ANSWER: What constitutes a specific denial of an allegation in a complaint?

Republic v. Sandiganbayan (G.R. 152154)

CORONA, J.

CASE SUMMARY
This case revolves around $356M allegedly taken by the Marcoses, hidden behind dummy foundations, and stashed in
Swiss banks. The crucial issues discussed were: (1) whether or not respondents raised any genuine issue of fact which
would either justify or negate summary judgement; and (2) whether or not petitioner Republic was able to prove its case
for forfeiture. For the first issue, the Supreme Court granted the petitioners motion for summary judgment because the
Marcoses were not able to dispute any of the facts that were alleged by the petitioner. 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 just stock answers without stating the basis of such assertions. Ergo, there was clearly no genuine issue
as to any material fact in the action - merely sham or fictitious defenses calibrated to confuse the issues. Anent the
second issue, it was found that they did in fact own the Swiss funds and the court eventually ruled that they were ill-gotten
wealth to be forfeited to the Republic.

DOCTRINE (this is kind of long, but important to read - placed almost everything here so you wont have to
treasure hunt under the ISSUES and RULING portion of the digest)

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.

The purpose of requiring respondents to make a specific denial is to make them disclose facts which will disprove
allegations of petitioner at the trial, together with the matters they rely upon in support of such denial. This is 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.

In this case, the Marcoses 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 (but the Court actually agreed with the
petitioner that these denials were based on a lack of recollection not lack of knowledge). The Marcoses couched it in
stock answers such as they have no sufficient knowledge or they could not recall because it happened a long time ago
or, as to Mrs. Marcos, the funds were lawfully acquired without stating the basis of such assertions.

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.
However, in the case when an allegation specifically charges the accused with a particular act, the denial must be
expressly and categorically made (Morales v. CA).

The important question is thus whether the kind of denial made by the Marcoses qualifies as a specific denial
required by the rules. THE SC DOES NOT THINK SO. Such a general, self-serving claim of ignorance of the facts
alleged is insufficient to raise an issue. The Marcoses should have positively stated how it was that they were
supposedly ignorant of the facts alleged.

For example (they had a lot of responses similar to the stock answer below), the material allegations in paragraph 23 of
the Republics petition were not specifically denied by the Marcoses in paragraph 22 of their answer:

REPUBLICS ALLEGATION MARCOSES DENIAL IN CONCLUSIONS/ OBSERVATIONS


The following presentation very clearly and
overwhelmingly show in detail how both
respondents clandestinely stashed away
the countrys wealth to Switzerland and hid
the same under layers upon layers of
foundations they opened and maintained
numerous bank accounts. But due to the
difficulty the following presentation is
confined to five identified account groups
with balances amounting to about $356-M
with a reservation for filing
supplemental or separate forfeiture
complaint should the need arise.
THEIR ANSWER
Respondents specifically Not specifically denied (this is called a
DENY paragraph 23 insofar as negative pregnant statement, that is, a
it alleges that Respondents denial pregnant with the admission of
clandestinely stashed the substantial facts).
countrys wealth in Switzerland
The material allegations of the Republic
and hid the same under layers
in paragraph 23 of the petition were not
and layers of foundations and
specifically denied in paragraph 22 of
corporate entities for being
their answer. The denial was pregnant
false, the truth being that
with the following substantial facts:
Respondents aforesaid
(1) That the Swiss bank deposits
of a properties were lawfully
existed; and
acquired. (2) That the estimated sum thereof
was $356

Moreover, when matters which respondents claim to have no knowledge or information sufficient to form a belief are
plainly and necessarily within their knowledge (i.e. the records they denied to have knowledge of, such as the ITRs
and balance sheets, were actually attached by the respondents themselves in their petition for forfeiture), their alleged
ignorance or lack of information will not be considered a specific denial. Simply put, a profession of ignorance
about a fact which is patently and necessarily within the pleaders knowledge or means of knowing is as
ineffective as no denial at all. (J.P. Juan & Sons Inc. v. Lianga Industries, Inc.)

Hence, anyway the Court looked at it, the Marcoses have put forth no real defense, only mere denials unaccompanied by
any fact which will be admissible in evidence at a hearing. In sum, these are not sufficient to raise genuine issues of
fact and will not defeat a motion for summary judgement .

The Court also stated that 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 purpose of delay.

TL;DR petitioner specifically alleging particular acts + respondent merely making general denials of allegations without
stating facts admissible in evidence at a hearing (NOT a specific denial) = failure to raise any genuine issue of fact =
summary judgement proper.

FACTS (just edited Amens fact set in his digest for Consti!)
1. DEC. 17, 1991 Petitioner Republic, through the PCGG represented by the OSG, filed a petition for forfeiture
pursuant to RA 1379 (provides for the forfeiture of illegally acquired property by a public official in favor of the state)
a. Petitioner seeks:
i. $356M (estimated now to be more than $658M) deposited in escrow in the PNB as ill-gotten wealth
which was previously held by 5 account groups using foreign foundations in Swiss Banks
ii. forfeiture of $25M and $5M in treasury notes (currently frozen in the BSP) which exceed the
Marcos salaries and other lawful income
2. OCT. 18, 1993 Respondents filed an answer to the petition
3. Before pre-trial on DEC. 28, 1993, the Marcos children and PCGG executed a General Agreement and Supplemental
Agreement for the Global Settlement of the Assets (These were subsequently pronounced to be null and void by the
Supreme Court in the Chavez v. PCGG case.)
 a. The agreements sought to identify, collate, cause the inventory of and distribute all Marcos family assets. it
also included a whereas clause which states that a Swiss Federal tribunal ruled that the $356M would
belong to the Philippines provided that certain conditions are met
4. On the motion of the Marcos children to have the Agreements granted, hearings were conducted
5. Petitioner filed a motion for summary judgment (which was opposed by the respondents) but this was denied due to
the pending approval of the compromise agreements which took precedence over this.
6. Imelda filed a manifestation that she was not a party to the compromise agreement and that she owned 90% of the
funds that were the subject of investigation with the remaining 10% belonging to Ferdinand Marcos (FM) estate
7. Petitioner filed an additional request with the District Attorney in Switzerland for the immediate transfer of the deposits
to an escrow account in the PNB. This was granted and upheld when the Marcoses appealed. The Marcos children
then requested that the funds be placed in custodia legis because the deposit in escrow was allegedly in danger of
dissipation by the Republic. This was granted by the Sandiganbayan.
8. Eventually the case was set for trial. Petitioner again filed a motion for summary judgment regarding the forfeiture of
$356M on MAR 10, 2000 and this was granted on the basis of the fact that:
i. respondents admitted to the facts warranting the forfeiture
ii. they also admitted in pre-trial that they have no interest or ownership over the funds
b. The hearing was held which granted the summary judgment, declaring that there was no need to present
evidence and that the funds were indeed ill-gotten wealth.
9. Respondents filed for reconsideration with the Sandiganbayan, and on JAN. 31, 2002, the Sandiganbayn granted
their petition ruling that there was no legal proof that the Marcoses owned the funds and the basis for forfeiture had
not been established.
10. Hence, this petition.
a. Petitioners claim that they were able to prove their case in accordance with sec. 2 and 3 of RA 1379 and
that the respondents never questioned the authenticity, accuracy, and admissibility of the Swiss decisions
(that the Marcoses owned the funds). The Sandiganbayan used the issue of lack of authenticated
translations of the Swiss decisions as the basis for reversal but the respondents never even raised this as an
issue
b. Imelda argued that petitioners had a plain, speedy, and adequate remedy at the Sandiganbayan which did
not err in setting the case for further proceedings in order to submit the authenticated translated decisions
c. The other respondents and Marcos children claim that:
i. petitioners were actually barred by laches from filing its motion for summary judgment
ii. a prima facie case for forfeiture was never actually established
iii. petitioners made their case by taking certain statements of the respondents out of context
iv. the remedy of certiorari does not lie since there is no proof supporting their allegations and the SC
is not a trier of facts

ISSUES AND RULING (just edited Amens Issues and Ruling in his digest for Consti! The important details
regarding the CivPro lesson have already been discussed under the DOCTRINE portion of the digest)

1. Propriety of petitioners action for certiorari (under Rule 65)

a. Petitions for certiorari are usually brought under Rule 45 but due to the case being ingrained with immense
public interest and deep historical repercussions, the court treated this as an exception
b. The importance of PCGGs task being pursued here (the recovery of ill-gotten wealth) justifies setting aside
technicalities

2. W/N respondents raised any genuine issue of fact which would negate the need for a summary judgment NO. The
Court ruled that the Marcoses failed to raise any genuine issue of fact in their pleadings so the motion for
summary judgment should take place as a matter of right.

a. Auman vs. Estenzo: summary judgment (sec. 1, Rule 35 of the 1997 Rules of Civil Procedure) takes
place before the trial but after both parties have pleaded upon the application by one party with supporting
 affidavits or documents and thereafter, notice upon the adverse party who may oppose the motion. This is
after both parties have presented their proof and if the court finds no real issue as to any material fact in the
action between them (thus the need to establish genuine issues of fact)
b. SolGens case for forfeiture:
The SolGen presented the following information regarding the Marcoses personal circumstances in their
income tax returns and balance sheet:

Schedule of Income Salaries

Official Salaries 2,627,581 FMs salary as president:

1966-1976 = P60,000
Legal Practice 11,109,836 1977-1985 = P100,000

Farm Income 149,700 Imelda Marcos salary as Minister of Human

Settlements:
Others 2,521,325 1975-1986 = P75,000

Total 16,408,442

The Marcoses claim that 10,649,836 of the income from their Legal practice are receivables paid by clients
from prior years (since he isnt allowed to continue his practice as President) but his BS attached to his 1965
ITR showed no evidence that he had any receivables at all and his net worth for the time was merely P120k
so there was nothing to account for the P10.65M.

Additionally the Republic accused them of hiding their wealth behind dummy foundations and organisations
and stashed it in Switzerland but due to the difficulty/impossibility of finding all the hidden accounts, they
limited the presentation to 5 identified accounts groups.

Behind these account groups, there was a pattern of (a) creating foundations, (b) the use of pseudonyms (to
hide their identities) and dummies, (c) the approval of regulations of the Foundations for the distribution of
capital and income to the First and Second beneficiaries (who were FM and his family), (d) opening of bank
accounts for the Foundations, (e) changing the names of the Foundations, (f) transferring the assets to other
foundations or Fides Trust (used as a fiduciary), (g) the liquidation of the foundations. The accounts groups
(enumerated below) had a total of $356M:

i. AZIO-VERSO-VIBUR Foundation Accounts

ii. XANDY-WINTROP: CHARIS-SCHOLARI-VALAMO-SPINUS-AVERTINA Foundation Accounts
iii. TRINIDAD-RAYBY-PALMY Foundation Accounts
iv. ROSALYS-AQUAMINA Foundation Accounts
v. MALER Foundation Accounts

c. The Marcoses denied everything generally, except for the presentation regarding their salaries as public
officials so the SC ruled that they failed to tender any genuine issues (those which call for the presentation of
evidence) in their answer since all their only replies were that: (1) they could not recall because it all
happened a long time ago, (2) they lacked the knowledge or info, and (3) that the funds in question were
 legally acquired (according to Imelda). Clearly the general denials were meant to confuse the issues and
prolong the proceedings.

d. The SC then proceeded to look into the Marcoses multiple pleadings replete with indications of a spurious
defense:

A. Respondents answer (where they made the general denials)

i. They denied everything but never substantiated their denials by providing facts. The purpose of the
necessity for a specific denial (under sec. 10, Rule 8 of the 1997 Rules of Civil Procedure) is to
make them disclose facts which will disprove allegations of petitioner at the trial, together with the
matters they rely upon in support of such denial. This is 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. Imelda merely stated that the funds were lawfully acquired but
never described how they were legally acquired
ii. Alleging that one is without knowledge or information sufficient to form a belief as to the truth of the
material averment in the complaint is a proper mode of specific denial but according to Morales
vs. CA, in the case when an allegation specifically charges the accused with a particular act, the
denial must be expressly and categorically made (not in general statements without facts to back it
up)
iii. In response to the allegation that they stashed the countrys wealth in Switzerland amounting to
$356M, they stated that they deny it and that the aforesaid properties were lawfully acquired
1. This constitutes a denial that is negative pregnant which, according to Galofa vs.
Nee Bon Sing, is equal to an admission. By stating that the properties were lawfully
acquired, they made a denial pregnant with an admission of the facts. In other words,
they basically admitted the existence of the funds in the Swiss Accounts and that they
were, in fact, theirs.
2. PLUS, since documents relating to the foreign foundations had their signatures, they
cannot claim lack of information. Here the Court agreed that the Marcoses denial
was not really grounded on lack of knowledge but on lack of recollection.
3. Ignorance about a fact which is patently within the pleaders knowledge is no denial
at all and so the denial of the Marcos children for lack of info.since they were not
privy to the transactions cannot be accepted since they were the legal heirs and
successors of FM

B. Pre-trial Brief, Opposition to the motion for Summary Judgment, Demurrer to evidence and motions for
reconsideration, Memoranda of Marcos Children, and the General/Supplemental Compromise Agreement
i. All contained general denials without affidavits, documents, or other evidence to support the facts
behind their denials.
ii. The Marcoses initially denied ownership/knowledge of the Swiss funds but in the Compromise
Agreements, they included it among assets to be distributed.

e. Basically everything pointed to the fact that the denials were not just meant to confuse and mislead. Under
these circumstances, the SC ruled that summary judgment was proper because there were no genuine
issues of fact since the denials were without basis.
3. Respondents contend that the petitioner bound itself to go to trial trough positive acts and express admissions prior to
filing the motion for summary judgment
a. This does not preclude them from filing a motion for summary judgment because Rule 35 states that a
plaintiff may move for summary judgment at any time after the pleading in answer thereto has been served
i. the issue of interpreting what at any time means was one of first impression so the SC took note
of US jurisprudence and found that it meant at any stage of the litigation, whenever it becomes
evident that no triable issue exists or that the defenses raised are a sham.

4. Respondents also claimed that the motion for summary judgment was based on the Respondents answer and other
documents that had long been in the records of the case so estoppel by laches had already set in against the
petitioner.
a. Estoppel by laches: failure/neglect for an unreasonable/unexplained length of time to do that which could or
should have been done earlier thus warranting the presumption that the person has abandoned his right to
assert it
b. Records show that the petitioner was never remiss in pursuing its case against the respondents through
every remedy available to them including a motion for summary judgment. They actually tried to file the
motion before but were prevented by the Compromise Agreement so the filing of the 2nd motion was NOT
due to neglect or inaction.
c. Even if laches had already set in, it doesnt apply when the government sues as a sovereign.

5. The propriety of forfeiture

a. The law raises a prima facie presumption that a property is unlawfully acquired if its value is disproportionate
to the officials salary and other lawful income (Sec. 2 and 6, RA 1379). In order to pursue forfeiture, the
following must be proved:
i. ownership by the public office of money or property acquired during his incumbency whether it be in
his name or otherwise
ii. The extent to which the amount of the money/property exceeds/is grossly disproportionate to the
legitimate income of the public officer
b. Respondents have already admitted to their accumulated salaries during the time material to this case and it
is an undisputed fact that they were public officials during this time.
c. All things considered, the total accumulated lawful income which would be used as the basis for forfeiture =
P2,319,583.33 or $304,372.43. This was used as the basis because the Marcoses never filed a Statement
on Assets and Liabilities and FM was prohibited from receiving any other emoluments from the government
or other sources during his tenure as the president anyway.
i. in fact, the management of businesses like the foreign foundations was prohibited
d. Respondents argue: petitioners failed to establish a prima facie case for forfeiture of the Swiss fund since it
failed to prove the approximate amount of property acquired during his incumbency in past and present
offices and describe the property and the total amount of government salary as well as the other property
earnings and incomes from legitimately acquired property
i. Supreme Court:
1. Petitioners should not have established for themselves the Marcos other lawful
income from legitimately acquired property since the respondents are in the best
position to determine if theyre receiving income from other sources. it was enough
that they specified the known lawful income (pertaining to the $304k)
2. BUT the respondents never filed a SAL (violation against the law) with which to
determine their net worth so they cannot assail the Republic for this issue since
allowing them to do so would reward them for violating the law. The petitioners had to
make do with what resources they had at their disposal.
 3. BESIDES, through their own conduct and express admissions (such as Imelda
saying that the properties were legally acquired, the compromise agreements, being
protective of the funds to be transferred) they already admitted that they own the
funds
4. Respondents argued that the Compromise agreements with the whereas clause
stating the Swiss Tribunals decision identifying the Marcoses as owners was
inadmissible as evidence since it was declared null and void but the nullification of
the agreements was because of provisions granting immunity to the Marcoses, not
the truthfulness of their admissions.

e. Since the petitioner was able to prove the aggregate lawful income of the Marcoses and that they
owned the Swiss funds, the prima facie presumption that the funds were unlawfully acquired stands.

6. Finally, Imelda contended that the judgment is void because the Republic failed to implead the foreign foundations
which were indispensable parties
a. Imelda herself admitted that she owned 90% of the subject funds and 10% belonged to the estate of FM so
the foundations did not own a single share of the assets in question. Given this, they were not indispensable
parties and they would not have been injured by any judgment rendered.
b. Republic vs. Sandiganbayan: impleading firms organized with ill-gotten wealth, if they are not themselves
guilty, is unnecessary.
i. The Foreign Foundations were simply the res (subject matter of the action) in the action for
recovery of the ill-gotten wealth
ii. even if they were indispensable, this is an error that can be cured at any stage in the proceedings
and does not justify rendering the ruling void

DISPOSITIVE
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 the petitioner Republic of the Philippines.

Digester: Kim