Estate of Marcos vs. Republic of the Philippines

Property acquired by a public officer during incumbency that is manifestly out of proportion to lawful income is presumed prima facie to have been unlawfully acquired, and the burden shifts to the public officer to prove lawful acquisition; failure to respond to a Request for Admission under Rule 26 results in implied admission of the matters stated therein, which may serve as basis for summary judgment.

The Republic, through the Presidential Commission on Good Government (PCGG) and the Office of the Solicitor General, filed a petition for forfeiture on December 17, 1991 against Ferdinand E. Marcos and Imelda R. Marcos before the Sandiganbayan, seeking recovery of assets acquired through improper or illegal use of government funds or properties. The petition, docketed as Civil Case No. 0141, was brought pursuant to R.A. 1379 in relation to Executive Order Nos. 1, 2, 14, and 14-A. Properties already subject of other pending forfeiture cases were excluded, and those covered by the 1991 Petition were clustered into 18 categories. Some properties had already been adjudged ill-gotten in prior cases — the Swiss deposits in Republic vs. Sandiganbayan (2003) and the Arelma funds in Marcos vs. Republic (2012). The jewelry recovered from the Marcoses was categorized into three collections: the Hawaii Collection, the Roumeliotes Collection, and the Malacañang Collection, with the Malacañang Collection alone valued between US$110,055 and US$153,089 based on Christie's 1991 appraisal.

The Republic of the Philippines, acting through the Presidential Commission on Good Government (PCGG) and the Office of the Solicitor General, filed a petition for forfeiture on December 17, 1991 against Ferdinand E. Marcos and Imelda R. Marcos before the Sandiganbayan. The petition, docketed as Civil Case No. 0141, was brought pursuant to R.A. 1379 in relation to Executive Order Nos. 1, 2, 14, and 14-A, and sought the recovery of assets and properties acquired by the Marcoses directly or indirectly through the improper or illegal use of government funds or properties. Properties already subject of other pending forfeiture cases were excluded, and those covered by the 1991 Petition were clustered into 18 categories. Among these properties, listed under paragraph 9(6) of the petition, were "jewelries, paintings and other valuable decorative arts found in Malacañang and in the United States estimated to be about $23.9-M," itemized in Annexes "F-1," "F-2," "F-2-a," and "F-3" attached as integral parts of the petition.

The jewelry recovered from the Marcoses was categorized into three collections. The Hawaii Collection consisted of pieces seized by the United States Customs Service upon the Marcoses' arrival in Honolulu and turned over to the Philippine Government, with the U.S. Hawaii District Court ruling on December 18, 1992 that the Republic was entitled to possession and control. The Roumeliotes Collection was seized from Roumeliotes at the Manila International Airport on March 1, 1986. The Malacañang Collection was seized from Malacañang after February 25, 1986 and transferred to the Central Bank on March 1, 1986. Based on the 1991 valuation by Christie, Manson and Woods International, Inc., the Malacañang Collection alone was valued between US$110,055 (low estimate) and US$153,089 (high estimate).

On June 24, 2009, the Republic filed a Motion for Partial Summary Judgment seeking to declare the Malacañang Collection as ill-gotten and to forfeit it in favor of the Republic. In support, the Republic cited a letter dated May 25, 2009 from Imelda Marcos, through counsel, demanding the immediate return of all her pieces of jewelry taken by the PCGG from Malacañang Palace and those turned over by the U.S. Government. The Republic argued that this letter proved the Marcoses' ownership of the collection, that the Marcoses' Answer to the 1991 Petition contained "negative pregnant" denials amounting to admissions, and that the Marcoses' lawful income of USD 304,372.43 was grossly disproportionate to the value of the jewelry.

On July 3, 2009, the Republic filed a Request for Admission addressed to the Estate of Ferdinand Marcos, Imelda Marcos, Imelda Marcos-Manotoc, and Irene Marcos Araneta, requesting admission under oath of several facts: that the Malacañang Collection was acquired during the incumbency of the Marcoses as public officials between 1966 and 1986; that it was acquired from abroad during their travels to Asia, Europe, and the United States; that the acquisition costs corresponded to the values appraised by Christie's; and that the pieces were in mint condition and mostly unused at the time of recovery. The Marcoses, rather than filing a sworn answer to the request, filed a Manifestation and Preliminary Comments on July 21, 2009 and a Manifestation and Motion to Expunge on July 25, 2009, arguing that the Request for Admission was inconsistent with the Motion for Partial Summary Judgment and that it was filed too late. The Sandiganbayan denied these motions in a Resolution dated August 2, 2010 and directed the Marcoses to file their sworn answer within 15 days, but they failed to comply.

After the parties submitted their respective memoranda, the Sandiganbayan issued a Partial Summary Judgment on January 13, 2014, ruling that the Malacañang Collection was part and subject of the forfeiture petition, that the motion for summary judgment was proper, and that the forfeiture was justified pursuant to R.A. 1379. Motions for reconsideration were denied by the Sandiganbayan in its Resolution dated June 11, 2014. The Marcoses elevated the case to the Supreme Court via petitions for review on certiorari, which were consolidated. The Sandiganbayan's factual findings included that the Marcoses' lawful income during their incumbency from 1966 to 1986 was pegged at USD 304,372.43, and that the Marcoses had failed to satisfactorily show that the properties were lawfully acquired.

• Jurisdiction over the Properties: Petitioners argued that the Sandiganbayan lacked jurisdiction over the Malacañang Collection, citing the Sandiganbayan's own Resolution dated October 25, 1996 and Order dated November 19, 2001, which stated that the Malacañang jewelry was not subject of any cause of action in the case.
• Inclusion in the Forfeiture Case: Petitioners maintained that the Malacañang Collection was merely "trivially mentioned" in the statement of facts of the 1991 Petition and was not specifically prayed for in the prayer of the petition.
• Inconsistency of Pleadings: Petitioners argued that the Republic's Request for Admission was inconsistent with its Motion for Partial Summary Judgment, and that the filing of the request was tantamount to an abdication of the position that the case was ripe for summary judgment, as it entertained a possibly genuine issue as to a material fact.
• Timeliness: Petitioners contended that the Request for Admission was filed too late, considering it was done after the Republic had filed its Motion for Summary Judgment in 2000 and after the case was concluded in 2004.
• Due Process: Petitioners claimed that there had been no trial or hearing and that they were never given an opportunity to show that the questioned properties may have been lawfully acquired through other means.

• Ownership and Admission: The Republic argued that Imelda Marcos's letter dated May 25, 2009 proved the Marcoses' ownership of the Malacañang Collection, and that the Marcoses were deemed to have admitted the allegations regarding the pieces of jewelry in the 1991 Petition.
• Negative Pregnant: The Republic contended that the stock phrases used in the Marcoses' Answer dated October 18, 1993 had been declared by the Court in the Swiss deposits case as a "negative pregnant" amounting to an admission if not squarely denied.
• Disproportionate Income: The Republic argued that the lawful income of the Marcoses during their incumbency was grossly disproportionate to the value of the pieces of jewelry, invoking the declaration in the Swiss deposits case that their lawful income amounted to USD 304,372.43.
• Complementarity of Pleadings: The Republic stated that the Request for Admission did not depart from the legal basis of the Motion for Partial Summary Judgment but merely sought to elicit details regarding the acquisition of the jewelry to expedite resolution, and that a request for admission may complement a summary judgment.
• Implied Admission: The Republic insisted that by operation of law, the Marcoses' failure to respond to the Request for Admission within the reglementary period resulted in their admission of the matters contained therein.

• Jurisdiction: Whether the Sandiganbayan has jurisdiction over the properties.
• Subject of Forfeiture: Whether the Malacañang Collection can be the subject of the forfeiture case.
• Justification for Forfeiture: Whether forfeiture is justified under R.A. 1379.
• Consistency of Pleadings: Whether the Sandiganbayan correctly ruled that the Motion for Partial Summary Judgment was not inconsistent with the Request for Admission.
• Due Process: Whether the Sandiganbayan correctly declared that the forfeiture was not a deprivation of petitioners' right to due process of law.

• Jurisdiction: Yes. The Sandiganbayan correctly acquired jurisdiction, the properties being included in the 1991 Petition under subparagraph (6) of paragraph (9), with the annexes itemizing the pieces of jewelry and their estimated values as integral parts of the petition.
• Subject of Forfeiture: Yes. The Malacañang Collection was properly the subject of the forfeiture case, having been categorically alleged in the 1991 Petition and itemized in annexes thereto, fulfilling the requirements of Section 3(d) of R.A. 1379.
• Justification for Forfeiture: Yes. The forfeiture was justified under R.A. 1379, the Marcoses' lawful income of USD 304,372.43 being manifestly out of proportion to the value of the jewelry, triggering the prima facie presumption of unlawful acquisition, which the Marcoses failed to rebut.
• Consistency of Pleadings: Yes. The Sandiganbayan correctly ruled that there was no inconsistency between the Request for Admission and the Motion for Partial Summary Judgment, a request for admission being capable of complementing a summary judgment.
• Due Process: Yes. The forfeiture was not a deprivation of due process, the Marcoses having had countless opportunities in various pleadings to prove lawful acquisition, and their invocation of lack of due process being belated, having never been raised before the Sandiganbayan.

• Jurisdiction: The 1991 Petition specifically listed the jewelry under paragraph 9(6), which referenced "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,' 'F-2,' 'F-2-a' and 'F-3.'" The Sandiganbayan correctly noted that these annexes, made integral parts of the petition, itemized and enumerated the pieces of jewelry with their estimated values. Applying the test for sufficiency of allegations in an initiatory pleading — whether, admitting the truth of the facts alleged, the court can render a valid judgment in accordance with the prayer — the 1991 Petition was compliant with the requirements of Section 1, Rule 8 of the Rules of Court and Section 3(d) of R.A. 1379. The sufficiency of its allegations was thus established with respect to the pieces of jewelry. The court may consider the appended annexes and admissions in the records in addition to the complaint itself, pursuant to Goodyear vs. Sy.

• Subject of Forfeiture: The Sandiganbayan found that the 1991 Petition had categorically alleged that the Malacañang Collection was included in the assets, monies, and properties sought to be recovered. The earlier Sandiganbayan Resolution dated October 25, 1996, while noting that the Malacañang jewelry was "not subject of any causes of action in this case," had also stated that it "could adversely affect the projected Compromise Agreement" and had temporarily restrained the Republic from selling it. The petition's annexes itemized the jewelry, establishing that the collection was properly within the scope of the forfeiture proceedings. The Republic's Supplement to the Motion for Partial Summary Judgment clarified 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 its Resolution dated October 25, 1996.

• Justification for Forfeiture: Section 2 of R.A. 1379 provides that whenever any public officer or employee has acquired during his incumbency an amount of property manifestly out of proportion to his salary and other lawful income, said property shall be presumed prima facie to have been unlawfully acquired. The Sandiganbayan had taken judicial notice of the Marcoses' legitimate income during their incumbency from 1966 to 1986, pegged at USD 304,372.43. This amount was grossly disproportionate to the value of the Malacañang Collection, valued between US$110,055 and US$153,089. The Marcoses failed to satisfactorily show that the properties were lawfully acquired. Their Answer to the 1991 Petition could not be considered a specific denial because they gave the same stock answer that they did not engage in illegal activities and that all their properties were lawfully acquired — a denial deemed a "negative pregnant" in Republic vs. Sandiganbayan. Their claim of not being privy to the actual data in the possession of the PCGG necessarily resulted in their failure to allege the lawfulness of the mode of acquiring the property. Imelda Marcos's letter dated May 25, 2009 demanding the return of the jewelry further established ownership, and the Marcoses were deemed to have admitted that the Malacañang Collection itemized in the annexes was found in the palace and owned by Mrs. Marcos.

• Consistency of Pleadings: A request for admission can serve as the basis for the grant of summary judgment when its subject is deemed admitted by the party's failure to respond. The Sandiganbayan correctly held that a request for admission may complement a summary judgment. The Republic filed the Request for Admission on July 3, 2009, and the Marcoses were required to respond within 15 days or until July 18, 2009. Instead of filing a sworn answer, the Marcoses filed a Manifestation and Motion to Expunge on July 25, 2009. Pursuant to Rule 26, Section 2 of the 1997 Rules of Civil Procedure, each of the matters of which an admission is requested shall be deemed admitted unless the party files and serves a sworn statement either denying specifically the matters or setting forth in detail the reasons why he cannot truthfully admit or deny those matters. The Marcoses' numerous pleadings did not include a response to the Request for Admission as required by the Rules. The cases of Concrete Aggregates Corp. vs. CA, Diman vs. Alumbres, and Allied Agri-Business vs. CA were cited in support: the first instructing that a request for admission should set forth relevant evidentiary matters of fact; the second teaching that failure to respond results in implied admission and that summary judgment may be granted when issues are shown to be sham through admissions; and the third demonstrating that the burden of affirmative action is on the party served with the request, whose silence constitutes admission.

• Due Process: The invocation of lack of due process was belated, as it was never raised before the Sandiganbayan. The various pleadings the Marcoses had filed in this case and in other cases involving Marcos properties constituted countless occasions when they could have proven that the Malacañang Collection had been lawfully acquired. Their allegation that they were denied due process by not being given any opportunity to prove lawful acquisition was found to be utterly baseless. The complete records of Civil Case No. 0141 — 35 volumes along with envelopes containing exhibits and transcripts — had been forwarded to the Supreme Court by the Sandiganbayan, confirming the veracity of the references to the documents and dispelling any doubt regarding them.

• Prima Facie Presumption of Unlawful Acquisition (R.A. 1379, Section 2) — Whenever any public officer or employee has acquired during his incumbency an amount of property manifestly out of proportion to his salary and other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. The burden shifts to the public officer to prove lawful acquisition. In this case, the Marcoses' lawful income of USD 304,372.43 was grossly disproportionate to the value of the Malacañang Collection, and they failed to rebut the presumption.

• Implied Admission by Failure to Respond to Request for Admission (Rule 26, Section 2) — Each of the matters of which an admission is requested shall be deemed admitted unless, within the period designated in the request (not less than 15 days after service), the party to whom the request is directed files and serves a sworn statement either denying specifically the matters or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters. The Marcoses' failure to file a sworn answer resulted in the implied admission of all matters in the Republic's Request for Admission.

• Negative Pregnant — A form of denial that, rather than being a direct negation, actually implies an admission. The stock phrases used by the Marcoses in their Answer — denying for lack of knowledge or information sufficient to form a belief and claiming they were not privy to the actual data — were deemed negative pregnants amounting to admissions when not squarely denied, as established in Republic vs. Sandiganbayan and followed in Marcos vs. Republic.

• Request for Admission as Basis for Summary Judgment — A request for admission may complement a motion for summary judgment, as admissions resulting from a party's failure to respond can establish that no genuine issue of material fact exists, warranting summary judgment. The two modes of discovery and procedure are not inconsistent; rather, the request may serve as the factual foundation for the summary judgment.

• Sufficiency of Allegations in Initiatory Pleadings — In determining whether an initiatory pleading states a cause of action, the test is: admitting the truth of the facts alleged, can the court render a valid judgment in accordance with the prayer? The court may consider the complaint, appended annexes, other pleadings, and admissions in the records. The 1991 Petition's listing of jewelry in paragraph 9(6) and itemization in annexes satisfied this test and the requirements of Section 3(d) of R.A. 1379.

• "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." — This is the Court's reiteration of the prima facie presumption under Section 2 of R.A. 1379, applied to the Marcoses' jewelry collection, forming the core legal basis for the forfeiture.

• "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" — This pronouncement clarifies the relationship between modes of discovery and summary judgment procedure, establishing that a Request for Admission is not inconsistent with a Motion for Summary Judgment but may serve as its factual foundation.

• "each of the matters of which an admission is requested shall be deemed admitted" — This is the Court's citation of Rule 26, Section 2, establishing the consequence of failure to respond to a Request for Admission, which was central to the Sandiganbayan's grant of summary judgment.

• "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 passage, quoted from Allied Agri-Business vs. CA, defines the burden allocation in requests for admission and was relied upon to establish the Marcoses' implied admission.

• Republic vs. Sandiganbayan, 453 Phil. 1059 (2003) — The Swiss deposits case. Controlling precedent followed for the prima facie presumption of unlawful acquisition, the determination of the Marcoses' lawful income at USD 304,372.43, and the characterization of the Marcoses' Answer as a "negative pregnant" amounting to an admission.

• Marcos vs. Republic, 686 Phil. 980 (2012) — The Arelma case. Followed for the same principles regarding the prima facie presumption and the insufficiency of the Marcoses' generic denials of lawful acquisition.

• Concrete Aggregates Corp. vs. CA, 334 Phil. 77 (1997) — Cited for the proposition that a request for admission should set forth relevant evidentiary matters of fact or documents whose purpose is to establish a party's cause of action or defense.

• Diman vs. Alumbres, 359 Phil. 796 (1998) — Cited for the nature of modes of discovery under Rule 26, specifically that failure to respond to a request for admission results in implied admission, and that summary judgment may be granted when issues arising from pleadings are shown to be sham or fictitious through admissions.

• Allied Agri-Business vs. CA, 360 Phil. 64 (1998) — Cited for the rule that the burden of affirmative action is on the party served with a request for admission, and that failure to answer results in admission of all material facts necessary for judgment.

• Goodyear vs. Sy, 511 Phil. 41 (2005) — Cited for the test in determining whether an initiatory pleading states a cause of action, including consideration of appended annexes and admissions in the records.

• Section 2, Republic Act No. 1379 — Establishes the prima facie presumption that property acquired by a public officer during incumbency manifestly out of proportion to lawful income is unlawfully acquired. Applied to the Marcoses' jewelry collection, given that their lawful income of USD 304,372.43 was grossly disproportionate to the collection's value of US$110,055 to US$153,089.

• Section 3(d), Republic Act No. 1379 — Sets forth the requirements for the filing of a forfeiture petition. The 1991 Petition's listing of the jewelry in paragraph 9(6) and itemization in Annexes "F-1," "F-2," "F-2-a," and "F-3" fulfilled these requirements.

• Section 1, Rule 8 of the Rules of Court — Requires every pleading to contain a plain, concise, and direct statement of the ultimate facts on which the party relies. The 1991 Petition was found compliant with this requirement.

• Section 2, Rule 26 of the 1997 Rules of Civil Procedure — Governs implied admission through failure to respond to a Request for Admission. The Marcoses' failure to file a sworn answer within the reglementary period of 15 days resulted in the deemed admission of all matters in the Republic's Request for Admission.

• Executive Order Nos. 1, 2, 14, and 14-A — Created the PCGG and defined its jurisdiction over cases involving ill-gotten wealth of the Marcoses. These executive orders provided the statutory framework for the 1991 Petition.

Del Castillo, Reyes, Perlas-Bernabe, and Caguioa, JJ., concurred.