Republic of the Philippines vs. Hon. Sandiganbayan, et al.

A voluntary admission against interest in a compromise document binds the admitting party and, where it negates the factual basis of a pleaded cause of action, justifies dismissal as to co-defendants similarly situated under the equal protection clause; it does not, however, release parties whom the same document inculpates rather than exculpates.

The case stems from foreign loans obtained by the Landoil Group, headed by then Congressman Jose de Venecia, Jr., syndicated by international banks and guaranteed by PHILGUARANTEE, a government-owned and controlled corporation. PHILGUARANTEE’s board then included private respondents Bondoc, Virata, Ancheta, Laya, Mapa, Ongpin, and Zalamea. After the EDSA revolution, the Aquino government created the PCGG under E.O. No. 1 to recover the alleged ill-gotten wealth of the Marcoses and their associates, and the Republic filed Civil Case No. 0020 for reconveyance, reversion, accounting, restitution, and damages against de Venecia, the Marcoses, and the PHILGUARANTEE directors. The dispute concerns the effect of a subsequent Deed of Assignment between the Republic and de Venecia on the Republic’s claims against the other defendants.

Before 1986, the Landoil Group of Companies, spearheaded by then Congressman Jose de Venecia, Jr., obtained foreign loans syndicated by various banks aggregating approximately US$120 million. PHILGUARANTEE, a government-owned and controlled corporation, guaranteed the loans. Its Board of Directors then included Rosendo D. Bondoc, who was its President, and Cesar E. A. Virata, Ruben Ancheta, Jaime C. Laya, Placido Mapa, Jr., Roberto Ongpin, and Cesar C. Zalamea, who were members. Landoil failed to seasonably service the loans, compelling PHILGUARANTEE to assume its obligation as guarantor.

After the February 1986 EDSA revolution removed the Marcoses from power, President Corazon C. Aquino created the Presidential Commission on Good Government under E.O. No. 1 to recover the alleged illegal wealth of the Marcoses, their family, subordinates, and close associates. The Republic filed Civil Case No. 0020 for Reconveyance, Reversion, Accounting, Restitution and Damages against de Venecia, Jr., Ferdinand E. Marcos, Imelda R. Marcos, Bondoc, Virata, Ancheta, Laya, Mapa, Ongpin, and Zalamea. The complaint alleged that Ferdinand Marcos abused his powers from September 21, 1972 to February 25, 1986 and, with others, embarked on a systematic plan to accumulate ill-gotten wealth. It further alleged that de Venecia organized the Landoil Group, borrowed foreign loans, applied for a PHILGUARANTEE guarantee, and, with the active collaboration of Bondoc and the other PHILGUARANTEE directors, obtained full government guarantee coverage; that de Venecia misused the loan proceeds; that PHILGUARANTEE continued to provide financial assistance despite violations; and that Landoil collapsed and defaulted, forcing PHILGUARANTEE to advance government funds. The complaint pleaded causes of action for abuse of right and power, unjust enrichment, breach of trust, accounting, and damages. The Landoil Group and PHILGUARANTEE were sequestered by the PCGG.

Notwithstanding the filing of Civil Case No. 0020, an investigation was conducted. It culminated in a Deed of Assignment between the Republic and de Venecia, Jr., representing seven of the eighteen companies of the Landoil Group. The Deed recited findings from the Republic’s investigation: the guarantee facility was obtained in the ordinary and regular course of business; no favor was accorded to the Landoil officers in the grant of the guarantee facility; and the business reversals of the Landoil Group were due, first, to its inability to collect contract receivables and, second, to the non-payment of its insurance claim. Under the Deed, de Venecia and his group assumed obligations to transfer to the Republic or its nominee the Landoil shares identified as belonging to Marcos, up to 45% of Landoil’s outstanding capital stock; to pay P13 million from Landoil’s recovery in a London arbitration against the Lloyd’s Syndicate of Insurance Underwriters; to assign the proceeds of Landoil’s New York case against insurance brokers Alexander and Alexander and the proceeds of its contract receivables from Middle East and other projects; and to cooperate in the prosecution of any case against former President Marcos and his cronies. In reciprocity, the Republic agreed to cause the dismissal without prejudice of Civil Case No. 0020 against de Venecia and his group of co-signors.

Pursuant to the Deed, de Venecia, Jr., with the express conformity of the PCGG, moved to dismiss Civil Case No. 0020 against him. On September 8, 1989, the Sandiganbayan granted the motion, and the dismissal became final and executory. The other private respondents then filed their respective motions to dismiss, which the Republic opposed. On December 4, 1989, the Sandiganbayan dismissed the Expanded Complaint against the private respondents on two grounds: removal of an indispensable party in the person of de Venecia, Jr., and lack of cause of action in view of the facts established and admitted by the Republic in the Deed of Assignment. The Republic’s motion for reconsideration and Supplement were denied on March 9, 1990.

Because the Expanded Complaint was dismissed on the basis of the private respondents’ motion to dismiss, the facts of the case were not fully developed. The Sandiganbayan’s dismissal rested on its findings that de Venecia, Jr., was an indispensable party and that the Republic’s admissions in the Deed negated its cause of action against the remaining private respondents. The Supreme Court’s review centered on the legal effect of those admissions and on whether the Marcoses stood in the same position as the PHILGUARANTEE directors.

• Deed of Assignment Should Not Benefit Co-Defendants: Petitioner argued that the Deed executed by Landoil in its favor should not be made to benefit de Venecia’s co-defendants; they were not parties to the Deed and petitioner received no consideration or benefit from them.
• De Venecia Not Indispensable: Petitioner maintained that de Venecia was not an indispensable party in the prosecution of the case against his co-defendants.
• Independent and Collective Liability: Petitioner contended that the liabilities of de Venecia’s co-defendants arose not only from their alleged conspiracy with de Venecia but also from their individual or collective actions done in unlawful concert with one another.
• Marcoses Unaffected by Deed: Petitioner argued that the causes of action against Ferdinand and Imelda Marcos have nothing to do with the Deed.
• Intent to Exclude Co-Defendants: Petitioner asserted that the parties manifestly intended to exclude de Venecia’s co-defendants from the benefit of the Deed.
• Multiple Causes of Action: Petitioner submitted that the Sandiganbayan erred in ruling it had only one cause of action against Bondoc and company; the Expanded Complaint allegedly pleaded several causes of action, as indicated by the phrase “among others” and paragraphs 13 to 17.
• Tort Release Rule: Petitioner argued that under the emerging rule in the United States, the release of one tortfeasor does not automatically result in the release of other tortfeasors.
• Indispensable Party Error: Petitioner argued that the Sandiganbayan gravely abused its discretion in holding de Venecia indispensable and dismissing the complaint against private respondents.
• Marcoses Dismissal Error: Petitioner contended that the dismissal of the complaint against the Marcoses was a grave abuse of discretion.

• Effect of Deed on PHILGUARANTEE Directors: Whether the Deed of Assignment justified the dismissal of the Expanded Complaint against Bondoc, Virata, Ancheta, Laya, Mapa, Ongpin, and Zalamea.
• Admission Against Interest: Whether petitioner’s admissions in the Deed, that the guarantee facility was obtained in the ordinary and regular course of business and no favor was accorded to Landoil officers, constituted an admission against interest that nullified its cause of action against those respondents despite their not being parties to the Deed.
• Number of Causes of Action: Whether petitioner pleaded several causes of action against Bondoc and company or only one cause of action based on conspiracy to extend unwarranted guarantees.
• Indispensable Party: Whether de Venecia, Jr., was an indispensable party whose exclusion required dismissal of the Expanded Complaint against the private respondents.
• Effect of Deed on Marcoses: Whether the Deed of Assignment justified the dismissal of the Expanded Complaint against Ferdinand and Imelda Marcos.
• Equal Protection: Whether the equal protection clause required dismissal of the complaint against Bondoc and company once the complaint against de Venecia, Jr., who was similarly situated, was dismissed.
• Tort Release: Whether the rule on release of one tortfeasor precluded dismissal of the complaint against the other respondents.

• Effect of Deed on PHILGUARANTEE Directors: Yes. The dismissal was proper because the Deed contained petitioner’s admission that the guarantee facility was obtained in the ordinary and regular course of business and without favor to Landoil officers, negating the cause of action against them.
• Admission Against Interest: Yes. The admission against interest bound petitioner; its effects did not depend on respondents being parties to the Deed or on consideration from them.
• Number of Causes of Action: No. The Expanded Complaint alleged only one cause of action against Bondoc and company in paragraph 11(a)-(f): conspiracy to extend unwarranted guarantees; the phrase “among others” cannot confer a cause of action.
• Indispensable Party: No. De Venecia was not an indispensable party because the case could be decided without him, but this did not reverse the dismissal since petitioner had dropped its cause of action by the Deed.
• Effect of Deed on Marcoses: No. The Deed did not exculpate the Marcoses; it inculpated them by alleging Marcos ownership through nominees and takeover of Landoil, so the complaint against them was reinstated.
• Equal Protection: Yes. Bondoc and company were similarly situated with de Venecia; after petitioner admitted no undue favor and dismissed him, equal protection required dismissal of the complaint against them.
• Tort Release: No. Tort principles were inapplicable; even if applied, the release was based on lack of cause of action, not satisfaction, and the claims were inseparable under the conspiracy theory.

• Effect of Deed on PHILGUARANTEE Directors: The respondent court dismissed because the Deed contained averments nullifying petitioner’s cause of action. Specifically, after investigation, petitioner satisfied itself that the guarantee facility was obtained in the ordinary and regular course of business and that no favor was accorded to Landoil officers. If so, petitioner could no longer insist on a cause of action against Bondoc and company. This admission of lack of cause of action is an admission against interest. It binds petitioner absent fraud, mistake, or inadvertence. It is immaterial that Bondoc and company were not parties to the Deed or that petitioner received no consideration from them; an admission against interest is voluntary and its effects do not depend on concurrence of another party or consideration. Thus dismissal was proper.
• Admission Against Interest: The Deed’s whereas clauses stated that the business reversals were due to inability to collect contract receivables and non-payment of the insurance claim. These specific admissions removed the need to speculate why the other corporations were not made parties to the Deed. The admission was made after petitioner’s own investigation and bound petitioner as an admission against interest.
• Number of Causes of Action: Paragraph 8 of the Expanded Complaint laid down general averments; paragraph 11 contained the specific averments. The cause of action against Bondoc and company is found in paragraph 11(a)-(f): with conspiracy, they allegedly extended unwarranted guarantees to enable the de Venecia group to obtain foreign loans. The phrase “among others” does not mean petitioner had other concealed causes of action; it is an artful phrase for leeway in evidence but cannot confer a cause of action. Such a ruling would violate substantive due process, which bars roaming generalities, and Section 1, Rule 8, which requires a plain, concise, and direct statement of ultimate facts. Paragraphs 13 to 17 are mere general averments. The dissent’s prima facie theory self-destructs as guesswork; certiorari is not proper for ruling on a prima facie case; the facts were not fully developed because the complaint was dismissed on a motion to dismiss.
• Indispensable Party: Petitioner’s argument has merit: the case can be decided without impleading de Venecia. However, this ruling is not enough to completely reverse the respondent court because petitioner dropped its cause of action in the Expanded Complaint by signing the Deed. It precluded itself from further pursuing its complaint not only against de Venecia but also against Bondoc and company.
• Effect of Deed on Marcoses: The Marcoses should be treated differently. The Deed only recognized the lack of culpability of de Venecia and, by necessary inference, Bondoc and company. It did not exculpate the Marcoses; it inculpated them. It alleged that Marcos, by himself and/or through nominees or cronies, owns approximately 45% of Landoil and, through Landoil, proportionate shares of the other Landoil companies. It alleged that Marcos and his cronies coveted the Landoil groups and caused them to be taken over by his agents and business associates. De Venecia agreed to surrender the Marcos shares and to cooperate in the prosecution of any case against the Marcoses. Thus petitioner has not surrendered its cause of action against the Marcoses.
• Equal Protection: The dismissal of the complaint against Bondoc and company is compelled by the equal protection clause. De Venecia and Bondoc and company are similarly situated. Bondoc and company were included only because they allegedly gave unwarranted favors to de Venecia in guaranteeing his foreign loans. When petitioner admitted that no undue favor was granted to de Venecia and dismissed its complaint against him, petitioner cannot avoid its duty of dismissing its complaint against Bondoc and company. To give more favored treatment to de Venecia when the parties are equally situated is to indulge in invidious discrimination.
• Tort Release: Civil Case No. 0020 is not a tort case; it is one for reconveyance, reversion, accounting, restitution, and damages. Even if tort principles apply, Zenith held that a party releases only those other parties whom he intends to release, but the release there was made in exchange for valuable consideration in satisfaction of the claim. Here petitioner released de Venecia and some companies not because its claim had been satisfied by sufficient consideration, but because it could not establish its cause of action against them. Petitioner’s investigation showed that de Venecia was not a crony and that he obtained the guarantees in the regular and ordinary course of business. Petitioner was convinced that de Venecia and company did not commit any actionable wrong, including any tortious act. The complaint against Bondoc and company for extending the guarantees cannot be pursued further; the complaint against de Venecia and these respondents are inseparable, especially because petitioner relied on the theory of conspiracy. The rule on release of one tortfeasor is still in a state of fluctuation even in the United States; the Restatement notes varying state positions.

• Admission Against Interest — A voluntary admission against interest binds the party making it, and its effects do not depend on the concurrence of any other party or on consideration of any kind. In this case, the Republic’s Deed of Assignment recited that the guarantee facility was obtained in the ordinary and regular course of business and that no favor was accorded to Landoil officers; this admission negated the factual basis of its conspiracy-based cause of action against PHILGUARANTEE’s board members and justified dismissal as to them.
• Pleading Ultimate Facts and the “Among Others” Problem — Section 1, Rule 8 requires every pleading to contain a plain, concise, and direct statement of the ultimate facts relied upon. The phrase “among others” may give a pleader leeway in presenting evidence, but it cannot itself confer a cause of action; substantive due process bars roaming generalities. The Court applied this to hold that the Expanded Complaint stated only one cause of action against Bondoc and company, based on conspiracy to extend unwarranted guarantees.
• Equal Protection — Similarly situated parties must be treated alike; giving more favored treatment to one when parties are equally situated is invidious discrimination. Because Bondoc and company were included only for allegedly giving unwarranted favors to de Venecia, and the Republic admitted no undue favor was given and dismissed de Venecia, equal protection compelled dismissal of the complaint against them.
• Indispensable Party — A party is not indispensable if the case can be decided without impleading that party. Although de Venecia, Jr., was not indispensable, the dismissal of the complaint against the other respondents was still sustained because the Republic had already dropped its cause of action against them by executing the Deed of Assignment.
• Release of One Tortfeasor — The rule that a release of one tortfeasor discharges only those intended to be released is not controlling where the action is not a tort case and the release was not given for valuable consideration in satisfaction of the claim. Here, the Republic released de Venecia because its investigation convinced it that no actionable wrong was committed; the claims against de Venecia and the PHILGUARANTEE directors were inseparable under the pleaded conspiracy theory.

• "An admission against interest is a voluntary act and its effects do not depend on the concurrence of any other party or consideration of any kind." — This states the ratio for binding the Republic to the admissions in the Deed of Assignment, notwithstanding that the PHILGUARANTEE directors were not parties to the Deed and gave no consideration.
• "The use of the phrase “among others” in the Expanded Complaint does not in any manner mean that petitioner has other concealed causes of action against these respondents. Smart pleaders resort to said artful phrase only to gain more leeway in presenting their evidence. By no stretch of the imagination, however, can it be maintained that the opaque phrase “among others” can confer a cause of action." — This articulates the Court’s pleading doctrine: a cause of action must be pleaded by ultimate facts, and “among others” cannot supply omitted causes of action.
• "To give a more favored treatment to de Venecia, Jr., when the parties are equally situated is to indulge in invidious discrimination." — This is the equal protection rationale requiring dismissal of the complaint against Bondoc and company after de Venecia, Jr., was dismissed.
• "In fine, the Deed of Assignment leaves it crystal clear that petitioner has not surrendered its cause of action against the Marcoses as it did with respect to the respondents Bondoc and company." — This distinguishes the Marcoses from the PHILGUARANTEE directors and supports reinstatement of the Expanded Complaint against the Marcoses.

• Zenith Radio Corp. vs. Hazeltine Research, Inc., 401 U.S. 321, 91 S. Ct. 795 — Cited for the rule that a party releases only those other parties whom he intends to release; distinguished because the release there was made in exchange for valuable consideration in satisfaction of the claim, whereas the Republic’s release of de Venecia was based on its inability to establish a cause of action.

• Section 1, Rule 8, Rules of Court — Requires every pleading to contain, in methodical and logical form, a plain, concise, and direct statement of the ultimate facts on which the party relies; applied to reject the phrase “among others” as a source of additional causes of action.
• Equal protection clause of the Constitution — Applied to require dismissal of the complaint against Bondoc and company once the similarly situated de Venecia, Jr., was dismissed.
• Substantive due process — Cited to bar roaming generalities in complaints and to require specific ultimate facts.
• E.O. No. 1 — Created the PCGG to recover the alleged illegal wealth of the Marcoses and their associates; provided the background for Civil Case No. 0020.

Justices Feliciano, Bidin, Regalado, Nocon, Bellosillo, Melo, Vitug, and Kapunan concurred. Chief Justice Narvasa and Justices Cruz, Romero, and Quiason took no part.

• Justice Davide, Jr. — The separate opinion/dissent, as recounted in the majority, maintained that petitioner pleaded several causes of action against Bondoc and company, as indicated by the phrase “among others” and paragraphs 13 to 17. It argued that petitioner’s admissions did not by themselves clear the Board of Directors or officers of PHILGUARANTEE from liability because they were sued not as directors or officers of a private corporation but as government officials obliged to serve with the highest degree of responsibility, integrity, loyalty, and efficiency and to remain accountable to the people. It also posited a prima facie showing that the assets of defendants in the eleven corporations were not necessarily obtained through the acts in paragraph 11(a)-(f) but probably through other devices, schemes, or strategems. The majority rejected these positions.