Locsin vs. Sandiganbayan

A trial court does not commit grave abuse of discretion correctable by certiorari in denying admission of a proposed amended complaint where the amendments are substantial, would cause delay, and introduce evidentiary rather than ultimate facts; the denial of a motion to admit amendments, being interlocutory, cannot be questioned by certiorari absent extraordinary circumstances showing a patent disregard of justice and fair play.

Oriental Petroleum and Minerals Corporation was organized on October 10, 1969, engaged in the exploration, development, acquisition, financing, and management of petroleum and mineral resources, and achieved the Philippines' first oil discovery in 1976. Its PhP 10 billion common shares were divided into six billion Class "A" shares (issuable only to Filipino citizens) and four billion Class "B" shares (issuable to aliens). Petitioners are stockholders of Oriental who allege that former President Ferdinand E. Marcos and his cronies acquired approximately 4.5 billion Oriental shares through simulated transactions, extortion, and systematic abuse of power. The Presidential Commission on Good Government sequestered these disputed shares in April 1986, thereafter taking control of Oriental's board and management.

Petitioners are individual stockholders of Oriental Petroleum and Minerals Corporation, a company organized on October 10, 1969, engaged in petroleum and mineral exploration, development, and management. Oriental's authorized capital of PhP 10 billion common shares was divided into six billion Class "A" shares (for Filipino citizens) and four billion Class "B" shares (for aliens). According to petitioners, former President Marcos and his cronies acquired three blocks of Oriental shares at various times through illegal means. The first block, one billion Class "B" shares, was allegedly transferred in 1970 to Star Management Corporation upon Marcos's instructions through a bill of sale executed by the underwriter J.M. Barcelon & Co., with no valid consideration. Of these, 999 million shares were later transferred to Ultrana Minerals Corporation, and subsequently to Independent Realty Corporation and Vincent Recto, leaving 162 million shares in Independent Realty as of the filing of the suit. The second block, 1.85 billion Class "B" shares, was allegedly acquired in 1976 through simulated transactions and distributed to Performance Investment Corporation (1 billion), Mid-Pasig Development Corporation (840 million), and Fabian Ver (10 million), at a subscription price of P0.01 per share despite a market average of P0.10. The third block, 2.5 billion shares, was allegedly issued in 1978 after Marcos forced Oriental to increase its authorized capital stock, in exchange for a 2.5% interest in Service Contract No. 14 over the Nido and Matinloc oil fields; these shares were placed in the name of Piedras Petroleum Corporation.

On April 10 and 14, 1986, the PCGG issued sequestration orders covering all the above shares. Petitioners alleged that the PCGG nominees then set into motion a scheme to raid and plunder Oriental. On May 5, 1988, petitioners Yao Shiong Shio, Oscar Manuel, and Ramon Linan filed a complaint in the Sandiganbayan, docketed as S.B. Case No. 0041, seeking nullification of the PCGG deed of sale and sequestration orders, with a prayer for injunctive relief. The SB First Division denied the plea for an injunctive writ on May 25, 1988. Petitioners filed an amended complaint on July 6, 1988, but then filed a Notice of Dismissal of both the original and amended complaints on July 27, 1988, which the SB First Division approved on July 28, 1988.

On the same day, July 28, 1988, petitioners filed a new complaint docketed as S.B. Case No. 0042, which was identical to the amended complaint in S.B. Case No. 0041 but impleaded additional plaintiffs and defendants. The SB Third Division noted the apparent forum shopping and returned the case to the First Division. After receiving the case, the SB First Division conducted hearings on the prayer for injunctive relief and, on June 21, 1989, denied the preliminary injunction, finding that petitioners had provided details only on the first block of shares while merely describing the second and third blocks as acquired through "simulated transactions" and "systematic abuse of power" without further particulars. Prompted by this denial, petitioners filed on October 18, 1989 a Motion for Leave to Admit Amended Complaint, seeking to state more fully their averments in express terms. The SB First Division denied admission on March 21, 1990, finding the proposed amendments substantial and likely to cause delay, as the 19 defendants had already filed their answers. Petitioners' Motion for Reconsideration was denied on May 12, 1998, giving rise to the instant petition for certiorari.

During the pendency of the petition, several events transpired. Respondent Eduardo F. Hernandez was cleared by the Supreme Court in G.R. No. 101967 of any wrongdoing relative to the sale of 999 million shares, and the Sandiganbayan dismissed the case as to him on October 2, 1998. The Asset Privatization Trust returned 1,004,230,000 Oriental shares to the PCGG pursuant to Administrative Order No. 241, and APT's term expired on December 31, 2000, with the Privatization and Management Office taking over its functions. Respondents Antonio Caguiat and Valeriano Fugoso died during the pendency of the case.

• No Substantial Alteration of Cause of Action: Petitioners maintained that the proposed amendments did not modify their cause of action, as the amendments only detailed, amplified, and made in express terms the same alleged transactions that were impliedly alleged in the original complaint, citing Rubio vs. Mariano.
• Liberality of Amendments: Petitioners argued that amendments to pleadings are allowed at any stage of the action to avoid multiplicity of suits and to accord parties the opportunity to present the real controversy, citing Sedeco vs. Court of Appeals, Paman vs. Diaz, and Marini-Gonzales vs. Lood for the proposition that the rules on amendments are permissive and liberally construed.
• No Prejudice to Respondents: Petitioners contended that the amended complaint would not prejudice respondents, who would be accorded time to answer and could prepare sufficiently for trial, considering that trial proper had not yet commenced.
• No Forum Shopping: Petitioners countered that the dismissal of S.B. Case No. 0041 and the subsequent filing of S.B. Case No. 0042 did not amount to forum shopping, as the Rules allow withdrawal of a complaint at the instance of plaintiffs who are not prejudiced thereby nor precluded from re-filing.
• PMO Should Remain a Party: Petitioners asserted that PMO had not shown that the assailed transfer of 1,004,230,000 Oriental shares had indeed been mooted, as no proof was presented that the shares had been returned to the PCGG.

• Substantial Change of Cause of Action: Respondents countered that petitioners' proposed amendments constituted a substantial change of the cause of action, as the alterations were such that the statement of the wrong done had been substantially altered from that which originally confronted the defendants.
• Delay: Respondents averred that the proposed amendments were pursued in order to delay the instant case, since what had been proposed could be well ventilated during trial with testimonial evidence and proper representation.
• Forum Shopping and Res Judicata: Respondents Hernandez, Roxas, and PMO raised the issues of forum shopping and res judicata, alleging that petitioners had concealed the existence of multiple cases in different fora involving the same parties and subject matter.
• Mootness as to APT/PMO: Respondent APT (later PMO) contended that the questioned transfer of shares was moot and academic, as APT had returned the shares to the PCGG pursuant to Administrative Order No. 241.

• Forum Shopping and Res Judicata: Whether the present petition should be dismissed for forum shopping and res judicata.
• PMO as Party-Litigant: Whether the Privatization and Management Office (formerly Asset Privatization Trust) should remain a party in the action.
• Grave Abuse of Discretion: Whether the Sandiganbayan acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack of jurisdiction, in denying the admission of the amended complaint dated October 18, 1989.
• Substantial Alteration: Whether the proposed amendment substantially alters petitioners' cause of action.
• Prejudice to Respondents: Whether the proposed amendment will prejudice respondents or place them at a disadvantage.
• Admissibility: Whether the proposed amendment should be allowed.

• Forum Shopping and Res Judicata: No. The issue was not raised in a motion to dismiss in S.B. Case No. 0042 below and is properly within the Sandiganbayan's jurisdiction to resolve; moreover, no competent evidence of the relevant records of the enumerated cases was presented.
• PMO as Party-Litigant: Yes. PMO has not shown that the assailed transfer of 1,004,230,000 Oriental shares has been mooted, its contention being a mere self-serving assertion without proof of actual return.
• Grave Abuse of Discretion: No. The Sandiganbayan was accorded sound discretion under Section 3, Rule 10 of the 1997 Revised Rules of Civil Procedure to grant or deny proposed substantial amendments, and its denial was not attended by grave abuse.
• Substantial Alteration: Yes. The proposed amendments substantially alter the cause of action by adding new parties, new factual allegations, and new averments across multiple causes of action.
• Prejudice to Respondents: Yes. The amendments would cause delay by resetting the proceedings, as the 19 defendants had already filed their answers and would be entitled to file new motions to dismiss or seek extensions.
• Admissibility: No. The proposed amendments should not be allowed, as they introduce evidentiary rather than ultimate facts and would cause obnoxious delay.

• Forum Shopping and Res Judicata: The issue of forum shopping and res judicata was not raised in a motion to dismiss in S.B. Case No. 0042 below; thus, the Supreme Court could not entertain and resolve it at that point, as it was properly within the purview and jurisdiction of the Sandiganbayan. Even if the Court delved into the issue, no pertinent and relevant parts of the records of the enumerated cases were presented to prove the existence of forum shopping or the application of res judicata. The mere enumeration of cases in different fora cannot vest upon the Court the right to determine a violation without competent evidence. Furthermore, the dismissal of S.B. Case No. 0041 upon petitioners' instance and the subsequent filing of S.B. Case No. 0042 did not amount to forum shopping, as Sections 1 and 2 of Rule 17 allow the withdrawal of a complaint at the instance of plaintiffs who are not prejudiced thereby nor precluded from re-filing, absent any indication in the order of dismissal that it was with prejudice.

• PMO as Party-Litigant: PMO's contention that it had returned the 1,004,230,000 Oriental shares to the PCGG pursuant to Administrative Order No. 241 was a mere self-serving assertion, as no proof was shown that the questioned shares had indeed been returned. Accordingly, PMO was not discharged as a party-litigant.

• Grave Abuse of Discretion: The Revised Internal Rules of the Sandiganbayan does not provide for amendment of the initiatory pleading, so the pertinent provisions of the 1997 Revised Rules of Civil Procedure apply suppletorily. Under Section 3, Rule 10, substantial amendments may be made only upon leave of court, and such leave may be refused if it appears that the motion was made with intent to delay. The trial court is accorded sound discretion to grant or deny proposed substantial amendments. Generally, proposed amendments are denied if they would result in delay, would change the cause of action or defense or the theory of the case, or are inconsistent with the allegations in the original complaint. The Sandiganbayan found the proposed amendments substantial and likely to cause delay, as the 19 defendants had already filed their answers and entertaining the amended pleading would put the case back to square one, with defendants potentially filing motions to dismiss, motions for reconsideration, and petitions to higher courts. The inclusion of John Does as party-defendants would further cause delay. The Sandiganbayan also found that the real objective was to supply evidentiary support for the denied prayer for injunction. The Supreme Court agreed, noting that the proposed amendments pertained to evidentiary facts rather than ultimate facts, as admitted by petitioners themselves when they stated that the amendments "only detailed, amplified and made in express terms" the same wrong. Being merely evidentiary facts, the proposed amendments were unnecessary to justify admission. The denial of a motion to admit an amended complaint, being interlocutory, cannot be questioned by certiorari except in the presence of extraordinary circumstances evincing a patent disregard of justice and fair play. The proper remedy was to continue with the trial and interpose the proper testimonial and documentary evidence, or to utilize pre-trial and discovery mechanisms to present the details sought to be incorporated.

• Substantial Alteration: The proposed amendments were substantial, as they included the addition of John Doe defendants, new factual allegations common to all causes of action providing historical background, new averments on standing to sue, jurisdiction of the Sandiganbayan, and additional allegations across all five causes of action addressing the PCGG's claim based on Campos's affidavit, E. Barcelon's alleged breach of fiduciary duty, the PCGG's stance on Marcos's ill-gotten wealth, and the nullity of the Piedras exchange. These alterations substantially changed the statement of the wrong done from that which originally confronted the defendants.

• Prejudice to Respondents: Entertaining the amended pleading would put the case back to square one, as the 19 defendants had already filed their answers. Some or all defendants could file motions to dismiss anchored on grounds springing from the new averments, followed by motions for reconsideration and petitions to the Court of Appeals and the Supreme Court. The inclusion of John Does would further cause delay, as petitioners would seek to add additional parties upon learning their identities. Even without motions to dismiss, defendants would likely seek extensions of time to file responsive pleadings due to the substantial and myriad details incorporated.

• Admissibility: The proposed amendments should not be allowed because they introduced evidentiary facts rather than ultimate facts. Section 1, Rule 8 of the Rules of Court requires that every pleading contain a plain, concise, and direct statement of the ultimate facts, omitting mere evidentiary facts. Evidentiary facts are those necessary to prove the ultimate fact and are not proper as allegations in pleadings, as they may confuse the statement of the cause of action and their exposition is premature, being drawn from testimonial and other evidence. Petitioners' own admission that the amendments "only detailed, amplified and made in express terms" the same wrong confirmed their evidentiary nature. Petitioners were not without remedy, as they could present the desired details through pre-trial briefs, stipulations of facts, discovery measures under Rules 23, 25, 26, 27, and 28, and the identification of evidence during pre-trial.

• Sound Discretion in Admitting Amendments — Under Section 3, Rule 10 of the 1997 Revised Rules of Civil Procedure, substantial amendments to pleadings may be made only upon leave of court, and such leave may be refused if it appears that the motion was made with intent to delay. The trial court is accorded sound discretion to grant or deny proposed substantial amendments. Generally, proposed amendments are denied if they would result in delay, would change the cause of action or defense or change the theory of the case, or are inconsistent with the allegations in the original complaint. In this case, the Sandiganbayan's denial was upheld because the amendments were substantial, would cause delay, and introduced evidentiary facts.

• Ultimate Facts vs. Evidentiary Facts — Ultimate facts are the important and substantial facts which either directly form the basis of the plaintiff's primary right and duty or directly make up the wrongful acts or omissions of the defendant. Evidentiary facts are those necessary to prove the ultimate fact or which furnish evidence of the existence of other facts; they are not proper as allegations in pleadings as they may confuse the statement of the cause of action, and their exposition is premature as they must be drawn from testimonial and other evidence. The Court applied this distinction to hold that petitioners' proposed amendments, which "only detailed, amplified and made in express terms" the same wrong, were evidentiary facts unnecessary for admission.

• Interlocutory Orders Not Reviewable by Certiorari — The denial of a motion to admit an amended complaint, being interlocutory, cannot be questioned by certiorari and cannot be the subject of appeal until a final judgment or order is rendered. Resort to certiorari is proper only in the presence of extraordinary circumstances evincing a patent disregard of justice and fair play. The proper remedy against an order denying a motion to admit amendments is to continue with the trial and interpose the proper testimonial and documentary evidence.

• Dismissal Without Prejudice Allows Refiling — Under Sections 1 and 2 of Rule 17, a dismissal by notice or by motion of the plaintiff is without prejudice unless otherwise stated, and does not preclude the re-filing of the same or substantially the same complaint absent any indication in the order of dismissal that it was with prejudice. The Court applied this doctrine to hold that the dismissal of S.B. Case No. 0041 and the subsequent filing of S.B. Case No. 0042 did not amount to forum shopping.

• "The rule expressly provides that the proposed amendments are refused admittance if it appears that these are substantial and were made to delay the case. Generally, where the trial court has jurisdiction over the case, proposed amendments are denied if such would result in delay, or would result in a change of cause of action or defense or change the theory of the case, or are inconsistent with the allegations in the original complaint." — This passage states the controlling rule on when a trial court may refuse to admit proposed amendments to a pleading, forming the analytical framework for the Court's ruling.

• "It is clear from the many proposed changes in the complaint that said averments pertain to evidentiary facts and are not essential components of the ultimate facts of petitioners' complaint. This conclusion results from the admission of petitioners that the 'proposed amendments only detail[ed], amplified and made in express terms the same wrong with respect to the same alleged transactions that are the subject of the controversy.'" — This passage articulates the ratio decidendi on why the proposed amendments were properly rejected: they were evidentiary facts, not ultimate facts, as admitted by petitioners themselves.

• "The proper remedy against an order denying a motion to admit amendments to a pleading is to continue with the trial and interpose the proper testimonial and documentary evidence to prove ultimate facts that are supposed to be included in the amended complaint. It is only in the presence of extraordinary circumstances evincing a patent disregard of justice and fair play where resort to a petition for certiorari is proper." — This passage defines the proper remedy when a motion to admit an amended pleading is denied and the narrow exception when certiorari may nonetheless be availed of.

• Rubio vs. Mariano, 49 SCRA 319 (1973) — Cited by petitioners for the proposition that amendments which only detail, amplify, and make express what was implied in the original complaint do not change the cause of action; the Court found the proposition inapplicable because the proposed amendments were evidentiary facts.
• Sedeco vs. Court of Appeals, 115 SCRA 96 (1982) — Cited by petitioners for the liberality of the rules on amendments; distinguished on the facts, as the proposed amendments here were substantial and would cause delay.
• Paman vs. Diaz, 116 SCRA 125 (1982) — Cited by petitioners for the same liberality principle; likewise distinguished.
• Marini-Gonzales vs. Lood, 148 SCRA 452 (1987) — Cited by petitioners for the proposition that amendments altering the theory of the case may be allowed in furtherance of justice; not applied because the proposed amendments here were evidentiary facts and would cause delay.
• Santiago Land Development Co. vs. CA, 258 SCRA 535 (1996) — Cited for the doctrine that the denial of a motion to admit an amended complaint, being interlocutory, cannot be questioned by certiorari.
• Tribiana vs. Tribiana, 438 SCRA 216 (2004) — Cited for the exception that certiorari is proper only in the presence of extraordinary circumstances evincing a patent disregard of justice and fair play.
• Eduardo F. Hernandez vs. Deputy Ombudsman for Luzon, G.R. No. 101967 (1992) — Cited as the basis for dismissing the case with respect to respondent Hernandez, the Court having found no prima facie evidence of his participation in the sale of 999 million Oriental shares.
• Alzua vs. Johnson, 21 Phil. 308 (1912) — Cited for the definition of ultimate facts in pleadings.

• Section 3, Rule 10, 1997 Revised Rules of Civil Procedure — Governs amendments by leave of court; provides that substantial amendments may be made only upon leave of court, and such leave may be refused if it appears that the motion was made with intent to delay. Applied as the controlling rule: since respondents had already filed their answers, leave of court was required, and the Sandiganbayan acted within its sound discretion in denying the motion.
• Section 1, Rule 8, Rules of Court — Requires that every pleading contain a plain, concise, and direct statement of the ultimate facts, omitting the statement of mere evidentiary facts. Applied to hold that petitioners' proposed amendments, being evidentiary facts, were unnecessary and improper in the pleading.
• Sections 1 and 2, Rule 17, 1997 Revised Rules of Civil Procedure — Govern dismissal upon notice and upon motion by the plaintiff; provide that dismissal is without prejudice unless otherwise stated. Applied to hold that the dismissal of S.B. Case No. 0041 and the filing of S.B. Case No. 0042 did not constitute forum shopping.
• Section 16, Rule 3, 1997 Revised Rules of Civil Procedure — Governs the death of a party during the pendency of an action and the duty of counsel to inform the court and provide the names of legal representatives. Applied in the dismissal of the case with respect to deceased respondents Fugoso and Caguiat.
• A.M. No. 03-1-09-SC (Pre-Trial Guidelines) — Provides guidelines for trial court judges in the conduct of pre-trial and use of deposition-discovery measures. Cited as an available alternative remedy through which petitioners could present the details sought to be incorporated in the amended complaint.

Leonardo A. Quisumbing (Chairperson), Antonio T. Carpio, Conchita Carpio Morales, and Dante O. Tinga concurred. No separate concurring opinions were written.