preference for Westinghouse and Burns & Roe
7. A number of letters, correspondences and notes between Westinghouse and Burns & Roe officials -- specifically
Ketterer, Hull and Hammett -- narrating their transactions involving the PNPP project and the corresponding
commission payments to Disini

8. Three separate documents showing that at least three members of the Marcos administration -- NPC General
Manager Ravanzo, Executive Secretary Alejandro Melchor and Solicitor General Estelito P. Mendoza -- disapproved
the Westinghouse and Burns & Roe proposals and objected to the government’s PNPP contract with Westinghouse
for being highly onerous and disadvantageous to the government

9. A host of documents showing Disini’s Interbank Foreign Currency Deposit Account with a corresponding flow of
commission payments into and out of Swiss bank accounts

10. Documents detailing the formation and the financial transactions of Disini’s corporations including Power
Contractors, Inc.; Herdis Group, Inc.; and Vulcan Industrial & Mining Corporation.

To our mind, the whole gamut of evidence presented is more than sufficient to support a criminal complaint for
the crimes of corruption of public officials in relation to bribery, and violation of the Anti-Graft Law. The evidence
on record has engendered the reasonable belief that Disini had offered, promised or actually given to a public
officer (Marcos) gifts or presents that made the latter liable for bribery.

Also, the PCGG has sufficiently established probable cause to show that Disini had capitalized, exploited and taken
advantage of his close personal relations with the former President, who was to decide ultimately which
corporation would undertake the PNPP project. In so doing, Disini requested and received pecuniary
considerations from Westinghouse and Burns & Roe, which were endeavoring to close the PNPP contract with the
Philippine government. All these things happened in violation of the Revised Penal Code and/or the Anti-Graft and
Corrupt Practices Act.

Should the appropriate information(s) be filed, nothing should prevent the ombudsman from presenting other
pieces of evidence to buttress the prosecution’s case and to prove beyond reasonable doubt the offense(s)
charged.

Parenthetically, the Republic of the Philippines and the NPC brought action against Westinghouse and Burns & Roe
before the US District Court of New Jersey. Ironically, after evaluating the foregoing documents, District Judge
Dickinson R. Debevoise concluded in his Decision dated September 19, 1991,85 that "there [was] sufficient
evidence of bribery." It behooves the Philippine government, especially the respondent ombudsman as the directly
affected authority, to review the facts carefully and to let the ax fall where it should.

Judge Debevoise rendered the Decision when the defendants therein moved for summary judgment. They alleged,
among others, that no genuine issue as to the charge of bribery was shown by the plaintiff’s pleadings,
depositions, answers to interrogatories, admissions or affidavits on record.

Indeed, the Bataan nuclear power plant is a monumental, billion-dollar, non-performing white elephant, which our
impoverished people are still paying for even if they have not benefited from it at all. Justice is long overdue. Let
those who appear to be responsible for this humongous mess be brought to account for their participation. Let
justice be done!

WHEREFORE, the Petition is GRANTED. The Resolution and the Order of the Office of the Ombudsman dismissing
the charges against Herminio T. Disini are SET ASIDE and the ombudsman is DIRECTED to file in the proper court
the appropriate criminal charge(s) against him. No costs.
SO OREDERED.
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.

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 13791 in relation to Executive Order Nos. 1,2 2,3 144 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 couple's 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 Agreements6 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 petitioner's 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 petitioner's 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:

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 petitioner's 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 decision9 dated September 19, 2000, the Sandiganbayan granted petitioner's 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 resolution11 dated January 31, 2002, the Sandiganbayan reversed its September 19, 2000 decision, thus
denying petitioner's 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
--

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

THE FOREIGN FOUNDATIONS NEED NOT BE 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.

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 Sandiganbayan's 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 PETITIONER'S 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 6519 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. Lobregat22:

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. Estenzo24, 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. FM's 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. Respondent's 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 country's 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 foundation's
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 FOUNDATION as 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 foundation's 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 FM's 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 Bank's 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 Malacañang 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 Foundation's 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
foundation's 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 foundation's 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 foundation's 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 Foundation's 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
Corporation's (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
Malacañang documents. It stated, among others, that 50% of the Company's 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 Malacañang 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 couple's 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 Foundation's 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.

xxx 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
country's 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 rapier's 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 country's 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
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.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 country's
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 Republic's 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 Republic's 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 4737 and 4838 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-a39 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 defendant's 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 documents41 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 pleader's 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 truth 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 court's 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 Section 3, Rule 35 of the 1997 Rules
on Civil Procedure:

x x x The adverse party may serve opposing affidavits, depositions, or admissions at least three (3) days before
hearing. After hearing, the judgment sought shall be rendered forthwith if the pleadings, 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 that the moving party is entitled to a judgment as a matter of law.51

The absence of opposing affidavits, depositions and admissions to contradict the sworn declarations in the
Republic's motion only demonstrated that the averments of such opposition were not genuine and therefore
unworthy of belief.

• Demurrer to Evidence dated May 2, 2000;52

Motions for Reconsideration;53 and Memoranda
of Mrs. Marcos and the Marcos children54

All these pleadings again contained no allegations of facts showing their lawful acquisition of the funds. Once
more, respondents merely made general denials without alleging facts which would have been admissible in
evidence at the hearing, thereby failing to raise genuine issues of fact.

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 Republic's 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. That's your statement of
facts?

Atty. MARCELO:

Yes, Your Honor.

PJ Garchitorena:

That's it. Okay. Counsel for Manotoc and Manotoc, Jr. What is your point here? Does the estate of Marcos own
anything of the $360 million subject of this case.

Atty. TECSON:

We joined the Manifestation of Counsel.

PJ Garchitorena:

You do not own anything?

Atty. TECSON:

Yes, Your Honor.

PJ Garchitorena:

Counsel for Irene Araneta?

Atty. SISON:

I join the position taken by my other compañeros here, Your Honor.

xxx

Atty. SISON:

Irene Araneta as heir do (sic) not own any of the amount, Your Honor.55

We are convinced that the strategy of respondent 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:

COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this Honorable Court, most
respectfully manifests:

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.

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 137976 provide:

xxx xxx

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.

xxx xxx

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 couple's 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 income 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 886 of the 1997 Rules of Civil Procedure provides that material averments in the
complaint shall be deemed admitted when not specifically denied.

The General87 and Supplemental88 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 13090 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 immunity to the Marcos heirs was against the law;
(2) the PCGG's commitment to exempt from all forms of taxes the properties to be retained by the Marcos heirs
was against the Constitution; and (3) the government's 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 Castañeda, 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 hadn't
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 Manifestation99 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 8100 of the 1997 Rules of Civil
Procedure.

Likewise, in her Constancia101 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 Republic's 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 Imelda's 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 motion102 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 Court's 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 Undertaking103 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 officer's 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 party115 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 Government's 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 3122 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 3124 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 Sandiganbayan's decision was not dependent on the determination of the Swiss courts. For that matter,
neither is this Court's.

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.
G.R. No. 147062-64 December 14, 2001

REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG),
petitioner,
vs.
COCOFED, ET AL. and BALLARES, ET AL.,1 EDUARDO M. COJUANGCO JR. and the SANDIGANBAYAN (First Division)
respondents.

PANGANIBAN, J.:

The right to vote sequestered shares of stock registered in the names of private individuals or entitles and alleged
to have been acquired with ill-gotten wealth shall, as a rule, be exercised by the registered owner. The PCGG may,
however, be granted such voting right provided in can (1) show prima facie evidence that the wealth and/or the
shares are indeed ill-gotten; and (2) demonstrate imminent danger of dissipation of the assets, thus necessitating
their continued sequestration and voting by the government until a decision, ruling with finality on their
ownership, is promulgated by the proper court.1âwphi1.nêt

However, the foregoing "two-tiered" test does not apply when the sequestered stocks are acquired with funds
that are prima facie public in character or, at least, are affected with public interest. Inasmuch as the subject UCPB
shares in the present case were undisputably acquired with coco levy funds which are public in character, then the
right to vote them shall be exercised by the PCGG. In sum, the "public character" test, not the "two-tiered" one,
applies in the instant controversy.

The Case

Before us is a Petition for Certiorari with a prayer for the issuance of a temporary restraining order and/or a writ of
preliminary injunction under Rule 65 of the Rules of Court, seeking to set aside the February 28, 2001 Order2 of
the First Division of the Sandiganbayan3 in Civil Case Nos. 0033-A, 0033-B and 0033-F. The pertinent portions of
the assailed Order read as follows:

"In view hereof, the movants COCOFED, et al. and Ballares, et al. as well as Eduardo Cojuangco, et al., who were
acknowledged to be registered stockholders of the UCPB are authorized, as are all other registered stockholders of
the United Coconut Planters Bank, until further orders from this Court, to exercise their rights to vote their shares
of stock and themselves to be voted upon in the United Coconut Planters Bank (UCPB) at the scheduled
Stockholders' Meeting on March 6, 2001 or on any subsequent continuation or resetting thereof, and to perform
such acts as will normally follow in the exercise of these rights as registered stockholders.

"Since by way of form, the pleadings herein had been labeled as praying for an injunction, the right of the movants
to exercise their right as abovementioned will be subject to the posting of a nominal bond in the amount of FIFTY
THOUSAND PESOS (P50,000.00) jointly for the defendants COCOFED, et al. and Ballares, et al., as well as all other
registered stockholders of sequestered shares in that bank, and FIFTY THOUSAND PESOS (P50,000.00) for Eduardo
Cojuangco, Jr., et al., to answer for any undue damage or injury to the United Coconut Planters Bank as may be
attributed to their exercise of their rights as registered stockholders."4

The Antecedents

The very roots of this case are anchored on the historic events that transpired during the change of government in
1986. Immediately after the 1986 EDSA Revolution, then President Corazon C. Aquino issued Executive Order (EO)
Nos. 1,5 26 and 14.7
"On the explicit premise that 'vast resources of the government have been amassed by former President Ferdinand
E. Marcos, his immediate family, relatives, and close associates both here and abroad,' the Presidential
Commission on Good Government (PCGG) was created by Executive Order No. 1 to assist the President in the
recovery of the ill-gotten wealth thus accumulated whether located in the Philippines or abroad."8

Executive Order No. 2 states that the ill-gotten assets and properties are in the form of bank accounts, deposits,
trust accounts, shares of stocks, buildings, shopping centers, condominiums, mansions, residences, estates, and
other kinds of real and personal properties in the Philippines and in various countries of the world.9

Executive Order No. 14, on the other hand, empowered the PCGG, with the assistance of the Office of the Solicitor
General and other government agencies, inter alia, to file and prosecute all cases investigated by it under EO Nos.
1 and 2.

Pursuant to these laws, the PCGG issued and implemented numerous sequestrations, freeze orders and provisional
takeovers of allegedly ill-gotten companies, assets and properties, real or personal.10

Among the properties sequestered by the Commission were shares of stock in the United Coconut Planters Bank
(UCPB) registered in the names of the alleged "one million coconut farmers," the so-called Coconut Industry
Investment Fund companies (CIIF companies) and Private Respondent Eduardo Cojuangco Jr. (hereinafter
"Cojuangco").

In connection with the sequestration of the said UCPB shares, the PCGG, on July 31, 1987, instituted an action for
reconveyance, reversion, accounting, restitution and damages docketed as Case No. 0033 in the Sandiganbayan.

On November 15, 1990, upon Motion11 of Private Respondent COCOFED, the Sandiganbayan issued a
Resolution12 lifting the sequestration of the subject UCPB shares on the ground that herein private respondents –
in particular, COCOFED and the so-called CIIF companies – had not been impleaded by the PCGG as parties-
defendants in its July 31, 1987 Complaint for reconveyance, reversion, accounting, restitution and damages. The
Sandiganbayan ruled that the Writ of Sequestration issued by the Commission was automatically lifted for PCGG's
failure to commence the corresponding judicial action within the six-month period ending on August 2, 1987
provided under Section 26, Article XVIII of the 1987 Constitution. The anti-graft court noted that though these
entities were listed in an annex appended to the Complaint, they had not been named as parties-respondents.

This Sandiganbayan Resolution was challenged by the PCGG in a Petition for Certiorari docketed as GR No. 96073
in this Court. Meanwhile, upon motion of Cojuangco, the anti-graft court ordered the holding of elections for the
Board of Directors of UCPB. However, the PCGG applied for and was granted by this Court a Restraining Order
enjoining the holding of the election. Subsequently, the Court lifted the Restraining Order and ordered the UCPB to
proceed with the election of its board of directors. Furthermore, it allowed the sequestered shares to be voted by
their registered owners.

The victory of the registered shareholders was fleeting because the Court, acting on the solicitor general's Motion
for Clarification/Manifestation, issued a Resolution on February 16, 1993, declaring that "the right of petitioners
[herein private respondents] to vote stock in their names at the meetings of the UCPB cannot be conceded at this
time. That right still has to be established by them before the Sandiganbayan. Until that is done, they cannot be
deemed legitimate owners of UCPB stock and cannot be accorded the right to vote them."13 The dispositive
portion of the said Resolution reads as follows:
"IN VIEW OF THE FOREGOING, the Court recalls and sets aside the Resolution dated March 3, 1992 and, pending
resolution on the merits of the action at bar, and until further orders, suspends the effectivity of the lifting of the
sequestration decreed by the Sandiganbayan on November 15, 1990, and directs the restoration of the status quo
ante, so as to allow the PCGG to continue voting the shares of stock under sequestration at the meetings of the
United Coconut Planters Bank."14

On January 23, 1995, the Court rendered its final Decision in GR No. 96073, nullifying and setting aside the
November 15, 1990 Resolution of the Sandiganbayan which, as earlier stated, lifted the sequestration of the
subject UCPB shares. The express impleading of herein Respondents COCOFED et al. was deemed unnecessary
because "the judgment may simply be directed against the shares of stock shown to have been issued in
consideration of ill-gotten wealth."15 Furthermore, the companies "are simply the res in the actions for the
recovery of illegally acquires wealth, and there is, in principle, no cause of action against them and no ground to
implead them as defendants in said case."16

A month thereafter, the PCGG – pursuant to an Order of the Sandiganbayan – subdivided Case No. 0033 into eight
Complaints and docketed them as Case Nos. 0033-A to 0033-H.

Six years later, on February 13, 2001, the Board of Directors of UCPB received from the ACCRA Law Office a letter
written on behalf of the COCOFED and the alleged nameless one million coconut farmers, demanding the holding
of a stockholders' meeting for the purpose of, among others, electing the board of directors. In response, the
board approved a Resolution calling for a stockholders' meeting on March 6, 2001 at three o'clock in the
afternoon.

On February 23, 2001, "COCOFED, et al. and Ballares, et al." filed the "Class Action Omnibus Motion"17 referred to
earlier in Sandiganbayan Civil Case Nos. 0033-A, 0033-B and 0033-F, asking the court a quo:

"1. To enjoin the PCGG from voting the UCPB shares of stock registered in the respective names of the more than
one million coconut farmers; and

"2. To enjoin the PCGG from voting the SMC shares registered in the names of the 14 CIIF holding companies
including those registered in the name of the PCGG."18

On February 28, 2001, respondent court, after hearing the parties on oral argument, issued the assailed Order.

Hence, this Petition by the Republic of the Philippines represented by the PCGG.19

The case had initially been raffled to this Court's Third Division which, by a vote of 3-2,20 issued a Resolution21
requiring the parties to maintain the status quo existing before the issuance of the questioned Sandiganbayan
Order dated February 28, 2001. On March 7, 2001, Respondent COCOFED et al. moved that the instant Petition be
heard by the Court en banc.22 The Motion was unanimously granted by the Third Division.

On March 13, 2001, the Court en banc resolved to accept the Third Division's referral.23 It heard the case on Oral
Argument in Baguio City on April 17, 2001. During the hearing, it admitted the intervention of a group of coconut
farmers and farm worker organizations, the Pambansang Koalisyon ng mga Samahang Magsasaka at Manggagawa
ng Niyugan (PKSMMN). The coalition claims that its members have been excluded from the benefits of the coconut
levy fund. Inter alia, it joined petitioner in praying for the exclusion of private respondents in voting the
sequestered shares.

Issues
Petitioner submits the following issues for our consideration:24

"A.

Despite the fact that the subject sequestered shares were purchased with coconut levy funds (which were
declared public in character) and the continuing effectivity of Resolution dated February 16, 1993 in G.R. No.
96073 which allows the PCGG to vote said sequestered shares, Respondent Sandiganbayan, with grave abuse of
discretion, issued its Order dated February 20, 2001 enjoining PCGG from voting the sequestered shares of stock in
UCPB.

"B.

The Respondent Sandiganbayan violated petitioner's right to due process by taking cognizance of the Class Action
Omnibus Motion dated 23 February 2001 despite gross lack of sufficient notice and by issuing the writ of
preliminary injunction despite the obvious fact that there was no actual pressing necessity or urgency to do so."

In its Resolution dated April 17, 2001, the Court defined the issue to be resolved in the instant case simply as
follows:

This Court's Ruling

The Petition is impressed with merit.

Main Issue:

Who May Vote the Sequestered Shares of Stock?

Simply stated, the gut substantive issue to be resolved in the present Petition is: "Who may vote the sequestered
UCPB shares while the main case for their reversion to the State is pending in the Sandiganbayan?"

This Court holds that the government should be allowed to continue voting those shares inasmuch as they were
purchased with coconut levy funds – that are prima facie public in character or, at the very least, are "clearly
affected with public interest."

General Rule: Sequestered Shares

Are Voted by the Registered Holder

At the outset, it is necessary to restate the general rule that the registered owner of the shares of a corporation
exercises the right and the privilege of voting.25 This principle applies even to shares that are sequestered by the
government, over which the PCGG as a mere conservator cannot, as a general rule, exercise acts of dominion.26
On the other hand, it is authorized to vote these sequestered shares registered in the names of private persons
and acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered test devised by the Court in
Cojuangco v. Calpo27 and PCGG v. Cojuangco Jr.,28 as follows:

(1) Is there prima facie evidence showing that the said shares are ill-gotten and thus belong to the State?
(2) Is there an imminent danger of dissipation, thus necessitating their continued sequestration and voting by the
PCGG, while the main issue is pending with the Sandiganbayan?

Sequestered Shares Acquired with Public Funds are an Exception

From the foregoing general principle, the Court in Baseco v. PCGG29 (hereinafter "Baseco") and Cojuangco Jr. v.
Roxas30 ("Cojuangco-Roxas") has provided two clear "public character" exceptions under which the government is
granted the authority to vote the shares:

(1) Where government shares are taken over by private persons or entities who/which registered them in their
own names, and

(2) Where the capitalization or shares that were acquired with public funds somehow landed in private hands.

The exceptions are based on the common-sense principle that legal fiction must yield to truth; that public property
registered in the names of non-owners is affected with trust relations; and that the prima facie beneficial owner
should be given the privilege of enjoying the rights flowing from the prima facie fact of ownership.

In Baseco, a private corporation known as the Bataan Shipyard and Engineering Co. was placed under
sequestration by the PCGG. Explained the Court:

"The facts show that the corporation known as BASECO was owned and controlled by President Marcos 'during his
administration, through nominees, by taking undue advantage of his public office and/or using his powers,
authority, or influence,' and that it was by and through the same means, that BASECO had taken over the business
and/or assets of the National Shipyard and Engineering Co., Inc., and other government-owned or controlled
entities."31

Given this factual background, the Court discussed PCGG's right over BASECO in the following manner:

"Now, in the special instance of a business enterprise shown by evidence to have been 'taken over by the
government of the Marcos Administration or by entities or persons close to former President Marcos,' the PCGG is
given power and authority, as already adverted to, to 'provisionally take (it) over in the public interest or to
prevent * * (its) disposal or dissipation;' and since the term is obviously employed in reference to going concerns,
or business enterprises in operation, something more than mere physical custody is connoted; the PCGG may in
this case exercise some measure of control in the operation, running, or management of the business itself."32

Citing an earlier Resolution, it ruled further:

"Petitioner has failed to make out a case of grave abuse or excess of jurisdiction in respondents' calling and holding
of a stockholders' meeting for the election of directors as authorized by the Memorandum of the President * * (to
the PCGG) dated June 26, 1986, particularly, where as in this case, the government can, through its designated
directors, properly exercise control and management over what appear to be properties and assets owned and
belonging to the government itself and over which the persons who appear in this case on behalf of BASECO have
failed to show any right or even any shareholding in said corporation."33 (Italics supplied)

The Court granted PCGG the right to vote the sequestered shares because they appeared to be "assets belonging
to the government itself." The Concurring Opinion of Justice Ameurfina A. Melencio-Herrera, in which she was
joined by Justice Florentino P. Feliciano, explained this principle as follows:
"I have no objection to according the right to vote sequestered stock in case of a take-over of business actually
belonging to the government or whose capitalization comes from public funds but which, somehow, landed in the
hands of private persons, as in the case of BASECO. To my mind, however, caution and prudence should be
exercised in the case of sequestered shares of an on-going private business enterprise, specially the sensitive ones,
since the true and real ownership of said shares is yet to be determined and proven more conclusively by the
Courts."34 (Italics supplied)

The exception was cited again by the Court in Cojuangco-Roxas35 in this wise:

"The rule in this jurisdiction is, therefore, clear. The PCGG cannot perform acts of strict ownership of sequestered
property. It is a mere conservator. It may not vote the shares in a corporation and elect the members of the board
of directors. The only conceivable exception is in a case of a takeover of a business belonging to the government or
whose capitalization comes from public funds, but which landed in private hands as in BASECO."36 (Italics
supplied)

The "public character" test was reiterated in many subsequent cases; most recently, in Antiporda v.
Sandiganbayan.37 Expressly citing Conjuangco-Roxas,38 this Court said that in determining the issue of whether
the PCGG should be allowed to vote sequestered shares, it was crucial to find out first whether these were
purchased with public funds, as follows:

"It is thus important to determine first if the sequestered corporate shares came from public funds that landed in
private hands."39

In short, when sequestered shares registered in the names of private individuals or entities are alleged to have
been acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequestered shares in
the name of private individuals or entities are shown, prima facie, to have been (1) originally government shares,
or (2) purchased with public funds or those affected with public interest, then the two-tiered test does not apply.
Rather, the public character exceptions in Baseco v. PCGG and Cojuangco Jr. v. Roxas prevail; that is, the
government shall vote the shares.

UCPB Shares Were Acquired With Coconut Levy Funds

In the present case before the Court, it is not disputed that the money used to purchase the sequestered UCPB
shares came from the Coconut Consumer Stabilization Fund (CCSF), otherwise known as the coconut levy funds.

This fact was plainly admitted by private respondent's counsel, Atty. Teresita J. Herbosa, during the Oral
Arguments held on April 17, 2001 in Baguio City, as follows:

"Justice Panganiban:

"In regard to the theory of the Solicitor General that the funds used to purchase [both] the original 28 million and
the subsequent 80 million came from the CCSF, Coconut Consumers Stabilization Fund, do you agree with that?

"Atty. Herbosa:

"Yes, Your Honor.

xxx xxx xxx

"Justice Panganiban:

"So it seems that the parties [have] agreed up to that point that the funds used to purchase 72% of the former First
United Bank came from the Coconut Consumer Stabilization Fund?

"Atty. Herbosa:

"Yes, Your Honor."40

Indeed in Cocofed v. PCGG,41 this Court categorically declared that the UCPB was acquired "with the use of the
Coconut Consumers Stabilization Fund in virtue of Presidential Decree No. 755, promulgated on July 29, 1975."

Coconut Levy Funds Are Affected With Public Interest

Having conclusively shown that the sequestered UCPB shares were purchased with coconut levies, we hold that
these funds and shares are, at the very least, "affected with public interest."

The Resolution issued by the Court on February 16, 1993 in Republic v. Sandiganbayan42 stated that coconut levy
funds were "clearly affected with public interest"; thus, herein private respondents – even if they are the
registered shareholders – cannot be accorded the right to vote them. We quote the said Resolution in part, as
follows:

"The coconut levy funds being 'clearly affected with public interest, it follows that the corporations formed and
organized from those funds, and all assets acquired therefrom should also be regarded as 'clearly affected with
public interest.'"43

xxx xxx xxx

"Assuming, however, for purposes of argument merely, the lifting of sequestration to be correct, may it also be
assumed that the lifting of sequestration removed the character of the coconut levy companies of being affected
with public interest, so that they and their stock and assets may now be considered to be of private ownership?
May it be assumed that the lifting of sequestration operated to relieve the holders of stock in the coconut levy
companies – affected with public interest – of the obligation of proving how that stock had been legitimately
transferred to private ownership, or that those stockholders who had had some part in the collection,
administration, or disposition of the coconut levy funds are now deemed qualified to acquire said stock, and freed
from any doubt or suspicion that they had taken advantage of their special or fiduciary relation with the agencies
in charge of the coconut levies and the funds thereby accumulated? The obvious answer to each of the questions
is a negative one. It seems plain that the lifting of sequestration has no relevance to the nature of the coconut levy
companies or their stock or property, or to the legality of the acquisition by private persons of their interest
therein, or to the latter's capacity or disqualification to acquire stock in the companies or any property acquired
from coconut levy funds.

"This being so, the right of the [petitioners] to vote stock in their names at the meetings of the UCPB cannot be
conceded at this time. That right still has to be established by them before the Sandiganbayan. Until that is done,
they cannot be deemed legitimate owners of UCPB stock and cannot be accorded the right to vote them."44
(Italics supplied)
It is however contended by respondents that this Resolution was in the nature of a temporary restraining order. As
such, it was supposedly interlocutory in character and became functus oficio when this Court decided GR No.
96073 on January 23, 1995.

This argument is aptly answered by petitioner in its Memorandum, which we quote:

"The ruling made in the Resolution dated 16 February 1993 confirming the public nature of the coconut levy funds
and denying claimants their purported right to vote is an affirmation of doctrines laid down in the cases of
COCOFED v. PCGG supra, Baseco v. PCGG, supra, and Cojuangco v. Roxas, supra. Therefore it is of no moment that
the Resolution dated 16 February 1993 has not been ratified. Its jurisprudential based remain."45 (Italics supplied)

To repeat, the foregoing juridical situation has not changed. It is still the truth today: "the coconut levy funds are
clearly affected with public interest." Private respondents have not "demonstrated satisfactorily that they have
legitimately become private funds."

If private respondents really and sincerely believed that the final Decision of the Court in Republic v.
Sandiganbayan (GR No. 96073, promulgated on January 23, 1995) granted them the right to vote, why did they
wait for the lapse of six long years before definitively asserting it (1) through their letter dated February 13, 2001,
addressed to the UCPB Board of Directors, demanding the holding of a shareholders' meeting on March 6, 2001;
and (2) through their Omnibus Motion dated February 23, 2001 filed in the court a quo, seeking to enjoin PCGG
from voting the subject sequestered shares during the said stockholders' meeting? Certainly, if they even half
believed their submission now – that they already had such right in 1995 – why are they suddenly and imperiously
claiming it only now?

It should be stressed at this point that the assailed Sandiganbayan Order dated February 28, 2001 – allowing
private respondents to vote the sequestered shares – is not based on any finding that the coconut levies and the
shares have "legitimately become private funds." Neither is it based on the alleged lifting of the TRO issued by this
Court on February 16, 1993. Rather, it is anchored on the grossly mistaken application of the two-tiered test
mentioned earlier in this Decision.

To stress, the two-tiered test is applied only when the sequestered asset in the hands of a private person is alleged
to have been acquired with ill-gotten wealth. Hence, in PCGG v. Cojuangco,47 we allowed Eduardo Cojuangco Jr. to
vote the sequestered shares of the San Miguel Corporation (SMC) registered in his name but alleged to have been
acquired with ill-gotten wealth. We did so on his representation that he had acquired them with borrowed funds
and upon failure of the PCGG to satisfy the "two-tiered" test. This test was, however, not applied to sequestered
SMC shares that were purchased with coco levy funds.

In the present case, the sequestered UCPB shares are confirmed to have been acquired with coco levies, not with
alleged ill-gotten wealth. Hence, by parity of reasoning, the right to vote them is not subject to the "two-tiered
test" but to the public character of their acquisition, which per Antiporda v. Sandiganbayan cited earlier, must first
be determined.

Coconut Levy Funds Are Prima Facie Public Funds

To avoid misunderstanding and confusion, this Court will even be more categorical and positive than its earlier
pronouncements: the coconut levy funds are not only affected with public interest; they are, in fact, prima facie
public funds.
Public funds are those moneys belonging to the State or to any political subdivision of the State; more specifically,
taxes, customs duties and moneys raised by operation of law for the support of the government or for the
discharge of its obligations.48 Undeniably, coconut levy funds satisfy this general definition of public funds,
because of the following reasons:

1. Coconut levy funds are raised with the use of the police and taxing powers of the State.

2. They are levies imposed by the State for the benefit of the coconut industry and its farmers.

3. Respondents have judicially admitted that the sequestered shares were purchased with public funds.

4. The Commission on Audit (COA) reviews the use of coconut levy funds.

5. The Bureau of Internal Revenue (BIR), with the acquiescence of private respondents, has treated them as public
funds.

6. The very laws governing coconut levies recognize their public character.

We shall now discuss each of the foregoing reasons, any one of which is enough to show their public character.

1. Coconut Levy Funds Are Raised Through the State's Police and Taxing Powers.

Indeed, coconut levy funds partake of the nature of taxes which, in general, are enforced proportional
contributions from persons and properties, exacted by the State by virtue of its sovereignty for the support of
government and for all public needs.49

Based on this definition, a tax has three elements, namely: a) it is an enforced proportional contribution from
persons and properties; b) it is imposed by the State by virtue of its sovereignty; and c) it is levied for the support
of the government. The coconut levy funds fall squarely into these elements for the following reasons:

(a) They were generated by virtue of statutory enactments imposed on the coconut farmers requiring the payment
of prescribed amounts. Thus, PD No. 276, which created the Coconut Consumer Stabilization Fund (CCSF),
mandated the following:

"a. A levy, initially, of P15.00 per 100 kilograms of copra resecada or its equivalent in other coconut products, shall
be imposed on every first sale, in accordance with the mechanics established under RA 6260, effective at the start
of business hours on August 10, 1973.

"The proceeds from the levy shall be deposited with the Philippine National Bank or any other government bank to
the account of the Coconut Consumers Stabilization Fund, as a separate trust fund which shall not form part of the
general fund of the government."50

The coco levies were further clarified in amendatory laws, specifically PD No. 96151 and PD No. 146852 – in this
wise:

"The Authority (Philippine Coconut Authority) is hereby empowered to impose and collect a levy, to be known as
the Coconut Consumers Stabilization Fund Levy, on every one hundred kilos of copra resecada, or its equivalent in
other coconut products delivered to, and/or purchased by, copra exporters, oil millers, desiccators and other end-
users of copra or its equivalent in other coconut products. The levy shall be paid by such copra exporters, oil
millers, desiccators and other end-users of copra or its equivalent in other coconut products under such rules and
regulations as the Authority may prescribe. Until otherwise prescribed by the Authority, the current levy being
collected shall be continued."53

Like other tax measures, they were not voluntary payments or donations by the people. They were enforced
contributions exacted on pain of penal sanctions, as provided under PD No. 276:

"3. Any person or firm who violates any provision of this Decree or the rules and regulations promulgated
thereunder, shall, in addition to penalties already prescribed under existing administrative and special law, pay a
fine of not less than P2,500 or more than P10,000, or suffer cancellation of licenses to operate, or both, at the
discretion of the Court."54

Such penalties were later amended thus:

"Whenever any person or entity willfully and deliberately violates any of the provisions of this Act, or any rule or
regulation legally promulgated hereunder by the Authority, the person or persons responsible for such violation
shall be punished by a fine of not more than P20,000.00 and by imprisonment of not more than five years. If the
offender be a corporation, partnership or a juridical person, the penalty shall be imposed on the officer or officers
authorizing, permitting or tolerating the violation. Aliens found guilty of any offenses shall, after having served his
sentence, be immediately deported and, in the case of a naturalized citizen, his certificate of naturalization shall be
cancelled."55

(b) The coconut levies were imposed pursuant to the laws enacted by the proper legislative authorities of the
State. Indeed, the CCSF was collected under PD No. 276, issued by former President Ferdinand E. Marcos who was
then exercising legislative powers.56

(c) They were clearly imposed for a public purpose. There is absolutely no question that they were collected to
advance the government's avowed policy of protecting the coconut industry. This Court takes judicial notice of the
fact that the coconut industry is one of the great economic pillars of our nation, and coconuts and their byproducts
occupy a leading position among the country's export products; that it gives employment to thousands of Filipinos;
that it is a great source of the state's wealth; and that it is one of the important sources of foreign exchange
needed by our country and, thus, pivotal in the plans of a government committed to a policy of currency stability.

Taxation is done not merely to raise revenues to support the government, but also to provide means for the
rehabilitation and the stabilization of a threatened industry, which is so affected with public interest as to be
within the police power of the State, as held in Caltex Philippines v. COA57 and Osmeña v. Orbos.58

Even if the money is allocated for a special purpose and raised by special means, it is still public in character. In the
case before us, the funds were even used to organize and finance State offices. In Cocofed v. PCGG,59 the Court
observed that certain agencies or enterprises "were organized and financed with revenues derived from coconut
levies imposed under a succession of laws of the late dictatorship x x x with deposed Ferdinand Marcos and his
cronies as the suspected authors and chief beneficiaries of the resulting coconut industry monopoly."60 The Court
continued: "x x x. It cannot be denied that the coconut industry is one of the major industries supporting the
national economy. It is, therefore, the State's concern to make it a strong and secure source not only of the
livelihood of a significant segment of the population, but also of export earnings the sustained growth of which is
one of the imperatives of economic stability. x x x."61

2. Coconut Funds Are Levied for the Benefit of the Coconut Industry and Its Farmers.
Just like the sugar levy funds, the coconut levy funds constitute state funds even though they may be held for a
special public purpose.

In fact, Executive Order No. 481 dated May 1, 1998 specifically likens the coconut levy funds to the sugar levy
funds, both being special public funds acquired through the taxing and police powers of the State. The sugar levy
funds, which are strikingly similar to the coconut levies in their imposition and purpose, were declared public funds
by this Court in Gaston v. Republic Planters Bank,62 from which we quote:

"The stabilization fees collected are in the nature of a tax which is within the power of the state to impose for the
promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute sugar liens (Sec. 7[b], P.D. No.
388). The collections made accrue to a 'Special Fund,' a 'Development and Stabilization Fund,' almost identical to
the 'Sugar Adjustment and Stabilization Fund' created under Section 6 of Commonwealth Act 567. The tax
collected is not in a pure exercise of the taxing power. It is levied with a regulatory purpose, to provide means for
the stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the State. (Lutz vs.
Araneta, supra.)."63

The Court further explained:64

"The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a special
purpose – that of 'financing the growth and development of the sugar industry and all its components, stabilization
of the domestic market including the foreign market.' The fact that the State has taken possession of moneys
pursuant to law is sufficient to constitute them as state funds, even though they are held for a special purpose
(Lawrence v. American Surety Co., 263 Mich 586. 294 ALR 535, cited in 42 Am. Jur., Sec. 2., p. 718). Having been
levied for a special purpose, the revenues collected are to be treated as a special fund, to be, in the language of
the statute, 'administered in trust' for the purpose intended. Once the purpose has been fulfilled or abandoned,
the balance, if any, is to be transferred to the general funds of the Government. That is the essence of the trust
intended (see 1987 Constitution, Art. VI, Sec. 29[3], lifted from the 1935 Constitution, Article VI, Sec. 23[1]. (Italics
supplied)

"The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are deposited in
the Philippine National Bank and not in the Philippine Treasury, moneys from which may be paid out only in
pursuance of an appropriation made by law (1987 Constitution, Article VI, Sec. 29[1], 1973 Constitution, Article
VIII, Sec. 18[1]).

"That the fees were collected from sugar producers, planters and millers, and that the funds were channeled to
the purchase of shares of stock in respondent Bank do not convert the funds into a trust fund for their benefit nor
make them the beneficial owners of the shares so purchased. It is but rational that the fees be collected from them
since it is also they who are to be benefited from the expenditure of the funds derived from it. The investment in
shares of respondent Bank is not alien to the purpose intended because of the Bank's character as a commodity
bank for sugar conceived for the industry's growth and development. Furthermore, of note is the fact that one-half
(1/2) or P0.50 per picul, of the amount levied under P.D. No. 388 is to be utilized for the 'payment of salaries and
wages of personnel, fringe benefits and allowances of officers and employees of PHILSUCOM' thereby immediately
negating the claim that the entire amount levied is in trust for sugar, producers, planters and millers.

"To rule in petitioners' favor would contravene the general principle that revenues derived from taxes cannot be
used for purely private purposes or for the exclusive benefit of private persons. The Stabilization Fund is to be
utilized for the benefit of the entire sugar industry, 'and all its components, stabilization of the domestic market
including the foreign market,' the industry being of vital importance to the country's economy and to national
interest."
In the same manner, this Court has also ruled that the oil stabilization funds were public in character and subject
to audit by COA. It ruled in this wise:

"Hence, it seems clear that while the funds collected may be referred to as taxes, they are exacted in the exercise
of the police power of the State. Moreover, that the OPSF is a special fund is plain from the special treatment given
it by E.O. 137. It is segregated from the general fund; and while it is placed in what the law refers to as a 'trust
liability account,' the fund nonetheless remains subject to the scrutiny and review of the COA. The Court is
satisfied that these measures comply with the constitutional description of a 'special fund.' Indeed, the practice is
not without precedent."65

In his Concurring Opinion in Kilosbayan v. Guingona,66 Justice Florentino P. Feliciano explained that the funds
raised by the On-line Lottery System were also public in nature. In his words:

"x x x. In the case presently before the Court, the funds involved are clearly public in nature. The funds to be
generated by the proposed lottery are to be raised from the population at large. Should the proposed operation be
as successful as its proponents project, those funds will come from well-nigh every town and barrio of Luzon. The
funds here involved are public in another very real sense: they will belong to the PCSO, a government owned or
controlled corporation and an instrumentality of the government and are destined for utilization in social
development projects which, at least in principle, are designed to benefit the general public. x x x. The interest of a
private citizen in seeing to it that public funds, from whatever source they may have been derived, go only to the
uses directed and permitted by law is as real and personal and substantial as the interest of a private taxpayer in
seeing to it that tax monies are not intercepted on their way to the public treasury or otherwise diverted from uses
prescribed or allowed by law. It is also pertinent to note that the more successful the government is in raising
revenues by non-traditional methods such as PAGCOR operations and privatization measures, the lesser will be the
pressure upon the traditional sources of public revenues, i.e., the pocket books of individual taxpayers and
importers."67

Thus, the coconut levy funds – like the sugar levy and the oil stabilization funds, as well as the monies generated by
the On-line Lottery System – are funds exacted by the State. Being enforced contributions, the are prima facie
public funds.

3. Respondents Judicially Admit That the Levies Are Government Funds.

Equally important as the fact that the coconut levy funds were raised through the taxing and police powers of the
State is respondents' effective judicial admission that these levies are government funds. As shown by the
attachments to their pleadings,68 respondents concede that the Coconut Consumers Stabilization Fund (CCSF) and
the Coconut Investment Development Fund "constitute government funds x x x for the benefit of coconut
farmers."

"Collections on both levies constitute government funds. However, unlike other taxes that the Government levies
and collects such as income tax, tariff and customs duties, etc., the collections on the CCSF and CIDF are, by
express provision of the laws imposing them, for a definite purpose, not just for any governmental purpose. As
stated above part of the collections on the CCSF levy should be spent for the benefit of the coconut farmers. And in
respect of the collections on the CIDF levy, P.D. 582 mandatorily requires that the same should be spent exclusively
for the establishment, operation and maintenance of a hybrid coconut seed garden and the distribution, for free,
to the coconut farmers of the hybrid coconut seednuts produced from that seed garden.
"On the other hand, the laws which impose special levies on specific industries, for example on the mining
industry, sugar industry, timber industry, etc., do not, by their terms, expressly require that the collections on
those levies be spent exclusively for the benefit of the industry concerned. And if the enabling law thus so provide,
the fact remains that the governmental agency entrusted with the duty of implementing the purpose for which the
levy is imposed is vested with the discretionary power to determine when and how the collections should be
appropriated."69

4. The COA Audit Shows the Public Nature of the Funds.

Under COA Office Order No. 86-9470 dated April 15, 1986,70 the COA reviewed the expenditure and use of the
coconut levies allocated for the acquisition of the UCPB. The audit was aimed at ascertaining whether these were
utilized for the purpose for which they had been intended.71 Under the 1987 Constitution, the powers of the COA
are as follows:

"The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts
pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust
by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities x x x."72

Because these funds have been subjected to COA audit, there can be no other conclusion than that are prima facie
public in character.

5. The BIR Has Pronounced That the Coconut Levy Funds Are Taxes.

In response to a query posed by the administrator of the Philippine Coconut Authority regarding the character of
the coconut levy funds, the Bureau of Internal Revenue has affirmed that these funds are public in character. It
held as follows: "[T]he coconut levy is not a public trust fund for the benefit of the coconut farmers, but is in the
nature of a tax and, therefore, x x x public funds that are subject to government administration and disposition."73

Furthermore, the executive branch treats the coconut levies as public funds. Thus, Executive Order No. 277, issued
on September 24, 1995, directed the mode of treatment, utilization, administration and management of the
coconut levy funds. It provided as follows:

'(a) The coconut levy funds, which include all income, interests, proceeds or profits derived therefrom, as well as
all assets, properties and shares of stocks procured or obtained with the use of such funds, shall be treated,
utilized, administered and managed as public funds consistent with the uses and purposes under the laws which
constituted them and the development priorities of the government, including the government's coconut
productivity, rehabilitation, research extension, farmers organizations, and market promotions programs, which
are designed to advance the development of the coconut industry and the welfare of the coconut farmers."74
(Italics supplied)

Doctrinally, acts of the executive branch are prima facie valid and binding, unless declared unconstitutional or
contrary to law.

6. Laws Governing Coconut Levies Recognize Their Public Nature.

Finally and tellingly, the very laws governing the coconut levies recognize their public character. Thus, the third
Whereas clause of PD No. 276 treats them as special funds for a specific public purpose. Furthermore, PD No. 711
transferred to the general funds of the State all existing special and fiduciary funds including the CCSF. On the
other hand, PD No. 1234 specifically declared the CCSF as a special fund for a special purpose, which should be
treated as a special account in the National Treasury.

Moreover, even President Marcos himself, as the sole legislative/executive authority during the martial law years,
struck off the phrase which is a private fund of the coconut farmers from the original copy of Executive Order No.
504 dated May 31, 1978, and we quote:

"WHEREAS, by means of the Coconut Consumers Stabilization Fund ('CCSF'), which is the private fund of the
coconut farmers (deleted), essential coconut-based products are made available to household consumers at
socialized prices." (Emphasis supplied)

The phrase in bold face -- which is the private fund of the coconut farmers – was crossed out and duly initialed by
its author, former, President Marcos. This deletion, clearly visible in "Attachment C" of petitioner's
Memorandum,75 was a categorical legislative intent to regard the CCSF as public, not private, funds.

Having Been Acquired With Public Funds, UCPB Shares Belong, Prima Facie, to the Government

Having shown that the coconut levy funds are not only affected with public interest, but are in fact prima facie
public funds, this Court believes that the government should be allowed to vote the questioned shares, because
they belong to it as the prima facie beneficial and true owner.

As stated at the beginning, voting is an act of dominion that should be exercised by the share owner. One of the
recognized rights of an owner is the right to vote at meetings of the corporation. The right to vote is classified as
the right to control.76 Voting rights may be for the purpose of, among others, electing or removing directors,
amending a charter, or making or amending by laws.77 Because the subject UCPB shares were acquired with
government funds, the government becomes their prima facie beneficial and true owner.

Ownership includes the right to enjoy, dispose of, exclude and recover a thing without limitations other than those
established by law or by the owner.78 Ownership has been aptly described as the most comprehensive of all real
rights.79 And the right to vote shares is a mere incident of ownership. In the present case, the government has
been shown to be the prima facie owner of the funds used to purchase the shares. Hence, it should be allowed the
rights and privileges flowing from such fact.

And paraphrasing Cocofed v. PCGG, already cited earlier, the Republic should continue to vote those shares until
and unless private respondents are able to demonstrate, in the main cases pending before the Sandiganbayan,
that "they [the sequestered UCPB shares] have legitimately become private."

Procedural and Incidental Issues:

Grave Abuse of Discretion, Improper Arguments and Intervenors' Relief

Procedurally, respondents argue that petitioner has failed to demonstrate that the Sandiganbayan committed
grave abuse of discretion, a demonstration required in every petition under Rule 65.80

We disagree. We hold that the Sandiganbayan gravely abused its discretion when it contravened the rulings of this
Court in Baseco and Cojuangco-Roxas – thereby unlawfully, capriciously and arbitrarily depriving the government
of its right to vote sequestered shares purchased with coconut levy funds which are prima facie public funds.
Indeed, grave abuse of discretion may arise when a lower court or tribunal violates or contravenes the
Constitution, the law or existing jurisprudence. In one case,81 this Court ruled that the lower court's resolution
was "tantamount to overruling a judicial pronouncement of the highest Court x x x and unmistakably a very grave
abuse of discretion."82

The Public Character of Shares Is a Valid Issue

Private respondents also contend that the public nature of the coconut levy funds was not raised as an issue
before the Sandiganbayan. Hence, it could not be taken up before this Court.

Again we disagree. By ruling that the two-tiered test should be applied in evaluating private respondents' claim of
exercising voting rights over the sequestered shares, the Sandiganbayan effectively held that the subject assets
were private in character. Thus, to meet this issue, the Office of the Solicitor General countered that the shares
were not private in character, and that quite the contrary, they were and are public in nature because they were
acquired with coco levy funds which are public in character. In short, the main issue of who may vote the shares
cannot be determined without passing upon the question of the public/private character of the shares and the
funds used to acquire them. The latter issue, although not specifically raised in the Court a quo, should still be
resolved in order to fully adjudicate the main issue.

Indeed, this Court has "the authority to waive the lack of proper assignment of errors if the unassigned errors
closely relate to errors properly pinpointed out or if the unassigned errors refer to matters upon which the
determination of the questions raised by the errors properly assigned depend."83

Therefore, "where the issues already raised also rest on other issues not specifically presented as long as the latter
issues bear relevance and close relation to the former and as long as they arise from matters on record, the Court
has the authority to include them in its discussion of the controversy as well as to pass upon them."84

No Positive Relief For Intervenors

Intervenors anchor their interest in this case on an alleged right that they are trying to enforce in another
Sandiganbayan case docketed as SB Case No. 0187.85 In that case, they seek the recovery of the subject UCPB
shares from herein private respondents and the corporations controlled by them. Therefore, the rights sought to
be protected and the reliefs prayed for by intervenors are still being litigated in the said case. The purported rights
they are invoking are mere expectancies wholly dependent on the outcome of that case in the Sandiganbayan.

Clearly, we cannot rule on intervenors' alleged right to vote at this time and in this case. That right is dependent
upon the Sandiganbayan's resolution of their action for the recovery of said sequestered shares. Given the patent
fact that intervenors are not registered stockholders of UCPB as of the moment, their asserted rights cannot be
ruled upon in the present proceedings. Hence, no positive relief can be given them now, except insofar as they join
petitioner in barring private respondents from voting the subject shares.

Epilogue

In sum, we hold that the Sandiganbayan committed grave abuse of discretion in grossly contradicting and
effectively reversing existing jurisprudence, and in depriving the government of its right to vote the sequestered
UCPB shares which are prima facie public in character.

In making this ruling, we are in no way preempting the proceedings the Sandiganbayan may conduct or the final
judgment it may promulgate in Civil Case Nos. 0033-A, 0033-B and 0033-F. Our determination here is merely prima
facie, and should not bar the anti-graft court from making a final ruling, after proper trial and hearing, on the
issues and prayers in the said civil cases, particularly in reference to the ownership of the subject shares.

We also lay down the caveat that, in declaring the coco levy funds to be prima facie public in character, we are not
ruling in any final manner on their classification – whether they are general or trust or special funds – since such
classification is not at issue here. Suffice it to say that the public nature of the coco levy funds is decreed by the
Court only for the purpose of determining the right to vote the shares, pending the final outcome of the said civil
cases.

Neither are we resolving in the present case the question of whether the shares held by Respondent Cojuangco
are, as he claims, the result of private enterprise. This factual matter should also be taken up in the final decision in
the cited cases that are pending in the court a quo. Again suffice it to say that the only issue settled here is the
right of PCGG to vote the sequestered shares, pending the final outcome of said cases.

This matter involving the coconut levy funds and the sequestered UCPB shares has been straddling the courts for
about 15 years. What we are discussing in the present Petition, we stress, is just an incident of the main cases
which are pending in the anti-graft court – the cases for the reconveyance, reversion and restitution to the State of
these UCPB shares.

The resolution of the main cases has indeed been long overdue. Every effort, both by the parties and the
Sandiganbayan, should be exerted to finally settle this controversy.

WHEREFORE, the Petition is hereby GRANTED and the assailed Order SET ASIDE. The PCGG shall continue voting
the sequestered shares until Sandiganbayan Civil Case Nos. 0033-A, 0033-B and 0033-F are finally and completely
resolved. Furthermore, the Sandiganbayan is ORDERED to decide with finality the aforesaid civil cases within a
period of six (6) months from notice. It shall report to this Court on the progress of the said cases every three (3)
months, on pain of contempt. The Petition in Intervention is DISMISSED inasmuch as the reliefs prayed for are not
covered by the main issues in this case. No costs.

SO ORDERED.
G.R. No. 213027

ESTATE OF FERDINAND E. MARCOS, Petitioner

vs.
REPUBLIC OF THE PHILIPPINES, Respondent.

x-----------------------x

IMELDA ROMUALDEZ MARCOS and IRENE MARCOS ARANETA, Petitioners,

vs.
REPUBLIC OF THE PHILIPPINES,1 Respondent.

RESOLUTION

SERENO, CJ.:

Before us are Petitions for Review on Certiorari2assailing the Partial Summary Judgment3 dated 13 January 2014
and the Resolution4 dated 11 June 2014 rendered by the Sandiganbayan, Special Division,5 in Civil Case No. 0141.
In the assailed Judgment and Resolution, the pieces of jewelry, known as the Malacañang Collection, were labeled
as ill-gotten and were consequently forfeited in favor of the Republic.

THE ANTECEDENT FACTS

Civil Case No. 0141 is a forfeiture case entitled Republic of the Philippines v. Ferdinand E. Marcos, (represented by
his Estate/Heirs) and Imelda R. Marcos. It emanated from the Petition6 dated 17 December 1991 (1991 Petition)
filed by the Republic through the Presidential Commission on Good Government (PCGG), represented by the Office
of the Solicitor General (OSG), pursuant to Republic Act No. (R.A.) 13797 in relation to Executive Order Nos. 1,8 2,9
1410 and 14-A. 11 The 1991 Petition sought the recovery of the assets and properties pertaining to the Marcoses,
who acquired them directly or indirectly through, or as a result of, the improper or illegal use of funds or
properties owned by the government. 12 The properties, subject of other pending forfeiture cases before the
Sandiganbayan, were excluded; and the properties, subject of the 1991 Petition, were specifically listed and
accordingly clustered into 18. 13

Some of the properties listed in the 1991 Petition were already adjudged as ill-gotten wealth and consequently
forfeited in favor of the government. In Republic v. Sandiganbayan 14 (the Swiss deposits case), the Court en banc
in 2003 decreed that the deposits in various Swiss banks, referred to in the 1991 Petition under paragraph 9 (18),
15 were ill-gotten wealth and forfeited in favor of the State. 16 Likewise, in Marcos v. Republic17 (the Arelma
case), the Court's Second Division in 2012 declared that the funds, properties, and interests of Arelma were also ill-
gotten wealth and forfeited in favor of the State. 18

The present consolidated petitions emanated from the same Civil Case No. 0141, when the Republic filed a Motion
for Partial Summary Judgment19 dated 24 June 2009 with respect to another property listed in the 1991 Petition.
By way of that motion, the Republic asked the Sandiganbayan to render judgment declaring the pieces of jewelry,
known as the Malacañang Collection and specifically mentioned under paragraph 9 (6) of the 1991 Petition, as ill-
gotten; and to subsequently cause this collection of jewelry to be declared forfeited in favor of the Republic.20 The
latter categorized the pieces of jewelry recovered from the Marcoses into three collections and singled out the
Malacañang Collection as the object of the motion.21 The estimated values thereof were presented also in the
motion as follows:

First, the so-called Hawaii Collection x x x mentioned in paragraph 9 (7)22 of the x x x forfeiture petition x x x seized
by the United States Customs Service and x x x turned over to the Philippine Government. Significantly, a ruling
was made by the United States (U.S.) Hawaii District Court on December 18, 1992 that the Republic of the
Philippines is entitled to the possession and control of the said collection. (Annex "A")23 [The Sandiganbayan] had
taken judicial notice of said ruling in its Resolution24 dated October 25, 1996.

Second, the Roumeliotes Collection x x x referred to as "MIA Jewelry" x x x seized from Roumeliotes at the Manila
International Airport on March 1, 1986. Although not covered by this forfeiture proceeding, respondents earlier
sought their inclusion in then pending negotiations for settlement.

Third, the Malacañang Collection x x x seized from Malacañang after February 25, 1986 and transferred to the
Central Bank on March 1, 1986. As ruled by this Honorable Court in the said resolution (Annex "B"), 25 this
collection is the object of this forfeiture proceeding.

This collection is itemized in ANNEX "C''26 hereof.

Based on the 1991 valuation of auction house Christie, Manson and Woods International, Inc., the Roumeliotes,
Malacañang and Hawaii collections were worth between US$5,3 l 3,575 (low estimate) to US$7,112,879 (high
estimate), at the time of the filing of the petition. (ANNEX "D")27 The value of the Malacañang collection by itself
was US$110,055 (low estimate) to US$153,089 (high estimate ).28 (citations supplied)

In support of the motion, the Republic cited the letter29 dated 25 May 2009 sent to the PCGG by Imelda Marcos,
through counsel, demanding "the immediate return of all her pieces of jewelry (i) taken by PCGG from Malacañang
Palace and (ii) those turned over to PCGG by the U.S. Government."30 The Republic argued that the letter proved
the claim of the Marcoses that they owned the Malacañang Collection, including the Hawaii Collection.31 It further
argued that in the 1991 Petition, they were deemed to have admitted the allegations regarding the pieces of
jewelry.32 The Republic said that the words or stock phrases they used in their Answer33 dated 18 October 1993
had been declared by this Court in the Swiss deposits case as a "negative pregnant" and, as such, amounted to an
admission if not squarely denied.34 Finally, it contended that "the lawful income of the Marcoses during their
incumbencies as public officials was grossly disproportionate to the value of the pieces of jewelry."35 Invoking the
declaration of his Court in the Swiss deposits case,36 the Republic stated that their lawful income amounting to
USD 304,372.43 was grossly disproportionate to the value of the pieces of jewelry in 1991.37

On 3 July 2009, the Republic also filed a Request for Admission38 addressed to the Estate of Ferdinand Marcos,
Imelda Marcos, Imelda Marcos-Manotoc, and Irene Marcos Araneta. It requested the admission under oath of the
truth of the following:

1.That the set of jewelry described as the "Malacañang Collection" subject of this petition and Motion for Partial
Summary Judgment dated June 24, 2009 had been acquired during the incumbency of respondents Ferdinand E.
Marcos and Imelda R. Marcos as public officials of the Republic of the Philippines, particularly between 1966-1986.

2. That the said "Malacañang Collection'' had been acquired from abroad, particularly during respondents' travels
to Asia, Europe and the United States.

3. That the acquisition costs of the "Malacañang Collection'' more or less corresponds to the values appraised by
Christie's in 1998 as summarized in Annex F-2 of the Petition, also Annex D of the Motion for Summary Judgment
dated June 24, 2009.

4. That at the time of the recovery of the Collection in Malacañang, the pieces of jewelry were in mint condition,
and most of which has never been used by respondents.39

The Republic also submitted a Supplement to Motion for Partial Summary Judgment40 dated 14 July 2009. It
restated that the object of the motion covered only the Malacañang Collection, as the ownership of the two other
collections had been settled by the Sandiganbayan in a Resolution41 dated 25 October 1996.42 It also attached the
Affidavit43 of J. Ermin Ernest Louie R. Miguel, director of the legal department of the PCGG, which was the
custodian of the official records pertaining to the cases filed for the recovery of the ill-gotten wealth of the
Marcoses.44 The Affidavit sought to prove the value of the Honolulu/PCGG Collection according to the appraisal45
by Christie's at US Customs in Honolulu, Hawaii, on 28 and 29 September 1992; of the Roumeliotes Collection
according to the appraisal46 by Christie's at the Central Bank in Manila, Philippines, on 7 March 1988; and of the
Malacañang Collection according to the appraisal47 by Christie's at the Central Bank in Manila, Philippines, on 7
March 1988 and to the much higher acquisition costs indicated in the Invoices48 transmitted by Gemsland to
Imelda Marcos through Mrs. Gliceria Tantoco.49

Imelda Marcos and Irene Marcos Araneta filed their Manifestation and Preliminary Comments50 dated 21 July
2009. They manifested therein that Imelda Marcos had indeed demanded the return of the jewelry to her through
a letter51 dated 25 May 2009 and that the PCGG had been unlawfully possessing the prope1iies in view of its
failure to initiate the proper proceeding or to issue a sequestration or freeze order.52 It was further manifested
that Imelda Marcos also wrote a letter53 dated 28 May 2009 to the Department of Justice (DOJ), which had
administrative supervision and control over the PCGG, through DOJ Secretary Raul M. Gonzalez. In turn, he sent a
letter54 dated 4 June 2009 to the PCGG through Chairperson Camilo M. Sabio ordering the latter to return the
jewelry if there was no legal impediment. The PCGG, however, referred the matter to the OSG through Solicitor
General Agnes VST Devanadera in a letter55 dated 9 June 2009. The OSG replied to the Marcoses' letter56 dated
25 May 2009 by way also of a letter57 dated 21 July 2009. It said that according to the OSG in its letter58 to the
PCGG dated 19 June 2009, the former pointed out that the fact the jewelry collection was the subject of an action
for forfeiture before the Sandiganbayan was a legal impediment to their return. 59

Imelda Marcos and Irene Marcos Araneta then stated that the Republic's Motion for Partial Summary Judgment
was filed to justify the possession by the PCGG of the pieces of jewelry, even if these were not part of the
forfeiture case - Civil Case No. 0141.60 They based their allegations on the pronouncements of the Sandiganbayan
in its Resolution61 dated 25 October 1996 and Order62 dated 19 November 2001 and on the Republic's omission
of the collection in the prayer63 of the 1991 Petition. 64

The Marcoses further stated that the Request for Admission was inconsistent with the Motion for Partial Summary
Judgment and the Supplement thereto and further reserved their right to present additional arguments or
comments on the Motion and the Supplement.65

Imelda Marcos and Irene Marcos Araneta subsequently filed a Manifestation and Motion to Expunge66 dated 25
July 2009. They specifically stated therein that they were adopting the same arguments raised in their
Comment,67 as well as in their Motion for Reconsideration68 dated 5 May 2009, which was filed after the
Sandiganbayan Decision69 dated 2 April 2009 granting the Motion for Partial Summary Judgment on the Arelma
account. 70

In their Manifestation and Motion to Expunge, Imelda Marcos and Irene Marcos Araneta claimed that the filing of
the Request for Admission was tantamount to an abdication of the earlier position of the Republic that the case
was ripe for summary judgment.71 They argued that the Request for Admission entertained a possibly genuine
issue as to a material fact, which was needed for the grant of the motion for summary judgment.72 They further
argued that the filing of the Request for Admission was rather late, considering that it was done after the Republic
had filed its Motion for Summary Judgment in 2000 and after the case was concluded in 2004.73 They then
requested that all pleadings, motions and requests filed after the termination of the case in 2004 be expunged. 74
Pending a resolution of the motion to expunge, they simultaneously asked for additional time to answer the
Request for Admission and for permission to conduct an ocular inspection of the subject jewelry, which had been
in the Republic's possession for the past 22 years. 75

Meanwhile, Ferdinand Marcos Jr. filed a Manifestation76 that he was adopting the Manifestation and Motion to
Expunge filed by Marcos and Irene Marcos Araneta. 77 The Republic filed its Opposition78 dated 24 August 2009,
in which it said that the Manifestation and Motion to Expunge of Imelda Marcos and Irene Marcos Araneta argued
on trivial matters, raised puerile arguments, and failed to refute the contention that the collection was ill-gotten
and subject to forfeiture. 79 It further stated that the Request for Admission did not depart from the legal basis of
the Motion for Partial Summary Judgment. Instead, the request merely sought to elicit details regarding the
acquisition of the jewelry in order to expedite the resolution of the motion.80 The Republic therefore claimed that
by operation of law, the failure of the Marcoses to respond resulted in their admission of the matters contained in
the request. 81

In response to the Marcoses' Manifestation and Preliminary Comments, the Republic likewise filed its Reply82
dated 24 August 2009. It insisted that while the Decision dated 2 April 2009 focused on the Arelma assets, it had
reservations regarding "other reliefs and remedies as may be just and equitable under the premises."83 These
reliefs and remedies included the prayer for the forfeiture of the Malacañang Collection as part of the ill-gotten
wealth of the Marcoses.84 Also, the Republic stated that the Request for Admission was not inconsistent with its
Motion for Partial Summary Judgment, and that the filing of the request after the motion was not prohibited by
the Rules of Court.85 It stressed that the Request for Admission was filed and served on 3 July 2009.86 It said that
instead of making an admission or a denial as a timely response to the request within 15 days or until 18 July 2009,
the Marcoses filed - and belatedly at that - a Manifestation and Motion to Expunge on 25 July 2009.87 Thus, the
Republic insisted that all the matters that were the subject of the request be deemed admitted by the Marcoses.88

A Rejoinder89 dated 7 September 2009 was filed by the Marcoses who alleged that the demand could not have
meant that the collection was part of the case, because the jewelry collection was "trivially mentioned" in the
statement of facts of the 1991 petition;90 was not specifically prayed for;91 was not subject of the case, according
to the Sandiganbayan in its Resolution92 dated 25 October 1996 and Order93 dated 19 November 2001.94 They
also reiterated that the Request for Admission was inconsistent with the Republic's Motion for Partial Summary
Judgment.95

In a Resolution96 dated 2 August 2010, the Sandiganbayan denied the Marcoses' Manifestation and Preliminary
Comments and Manifestation and Motion to Expunge. It ruled that (1) the proceedings in this case had not been
terminated;97 (2) in filing their objection, respondents were not deemed to have admitted the matters in the
Request for Admission;98 and (3) the Republic's Request for Admission was not inconsistent with the Motion for
Summary Judgment.99 The Sandiganbayan further directed the Marcoses to file and serve within 15 days their
sworn answer to the Request for Admission, 100 but they failed to comply with the directive. 101

After the submission of the parties of their respective memoranda, 102 the Sandiganbayan issued a Partial
Summary Judgment103 dated 13 January 2014 ruling that (1) the Malacañang Collection was part and subject of
the forfeiture petition; 104 (2) the Motion for Summary Judgment was proper; 105 and (3) the forfeiture of the
Malacañang Collection was justified pursuant to R.A. 1379. 106

Motions for Reconsideration were filed by the Estate of Marcos on 29 January 2014107 and by Imelda Marcos and
Irene Marcos Araneta on 30 January 2014. 108 The Republic submitted its Consolidated Opposition109 dated 25
February 2014, while Replies were submitted by the Estate of Marcos on 12 March 2014110 and by Imelda Marcos
and Irene Marcos Araneta on 31 March 2014. 111 The Republic filed its Consolidated Rejoinder112 on 23 April
2014.

In a Resolution113 dated 11 June 2014, the Sandiganbayan denied the Motions for Reconsideration for being mere
rehashes of the arguments of the Marcoses in their Comments and Opposition to the Republic's Motion for
Summary Judgment. 114

Imelda Marcos and Irene Marcos Araneta received the Resolution denying their Motion for Reconsideration on 24
June 2014. 115 Within the 15-day period to file a petition, they submitted to this Court a Manifestation with Entry
of Appearance and Motion for Extension of Time, asking that they be given until 09 August 2014 to file their
petition. 116 Meanwhile, the Estate of Marcos filed a Motion for Extension of Time on 09 July 2014 and a
Manifestation on 8 August 2014, saying that its other executor in solidum was no longer filing a separate petition
for review, but was adopting that which was filed by Imelda Marcos. 117

This Court issued a Resolution 118 on 17 November 2014 in G.R. No. 213027 granting the Motion for Extension and
noting the Manifestation of the Estate of Marcos that the latter was adopting the petition for review filed by
Imelda Marcos and Irene Marcos Araneta in G.R. No. 213253. This Court also issued a Resolution 119 on 17
November 2014 in G.R. No. 213253 noting the Manifestation of Imelda Marcos and Irene Marcos Araneta's
counsels, who were seeking the grant of their Motion for an Extension. 120 This Court thereafter consolidated the
petitions. 121

THE ISSUES

The issues for this Court's resolution are as follows: (1) whether the Sandiganbayan has jurisdiction over the
properties; (2) whether the Malacañang Collection can be the subject of the forfeiture case; (3) whether forfeiture
is justified under R.A. 1379; (4) whether the Sandiganbayan correctly ruled that the Motion for Partial Summary
Judgment was not inconsistent with the Request for Admission; and (5) whether the Sandiganbayan correctly
declared that the forfeiture was not a deprivation of petitioners' right to due process of law. 122

OUR RULING

We find no reversible error in the ruling of the Sandiganbayan.

The Sandiganbayan correctly acquired jurisdiction over the case. The properties are included in the 1991 Petition
as found in subparagraph (6) of paragraph (9), which reads:

9. However, the other properties which had been identified so far by both the PCGG and the Solicitor General
(excluding those involved in the aforesaid civil cases) are approximated at US$5-B and which include-

xxxx

(6) Paintings and silverware sold at public auction in the United States worth $17-M as shown by Annex "F" hereof,
aside from the jewelries, paintings and other valuable decorative arts found in Malacañang and in the United
States estimated to be about $23.9-M as listed and described in Annexes "F-1", 123 "F-2",124 "F-2-a"125 and "F-
3"126 hereto attached as integral parts hereof; 127 (Emphasis supplied)

The Sandiganbayan correctly noted the Annexes, which were mentioned in subparagraph 6 and made an integral
part of the 1991 Petition, itemizing and enumerating the pieces of jewelry with their estimated values. It ultimately
found that the 1991 Petition had categorically alleged that the Malacañang Collection was included in the assets,
monies and properties sought to be recovered.

With respect to the manner of making allegations in pleadings, the Rules of Court simply provides as follows:

Section 1. In general. - Every pleading shall contain in a methodical and logical form, a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense, as the case may be,
omitting the statement of mere evidentiary facts.

If a defense relied on is based on law, the pertinent provisions thereof and their applicability to him shall be

clearly and concisely stated. 128

With respect to the determination of whether an initiatory pleading sufficiently states a cause of action, this Court
has ruled in this wise:

In determining whether an initiatory pleading states a cause of action, the test is as follows: admitting the truth of
the facts alleged, can the court render a valid judgment in accordance with the prayer? To be taken into account
are only the material allegations in the complaint; extraneous facts and circumstances or other matters aliunde are
not considered. The court may consider -- in addition to the complaint -- the appended annexes or documents,
other pleadings of the plaintiff, or admissions in the records. 129

The 1991 Petition is compliant with the requirements stated in law and jurisprudence. The sufficiency of its
allegations is thus established with respect to the pieces of jewelry. Not only were these listed in paragraph 9 (6)
130 of that petition as part of the properties subject to forfeiture but these were also itemized in the documents
annexed thereto: Annexes "F-1," 131 "F-2,"132 "F-2-a," 133 and "F-3." 134 The 1991 Petition is more than enough
fulfillment of the requirement provided under Section 3135(d) of R.A. 1379.

Meanwhile, the Sandiganbayan correctly held that the forfeiture was justified and that the Malacañang Collection
was subject to forfeiture. The legitimate income of the Marcoses had been pegged at USD 304,372.43. 136 We
reiterate what we have already stated initially in Republic v. Sandiganbayan, 137 and subsequently in Marcos v.
Republic: 138 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." 139 Petitioners failed to satisfactorily show that the properties were lawfully
acquired; hence, the prima facie presumption that they were unlawfully acquired prevails.

The Sandiganbayan also properly ruled that there was no inconsistency or incongruity between Republic's Request
for Admission and Motion for Partial Summary Judgment. Indeed, we have held that a request for admission can
be the basis for the grant of summary judgment. The request can be the basis therefor when its subject is deemed
to have been admitted by the party and is requested as a result of that party's failure to respond to the court's
directive to state what specifically happened in the case. 140 The resort to such a request as a mode of discovery
rendered all the matters contained therein as matters that have been deemed admitted pursuant to Rule 26,
Section 2 of the 1997 Rules of Civil Procedure. 141

On the basis of respondent Imelda Marcos' s letter dated 25 May 2009; respondents' Answer to the 1991 Petition,
which was considered to be a "negative pregnant" in Republic v. Sandiganbayan; and respondents' failure to timely
respond to petitioner's Request for Admission, the Sandiganbayan thus correctly granted the Motion for Summary
Judgment of the Republic.

A careful scrutiny of the three bases used by the Sandiganbayan in justifying the absence of a genuine issue and
eventually granting the Motion for Partial Summary Judgment leads us to no other course of action but to affirm
the ruling of the Sandiganbayan. The prima facie presumption on unlawfully acquired property indeed finds
application on the first basis. Section 2 of R.A. 13 79 provides that "[w]henever 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 primafacie to have been unlawfully acquired." And in this regard, the Sandiganbayan
had taken judicial notice of the legitimate income of the Marcoses during their incumbency as public officers for
the period 1966-1986 which was pegged at USD 304,372.43. 142

With respect to the second basis - the Answer to the 1991 Petition - the denial of the Marcoses cannot be
considered a specific denial because similar to their denial in the Arelma case, in which insisted that they were not
privy to the transactions, the Marcoses gave "the same stock answer to the effect that [they] did not engage in any
illegal activities, and that all their properties were lawfully acquired." 143 That they were not privy to the actual
data in the possession of the PCGG and the Solicitor General is simply a line of defense which necessarily results in
their failure to allege the lawfulness of the mode of acquiring the property. subject of forfeiture, considering the
amount of their lawful income. 144 As in the Arelma case, the Marcoses are deemed to have admitted that the
Malacanang Collection itemized in the annexes were found in the palace and subsequently proven to have been
owned by Mrs. Marcos as she admitted in her letter dated 25 May 2009.

In light of the third basis, the factual antecedents of the case bear restating. The Republic filed a Motion for Partial
Summary Judgment dated 24 June 2009, after which it filed and served a Request for Admission on 3 July 2009.
Afterwards, it submitted a Supplement to Motion for Partial Summary Judgment dated 14 July 2009. On 28 July
2009, the Marcoses filed their Manifestation and Preliminary Comments. The Sandiganbayan noted the objection
they had raised in their Manifestation and Preliminary Comments. 145 In that manner, rather than declaring that
the matters raised in the Request for Admission were deemed admitted, the Sandiganbayan instead ruled on the
objection raised by the Marcoses. In short, it ruled that the Request for Admission was not inconsistent with the
motion for summary judgment. 146 The Sandiganbayan reasoned that there was no inconsistency between the
two. It said that a request for admission may even complement a summary judgment in that the request for
admission may be used as basis for filing a motion for summary judgment. 147 It then denied the Manifestation
and Preliminary Comments and Manifestation and Motion to Expunge filed by the Marcoses relative to the
Republic's Request for Admission. Thereafter, it required the Marcoses to file and serve their sworn answer to the
Request for Admission. 148 The Marcoses filed numerous pleadings, but none of these was made in response to
the Request for Admission as required by Rule 26, Section 2149 of the Rules of Court until the Sandiganbayan
eventually issued the Partial Summary Judgment dated 13 January 2014 and the Resolution dated 11June2014.

The Sandiganbayan ruled that "a request for admission may even complement a summary judgment in that the
request for admission may be used as basis for filing a summary judgment" 150 citing three cases as follows:
Concrete Aggregates Corp. v. CA, 151 Diman v. Alumbres, 152 and Allied Agri-Business v. CA. 153 The first case
instructs that a request for admission "should set forth relevant evidentiary matters of fact, or documents
described in and exhibited with the request, whose purpose is to establish said party's cause of action or defense."
154

The second case, on the other hand, teaches the nature of modes of discovery in this wise:

Particularly as regards request for admission under Rule 26 of the Rules of Court, the law ordains that when a party
is served with a written request that he admit : (1) the genuineness of any material and relevant document
described in and exhibited with the request, or (2) the truth of any material and relevant matter of fact set forth in
the request, said party is bound within the period designated in the request, to file and serve on the party
requesting the admission a sworn statement either (10 denying specifically the matters of which an admission is
requested or (2) setting forth in details the reasons why he cannot truthfully either admit or deny those matters. If
the party served does not respond with such sworn statement, each of the matters of whichan admission is
requested shall be deemed admitted.

In this case, the Dimans' request for admission was duly served by registered mail on Jose Lacalle on February 6,
1995, and a copy thereof on his lawyers on February 4, 1995. Neither made any response whatever within the
reglementary period. Nor did either of them do so even after receiving copy of the Dimans' "MANIFESTATION
WITH MOTION TO REQUIRE PLAINTIFFS TO ANSWER REQUEST FOR ADMISSION." dated March 28, 1995. On
account thereof, in legal contemplation, the Heirs impliedly admitted all the facts listed in the request for
admission.

xxxx

On the other hand, in the case of a summary judgment, issues apparently exist -- i.e., facts are asse1ied in the
complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative
defenses are in truth set out in the answer -- but the issues thus arising from the pleadings are sham, fictitious, not
genuine, as shown by admissions, depositions or admissions.155 (Italics supplied)

The third case demonstrates how failure to answer the request for admission within the period resulted in the
admission of the matters stated therein. The Court, in that case, specifically ruled:

The burden of affirmative action is on the party upon whom notice is served to avoid the admission rather than
upon the party seeking the admission. Hence, when petitioner failed to reply to a request to admit, it may not
argue that the adverse party has the burden of proving the facts sought to be admitted. Petitioners silence is an
admission of the facts stated in the request.

This Court finds that the motion for summary judgment filed by respondent CHERRY VALLEY on the ground that
there were no questions of fact in issue since the material allegations of the complaint were not disputed was
correctly granted by the trial court. It is a settled rule that summary judgment may be granted if the facts which
stand admitted by reason of a partys failure to deny statements contained in a request for admission show that no
material issue of fact exists. By its failure to answer the other partys request for admission, petitioner has admitted
all the material facts necessary for judgment against itself. 156

Petitioners claim that there has been a lack of observance of due process; 157 that "there has been no trial or
hearing"; 158 and that "petitioners were shamefully never given an opportunity to show that the questioned
properties may have been lawfully acquired through other means." 159 We find the invocation of lack of
observance of due process at this stage of the proceedings rather belated, especially when it was never invoked
before the Sandiganbayan. Needless to say, the various pleadings petitioners have filed in this case and in other
cases involving the Marcos properties were countless occasions when they could have proven that the Malacañang
Collection had indeed been lawfully acquired as claimed. They allege that they were denied due process by not
being given any opportunity to prove their lawful acquisition of the Malacañang Collection. This allegation cannot
be given credence for being utterly baseless.

The complete records of Civil Case No. 0141 - a total of 35 volumes along with 2 envelopes containing exhibits and
1 envelope containing the transcripts of stenographic notes - have been forwarded to this Court by the
Sandiganbayan. Pertinent parts of these documents annexed to the 1991 Petition, along with the other pleadings
filed before the Sandiganbayan relative to the present petitions, have also been extensively quoted and
reproduced verbatim in this resolution. The purpose is not only to provide a clearer statement of the factual
antecedents, but also to confirm the veracity of the reference to these documents and to equally dispel any doubt
regarding them.

All in all, in the absence of any compelling legal reason, there is no basis to overturn, or carve an exception to,
existing jurisprudence on the matters raised in the present case.

WHEREFORE, premises considered, the assailed Partial Summary Judgment dated 13 January 2014 and Resolution
dated 11 June 2014 rendered by the Sandiganbayan in Civil Case No. 0141 are AFFIRMED.

SO ORDERED.