G.R. No.

151445

April 11, 2002

ARTHUR D. LIM and PAULINO R. ERSANDO, petitioners, vs. HONORABLE EXECUTIVE SECRETARY as alter ego of HER EXCELLENCEY GLORIA MACAPAGALARROYO, and HONORABLE ANGELO REYES in his capacity as Secretary of National Defense, respondents. ---------------------------------------SANLAKAS and PARTIDO NG MANGGAGAWA, petitioners-intervenors, vs. GLORIA MACAPAGA-ARROYO, ALBERTO ROMULO, ANGELO REYES, respondents. DE LEON, JR., J.: This case involves a petition for certiorari and prohibition as well as a petition-in-intervention, praying that respondents be restrained from proceeding with the so-called "Balikatan 02-1" and that after due notice and hearing, that judgment be rendered issuing a permanent writ of injunction and/or prohibition against the deployment of U.S. troops in Basilan and Mindanao for being illegal and in violation of the Constitution. The facts are as follows: Beginning January of this year 2002, personnel from the armed forces of the United States of America started arriving in Mindanao to take part, in conjunction with the Philippine military, in "Balikatan 02-1." These so-called "Balikatan" exercises are the largest combined training operations involving Filipino and American troops. In theory, they are a simulation of joint military maneuvers pursuant to the Mutual Defense Treaty,1 a bilateral defense agreement entered into by the Philippines and the United States in 1951. Prior to the year 2002, the last "Balikatan" was held in 1995. This was due to the paucity of any formal agreement relative to the treatment of United States personnel visiting the Philippines. In the meantime, the respective governments of the two countries agreed to hold joint exercises on a reduced scale. The lack of consensus was eventually cured when the two nations concluded the Visiting Forces Agreement (V FA) in 1999. The entry of American troops into Philippine soil is proximately rooted in the international anti-terrorism campaign declared by President George W. Bush in reaction to the tragic events that occurred on September 11, 2001. On that day, three (3) commercial aircrafts were hijacked, flown and smashed into the twin towers of the World Trade Center in New York City and the Pentagon building in Washington, D.C. by terrorists with alleged links to the al-Qaeda ("the Base"), a Muslim extremist organization headed by the infamous Osama bin Laden. Of no comparable historical parallels, these acts caused billions of dollars worth of destruction of property and incalculable loss of hundreds of lives. On February 1, 2002, petitioners Arthur D. Lim and Paulino P. Ersando filed this petition for certiorari and prohibition, attacking the constitutionality of the joint exercise.2 They were joined subsequently by SANLAKAS and PARTIDO NG MANGGAGAWA, both party-Iist organizations, who filed a petition-in-intervention on February 11, 2002. Lim and Ersando filed suit in their capacities as citizens, lawyers and taxpayers. SANLAKAS and PARTIDO, on the other hand, aver that certain members of their organization are residents of Zamboanga and Sulu, and hence will be directly affected by the operations being conducted in Mindanao. They likewise pray for a relaxation on the rules relative to locus standi citing the unprecedented importance of the issue involved. On February 71 2002 the Senate conducted a hearing on the "Balikatan" exercise wherein Vice-President Teofisto T. Guingona, Jr., who is concurrently Secretary of Foreign. Affairs, presented the Draft Terms of Reference (TOR).3 Five days later, he approved the TOR, which we quote hereunder: I. POLICY LEVEL 1. The Exercise shall be consistent with the Philippine Constitution and all its activities shall be in consonance with the laws of the land and the provisions of the RP-US Visiting Forces Agreement (VFA).

2. The conduct of this training Exercise is in accordance with pertinent United Nations resolutions against global terrorism as understood by the respective parties. 3. No permanent US basing and support facilities shall be established. Temporary structures such as those for troop billeting, classroom instruction and messing may be set up for use by RP and US Forces during the Exercise. 4. The Exercise shall be implemented jointly by RP and US Exercise Co-Directors under the authority of the Chief of Staff, AFP. In no instance will US Forces operate independently during field training exercises (FTX). AFP and US Unit Commanders will retain command over their respective forces under the overall authority of the Exercise Co-Directors. RP and US participants shall comply with operational instructions of the AFP during the FTX. 5. The exercise shall be conducted and completed within a period of not more than six months, with the projected participation of 660 US personnel and 3,800 RP Forces. The Chief of Staff, AFP shall direct the Exercise Co-Directors to wind up and terminate the Exercise and other activities within the six month Exercise period. 6. The Exercise is a mutual counter-terrorism advising, assisting and training Exercise relative to Philippine efforts against the ASG, and will be conducted on the Island of Basilan. Further advising, assisting and training exercises shall be conducted in Malagutay and the Zamboanga area. Related activities in Cebu will be for support of the Exercise. 7. Only 160 US Forces organized in 12-man Special Forces Teams shall be deployed with AFP field, commanders. The US teams shall remain at the Battalion Headquarters and, when approved, Company Tactical headquarters where they can observe and assess the performance of the AFP Forces. 8. US exercise participants shall not engage in combat, without prejudice to their right of self-defense. 9. These terms of Reference are for purposes of this Exercise only and do not create additional legal obligations between the US Government and the Republic of the Philippines. II. EXERCISE LEVEL 1. TRAINING a. The Exercise shall involve the conduct of mutual military assisting, advising and training of RP and US Forces with the primary objective of enhancing the operational capabilities of both forces to combat terrorism. b. At no time shall US Forces operate independently within RP territory. c. Flight plans of all aircraft involved in the exercise will comply with the local air traffic regulations. 2. ADMINISTRATION & LOGISTICS a. RP and US participants shall be given a country and area briefing at the start of the Exercise. This briefing shall acquaint US Forces on the culture and sensitivities of the Filipinos and the provisions of the VF A. The briefing shall also promote the full cooperation on the part of the RP and US participants for the successful conduct of the Exercise. b. RP and US participating forces may share, in accordance with their respective laws and regulations, in the use of their resources, equipment and other assets. They will use their respective logistics channels. c. Medical evaluation shall be jointly planned and executed utilizing RP and US assets and resources. d. Legal liaison officers from each respective party shall be appointed by the Exercise Directors.

3. PUBLIC AFFAIRS a. Combined RP-US Information Bureaus shall be established at the Exercise Directorate in Zamboanga City and at GHQ, AFP in Camp Aguinaldo, Quezon City. b. Local media relations will be the concern of the AFP and all public affairs guidelines shall be jointly developed by RP and US Forces. c. Socio-Economic Assistance Projects shall be planned and executed jointly by RP and US Forces in accordance with their respective laws and regulations, and in consultation with community and local government officials. Contemporaneously, Assistant Secretary for American Affairs Minerva Jean A. Falcon and United States Charge d' Affaires Robert Fitts signed the Agreed Minutes of the discussion between the Vice-President and Assistant Secretary Kelly.4 Petitioners Lim and Ersando present the following arguments: I THE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL DEFENSE TREATY (MDT) in 1951 TO PROVIDE MUTUAL MILITARY ASSIST ANCE IN ACCORDANCE WITH THE 'CONSTITUTIONAL PROCESSE-S' OF EACH COUNTRY ONLY IN THE CASE OF AN ARMED ATTACK BY AN EXTERNAL AGGRESSOR, MEANING A THIRD COUNTRY AGAINST ONE OF THEM. BY NO STRETCH OF THE IMAGINA TION CAN IT BE SAID THAT THE ABU SAYYAF BANDITS IN BASILAN CONSTITUTE AN EXTERNAL ARMED FORCE THAT HAS SUBJECT THE PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO WARRANT U.S. MILITARY ASSISTANCE UNDER THE MDT OF 1951. II NEITHER DOES THE VFA OF 1999 AUTHORIZE AMERICAN SOLDIERS TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE TERRITORY, NOT EVEN TO FIRE BACK "IF FIRED UPON". Substantially the same points are advanced by petitioners SANLAKAS and PARTIDO. In his Comment, the Solicitor General points to infirmities in the petitions regarding, inter alia, Lim and Ersando's standing to file suit, the prematurity of the action, as well as the impropriety of availing of certiorari to ascertain a question of fact. Anent their locus standi, the Solicitor General argues that first, they may not file suit in their capacities as, taxpayers inasmuch as it has not been shown that "Balikatan 02-1 " involves the exercise of Congress' taxing or spending powers. Second, their being lawyers does not invest them with sufficient personality to initiate the case, citing our ruling in Integrated Bar of the Philippines v. Zamora.5 Third, Lim and Ersando have failed to demonstrate the requisite showing of direct personal injury. We agree. It is also contended that the petitioners are indulging in speculation. The Solicitor General is of the view that since the Terms of Reference are clear as to the extent and duration of "Balikatan 02-1," the issues raised by petitioners are premature, as they are based only on a fear of future violation of the Terms of Reference. Even petitioners' resort to a special civil action for certiorari is assailed on the ground that the writ may only issue on the basis of established facts. Apart from these threshold issues, the Solicitor General claims that there is actually no question of constitutionality involved. The true object of the instant suit, it is said, is to obtain an interpretation of the V FA. The Solicitor General asks that we accord due deference to the executive determination that "Balikatan 02-1" is covered by the VFA, considering the President's monopoly in the field of foreign relations and her role as commander-in-chief of the Philippine armed forces. Given the primordial importance of the issue involved, it will suffice to reiterate our view on this point in a related case:

Notwithstanding, in view of the paramount importance and the constitutional significance of the issues raised in the petitions, this Court, in the exercise of its sound discretion, brushes aside the procedural barrier and takes cognizance of the petitions, as we have done in the early Emergency Powers Cases, where we had occasion to rule: 'x x x ordinary citizens and taxpayers were allowed to question the constitutionality of several executive orders issued by President Quirino although they were involving only an indirect and general interest shared in common with the public. The Court dismissed the objection that they were not proper parties and ruled that 'transcendental importance to the public of these cases demands that they be settled promptly and definitely, brushing aside, if we must, technicalities of procedure.' We have since then applied the exception in many other cases. [citation omitted] This principle was reiterated in the subsequent cases of Gonzales vs. COMELEC, Daza vs. Singson, and Basco vs. Phil, Amusement and Gaming Corporation, where we emphatically held: Considering however the importance to the public of the case at bar, and in keeping with the Court's duty, under the 1987 Constitution, to determine whether or not the other branches of the government have kept themselves within the limits of the Constitution and the laws that they have not abused the discretion given to them, the Court has brushed aside technicalities of procedure and has taken cognizance of this petition. xxx' Again, in the more recent case of Kilosbayan vs. Guingona, Jr., this Court ruled that in cases of transcendental importance, the Court may relax the standing requirements and allow a suit to prosper even where there is no direct injury to the party claiming the right of judicial review. Although courts generally avoid having to decide a constitutional question based on the doctrine of separation of powers, which enjoins upon the department of the government a becoming respect for each other's act, this Court nevertheless resolves to take cognizance of the instant petition. 6 Hence, we treat with similar dispatch the general objection to the supposed prematurity of the action. At any rate, petitioners' concerns on the lack of any specific regulation on the latitude of activity US personnel may undertake and the duration of their stay has been addressed in the Terms of Reference. The holding of "Balikatan 02-1" must be studied in the framework of the treaty antecedents to which the Philippines bound itself. The first of these is the Mutual Defense Treaty (MDT, for brevity). The MDT has been described as the "core" of the defense relationship between the Philippines and its traditional ally, the United States. Its aim is to enhance the strategic and technological capabilities of our armed forces through joint training with its American counterparts; the "Balikatan" is the largest such training exercise directly supporting the MDT's objectives. It is this treaty to which the V FA adverts and the obligations thereunder which it seeks to reaffirm. The lapse of the US-Philippine Bases Agreement in 1992 and the decision not to renew it created a vacuum in US-Philippine defense relations, that is, until it was replaced by the Visiting Forces Agreement. It should be recalled that on October 10, 2000, by a vote of eleven to three, this Court upheld the validity of the VFA. 7 The V FA provides the "regulatory mechanism" by which "United States military and civilian personnel [may visit] temporarily in the Philippines in connection with activities approved by the Philippine Government." It contains provisions relative to entry and departure of American personnel, driving and vehicle registration, criminal jurisdiction, claims, importation and exportation, movement of vessels and aircraft, as well as the duration of the agreement and its termination. It is the VFA which gives continued relevance to the MDT despite the passage of years. Its primary goal is to facilitate the promotion of optimal cooperation between American and Philippine military forces in the event of an attack by a common foe. The first question that should be addressed is whether "Balikatan 02-1" is covered by the Visiting Forces Agreement. To resolve this, it is necessary to refer to the V FA itself: Not much help can be had therefrom, unfortunately, since the terminology employed is itself the source of the problem. The VFA permits United States personnel to engage, on an impermanent basis, in "activities," the exact meaning of which was left undefined. The expression is ambiguous, permitting a wide scope of undertakings subject only to the approval of the Philippine government.8 The sole encumbrance placed on its definition is couched in the negative, in that United States personnel must "abstain from any activity inconsistent with the spirit of this agreement, and in particular, from any political activity."9 All other activities, in other words, are fair game.

We are not left completely unaided, however. The Vienna Convention on the Law of Treaties, which contains provisos governing interpretations of international agreements, state: SECTION 3. INTERPRETATION OF TREATIES Article 31 General rule of interpretation 1. A treaty shall be interpreted in good faith ill accordance with the ordinary meaning to be given to the tenus of the treaty in their context and in the light of its object and purpose. 2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes: (a) any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty; (b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the party . 3. There shall be taken into account, together with the context: (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) any relevant rules of international law applicable in the relations between the parties. 4. A special meaning shall be given to a term if it is established that the parties so intended. Article 32 Supplementary means of interpretation Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31 : (a) leaves the meaning ambiguous or obscure; or (b) leads to a result which is manifestly absurd unreasonable. It is clear from the foregoing that the cardinal rule of interpretation must involve an examination of the text, which is presumed to verbalize the parties' intentions. The Convention likewise dictates what may be used as aids to deduce the meaning of terms, which it refers to as the context of the treaty, as well as other elements may be taken into account alongside the aforesaid context. As explained by a writer on the Convention , [t]he Commission's proposals (which were adopted virtually without change by the conference and are now reflected in Articles 31 and 32 of the Convention) were clearly based on the view that the text of a treaty must be presumed to be the authentic expression of the intentions of the parties; the Commission accordingly came down firmly in favour of the view that 'the starting point of interpretation is the elucidation of the meaning of the text, not an investigation ab initio into the intentions of the parties'. This is not to say that the travauxpreparatoires of a treaty , or the circumstances of its conclusion, are relegated to a subordinate, and wholly ineffective, role. As Professor Briggs points out, no rigid temporal prohibition on resort to travaux preparatoires of a treaty was intended by the use of the phrase 'supplementary means of interpretation' in what is now Article 32 of the Vienna Convention. The distinction between the general rule of interpretation and the supplementary means of interpretation is intended rather to ensure that the supplementary means do not constitute an alternative, autonomous method of interpretation divorced from the general rule.10

The Terms of Reference rightly fall within the context of the VFA. After studied reflection, it appeared farfetched that the ambiguity surrounding the meaning of the word .'activities" arose from accident. In our view, it was deliberately made that way to give both parties a certain leeway in negotiation. In this manner, visiting US forces may sojourn in Philippine territory for purposes other than military. As conceived, the joint exercises may include training on new techniques of patrol and surveillance to protect the nation's marine resources, sea search-and-rescue operations to assist vessels in distress, disaster relief operations, civic action projects such as the building of school houses, medical and humanitarian missions, and the like. Under these auspices, the VFA gives legitimacy to the current Balikatan exercises. It is only logical to assume that .'Balikatan 02-1," a "mutual anti- terrorism advising, assisting and training exercise," falls under the umbrella of sanctioned or allowable activities in the context of the agreement. Both the history and intent of the Mutual Defense Treaty and the V FA support the conclusion that combat-related activities -as opposed to combat itself -such as the one subject of the instant petition, are indeed authorized. That is not the end of the matter, though. Granted that "Balikatan 02-1" is permitted under the terms of the VFA, what may US forces legitimately do in furtherance of their aim to provide advice, assistance and training in the global effort against terrorism? Differently phrased, may American troops actually engage in combat in Philippine territory? The Terms of Reference are explicit enough. Paragraph 8 of section I stipulates that US exercise participants may not engage in combat "except in self-defense." We wryly note that this sentiment is admirable in the abstract but difficult in implementation. The target of "Balikatan 02-1 I" the Abu Sayyaf, cannot reasonably be expected to sit idly while the battle is brought to their very doorstep. They cannot be expected to pick and choose their targets for they will not have the luxury of doing so. We state this point if only to signify our awareness that the parties straddle a fine line, observing the honored legal maxim "Nemo potest facere per alium quod non potest facere per directum."11 The indirect violation is actually petitioners' worry, that in reality, "Balikatan 02-1 " is actually a war principally conducted by the United States government, and that the provision on self-defense serves only as camouflage to conceal the true nature of the exercise. A clear pronouncement on this matter thereby becomes crucial. In our considered opinion, neither the MDT nor the V FA allow foreign troops to engage in an offensive war on Philippine territory. We bear in mind the salutary proscription stated in the Charter of the United Nations, to wit: Article 2 The Organization and its Members, in pursuit of the Purposes stated in Article 1, shall act in accordance with the following Principles. xxx xxx xxx xxx

4. All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations. xxx xxx xxx xxx

In the same manner, both the Mutual Defense Treaty and the Visiting Forces Agreement, as in all other treaties and international agreements to which the Philippines is a party, must be read in the context of the 1987 Constitution. In particular, the Mutual Defense Treaty was concluded way before the present Charter, though it nevertheless remains in effect as a valid source of international obligation. The present Constitution contains key provisions useful in determining the extent to which foreign military troops are allowed in Philippine territory. Thus, in the Declaration of Principles and State Policies, it is provided that: xxx xxx xxx xxx

SEC. 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheres to the policy of peace, equality, justice, freedom, cooperation, and amity with all nations. xxx xxx xxx xxx

SEC. 7. The State shall pursue an independent foreign policy. In its relations with other states the paramount consideration shall be national sovereignty, territorial integrity, national interest, and the right to self- determination. SEC. 8. The Philippines, consistent with the national interest, adopts and pursues a policy of freedom from nuclear weapons in the country. xxx xxx xxx xxx

The Constitution also regulates the foreign relations powers of the Chief Executive when it provides that "[n]o treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the members of the Senate."12 Even more pointedly, the Transitory Provisions state: Sec. 25. After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning Military Bases, foreign military bases, troops or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting state. The aforequoted provisions betray a marked antipathy towards foreign military presence in the country, or of foreign influence in general. Hence, foreign troops are allowed entry into the Philippines only by way of direct exception. Conflict arises then between the fundamental law and our obligations arising from international agreements. A rather recent formulation of the relation of international law vis-a-vis municipal law was expressed in Philip Morris, Inc. v. Court of Appeals,13 to wit: xxx Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not superior, to national legislation. This is not exactly helpful in solving the problem at hand since in trying to find a middle ground, it favors neither one law nor the other, which only leaves the hapless seeker with an unsolved dilemma. Other more traditional approaches may offer valuable insights. From the perspective of public international law, a treaty is favored over municipal law pursuant to the principle ofpacta sunt servanda. Hence, "[e]very treaty in force is binding upon the parties to it and must be performed by them in good faith."14 Further, a party to a treaty is not allowed to "invoke the provisions of its internal law as justification for its failure to perform a treaty."15 Our Constitution espouses the opposing view. Witness our jurisdiction as I stated in section 5 of Article VIII: The Supreme Court shall have the following powers: xxx xxx xxx xxx

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and order of lower courts in: (A) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. xxx xxx xxx xxx

In Ichong v. Hernandez,16 we ruled that the provisions of a treaty are always subject to qualification or amendment by a subsequent law, or that it is subject to the police power of the State. In Gonzales v. Hechanova,17 xxx As regards the question whether an international agreement may be invalidated by our courts, suffice it to say that the Constitution of the Philippines has clearly settled it in the affirmative, by providing, in Section 2 of Article VIII thereof, that the Supreme Court may not be deprived "of its

jurisdiction to review, revise, reverse, modify, or affirm on appeal, certiorari, or writ of error as the law or the rules of court may provide, final judgments and decrees of inferior courts in -( I) All cases in which the constitutionality or validity of anytreaty, law, ordinance, or executive order or regulation is in question." In other words, our Constitution authorizes the nullification of a treaty, not only when it conflicts with the fundamental law, but, also, when it runs counter to an act of Congress. The foregoing premises leave us no doubt that US forces are prohibited / from engaging in an offensive war on Philippine territory. Yet a nagging question remains: are American troops actively engaged in combat alongside Filipino soldiers under the guise of an alleged training and assistance exercise? Contrary to what petitioners would have us do, we cannot take judicial notice of the events transpiring down south,18 as reported from the saturation coverage of the media. As a rule, we do not take cognizance of newspaper or electronic reports per se, not because of any issue as to their truth, accuracy, or impartiality, but for the simple reason that facts must be established in accordance with the rules of evidence. As a result, we cannot accept, in the absence of concrete proof, petitioners' allegation that the Arroyo government is engaged in "doublespeak" in trying to pass off as a mere training exercise an offensive effort by foreign troops on native soil. The petitions invite us to speculate on what is really happening in Mindanao, to issue I make factual findings on matters well beyond our immediate perception, and this we are understandably loath to do. It is all too apparent that the determination thereof involves basically a question of fact. On this point, we must concur with the Solicitor General that the present subject matter is not a fit topic for a special civil action forcertiorari. We have held in too many instances that questions of fact are not entertained in such a remedy. The sole object of the writ is to correct errors of jurisdiction or grave abuse of discretion: The phrase "grave abuse of discretion" has a precise meaning in law, denoting abuse of discretion "too patent and gross as to amount to an evasion of a positive duty, or a virtual refusal to perform the duty enjoined or act in contemplation of law, or where the power is exercised in an arbitrary and despotic manner by reason of passion and personal hostility."19 In this connection, it will not be amiss to add that the Supreme Court is not a trier of facts. 20 Under the expanded concept of judicial power under the Constitution, courts are charged with the duty "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government."21 From the facts obtaining, we find that the holding of "Balikatan 02-1" joint military exercise has not intruded into that penumbra of error that would otherwise call for correction on our part. In other words, respondents in the case at bar have not committed grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, the petition and the petition-in-intervention are hereby DISMISSED without prejudice to the filing of a new petition sufficient in form and substance in the proper Regional Trial Court. SO ORDERED.

DISSENTING OPINION KAPUNAN, J.: On September 11, 2001, terrorists, with the use of hijacked commercial airplanes, attacked the World Trade Center Building in New York City and the Pentagon Building in Washington D.C., U.S.A., killing thousands of people. Following the attacks, the United States declared a "global war" against terrorism and started to bomb and attack Afghanistan to topple the Taliban regime and capture Osama bin Laden, the suspected mastermind of the September 11, 2001 attacks. With the Northern Alliance mainly providing the ground forces, the Taliban regime fell in a few months, without Osama bin Laden having been captured. He is believed either to be still in Afghanistan or has crossed the border into Pakistan. In line with President Gloria Macapagal-Arroyo's pledge to render all-out aid to the US in its campaign against "global terrorism," an arrangement for a. joint military exercises known as "RP-US Balikatan 02-1 Exercises" was entered into between the US and Philippine authorities, allegedly within the ambit of the Visiting Forces Agreement (V FA) with the main objective of enhancing the operational capabilities of the countries in combating terrorism. The US government has identified the Abu Sayyaf Group (ASG) in the Philippines as a terrorist group forming part of a "terrorist underground" linked to the al-Qaeda network of Osama bin Laden. Beginning January 21, 2002, American troops started arriving in Mindanao as part of the total contingent force of 660 soldiers, 160 to be stationed in Basilan, 200 to 250 in Zamboanga, and 250 in the Air Force base in Mactan, Cebu. The salient features of the joint military exercises as embodied in the Terms of Reference (TOR) are summarized as follows: (a) The exercise shall be consistent with the Constitution and other Philippine laws, particularly the RPUS Visiting Forces Agreement; (b) No permanent US bases and support facilities will be established; (c) The exercise shall be implemented jointly by RP and US Exercise Co-Directors under the direction of the Chief of Staff of the AFP and in no instance will US Forces operate independently during field training exercises; (d) It shall be conducted and completed within a period of not more than six months, with the projected participation of 660 US personnel and 3,800 RP forces, and the Chief of Staff of the AFP shall direct the Exercise Co-Directors to wind up the Exercise and other activities and the withdrawal of US forces within the six-month period; (e) The exercise "is a mutual counter-terrorism advising, assisting and training exercise" relative to Philippine efforts against the Abu Sayyaf Group and will be conducted on the Island of Basilan. Further advising, assisting and training exercises shall be conducted in Malagutay and the Zamboanga area. Related activities in Cebu will also be conducted in support of the Exercise; (f) Only 160 US troops organized in 12-man Special Forces Teams shall be deployed in Basilan, with the US Team remaining at the Company Tactical Headquarters where they can observe and assess the performance of the troops; and (g) US exercise participants shall not engage in combat, without prejudice to their right to self-defense. Petitioners now seek the issuance of a writ of prohibition/injunction to prevent US troops from participating in areas of armed conflict on the ground that such is in gross violation of the Constitution. They argue that: I THE PHILIPPINES AND THE UNITED STATES SIGNED THE MUTUAL DEFENSE TREATY (MDT) IN 1951 TO PROVIDE MUTUAL MILITARY ASSISTANCE IN ACCORDANCE WITH THE CONSTITUTIONAL PROCESSES" OF EACH COUNTRY ONLY IN THE CASE OF AN ARMED ATTACK BY AN EXTERNAL AGGRESSOR, MEANING A THIRD COUNTRY AGAINST ONE OF THEM.

BY NO STRETCH OF THE IMAGINATION CAN IT BE SAID THAT THE ABU SAYYAF BANDITS IN BASILAN CONSTITUTE AN EXTERNAL ARMED FORCE THAT HAS SUBJECTED THE PHILIPPINES TO AN ARMED EXTERNAL ATTACK TO WARRANT US MILITARY ASSISTANCE UNDER THE MDT OF 1951. II NEITHER DOES THE VFA OF 1999 AUTHORIZED AMERICAN SOLDIERS TO ENGAGE IN COMBAT OPERATIONS IN PHILIPPINE TERRITORY, NOT EVEN TO FIRE BACK "IF FIRED UPON." Sanlakas and Partido ng Manggagawa as intervenors seek the same relief as petitioners, stressing that the Constitution prohibits the presence of foreign military troops or facilities in the country, except under a treaty duly concurred in by the Senate and recognized as a treaty by the other state. The petition is impressed with merit. There is no treaty allowing US troops to engage in combat. The Constitution prohibits foreign military bases, troops or facilities unless a treaty permits the same. Section 25, Article XVIII of the Constitution provides: After the expiration in 1991 of the Agreement between the Republic of the Philippines and the United States of America concerning Military Bases, foreign military bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly concurred in by the Senate and, when the Congress so requires, ratified by a majority of the votes cast by the people in a national referendum held for that purpose, and recognized as a treaty by the other contracting State. There is no treaty allowing foreign military troops to engage in combat with internal elements. The Mutual Defense Treaty (MDT) between the Republic of the Philippines and the United States of America does not authorize US military troops to engage the ASG in combat. The MDT contemplates only an "external armed attack." Article III of the treaty cannot be more explicit: The Parties, through their Foreign Ministers or their deputies, will consult together from time to time regarding the implementation of this treaty and whenever in the opinion of either of them the territorial integrity, political independence or security of either of the Parties is threatened by external armed attack in the Pacific. [Emphasis supplied.] Supporting this conclusion is the third paragraph of the MDT preamble where the parties express their desire to declare publicly and formally their sense of unity and their common determination to defend themselves against external armed attack, so that no potential aggressor could be under the illusion that either of them stands alone in the Pacific area. [Emphasis supplied.] There is no evidence that the ASG is connected with "global terrorism." There is no empirical basis for the allegation that the "terrorism" which the ASG is accused of constitutes an "external armed attack." The ASG has committed mostly crimes of kidnapping for ransom and murder common crimes that are punishable under the penal code but which, by themselves, hardly constitute "terrorism." Parenthetically, there is lack of agreement as to the precise definition of terrorism. Indeed, one man's terrorist may be another man's freedom fighter. The divergent interests of States have caused contradicting definitions and conflicting perceptions of what constitutes "terrorist acts" that make it difficult for the United Nations to reach a decision on the definition of terrorism. Because of this "definitional predicament," the power of definition is easily exercised by a superpower which, by reason of its unchallenged hegemony, could draw lists of what it considers terrorist organizations or states sponsoring terrorism based on criteria determined by the hegemon's own strategic interests.1

In any case, ties between the ASG and so-called international "terrorist" organizations have not been established.2Even assuming that such ties do exist, it does not necessarily make the "attacks" by the ASG "external" as to fall within the ambit of the MDT. Balikatan exercises are not covered by VFA as US troops are not allowed to engage in combat. Neither is the present situation covered by the so-called Visiting Forces Agreement (VFA). The V FA was concluded after the removal of the US military bases, troops and facilities in the aftermath of the termination of the treaty allowing the presence of American military bases in the Philippines. The VF A is nothing more than what its formal name suggests: an "Agreement between the Government of the Republic of the Philippines and the Government of the United States of America regarding the Treatment of United States Armed Forces Visiting the Philippines. "The last paragraph of the V FA preamble also "recogniz[es] the desirability of defining the treatmentof United States personnel visiting the Republic of the Philippines." The VFA was entered into to enable American troops to enter the country again after the removal of the American military bases so they can participate in military exercises under the auspices of the Mutual Defense Treaty. It provided the legal framework under which American soldiers will be treated while they remain in the country. The military exercises contemplated in the VFA are those in accordance with the National Defense Plan (NDP) of the Philippines. The NDP was previously approved and adopted by the Mutual Defense Board, jointly chaired by the Chief of Staff of the Armed Forces of the Philippines and the Commander in the Pacific of the United States Armed Forces. The NDP is directed against potential foreign aggressors, not designed to deal with internal disorders. This was what the Senate understood when it ratified the VFA in Senate Resolution No. 18, which reads: The VFA shall serve as the legal mechanism to promote defense cooperation between the two countries, enhancing the preparedness of the Armed Forces of the Philippines against external threats; and enabling the Philippines to bolster the stability of the Pacific Area in a shared effort with its neighbor states. The VFA's ambiguous reference to "activities"3 is not a loophole that legitimizes the presence of US troops in Basilan. In the treaty's preamble, the parties "reaffirm their obligations under the Mutual Defense Treaty of August 30, 1951." As the preamble comprises part of a treaty's context for the purpose of interpretation, the VFA must be read in light of the provisions of the MDT. As stated earlier, the MDT contemplates only an external armed attack; consequently, the "activities" referred to in the V FA cannot thus be interpreted to include armed confrontation with or suppression of the ASG members who appear to be mere local bandits, mainly engaged in kidnapping for ransom and murder -even arson, extortion and illegal possession of firearms, all of which are common offenses under our criminal laws. These activities involve purely police matters and domestic law and order problems; they are hardly "external" attacks within the contemplation of the MDT and the V FA. To construe the vagueness of the term "activities" in the V FA as authorizing American troops to confront the ASG in armed conflict would, therefore, contravene both spirit and letter of the MDT. Respondents maintain that the American troops are not here to fight the ASG but merely to engage in "training exercises." To allay fears that the American troops are here to engage the ASG in combat, the TOR professes that the present exercise "is a mutual counter-terrorism advising, assisting and training Exercise relative to Philippine efforts against the ASG, and will be conducted on the Island of Basilan." The TOR further provides that the "exercise" shall involve the conduct of "mutual military assisting, advising and training of RP and US Forces with the primary objective of enhancing the operational capabilities of both forces to combat terrorism." These avowals of assistance, advice, and training, however, fly in the face of the presence of US troops in the heart of the ASG's stronghold. Such presence is an act of provocation that makes an armed confrontation between US soldiers and ASG members inevitable. The US troops in Basilan have been described as being "on a slippery slope between training and fighting."Their very presence makes them a target for terrorist and for the local Moslem populace, which has been bitterly anti-American since colonial times. Though they are called advisers, the Americans win be going on risky missions deep into the jungle. A former Green Beret who is an analyst of Washington's Center for

Strategies and Budgetary Assessments notes that "when troops go out on patrol, they come as close as they can to direct combat."4 "Advising" or "training" Filipino soldiers hardly describes the involvement of US troops (unaccompanied by Filipino counterparts) on board combat helicopters which land on the battlegrounds to evacuate Filipino soldiers wounded while fighting the ASG. For example, on April 5,2002, US troops on board a Pave Hawk helicopter flew to the scene of a night battle on Basilan Island to evacuate a wounded Filipino soldier. This was reportedly the third time in recent weeks that chopper-borne US forces had evacuated Filipino soldiers fighting the ASG.5 Whatever euphemisms may be conjured to characterize American involvement, the RP-US Balikatan 02-1 Exercises are aimed at seeking out the ASG and exterminating it. The prohibition contained in the TOR against US exercise participants from engaging in combat but "without prejudice to their right to self- defense" provides little consolation. Combat muddles the distinction between aggression and self-defense. US troops can always say they did not fire first and no one would dare say otherwise. The ASG has been so demonized that no one cares how it is exorcised. Significantly, the TOR does not define the parameters of "self-defense." Militarily, a pre-emptive strike could be interpreted as an act of self -defense. What I fear most is that the country would be dragged into a more devastating and protracted conflict as a result of the continued presence of US military troops in Basilan. A single ASG sniper's bullet felling an American soldier could be used as an excuse for massive retaliation by US ground and air forces to attack and bomb out every suspected ASG lair, all in the name of "self -defense. Apprehensions over possible catastrophic consequence of US military involvement in our country are not without historical basis. The US experience in Vietnam, for example, began as an expression of support for the establishment of South Vietnam under Bao Dai's leadership in 1949 to. counteract the support given by communist China and the Soviet Union to North Vietnam. In 1950, the US began providing military assistance in fighting North Vietnam by sending military advisors as well as US tanks, planes, artillery and other supplies. The US became more involved in the Vietnam conflict when in 1961, it sent the first 400 Green Beret "Special Advisors" to South Vietnam to train the latter's soldiers in methods of counter-insurgency against the Viet Cong guerillas. It clarified that the American soldiers were not in Vietnam to engage in combat.6 However, due to the increased success of the Viet Cong guerillas, assisted by the Northern Vietnamese Army, the US eventually began to run covert operations using South Vietnamese commandos in speed boats to harass radar sites along the coastline of North Vietnam. In 1964, after an alleged torpedo attack by North Vietnam of the American destroyers USS. Maddox and USS. C. Turner Joy in the Gulf of Tonkin, the US decided to retaliate by conducting bombing raids in North Vietnam.7 The Vietnam War resulted in the death of two million Vietnamese and injuries to three million others. Twelve million Vietnamese became refugees and thousands of children became orphaned.8 Millions of acres of Vietnam's forests were defoliated by a herbicide called Agent Orange, dropped from the air. Millions of mines and unexploded bombs and artillery shells are still scattered in the countryside, posing constant danger to life and limb. US militarv presence is essentially indefinite and open-ended. Already, there are indications that the US intends to reestablish a more enduring presence in the country. Defense Secretary Angelo Reyes was quoted to have declared on March 20, 2002 that 2,665 US soldiers will take part in the RP-US Balikatan 02-2 starting next month in Central Luzon and that 10 more military exercises will be held this year.9 How many more war exercises are needed for "training and advising" Filipino soldiers? What conditions must be satisfied for the United States to consider the "war against terrorism" in Mindanao terminated? The endless frequency and successive repetition of the war exercises covering the two largest islands of the country amount, in a real sense, to the permanent presence of foreign military troops heresans a treaty in blatant violation of the constitutional proscription. US President George w. Bush in his January 30, 2002 speech declared:

The men and women of our armed-forces have delivered a message to every enemy of the United States. You shall not escape the justice of this nation. x x x. Should any country be timid in the face of terror, if they do not act, America will. President Arroyo, in a speech at the Regis Hotel in New York City on February 1, 2002, pledged her "full support" to US President George W. Bush in the fight against international terrorism. She declared that "the Philippines will continue to be a partner of the United States in the war to end terrorism" and that "(t)he antiterrorism partnership will continue after the whole world is secure against the terrorist."10 In his speech on the White House Laws on March 11, 2002, President Bush exhorted: America encourages and expects governments everywhere to help remove the terrorist parasites that threaten their own countries and the peace of the world. x x x. We are helping right now in the Philippines, where terrorist with links to Al Qaeda are trying to seize the southern part of the country to establish a military regime. They are oppressing local peoples, and have kidnapped both American and Filipino citizens."11 The Philippine Daily Inquirer in its March 17, 2002 issue carried the following report: The United States wants to bring in more troops for the controversial Balikatan 02-1 training exercise aimed at wiping out the Abu Sayyaf bandits in Basilan. The US military last week began calling the war-games "Operation Enduring Freedom-Philippines," giving credence to claims that the country has become, after Afghanistan, the second front of the USled global war on terrorism. Today's issue of April 1, 2002 reporting as its source New York News Service, quoted a senior Bush administration official as saying: We are looking at prolonged training. x x x. It takes more to build up capabilities than saying here are some night vision goggles. The declarations of the two Presidents on the war against terrorism and their avowal to secure the world against the terrorists would ineluctably suggest a long-drawn conflict without a foreseeable end. Worse, it is not unlikely that this war could expand and escalate to include as protagonists the Moro Islamic Liberation Front and the Moro National Liberation Front and -not improbably -the National People's Army, all lumped-up as "terrorists" in a unilateral characterization. No less than US Deputy Defense Secretary Paul Wolfowitz declared that the proposed $48-billion increase to the US defense budget for 2003 is intended to sustain the war on terrorism,12 including that fought in this country, thus: . Deputy Defense Secretary Paul Wolfowitz on Wednesday said the Pentagon needs a big budget increase next year on terrorism, which has expanded from Afghanistan to the Philippines and now appears to be moving to Georgia.13 The Court can take judicial notice of the foregoing pronouncements as they are of public knowledge,14 having been widely circulated in all channels of the media. Neither have they been denied. US military intervention is not the solution to the Mindanao problem. Assuming that the ASG is a terrorist organization, U.S. military intervention is not the solution to achieve peace. The annihilation of the rebel bandits would be a futile quest so long at the root causes of their criminality are not addressed. A study15 by the United Nations Secretariat, however, acknowledges that international terrorism springs from "misery, frustration, grievance and 'despair," elements which, many believe, are present in Basilan. Two veteran Philippine journalists have described the province as Mindanao's "war laboratory," where lawlessness, government neglect, religious strife, poverty, and power struggle are rampant.16

If indeed acts of terrorism are cries of desperation, if terrorism is but a symptom of the greater maladies of "misery, frustration, grievance and despair," then it cannot be remedied alone by ASG's physical extermination, which appears to be the object of President Bush and President Macapagal- Arroyo's joint campaign against global terrorism." Admittedly, the State has the right to use force as a means of self-preservation. But perhaps we should all consider that a military solution is but a first-aid measure, not the prescription to these diseases. It has been opined that: The issue of terrorism in the Philippines should be dealt with not from the perspective of ManilaWashington ties but from a serious study of how terrorism figures in the minds of leaders and armed men belonging to the large but deeply factionalized guerrilla movements in the country. Terrorism can never be dissociated from guerrilla warfare and the separatist movement in Mindanao. From these movements would arise religious extremists or millennarian groups. With the right resources and the right agenda, these movements will continue to attract men-skilled, intelligent, and experienced-who will come to grasp the practical realities of waging a war with the minimum of resources but maximum public impact. The government does not have to look for foreign connections-and be motivated by the desire to help foreign friends to address a problem that has been and will be the making of its own home grown armies.17 The presence of US troops in Basilan, whether from the legal, philosophical-or even from the practical perspective cannot be justified, On the contrary, it is counterproductive. It serves to fuel an already volatile situation. US troops are likely less able, if not less willing, to distinguish between the innocent and the enemy. The inevitable "collateral damage," the killing of women and children, Muslims and Christians, the destruction of homes, schools and hospitals would fan the flames of fanaticism and transform mere rogues into martyrs. The Filipino soldier has proven himself brave, courageous, fearless and tenacious in the field of battle as shown in Bataan and Corregidor, in the four long years of guerilla warfare thereafter against the Japanese, and in the struggle for independence against Spain and the United States at the turn of the last century. The local army and police have successfully battled in the past against Communist and other insurgents which were more organized and numerous, operating in larger parts of the country and fighting for their political beliefs. If our troops need training by us advisers or have to conduct joint exercises with US troops to improve their fighting capability, these could be more effectively achieved if done outside Basilan or away from the danger zones. Instead of bringing troops to the combat zones, the US can do more by supplying our soldiers with modern and high tech weaponry. Prescinding from the foregoing disquisitions, it is totally erroneous to argue that petitioners do not have legal standing or that the issues raised by them are premature and not based on sufficient facts. The issues raised are of transcendental importance.18 The Balikatan exercises pose direct injury to some of the petitioners (intervenors) who live in the affected areas. The presence of us troops in the combat zones "assisting" and "advising" our troops in combat against the ASG is a blatant violation of the Constitutional proscription against the stationing of foreign troops to fight a local insurgency and puts the country in peril of becoming a veritable killing field. If the time is not ripe to challenge the continuing affront against the Constitution and the safety of the people, when is the right time? When the countryside has been devastated and numerous lives lost? I therefore vote to give due course to the petition. SEPARATE OPINION* PANGANIBAN, J: Through their "Petition for Certiorari and, Prohibition," Arthur D. Lim and Paulino R. Ersanda -- joined by Intervenors Sanlakas and Partido ng Manggagawa -- plead for the issuance of an order "restraining the respondents from proceeding or continuing and completing the so-called 'Balikatan 02-1'" on the ground that the exercise is not sanctioned by any treaty and is, therefore, allegedly unconstitutional. Agreeing with the Comment of the Office of the Solicitor General (OSG), the ponencia of Mr. Justice Sabino R. de Leon Jr. dismisses the Petition essentially on these procedural grounds: 1. As taxpayers, petitioners do not have legal standing or locus standi, because Balikatan 02-1 "does not involve the exercise by Congress of its taxing or spending power."

2. Certiorari and prohibition are improper remedies, because petitioners have not alleged sufficient facts upon which grave abuse of discretion or excess/lack of jurisdiction could be argued from. 3. The Petition is premature because the alleged violation of the Constitution is merely speculative, not actual or imminent. 4. Though entitled "Certiorari and Prohibition," the Petition is really one for declaratory relief which merely seeks an advice or opinion, not a decision. The Supreme Court has no jurisdiction to issue opinions or advices. Ordinarily, the above reasons would indeed be sufficient to cause the dismissal of a petition. However, because of the "transcendental importance" of the main question raised - the constitutionality of the Balikatan exercise - the Court, I believe, could have exempted this case from these procedural requirements and tackled the case on the merits, if only to put to rest the legality of this major event of public interest ill our country and even ill the world. I, for one, would have voted to set aside these legalistic obstacles, had the Petition presented enough factual moorings upon which to base an intelligent discussion and disposition of the legal issues. For instance, this Court cannot be called upon to decide the factual issues of whether the US forces are actually engaging the Abu Sayyaf Group ill combat and whether they will stay ill our country permanently. This Court has no authority to conduct a trial, which can establish these factual antecedents. Knowing what these antecedents are is necessary to determine whether the Balikatan violates the Constitution or the Mutual Defense Treaty (MDT) of 1951 or the Visiting Forces Agreement (VFA) of 1999. Verily, the Petition has not even alleged that the American troops have indeed been unconstitutionally engaged ill actual offensive combat. The contention that they would necessarily and surely violate the Constitution by participating ill the joint exercise in Basilan is merely speculative. Petitioners aver: "American soldiers with high-tech weaponry, disguised as trainers or advisers to Filipino troops, will go to the war zones of Basilan. Hence, while dubbed as a military exercise, it is in reality a continuing combat operation by the AFP against the Abu Sayyaf to be participated in this time by U.S. troops. It has been admitted that U.S. 'advisers' will accompany Filipino soldiers on patrol in the combat zones. Also, a base of operation will be in the Sampinit complex which is in the heartland of the Abu Sayyaf's 'territorial domain' in Basilan island. A shooting war, not just an exercise, is unavoidable." That a "shooting war is unavoidable" is conjectural; at best, a conclusion that is not borne by solid factual moorings. Cases cannot be decided on mere speculation or prophecy .The Petition claims that while the us troops are "disguised" as "advisers" or "trainors" or "chaperons," they are actually combatants engaged in an offensive war against local insurgents. Again, there is no solid factual basis for this statement. It may or may not be true. The Petition also alleges, again without firm factual support, that the American forces will stay here indefinitely "for a year or even more depending on the need of the AFP for them." On the other hand, the OSG assures that petitioners' "apprehensions are belied" by the Terms of Reference (TOR) approved by both the Philippines and the United States, which "expressly limit. the conduct and completion of the exercise within a period not exceeding six " (6) months and prohibits the American participants from engaging in combat, without prejudice to their right to self-defense." I stress that cases cannot be decided by this Court on the basis of speculative or hypothetical assumptions like "If the facts were these, then our decision would be this; on the other hand, if the facts change, then our ruling would be modified as follows. " Decisions of this Court especially in certiorari and prohibition cases are issued only if the facts are clear and definite. As a rule, courts may not consider or judge facts or matters unless they are alleged in the pleadings and proven by the parties. Our duty is to apply the law to facts that are not in dispute. In the absence of firm factual findings that the Americans "will stay indefinitely" in our country or "are engaged in actual offensive combat with local insurgents" as alleged by petitioners, respondent Philippine officials who are hosting the Balikatan exercise cannot possibly be imputed with grave abuse of discretion - an indispensable element of certiorari. 1wphi1.nt True, there are some questions that may genuinely be raised in regard to the Balikatan 02-1 vis-a-vis our Constitution, the MDT and the VFA, like the following:

(1) Is the Abu Sayyaf Group composed of "international terrorists" whose acts and practices violate the United Nations Charter to such an extent as to pose a threat to international peace and security? (2) Is there an "external armed attack" against the Philippines sufficient in force and magnitude as to justify an invocation of the MDT? (3) Are the size, the kind, and the location of the Balikatan deployment justified by the nature, the scope, the duration, and the kind of "activities" allowed under the VFA? (4) Is it true that the real American objective is the rescue of ASG hostages Martin and Gracia Burnham, who are both American citizens? If so, is such rescue legally justified? (5) Does the Balikatan pose a "political question " which the Supreme Court has no authority to rule upon, and which may only be decided by our people directly or through their I elected representatives? Unfortunately, the foregoing and other similar nagging questions cannot be judicially taken up and answered until a petition, sufficient in form and substance, is properly presented to the appropriate court. FOR THE FOREGOING REASONS, I vote to DISMISS the present Petition.

G.R. No. 152154

July 15, 2003

REPUBLIC OF THE PHILIPPINES, petitioner, vs. HONORABLE SANDIGANBAYAN (SPECIAL FIRST DIVISION), FERDINAND E. MARCOS (REPRESENTED BY HIS ESTATE/HEIRS: IMELDA R. MARCOS, MARIA IMELDA [IMEE] MARCOSMANOTOC, FERDINAND R. MARCOS, JR. AND IRENE MARCOS-ARANETA) AND IMELDA ROMUALDEZ MARCOS, respondents. CORONA, J.: This is a petition for certiorari under Rule 65 of the Rules of Court seeking to (1) set aside the Resolution dated January 31, 2002 issued by the Special First Division of the Sandiganbayan in Civil Case No. 0141 entitledRepublic of the Philippines vs. Ferdinand E. Marcos, et. al., and (2) reinstate its earlier decision dated September 19, 2000 which forfeited in favor of petitioner Republic of the Philippines (Republic) the amount held in escrow in the Philippine National Bank (PNB) in the aggregate amount of US$658,175,373.60 as of January 31, 2002. BACKGROUND OF THE CASE On December 17, 1991, petitioner Republic, through the Presidential Commission on Good Government (PCGG), represented by the Office of the Solicitor General (OSG), filed a petition for forfeiture before the Sandiganbayan, docketed as Civil Case No. 0141 entitled Republic of the Philippines vs. Ferdinand E. Marcos, represented by his Estate/Heirs and Imelda R. Marcos, pursuant to RA 13791 in relation to Executive Order Nos. 1,2 2,3 144 and 14-A.5 In said case, petitioner sought the declaration of the aggregate amount of US$356 million (now estimated to be more than US$658 million inclusive of interest) deposited in escrow in the PNB, as ill-gotten wealth. The funds were previously held by the following five account groups, using various foreign foundations in certain Swiss banks: (1) Azio-Verso-Vibur Foundation accounts; (2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus- Avertina Foundation accounts; (3) Trinidad-Rayby-Palmy Foundation accounts; (4) Rosalys-Aguamina Foundation accounts and (5) Maler Foundation accounts. In addition, the petition sought the forfeiture of US$25 million and US$5 million in treasury notes which exceeded the Marcos couple's salaries, other lawful income as well as income from legitimately acquired property. The treasury notes are frozen at the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, by virtue of the freeze order issued by the PCGG. On October 18, 1993, respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and Ferdinand R. Marcos, Jr. filed their answer. Before the case was set for pre-trial, a General Agreement and the Supplemental Agreements6 dated December 28, 1993 were executed by the Marcos children and then PCGG Chairman Magtanggol Gunigundo for a global settlement of the assets of the Marcos family. Subsequently, respondent Marcos children filed a motion dated December 7, 1995 for the approval of said agreements and for the enforcement thereof. The General Agreement/Supplemental Agreements sought to identify, collate, cause the inventory of and distribute all assets presumed to be owned by the Marcos family under the conditions contained therein. The aforementioned General Agreement specified in one of its premises or "whereas clauses" the fact that petitioner "obtained a judgment from the Swiss Federal Tribunal on December 21, 1990, that the Three Hundred Fifty-six Million U.S. dollars (US$356 million) belongs in principle to the Republic of the Philippines provided certain conditionalities are met x x x." The said decision of the Swiss Federal Supreme Court affirmed the decision of Zurich District Attorney Peter Consandey, granting petitioner's request for legal assistance.7 Consandey declared the various deposits in the name of the enumerated foundations to be of

illegal provenance and ordered that they be frozen to await the final verdict in favor of the parties entitled to restitution. Hearings were conducted by the Sandiganbayan on the motion to approve the General/Supplemental Agreements. Respondent Ferdinand, Jr. was presented as witness for the purpose of establishing the partial implementation of said agreements. On October 18, 1996, petitioner filed a motion for summary judgment and/or judgment on the pleadings. Respondent Mrs. Marcos filed her opposition thereto which was later adopted by respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr. In its resolution dated November 20, 1997, the Sandiganbayan denied petitioner's motion for summary judgment and/or judgment on the pleadings on the ground that the motion to approve the compromise agreement "(took) precedence over the motion for summary judgment." Respondent Mrs. Marcos filed a manifestation on May 26, 1998 claiming she was not a party to the motion for approval of the Compromise Agreement and that she owned 90% of the funds with the remaining 10% belonging to the Marcos estate. Meanwhile, on August 10, 1995, petitioner filed with the District Attorney in Zurich, Switzerland, an additional request for the immediate transfer of the deposits to an escrow account in the PNB. The request was granted. On appeal by the Marcoses, the Swiss Federal Supreme Court, in a decision dated December 10, 1997, upheld the ruling of the District Attorney of Zurich granting the request for the transfer of the funds. In 1998, the funds were remitted to the Philippines in escrow. Subsequently, respondent Marcos children moved that the funds be placed in custodia legis because the deposit in escrow in the PNB was allegedly in danger of dissipation by petitioner. The Sandiganbayan, in its resolution dated September 8, 1998, granted the motion. After the pre-trial and the issuance of the pre-trial order and supplemental pre-trial order dated October 28, 1999 and January 21, 2000, respectively, the case was set for trial. After several resettings, petitioner, on March 10, 2000, filed another motion for summary judgment pertaining to the forfeiture of the US$356 million, based on the following grounds: I THE ESSENTIAL FACTS WHICH WARRANT THE FORFEITURE OF THE FUNDS SUBJECT OF THE PETITION UNDER R.A. NO. 1379 ARE ADMITTED BY RESPONDENTS IN THEIR PLEADINGS AND OTHER SUBMISSIONS MADE IN THE COURSE OF THE PROCEEDING. II RESPONDENTS' ADMISSION MADE DURING THE PRE-TRIAL THAT THEY DO NOT HAVE ANY INTEREST OR OWNERSHIP OVER THE FUNDS SUBJECT OF THE ACTION FOR FORFEITURE TENDERS NO GENUINE ISSUE OR CONTROVERSY AS TO ANY MATERIAL FACT IN THE PRESENT ACTION, THUS WARRANTING THE RENDITION OF SUMMARY JUDGMENT.8 Petitioner contended that, after the pre-trial conference, certain facts were established, warranting a summary judgment on the funds sought to be forfeited. Respondent Mrs. Marcos filed her opposition to the petitioner's motion for summary judgment, which opposition was later adopted by her co-respondents Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr. On March 24, 2000, a hearing on the motion for summary judgment was conducted. In a decision9 dated September 19, 2000, the Sandiganbayan granted petitioner's motion for summary judgment: CONCLUSION There is no issue of fact which calls for the presentation of evidence. The Motion for Summary Judgment is hereby granted.

The Swiss deposits which were transmitted to and now held in escrow at the PNB are deemed unlawfully acquired as ill-gotten wealth. DISPOSITION WHEREFORE, judgment is hereby rendered in favor of the Republic of the Philippines and against the respondents, declaring the Swiss deposits which were transferred to and now deposited in escrow at the Philippine National Bank in the total aggregate value equivalent to US$627,608,544.95 as of August 31, 2000 together with the increments thereof forfeited in favor of the State. 10 Respondent Mrs. Marcos filed a motion for reconsideration dated September 26, 2000. Likewise, Mrs. Manotoc and Ferdinand, Jr. filed their own motion for reconsideration dated October 5, 2000. Mrs. Araneta filed a manifestation dated October 4, 2000 adopting the motion for reconsideration of Mrs. Marcos, Mrs. Manotoc and Ferdinand, Jr. Subsequently, petitioner filed its opposition thereto. In a resolution11 dated January 31, 2002, the Sandiganbayan reversed its September 19, 2000 decision, thus denying petitioner's motion for summary judgment: CONCLUSION In sum, the evidence offered for summary judgment of the case did not prove that the money in the Swiss Banks belonged to the Marcos spouses because no legal proof exists in the record as to the ownership by the Marcoses of the funds in escrow from the Swiss Banks. The basis for the forfeiture in favor of the government cannot be deemed to have been established and our judgment thereon, perforce, must also have been without basis. WHEREFORE, the decision of this Court dated September 19, 2000 is reconsidered and set aside, and this case is now being set for further proceedings.12 Hence, the instant petition. In filing the same, petitioner argues that the Sandiganbayan, in reversing its September 19, 2000 decision, committed grave abuse of discretion amounting to lack or excess of jurisdiction considering that -I PETITIONER WAS ABLE TO PROVE ITS CASE IN ACCORDANCE WITH THE REQUISITES OF SECTIONS 2 AND 3 OF R.A. NO. 1379: A. PRIVATE RESPONDENTS CATEGORICALLY ADMITTED NOT ONLY THE PERSONAL CIRCUMSTANCES OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS BUT ALSO THE EXTENT OF THEIR SALARIES AS SUCH PUBLIC OFFICIALS, WHO UNDER THE CONSTITUTION, WERE PROHIBITED FROM ENGAGING IN THE MANAGEMENT OF FOUNDATIONS. B. PRIVATE RESPONDENTS ALSO ADMITTED THE EXISTENCE OF THE SWISS DEPOSITS AND THEIR OWNERSHIP THEREOF: 1. ADMISSIONS IN PRIVATE RESPONDENTS' ANSWER; 2. ADMISSION IN THE GENERAL / SUPPLEMENTAL AGREEMENTS THEY SIGNED AND SOUGHT TO IMPLEMENT; 3. ADMISSION IN A MANIFESTATION OF PRIVATE RESPONDENT IMELDA R. MARCOS AND IN THE MOTION TO PLACE THE RES IN CUSTODIA LEGIS; AND 4. ADMISSION IN THE UNDERTAKING TO PAY THE HUMAN RIGHTS VICTIMS. C. PETITIONER HAS PROVED THE EXTENT OF THE LEGITIMATE INCOME OF FERDINAND E. MARCOS AND IMELDA R. MARCOS AS PUBLIC OFFICIALS.

D. PETITIONER HAS ESTABLISHED A PRIMA FACIE PRESUMPTION OF UNLAWFULLY ACQUIRED WEALTH. II SUMMARY JUDGMENT IS PROPER SINCE PRIVATE RESPONDENTS HAVE NOT RAISED ANY GENUINE ISSUE OF FACT CONSIDERING THAT: A. PRIVATE RESPONDENTS' DEFENSE THAT SWISS DEPOSITS WERE LAWFULLY ACQUIRED DOES NOT ONLY FAIL TO TENDER AN ISSUE BUT IS CLEARLY A SHAM; AND B. IN SUBSEQUENTLY DISCLAIMING OWNERSHIP OF THE SWISS DEPOSITS, PRIVATE RESPONDENTS ABANDONED THEIR SHAM DEFENSE OF LEGITIMATE ACQUISITION, AND THIS FURTHER JUSTIFIED THE RENDITION OF A SUMMARY JUDGMENT. III THE FOREIGN FOUNDATIONS NEED NOT BE IMPLEADED. IV THE HONORABLE PRESIDING JUSTICE COMMITTED GRAVE ABUSE OF DISCRETION IN REVERSING HIMSELF ON THE GROUND THAT ORIGINAL COPIES OF THE AUTHENTICATED SWISS DECISIONS AND THEIR "AUTHENTICATED TRANSLATIONS" HAVE NOT BEEN SUBMITTED TO THE COURT, WHEN EARLIER THE SANDIGANBAYAN HAS QUOTED EXTENSIVELY A PORTION OF THE TRANSLATION OF ONE OF THESE SWISS DECISIONS IN HIS "PONENCIA" DATED JULY 29, 1999 WHEN IT DENIED THE MOTION TO RELEASE ONE HUNDRED FIFTY MILLION US DOLLARS ($150,000,000.00) TO THE HUMAN RIGHTS VICTIMS. V PRIVATE RESPONDENTS ARE DEEMED TO HAVE WAIVED THEIR OBJECTION TO THE AUTHENTICITY OF THE SWISS FEDERAL SUPREME COURT DECISIONS.13 Petitioner, in the main, asserts that nowhere in the respondents' motions for reconsideration and supplemental motion for reconsideration were the authenticity, accuracy and admissibility of the Swiss decisions ever challenged. Otherwise stated, it was incorrect for the Sandiganbayan to use the issue of lack of authenticated translations of the decisions of the Swiss Federal Supreme Court as the basis for reversing itself because respondents themselves never raised this issue in their motions for reconsideration and supplemental motion for reconsideration. Furthermore, this particular issue relating to the translation of the Swiss court decisions could not be resurrected anymore because said decisions had been previously utilized by the Sandiganbayan itself in resolving a "decisive issue" before it. Petitioner faults the Sandiganbayan for questioning the non-production of the authenticated translations of the Swiss Federal Supreme Court decisions as this was a marginal and technical matter that did not diminish by any measure the conclusiveness and strength of what had been proven and admitted before the Sandiganbayan, that is, that the funds deposited by the Marcoses constituted ill-gotten wealth and thus belonged to the Filipino people. In compliance with the order of this Court, Mrs. Marcos filed her comment to the petition on May 22, 2002. After several motions for extension which were all granted, the comment of Mrs. Manotoc and Ferdinand, Jr. and the separate comment of Mrs. Araneta were filed on May 27, 2002. Mrs. Marcos asserts that the petition should be denied on the following grounds: A. PETITIONER HAS A PLAIN, SPEEDY, AND ADEQUATE REMEDY AT THE SANDIGANBAYAN. B.

THE SANDIGANBAYAN DID NOT ABUSE ITS DISCRETION IN SETTING THE CASE FOR FURTHER PROCEEDINGS.14 Mrs. Marcos contends that petitioner has a plain, speedy and adequate remedy in the ordinary course of law in view of the resolution of the Sandiganbayan dated January 31, 2000 directing petitioner to submit the authenticated translations of the Swiss decisions. Instead of availing of said remedy, petitioner now elevates the matter to this Court. According to Mrs. Marcos, a petition for certiorari which does not comply with the requirements of the rules may be dismissed. Since petitioner has a plain, speedy and adequate remedy, that is, to proceed to trial and submit authenticated translations of the Swiss decisions, its petition before this Court must be dismissed. Corollarily, the Sandiganbayan's ruling to set the case for further proceedings cannot and should not be considered a capricious and whimsical exercise of judgment. Likewise, Mrs. Manotoc and Ferdinand, Jr., in their comment, prayed for the dismissal of the petition on the grounds that: (A) BY THE TIME PETITIONER FILED ITS MOTION FOR SUMMARY JUDGMENT ON 10 MARCH 2000, IT WAS ALREADY BARRED FROM DOING SO. (1) The Motion for Summary Judgment was based on private respondents' Answer and other documents that had long been in the records of the case. Thus, by the time the Motion was filed on 10 March 2000, estoppel by laches had already set in against petitioner. (2) By its positive acts and express admissions prior to filing the Motion for Summary Judgment on 10 March 1990, petitioner had legally bound itself to go to trial on the basis of existing issues. Thus, it clearly waived whatever right it had to move for summary judgment. (B) EVEN ASSUMING THAT PETITIONER WAS NOT LEGALLY BARRED FROM FILING THE MOTION FOR SUMMARY JUDGMENT, THE SANDIGANBAYAN IS CORRECT IN RULING THAT PETITIONER HAS NOT YET ESTABLISHED A PRIMA FACIE CASE FOR THE FORFEITURE OF THE SWISS FUNDS. (1) Republic Act No. 1379, the applicable law, is a penal statute. As such, its provisions, particularly the essential elements stated in section 3 thereof, are mandatory in nature. These should be strictly construed against petitioner and liberally in favor of private respondents. (2) Petitioner has failed to establish the third and fourth essential elements in Section 3 of R.A. 1379 with respect to the identification, ownership, and approximate amount of the property which the Marcos couple allegedly "acquired during their incumbency". (a) Petitioner has failed to prove that the Marcos couple "acquired" or own the Swiss funds. (b) Even assuming, for the sake of argument, that the fact of acquisition has been proven, petitioner has categorically admitted that it has no evidence showing how much of the Swiss funds was acquired "during the incumbency" of the Marcos couple from 31 December 1965 to 25 February 1986. (3) In contravention of the essential element stated in Section 3 (e) of R.A. 1379, petitioner has failed to establish the other proper earnings and income from legitimately acquired property of the Marcos couple over and above their government salaries. (4) Since petitioner failed to prove the three essential elements provided in paragraphs (c)15 (d),16 and (e)17 of Section 3, R.A. 1379, the inescapable conclusion is that the prima facie presumption of unlawful acquisition of the Swiss funds has not yet attached. There can, therefore, be no premature forfeiture of the funds. (C) IT WAS ONLY BY ARBITRARILY ISOLATING AND THEN TAKING CERTAIN STATEMENTS MADE BY PRIVATE RESPONDENTS OUT OF CONTEXT THAT PETITIONER WAS ABLE TO TREAT

THESE AS "JUDICIAL ADMISSIONS" SUFFICIENT TO ESTABLISH A PRIMA FACIE AND THEREAFTER A CONCLUSIVE CASE TO JUSTIFY THE FORFEITURE OF THE SWISS FUNDS. (1) Under Section 27, Rule 130 of the Rules of Court, the General and Supplemental Agreements, as well as the other written and testimonial statements submitted in relation thereto, are expressly barred from being admissible in evidence against private respondents. (2) Had petitioner bothered to weigh the alleged admissions together with the other statements on record, there would be a demonstrable showing that no such "judicial admissions" were made by private respondents. (D) SINCE PETITIONER HAS NOT (YET) PROVEN ALL THE ESSENTIAL ELEMENTS TO ESTABLISH A PRIMA FACIE CASE FOR FORFEITURE, AND PRIVATE RESPONDENTS HAVE NOT MADE ANY JUDICIAL ADMISSION THAT WOULD HAVE FREED IT FROM ITS BURDEN OF PROOF, THE SANDIGANBAYAN DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN DENYING THE MOTION FOR SUMMARY JUDGMENT. CERTIORARI, THEREFORE, DOES NOT LIE, ESPECIALLY AS THIS COURT IS NOT A TRIER OF FACTS.18 For her part, Mrs. Araneta, in her comment to the petition, claims that obviously petitioner is unable to comply with a very plain requirement of respondent Sandiganbayan. The instant petition is allegedly an attempt to elevate to this Court matters, issues and incidents which should be properly threshed out at the Sandiganbayan. To respondent Mrs. Araneta, all other matters, save that pertaining to the authentication of the translated Swiss Court decisions, are irrelevant and impertinent as far as this Court is concerned. Respondent Mrs. Araneta manifests that she is as eager as respondent Sandiganbayan or any interested person to have the Swiss Court decisions officially translated in our known language. She says the authenticated official English version of the Swiss Court decisions should be presented. This should stop all speculations on what indeed is contained therein. Thus, respondent Mrs. Araneta prays that the petition be denied for lack of merit and for raising matters which, in elaborated fashion, are impertinent and improper before this Court. PROPRIETY OF PETITIONER'S ACTION FOR CERTIORARI But before this Court discusses the more relevant issues, the question regarding the propriety of petitioner Republic's action for certiorari under Rule 6519 of the 1997 Rules of Civil Procedure assailing the Sandiganbayan Resolution dated January 21, 2002 should be threshed out. At the outset, we would like to stress that we are treating this case as an exception to the general rule governing petitions for certiorari. Normally, decisions of the Sandiganbayan are brought before this Court under Rule 45, not Rule 65.20 But where the case is undeniably ingrained with immense public interest, public policy and deep historical repercussions, certiorari is allowed notwithstanding the existence and availability of the remedy of appeal.21 One of the foremost concerns of the Aquino Government in February 1986 was the recovery of the unexplained or ill-gotten wealth reputedly amassed by former President and Mrs. Ferdinand E. Marcos, their relatives, friends and business associates. Thus, the very first Executive Order (EO) issued by then President Corazon Aquino upon her assumption to office after the ouster of the Marcoses was EO No. 1, issued on February 28, 1986. It created the Presidential Commission on Good Government (PCGG) and charged it with the task of assisting the President in the "recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship." The urgency of this undertaking was tersely described by this Court inRepublic vs. Lobregat22: surely x x x an enterprise "of great pith and moment"; it was attended by "great expectations"; it was initiated not only out of considerations of simple justice but also out of sheer necessity - the national coffers were empty, or nearly so. In all the alleged ill-gotten wealth cases filed by the PCGG, this Court has seen fit to set aside technicalities and formalities that merely serve to delay or impede judicious resolution. This Court prefers to have such cases resolved on the merits at the Sandiganbayan. But substantial justice to the Filipino people and to all parties concerned, not mere legalisms or perfection of form, should now be

relentlessly and firmly pursued. Almost two decades have passed since the government initiated its search for and reversion of such ill-gotten wealth. The definitive resolution of such cases on the merits is thus long overdue. If there is proof of illegal acquisition, accumulation, misappropriation, fraud or illicit conduct, let it be brought out now. Let the ownership of these funds and other assets be finally determined and resolved with dispatch, free from all the delaying technicalities and annoying procedural sidetracks.23 We thus take cognizance of this case and settle with finality all the issues therein. ISSUES BEFORE THIS COURT The crucial issues which this Court must resolve are: (1) whether or not respondents raised any genuine issue of fact which would either justify or negate summary judgment; and (2) whether or not petitioner Republic was able to prove its case for forfeiture in accordance with Sections 2 and 3 of RA 1379. (1) THE PROPRIETY OF SUMMARY JUDGMENT We hold that respondent Marcoses failed to raise any genuine issue of fact in their pleadings. Thus, on motion of petitioner Republic, summary judgment should take place as a matter of right. In the early case of Auman vs. Estenzo24, summary judgment was described as a judgment which a court may render before trial but after both parties have pleaded. It is ordered by the court upon application by one party, supported by affidavits, depositions or other documents, with notice upon the adverse party who may in turn file an opposition supported also by affidavits, depositions or other documents. This is after the court summarily hears both parties with their respective proofs and finds that there is no genuine issue between them. Summary judgment is sanctioned in this jurisdiction by Section 1, Rule 35 of the 1997 Rules of Civil Procedure: SECTION 1. Summary judgment for claimant.- A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof.25 Summary judgment is proper when there is clearly no genuine issue as to any material fact in the action.26 The theory of summary judgment is that, although an answer may on its face appear to tender issues requiring trial, if it is demonstrated by affidavits, depositions or admissions that those issues are not genuine but sham or fictitious, the Court is justified in dispensing with the trial and rendering summary judgment for petitioner Republic. The Solicitor General made a very thorough presentation of its case for forfeiture: xxx 4. Respondent Ferdinand E. Marcos (now deceased and represented by his Estate/Heirs) was a public officer for several decades continuously and without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 31, 1965 up to his ouster by direct action of the people of EDSA on February 22-25, 1986. 5. Respondent Imelda Romualdez Marcos (Imelda, for short) the former First Lady who ruled with FM during the 14-year martial law regime, occupied the position of Minister of Human Settlements from June 1976 up to the peaceful revolution in February 22-25, 1986. She likewise served once as a member of the Interim Batasang Pambansa during the early years of martial law from 1978 to 1984 and as Metro Manila Governor in concurrent capacity as Minister of Human Settlements. x x x xxx xxx xxx

11. At the outset, however, it must be pointed out that based on the Official Report of the Minister of Budget, the total salaries of former President Marcos as President form 1966 to 1976 was P60,000 a year and from 1977 to 1985, P100,000 a year; while that of the former First Lady, Imelda R. Marcos, as Minister of Human Settlements from June 1976 to February 22-25, 1986 was P75,000 a year xxx. ANALYSIS OF RESPONDENTS LEGITIMATE INCOME

xxx 12. Based on available documents, the ITRs of the Marcoses for the years 1965-1975 were filed under Tax Identification No. 1365-055-1. For the years 1976 until 1984, the returns were filed under Tax Identification No. M 6221-J 1117-A-9. 13. The data contained in the ITRs and Balance Sheet filed by the "Marcoses are summarized and attached to the reports in the following schedules: Schedule A: Schedule of Income (Annex "T" hereof); Schedule B: Schedule of Income Tax Paid (Annex "T-1" hereof); Schedule C: Schedule of Net Disposable Income (Annex "T-2" hereof); Schedule D: Schedule of Networth Analysis (Annex "T-3" hereof). 14. As summarized in Schedule A (Annex "T" hereof), the Marcoses reported P16,408,442.00 or US$2,414,484.91 in total income over a period of 20 years from 1965 to 1984. The sources of income are as follows: Official Salaries Farm Income Others Total - P 2,627,581.00 - 16.01% - 67.71% - .91% - 15.37%

Legal Practice - 11,109,836.00 - 149,700.00 - 2,521,325.00

P16,408,442.00 - 100.00%

15. FM's official salary pertains to his compensation as Senate President in 1965 in the amount of P15,935.00 and P1,420,000.00 as President of the Philippines during the period 1966 until 1984. On the other hand, Imelda reported salaries and allowances only for the years 1979 to 1984 in the amount of P1,191,646.00. The records indicate that the reported income came from her salary from the Ministry of Human Settlements and allowances from Food Terminal, Inc., National Home Mortgage Finance Corporation, National Food Authority Council, Light Rail Transit Authority and Home Development Mutual Fund. 16. Of the P11,109,836.00 in reported income from legal practice, the amount of P10,649,836.00 or 96% represents "receivables from prior years" during the period 1967 up to 1984. 17. In the guise of reporting income using the cash method under Section 38 of the National Internal Revenue Code, FM made it appear that he had an extremely profitable legal practice before he became a President (FM being barred by law from practicing his law profession during his entire presidency) and that, incredibly, he was still receiving payments almost 20 years after. The only problem is that in his Balance Sheet attached to his 1965 ITR immediately preceeding his ascendancy to the presidency he did not show any Receivables from client at all, much less the P10,65-M that he decided to later recognize as income. There are no documents showing any withholding tax certificates. Likewise, there is nothing on record that will show any known Marcos client as he has no known law office. As previously stated, his networth was a mere P120,000.00 in December, 1965. The joint income tax returns of FM and Imelda cannot, therefore, conceal the skeletons of their kleptocracy. 18. FM reported a total of P2,521,325.00 as Other Income for the years 1972 up to 1976 which he referred to in his return as "Miscellaneous Items" and "Various Corporations." There is no indication of any payor of the dividends or earnings.

19. Spouses Ferdinand and Imelda did not declare any income from any deposits and placements which are subject to a 5% withholding tax. The Bureau of Internal Revenue attested that after a diligent search of pertinent records on file with the Records Division, they did not find any records involving the tax transactions of spouses Ferdinand and Imelda in Revenue Region No. 1, Baguio City, Revenue Region No.4A, Manila, Revenue Region No. 4B1, Quezon City and Revenue No. 8, Tacloban, Leyte. Likewise, the Office of the Revenue Collector of Batac. Further, BIR attested that no records were found on any filing of capital gains tax return involving spouses FM and Imelda covering the years 1960 to 1965. 20. In Schedule B, the taxable reported income over the twenty-year period was P14,463,595.00 which represents 88% of the gross income. The Marcoses paid income taxes totaling P8,233,296.00 or US$1,220,667.59. The business expenses in the amount of P861,748.00 represent expenses incurred for subscription, postage, stationeries and contributions while the other deductions in the amount of P567,097.00 represents interest charges, medicare fees, taxes and licenses. The total deductions in the amount of P1,994,845.00 represents 12% of the total gross income. 21. In Schedule C, the net cumulative disposable income amounts to P6,756,301.00 or US$980,709.77. This is the amount that represents that portion of the Marcoses income that is free for consumption, savings and investments. The amount is arrived at by adding back to the net income after tax the personal and additional exemptions for the years 1965-1984, as well as the tax-exempt salary of the President for the years 1966 until 1972. 22. Finally, the networth analysis in Schedule D, represents the total accumulated networth of spouses, Ferdinand and Imelda. Respondent's Balance Sheet attached to their 1965 ITR, covering the year immediately preceding their ascendancy to the presidency, indicates an ending networth of P120,000.00 which FM declared as Library and Miscellaneous assets. In computing for the networth, the income approach was utilized. Under this approach, the beginning capital is increased or decreased, as the case may be, depending upon the income earned or loss incurred. Computations establish the total networth of spouses Ferdinand and Imelda, for the years 1965 until 1984 in the total amount of US$957,487.75, assuming the income from legal practice is real and valid x x x. G. THE SECRET MARCOS DEPOSITS IN SWISS BANKS 23. The following presentation very clearly and overwhelmingly show in detail how both respondents clandestinely stashed away the country's wealth to Switzerland and hid the same under layers upon layers of foundations and other corporate entities to prevent its detection. Through their dummies/nominees, fronts or agents who formed those foundations or corporate entities, they opened and maintained numerous bank accounts. But due to the difficulty if not the impossibility of detecting and documenting all those secret accounts as well as the enormity of the deposits therein hidden, the following presentation is confined to five identified accounts groups, with balances amounting to about $356-M with a reservation for the filing of a supplemental or separate forfeiture complaint should the need arise. H. THE AZIO-VERSO-VIBUR FOUNDATION ACCOUNTS 24. On June 11, 1971, Ferdinand Marcos issued a written order to Dr. Theo Bertheau, legal counsel of Schweizeresche Kreditanstalt or SKA, also known as Swiss Credit Bank, for him to establish the AZIO Foundation. On the same date, Marcos executed a power of attorney in favor of Roberto S. Benedicto empowering him to transact business in behalf of the said foundation. Pursuant to the said Marcos mandate, AZIO Foundation was formed on June 21, 1971 in Vaduz. Walter Fessler and Ernst Scheller, also of SKA Legal Service, and Dr. Helmuth Merling from Schaan were designated as members of the Board of Trustees of the said foundation. Ferdinand Marcos was named first beneficiary and the Marcos Foundation, Inc. was second beneficiary. On November 12, 1971, FM again issued another written order naming Austrahil PTY Ltd. In Sydney, Australia, as the foundation's first and sole beneficiary. This was recorded on December 14, 1971. 25. In an undated instrument, Marcos changed the first and sole beneficiary to CHARIS FOUNDATION. This change was recorded on December 4, 1972. 26. On August 29, 1978, the AZIO FOUNDATION was renamed to VERSO FOUNDATION. The Board of Trustees remained the same. On March 11, 1981, Marcos issued a written directive to liquidated VERSO FOUNDATION and to transfer all its assets to account of FIDES TRUST COMPANY at Bank

Hofman in Zurich under the account "Reference OSER." The Board of Trustees decided to dissolve the foundation on June 25, 1981. 27. In an apparent maneuver to bury further the secret deposits beneath the thick layers of corporate entities, FM effected the establishment of VIBUR FOUNDATION on May 13, 1981 in Vaduz. Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust, were designated as members of the Board of Trustees. The account was officially opened with SKA on September 10, 1981. The beneficial owner was not made known to the bank since Fides Trust Company acted as fiduciary. However, comparison of the listing of the securities in the safe deposit register of the VERSO FOUNDATION as of February 27, 1981 with that of VIBUR FOUNDATION as of December 31, 1981 readily reveals that exactly the same securities were listed. 28. Under the foregoing circumstances, it is certain that the VIBUR FOUNDATION is the beneficial successor of VERSO FOUNDATION. 29. On March 18, 1986, the Marcos-designated Board of Trustees decided to liquidate VIBUR FOUNDATION. A notice of such liquidation was sent to the Office of the Public Register on March 21, 1986. However, the bank accounts and respective balances of the said VIBUR FOUNDATION remained with SKA. Apparently, the liquidation was an attempt by the Marcoses to transfer the foundation's funds to another account or bank but this was prevented by the timely freeze order issued by the Swiss authorities. One of the latest documents obtained by the PCGG from the Swiss authorities is a declaration signed by Dr. Ivo Beck (the trustee) stating that the beneficial owner of VIBUR FOUNDATION is Ferdinand E. Marcos. Another document signed by G. Raber of SKA shows that VIBUR FOUNDATION is owned by the "Marcos Familie" 30. As of December 31, 1989, the balance of the bank accounts of VIBUR FOUNDATION with SKA, Zurich, under the General Account No. 469857 totaled $3,597,544.00 I. XANDY-WINTROP: VALAMO-SPINUS-AVERTINA FOUNDATION ACCOUNTS CHARIS-SCOLARI-

31. This is the most intricate and complicated account group. As the Flow Chart hereof shows, two (2) groups under the foundation organized by Marcos dummies/nominees for FM's benefit, eventually joined together and became one (1) account group under the AVERTINA FOUNDATION for the benefit of both FM and Imelda. This is the biggest group from where the $50-M investment fund of the Marcoses was drawn when they bought the Central Bank's dollar-denominated treasury notes with high-yielding interests. 32. On March 20, 1968, after his second year in the presidency, Marcos opened bank accounts with SKA using an alias or pseudonym WILLIAM SAUNDERS, apparently to hide his true identity. The next day, March 21, 1968, his First Lady, Mrs. Imelda Marcos also opened her own bank accounts with the same bank using an American-sounding alias, JANE RYAN. Found among the voluminous documents in Malacaang shortly after they fled to Hawaii in haste that fateful night of February 25, 1986, were accomplished forms for "Declaration/Specimen Signatures" submitted by the Marcos couple. Under the caption "signature(s)" Ferdinand and Imelda signed their real names as well as their respective aliases underneath. These accounts were actively operated and maintained by the Marcoses for about two (2) years until their closure sometime in February, 1970 and the balances transferred to XANDY FOUNDATION. 33. The XANDY FOUNDATION was established on March 3, 1970 in Vaduz. C.W. Fessler, C. Souviron and E. Scheller were named as members of the Board of Trustees. 34. FM and Imelda issued the written mandate to establish the foundation to Markus Geel of SKA on March 3, 1970. In the handwritten Regulations signed by the Marcos couple as well as in the typewritten Regulations signed by Markus Geel both dated February 13, 1970, the Marcos spouses were named the first beneficiaries, the surviving spouse as the second beneficiary and the Marcos children Imee, Ferdinand, Jr. (Bongbong) and Irene as equal third beneficiaries. 35. The XANDY FOUNDATION was renamed WINTROP FOUNDATION on August 29, 1978. The Board of Trustees remained the same at the outset. However, on March 27, 1980, Souviron was replaced by Dr. Peter Ritter. On March 10. 1981, Ferdinand and Imelda Marcos issued a written order to the Board of Wintrop to liquidate the foundation and transfer all its assets to Bank Hofmann in Zurich in favor of FIDES TRUST COMPANY. Later, WINTROP FOUNDATION was dissolved.

36. The AVERTINA FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of FIDES TRUST CO., as members of the Board of Trustees. Two (2) account categories, namely: CAR and NES, were opened on September 10, 1981. The beneficial owner of AVERTINA was not made known to the bank since the FIDES TRUST CO. acted as fiduciary. However, the securities listed in the safe deposit register of WINTROP FOUNDATION Category R as of December 31, 1980 were the same as those listed in the register of AVERTINA FOUNDATION Category CAR as of December 31, 1981. Likewise, the securities listed in the safe deposit register of WINTROP FOUNDATION Category S as of December 31, 1980 were the same as those listed in the register of Avertina Category NES as of December 31, 1981.Under the circumstances, it is certain that the beneficial successor of WINTROP FOUNDATION is AVERTINA FOUNDATION. The balance of Category CAR as of December 31, 1989 amounted to US$231,366,894.00 while that of Category NES as of 12-31-83 was US$8,647,190.00. Latest documents received from Swiss authorities included a declaration signed by IVO Beck stating that the beneficial owners of AVERTINA FOUNDATION are FM and Imelda. Another document signed by G. Raber of SKA indicates that Avertina Foundation is owned by the "Marcos Families." 37. The other groups of foundations that eventually joined AVERTINA were also established by FM through his dummies, which started with the CHARIS FOUNDATION. 38. The CHARIS FOUNDATION was established in VADUZ on December 27, 1971. Walter Fessler and Ernst Scheller of SKA and Dr. Peter Ritter were named as directors. Dr. Theo Bertheau, SKA legal counsel, acted as founding director in behalf of FM by virtue of the mandate and agreement dated November 12, 1971. FM himself was named the first beneficiary and Xandy Foundation as second beneficiary in accordance with the handwritten instructions of FM on November 12, 1971 and the Regulations. FM gave a power of attorney to Roberto S. Benedicto on February 15, 1972 to act in his behalf with regard to Charis Foundation. 39. On December 13, 1974, Charis Foundation was renamed Scolari Foundation but the directors remained the same. On March 11, 1981 FM ordered in writing that the Valamo Foundation be liquidated and all its assets be transferred to Bank Hofmann, AG in favor of Fides Trust Company under the account "Reference OMAL". The Board of Directors decided on the immediate dissolution of Valamo Foundation on June 25, 1981. 40 The SPINUS FOUNDATION was established on May 13, 1981 in Vaduz with Atty. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co., as members of the Foundation's Board of Directors. The account was officially opened with SKA on September 10, 1981. The beneficial owner of the foundation was not made known to the bank since Fides Trust Co. acted as fiduciary. However, the list of securities in the safe deposit register of Valamo Foundation as of December 31, 1980 are practically the same with those listed in the safe deposit register of Spinus Foundation as of December 31, 1981. Under the circumstances, it is certain that the Spinus Foundation is the beneficial successor of the Valamo Foundation. 41. On September 6, 1982, there was a written instruction from Spinus Foundation to SKA to close its Swiss Franc account and transfer the balance to Avertina Foundation. In July/August, 1982, several transfers from the foundation's German marks and US dollar accounts were made to Avertina Category CAR totaling DM 29.5-M and $58-M, respectively. Moreover, a comparison of the list of securities of the Spinus Foundation as of February 3, 1982 with the safe deposit slips of the Avertina Foundation Category CAR as of August 19, 1982 shows that all the securities of Spinus were transferred to Avertina. J. TRINIDAD-RAYBY-PALMY FOUNDATION ACCOUNTS 42. The Trinidad Foundation was organized on August 26, 1970 in Vaduz with C.W. Fessler and E. Scheller of SKA and Dr. Otto Tondury as the foundation's directors. Imelda issued a written mandate to establish the foundation to Markus Geel on August 26, 1970. The regulations as well as the agreement, both dated August 28, 1970 were likewise signed by Imelda. Imelda was named the first beneficiary and her children Imelda (Imee), Ferdinand, Jr. (Bongbong) and, Irene were named as equal second beneficiaries. 43. Rayby Foundation was established on June 22, 1973 in Vaduz with Fessler, Scheller and Ritter as members of the board of directors. Imelda issued a written mandate to Dr. Theo Bertheau to establish the foundation with a note that the foundation's capitalization as well as the cost of establishing it be debited against the account of Trinidad Foundation. Imelda was named the first and only beneficiary of Rayby foundation. According to written information from SKA dated November 28, 1988, Imelda

apparently had the intention in 1973 to transfer part of the assets of Trinidad Foundation to another foundation, thus the establishment of Rayby Foundation. However, transfer of assets never took place. On March 10, 1981, Imelda issued a written order to transfer all the assets of Rayby Foundation to Trinidad Foundation and to subsequently liquidate Rayby. On the same date, she issued a written order to the board of Trinidad to dissolve the foundation and transfer all its assets to Bank Hofmann in favor of Fides Trust Co. Under the account "Reference Dido," Rayby was dissolved on April 6, 1981 and Trinidad was liquidated on August 3, 1981. 44. The PALMY FOUNDATION was established on May 13, 1981 in Vaduz with Dr. Ivo Beck and Limag Management, a wholly-owned subsidiary of Fides Trust Co, as members of the Foundation's Board of Directors. The account was officially opened with the SKA on September 10, 1981. The beneficial owner was not made known to the bank since Fides Trust Co. acted as fiduciary. However, when one compares the listing of securities in the safe deposit register of Trinidad Foundation as of December 31,1980 with that of the Palmy Foundation as of December 31, 1980, one can clearly see that practically the same securities were listed. Under the circumstances, it is certain that the Palmy Foundation is the beneficial successor of the Trinidad Foundation. 45. As of December 31, 1989, the ending balance of the bank accounts of Palmy Foundation under General Account No. 391528 is $17,214,432.00. 46. Latest documents received from Swiss Authorities included a declaration signed by Dr. Ivo Beck stating that the beneficial owner of Palmy Foundation is Imelda. Another document signed by Raber shows that the said Palmy Foundation is owned by "Marcos Familie". K. ROSALYS-AGUAMINA FOUNDATION ACCOUNTS 47. Rosalys Foundation was established in 1971 with FM as the beneficiary. Its Articles of Incorporation was executed on September 24, 1971 and its By-Laws on October 3, 1971. This foundation maintained several accounts with Swiss Bank Corporation (SBC) under the general account 51960 where most of the bribe monies from Japanese suppliers were hidden. 48. On December 19, 1985, Rosalys Foundation was liquidated and all its assets were transferred to Aguamina Corporation's (Panama) Account No. 53300 with SBC. The ownership by Aguamina Corporation of Account No. 53300 is evidenced by an opening account documents from the bank. J. Christinaz and R.L. Rossier, First Vice-President and Senior Vice President, respectively, of SBC, Geneva issued a declaration dated September 3, 1991 stating that the by-laws dated October 3, 1971 governing Rosalys Foundation was the same by-law applied to Aguamina Corporation Account No. 53300. They further confirmed that no change of beneficial owner was involved while transferring the assets of Rosalys to Aguamina. Hence, FM remains the beneficiary of Aguamina Corporation Account No. 53300. As of August 30, 1991, the ending balance of Account No. 53300 amounted to $80,566,483.00. L. MALER FOUNDATION ACCOUNTS 49. Maler was first created as an establishment. A statement of its rules and regulations was found among Malacaang documents. It stated, among others, that 50% of the Company's assets will be for sole and full right disposal of FM and Imelda during their lifetime, which the remaining 50% will be divided in equal parts among their children. Another Malacaang document dated October 19,1968 and signed by Ferdinand and Imelda pertains to the appointment of Dr. Andre Barbey and Jean Louis Sunier as attorneys of the company and as administrator and manager of all assets held by the company. The Marcos couple, also mentioned in the said document that they bought the Maler Establishment from SBC, Geneva. On the same date, FM and Imelda issued a letter addressed to Maler Establishment, stating that all instructions to be transmitted with regard to Maler will be signed with the word "JOHN LEWIS". This word will have the same value as the couple's own personal signature. The letter was signed by FM and Imelda in their signatures and as John Lewis. 50. Maler Establishment opened and maintained bank accounts with SBC, Geneva. The opening bank documents were signed by Dr. Barbey and Mr. Sunnier as authorized signatories. 51. On November 17, 1981, it became necessary to transform Maler Establishment into a foundation. Likewise, the attorneys were changed to Michael Amaudruz, et. al. However, administration of the assets was left to SBC. The articles of incorporation of Maler Foundation registered on November 17,

1981 appear to be the same articles applied to Maler Establishment. On February 28, 1984, Maler Foundation cancelled the power of attorney for the management of its assets in favor of SBC and transferred such power to Sustrust Investment Co., S.A. 52. As of June 6, 1991, the ending balance of Maler Foundation's Account Nos. 254,508 BT and 98,929 NY amount SF 9,083,567 and SG 16,195,258, respectively, for a total of SF 25,278,825.00. GM only until December 31, 1980. This account was opened by Maler when it was still an establishment which was subsequently transformed into a foundation. 53. All the five (5) group accounts in the over-all flow chart have a total balance of about Three Hundred Fifty Six Million Dollars ($356,000,000.00) as shown by Annex "R-5" hereto attached as integral part hereof. xxx x x x.27

Respondents Imelda R. Marcos, Maria Imelda M. Manotoc, Irene M. Araneta and Ferdinand Marcos, Jr., in their answer, stated the following: xxx xxx xxx

4. Respondents ADMIT paragraphs 3 and 4 of the Petition. 5. Respondents specifically deny paragraph 5 of the Petition in so far as it states that summons and other court processes may be served on Respondent Imelda R. Marcos at the stated address the truth of the matter being that Respondent Imelda R. Marcos may be served with summons and other processes at No. 10-B Bel Air Condominium 5022 P. Burgos Street, Makati, Metro Manila, and ADMIT the rest. xxx xxx xxx

10. Respondents ADMIT paragraph 11 of the Petition. 11. Respondents specifically DENY paragraph 12 of the Petition for lack of knowledge sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions and that they cannot remember exactly the truth as to the matters alleged. 12. Respondents specifically DENY paragraph 13 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and Balance Sheet. 13. Respondents specifically DENY paragraph 14 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 14. Respondents specifically DENY paragraph 15 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 15. Respondents specifically DENY paragraph 16 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 16. Respondents specifically DENY paragraph 17 of the Petition insofar as it attributes willful duplicity on the part of the late President Marcos, for being false, the same being pure conclusions based on pure assumption and not allegations of fact; and specifically DENY the rest for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs or the attachments thereto. 17. Respondents specifically DENY paragraph 18 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs.

18. Respondents specifically DENY paragraph 19 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs and that they are not privy to the activities of the BIR. 19. Respondents specifically DENY paragraph 20 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 20. Respondents specifically DENY paragraph 21 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 21. Respondents specifically DENY paragraph 22 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents cannot remember with exactitude the contents of the alleged ITRs. 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundation and corporate entities for being false, the truth being that Respondents aforesaid properties were lawfully acquired. 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since Respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36,37, 38, 39, 40, and 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents are not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 44, 45, and 46, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. 26. Respondents specifically DENY paragraphs 49, 50, 51 and 52, of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since Respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to Respondent Imelda R. Marcos she specifically remembers that the funds involved were lawfully acquired. Upon careful perusal of the foregoing, the Court finds that respondent Mrs. Marcos and the Marcos children indubitably failed to tender genuine issues in their answer to the petition for forfeiture. A genuine issue is an issue of fact which calls for the presentation of evidence as distinguished from an issue which is fictitious and contrived, set up in bad faith or patently lacking in substance so as not to constitute a genuine issue for trial. Respondents' defenses of "lack of knowledge for lack of privity" or "(inability to) recall because it happened a long time ago" or, on the part of Mrs. Marcos, that "the funds were lawfully acquired" are fully insufficient to tender genuine issues. Respondent Marcoses' defenses were a sham and evidently calibrated to compound and confuse the issues. The following pleadings filed by respondent Marcoses are replete with indications of a spurious defense: (a) Respondents' Answer dated October 18, 1993; (b) Pre-trial Brief dated October 4, 1999 of Mrs. Marcos, Supplemental Pre-trial Brief dated October 19, 1999 of Ferdinand, Jr. and Mrs. Imee Marcos-Manotoc adopting the pre-trial brief of Mrs. Marcos, and Manifestation dated October 19, 1999 of Irene Marcos-Araneta adopting the pre-trial briefs of her corespondents;

(c) Opposition to Motion for Summary Judgment dated March 21, 2000, filed by Mrs. Marcos which the other respondents (Marcos children) adopted; (d) Demurrer to Evidence dated May 2, 2000 filed by Mrs. Marcos and adopted by the Marcos children; (e) Motion for Reconsideration dated September 26, 2000 filed by Mrs. Marcos; Motion for Reconsideration dated October 5, 2000 jointly filed by Mrs. Manotoc and Ferdinand, Jr., and Supplemental Motion for Reconsideration dated October 9, 2000 likewise jointly filed by Mrs. Manotoc and Ferdinand, Jr.; (f) Memorandum dated December 12, 2000 of Mrs. Marcos and Memorandum dated December 17, 2000 of the Marcos children; (g) Manifestation dated May 26, 1998; and (h) General/Supplemental Agreement dated December 23, 1993. An examination of the foregoing pleadings is in order. Respondents' Answer dated October 18, 1993.

In their answer, respondents failed to specifically deny each and every allegation contained in the petition for forfeiture in the manner required by the rules. All they gave were stock answers like "they have no sufficient knowledge" or "they could not recall because it happened a long time ago," and, as to Mrs. Marcos, "the funds were lawfully acquired," without stating the basis of such assertions. Section 10, Rule 8 of the 1997 Rules of Civil Procedure, provides: A defendant must specify each material allegation of fact the truth of which he does not admit and, whenever practicable, shall set forth the substance of the matters upon which he relies to support his denial. Where a defendant desires to deny only a part of an averment, he shall specify so much of it as is true and material and shall deny the remainder. Where a defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment made in the complaint, he shall so state, and this shall have the effect of a denial.28 The purpose of requiring respondents to make a specific denial is to make them disclose facts which will disprove the allegations of petitioner at the trial, together with the matters they rely upon in support of such denial. Our jurisdiction adheres to this rule to avoid and prevent unnecessary expenses and waste of time by compelling both parties to lay their cards on the table, thus reducing the controversy to its true terms. As explained in Alonso vs. Villamor,29 A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is rather a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by a rapier's thrust. On the part of Mrs. Marcos, she claimed that the funds were lawfully acquired. However, she failed to particularly state the ultimate facts surrounding the lawful manner or mode of acquisition of the subject funds. Simply put, she merely stated in her answer with the other respondents that the funds were "lawfully acquired" without detailing how exactly these funds were supposedly acquired legally by them. Even in this case before us, her assertion that the funds were lawfully acquired remains bare and unaccompanied by any factual support which can prove, by the presentation of evidence at a hearing, that indeed the funds were acquired legitimately by the Marcos family. Respondents' denials in their answer at the Sandiganbayan were based on their alleged lack of knowledge or information sufficient to form a belief as to the truth of the allegations of the petition. It is true that one of the modes of specific denial under the rules is a denial through a statement that the defendant is without knowledge or information sufficient to form a belief as to the truth of the material averment in the complaint. The question, however, is whether the kind of denial in respondents' answer qualifies as the specific denial called for by the rules. We do not think so. In Morales vs. Court of Appeals,30 this Court ruled that if an allegation directly and specifically charges a party with having done, performed or committed a

particular act which the latter did not in fact do, perform or commit, a categorical and express denial must be made. Here, despite the serious and specific allegations against them, the Marcoses responded by simply saying that they had no knowledge or information sufficient to form a belief as to the truth of such allegations. Such a general, self-serving claim of ignorance of the facts alleged in the petition for forfeiture was insufficient to raise an issue. Respondent Marcoses should have positively stated how it was that they were supposedly ignorant of the facts alleged.31 To elucidate, the allegation of petitioner Republic in paragraph 23 of the petition for forfeiture stated: 23. The following presentation very clearly and overwhelmingly show in detail how both respondents clandestinely stashed away the country's wealth to Switzerland and hid the same under layers upon layers of foundations and other corporate entities to prevent its detection. Through their dummies/nominees, fronts or agents who formed those foundations or corporate entities, they opened and maintained numerous bank accounts. But due to the difficulty if not the impossibility of detecting and documenting all those secret accounts as well as the enormity of the deposits therein hidden, the following presentation is confined to five identified accounts groups, with balances amounting to about $356-M with a reservation for the filing of a supplemental or separate forfeiture complaint should the need arise.32 Respondents' lame denial of the aforesaid allegation was: 22. Respondents specifically DENY paragraph 23 insofar as it alleges that Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities for being false, the truth being that Respondents' aforesaid properties were lawfully acquired.33 Evidently, this particular denial had the earmark of what is called in the law on pleadings as a negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It was in effect an admission of the averments it was directed at.34 Stated otherwise, a negative pregnant is a form of negative expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified are literally denied, has been held that the qualifying circumstances alone are denied while the fact itself is admitted.35 In the instant case, the material allegations in paragraph 23 of the said petition were not specifically denied by respondents in paragraph 22 of their answer. The denial contained in paragraph 22 of the answer was focused on the averment in paragraph 23 of the petition for forfeiture that "Respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities." Paragraph 22 of the respondents' answer was thus a denial pregnant with admissions of the following substantial facts: (1) the Swiss bank deposits existed and (2) that the estimated sum thereof was US$356 million as of December, 1990. Therefore, the allegations in the petition for forfeiture on the existence of the Swiss bank deposits in the sum of about US$356 million, not having been specifically denied by respondents in their answer, were deemed admitted by them pursuant to Section 11, Rule 8 of the 1997 Revised Rules on Civil Procedure: Material averment in the complaint, xxx shall be deemed admitted when not specifically denied. xxx.36 By the same token, the following unsupported denials of respondents in their answer were pregnant with admissions of the substantial facts alleged in the Republic's petition for forfeiture: 23. Respondents specifically DENY paragraphs 24, 25, 26, 27, 28, 29 and 30 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegation since respondents were not privy to the transactions regarding the alleged Azio-Verso-Vibur Foundation accounts, except that, as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired.

24. Respondents specifically DENY paragraphs 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41 of the Petition for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transactions they were privy to, they cannot remember with exactitude the same having occurred a long time ago, except as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. 25. Respondents specifically DENY paragraphs 42, 43, 45, and 46 of the petition for lack of knowledge or information sufficient to from a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transaction they were privy to, they cannot remember with exactitude, the same having occurred a long time ago, except that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. 26. Respondents specifically DENY paragraphs 49, 50, 51 and 52 of the petition for lack of knowledge and information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions and as to such transaction they were privy to they cannot remember with exactitude the same having occurred a long time ago, except that as to respondent Imelda R. Marcos, she specifically remembers that the funds involved were lawfully acquired. The matters referred to in paragraphs 23 to 26 of the respondents' answer pertained to the creation of five groups of accounts as well as their respective ending balances and attached documents alleged in paragraphs 24 to 52 of the Republic's petition for forfeiture. Respondent Imelda R. Marcos never specifically denied the existence of the Swiss funds. Her claim that "the funds involved were lawfully acquired" was an acknowledgment on her part of the existence of said deposits. This only reinforced her earlier admission of the allegation in paragraph 23 of the petition for forfeiture regarding the existence of the US$356 million Swiss bank deposits. The allegations in paragraphs 4737 and 4838 of the petition for forfeiture referring to the creation and amount of the deposits of the Rosalys-Aguamina Foundation as well as the averment in paragraph 52-a39 of the said petition with respect to the sum of the Swiss bank deposits estimated to be US$356 million were again not specifically denied by respondents in their answer. The respondents did not at all respond to the issues raised in these paragraphs and the existence, nature and amount of the Swiss funds were therefore deemed admitted by them. As held in Galofa vs. Nee Bon Sing,40 if a defendant's denial is a negative pregnant, it is equivalent to an admission. Moreover, respondents' denial of the allegations in the petition for forfeiture "for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since respondents were not privy to the transactions" was just a pretense. Mrs. Marcos' privity to the transactions was in fact evident from her signatures on some of the vital documents41 attached to the petition for forfeiture which Mrs. Marcos failed to specifically deny as required by the rules.42 It is worthy to note that the pertinent documents attached to the petition for forfeiture were even signed personally by respondent Mrs. Marcos and her late husband, Ferdinand E. Marcos, indicating that said documents were within their knowledge. As correctly pointed out by Sandiganbayan Justice Francisco Villaruz, Jr. in his dissenting opinion: The pattern of: 1) creating foundations, 2) use of pseudonyms and dummies, 3) approving regulations of the Foundations for the distribution of capital and income of the Foundations to the First and Second beneficiary (who are no other than FM and his family), 4) opening of bank accounts for the Foundations, 5) changing the names of the Foundations, 6) transferring funds and assets of the Foundations to other Foundations or Fides Trust, 7) liquidation of the Foundations as substantiated by the Annexes U to U-168, Petition [for forfeiture] strongly indicate that FM and/or Imelda were the real owners of the assets deposited in the Swiss banks, using the Foundations as dummies.43 How could respondents therefore claim lack of sufficient knowledge or information regarding the existence of the Swiss bank deposits and the creation of five groups of accounts when Mrs. Marcos and her late husband personally masterminded and participated in the formation and control of said foundations? This is a fact respondent Marcoses were never able to explain. Not only that. Respondents' answer also technically admitted the genuineness and due execution of the Income Tax Returns (ITRs) and the balance sheets of the late Ferdinand E. Marcos and Imelda R. Marcos attached to the petition for forfeiture, as well as the veracity of the contents thereof.

The answer again premised its denials of said ITRs and balance sheets on the ground of lack of knowledge or information sufficient to form a belief as to the truth of the contents thereof. Petitioner correctly points out that respondents' denial was not really grounded on lack of knowledge or information sufficient to form a belief but was based on lack of recollection. By reviewing their own records, respondent Marcoses could have easily determined the genuineness and due execution of the ITRs and the balance sheets. They also had the means and opportunity of verifying the same from the records of the BIR and the Office of the President. They did not. When matters regarding which respondents claim to have no knowledge or information sufficient to form a belief are plainly and necessarily within their knowledge, their alleged ignorance or lack of information will not be considered a specific denial.44 An unexplained denial of information within the control of the pleader, or is readily accessible to him, is evasive and is insufficient to constitute an effective denial.45 The form of denial adopted by respondents must be availed of with sincerity and in good faith, and certainly not for the purpose of confusing the adverse party as to what allegations of the petition are really being challenged; nor should it be made for the purpose of delay.46 In the instant case, the Marcoses did not only present unsubstantiated assertions but in truth attempted to mislead and deceive this Court by presenting an obviously contrived defense. Simply put, a profession of ignorance about a fact which is patently and necessarily within the pleader's knowledge or means of knowing is as ineffective as no denial at all.47 Respondents' ineffective denial thus failed to properly tender an issue and the averments contained in the petition for forfeiture were deemed judicially admitted by them. As held in J.P. Juan & Sons, Inc. vs. Lianga Industries, Inc.: Its "specific denial" of the material allegation of the petition without setting forth the substance of the matters relied upon to support its general denial, when such matters were plainly within its knowledge and it could not logically pretend ignorance as to the same, therefore, failed to properly tender on issue.48 Thus, the general denial of the Marcos children of the allegations in the petition for forfeiture "for lack of knowledge or information sufficient to form a belief as to the truth of the allegations since they were not privy to the transactions" cannot rightfully be accepted as a defense because they are the legal heirs and successorsin-interest of Ferdinand E. Marcos and are therefore bound by the acts of their father vis-a-vis the Swiss funds. PRE-TRIAL BRIEF DATED OCTOBER 18, 1993

The pre-trial brief of Mrs. Marcos was adopted by the three Marcos children. In said brief, Mrs. Marcos stressed that the funds involved were lawfully acquired. But, as in their answer, they failed to state and substantiate how these funds were acquired lawfully. They failed to present and attach even a single document that would show and prove the truth of their allegations. Section 6, Rule 18 of the 1997 Rules of Civil Procedure provides: The parties shall file with the court and serve on the adverse party, x x x their respective pre-trial briefs which shall contain, among others: xxx (d) the documents or exhibits to be presented, stating the purpose thereof; xxx (f) the number and names of the witnesses, and the substance of their respective testimonies.49 It is unquestionably within the court's power to require the parties to submit their pre-trial briefs and to state the number of witnesses intended to be called to the stand, and a brief summary of the evidence each of them is expected to give as well as to disclose the number of documents to be submitted with a description of the nature of each. The tenor and character of the testimony of the witnesses and of the documents to be deduced at the trial thus made known, in addition to the particular issues of fact and law, it becomes apparent if genuine issues are being put forward necessitating the holding of a trial. Likewise, the parties are obliged not only to make a formal identification and specification of the issues and their proofs, and to put these matters in writing and submit them to the court within the specified period for the prompt disposition of the action. 50

The pre-trial brief of Mrs. Marcos, as subsequently adopted by respondent Marcos children, merely stated: xxx WITNESSES 4.1 Respondent Imelda will present herself as a witness and reserves the right to present additional witnesses as may be necessary in the course of the trial. xxx DOCUMENTARY EVIDENCE 5.1 Respondent Imelda reserves the right to present and introduce in evidence documents as may be necessary in the course of the trial. Mrs. Marcos did not enumerate and describe the documents constituting her evidence. Neither the names of witnesses nor the nature of their testimony was stated. What alone appeared certain was the testimony of Mrs. Marcos only who in fact had previously claimed ignorance and lack of knowledge. And even then, the substance of her testimony, as required by the rules, was not made known either. Such cunning tactics of respondents are totally unacceptable to this Court. We hold that, since no genuine issue was raised, the case became ripe for summary judgment. OPPOSITION TO MOTION FOR SUMMARY JUDGMENT DATED MARCH 21, 2000

The opposition filed by Mrs. Marcos to the motion for summary judgment dated March 21, 2000 of petitioner Republic was merely adopted by the Marcos children as their own opposition to the said motion. However, it was again not accompanied by affidavits, depositions or admissions as required by Section 3, Rule 35 of the 1997 Rules on Civil Procedure: x x x The adverse party may serve opposing affidavits, depositions, or admissions at least three (3) days before hearing. After hearing, the judgment sought shall be rendered forthwith if the pleadings, supporting affidavits, depositions, and admissions on file, show that, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.51 The absence of opposing affidavits, depositions and admissions to contradict the sworn declarations in the Republic's motion only demonstrated that the averments of such opposition were not genuine and therefore unworthy of belief. Demurrer to Evidence dated May 2, 2000;52 Motions for Reconsideration;53 and Memoranda of Mrs. Marcos and the Marcos children54

All these pleadings again contained no allegations of facts showing their lawful acquisition of the funds. Once more, respondents merely made general denials without alleging facts which would have been admissible in evidence at the hearing, thereby failing to raise genuine issues of fact. Mrs. Marcos insists in her memorandum dated October 21, 2002 that, during the pre-trial, her counsel stated that his client was just a beneficiary of the funds, contrary to petitioner Republic's allegation that Mrs. Marcos disclaimed ownership of or interest in the funds. This is yet another indication that respondents presented a fictitious defense because, during the pre-trial, Mrs. Marcos and the Marcos children denied ownership of or interest in the Swiss funds: PJ Garchitorena: Make of record that as far as Imelda Marcos is concerned through the statement of Atty. Armando M. Marcelo that the US$360 million more or less subject matter of the instant lawsuit as allegedly obtained from the various Swiss Foundations do not belong to the estate of Marcos or to Imelda Marcos herself. That's your statement of facts?

Atty. MARCELO: Yes, Your Honor. PJ Garchitorena: That's it. Okay. Counsel for Manotoc and Manotoc, Jr. What is your point here? Does the estate of Marcos own anything of the $360 million subject of this case. Atty. TECSON: We joined the Manifestation of Counsel. PJ Garchitorena: You do not own anything? Atty. TECSON: Yes, Your Honor. PJ Garchitorena: Counsel for Irene Araneta? Atty. SISON: I join the position taken by my other compaeros here, Your Honor. xxx Atty. SISON: Irene Araneta as heir do (sic) not own any of the amount, Your Honor.55 We are convinced that the strategy of respondent Marcoses was to confuse petitioner Republic as to what facts they would prove or what issues they intended to pose for the court's resolution. There is no doubt in our mind that they were leading petitioner Republic, and now this Court, to perplexity, if not trying to drag this forfeiture case to eternity. Manifestation dated May 26, 1998 filed by MRS. Marcos; General/Supplemental Compromise Agreement dated December 28, 1993

These pleadings of respondent Marcoses presented nothing but feigned defenses. In their earlier pleadings, respondents alleged either that they had no knowledge of the existence of the Swiss deposits or that they could no longer remember anything as it happened a long time ago. As to Mrs. Marcos, she remembered that it was lawfully acquired. In her Manifestation dated May 26, 1998, Mrs. Marcos stated that: COMES NOW undersigned counsel for respondent Imelda R. Marcos, and before this Honorable Court, most respectfully manifests: That respondent Imelda R, Marcos owns 90% of the subject matter of the above-entitled case, being the sole beneficiary of the dollar deposits in the name of the various foundations alleged in the case; That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of the late President Ferdinand E. Marcos.

In the Compromise/Supplemental Agreements, respondent Marcoses sought to implement the agreed distribution of the Marcos assets, including the Swiss deposits. This was, to us, an unequivocal admission of ownership by the Marcoses of the said deposits. But, as already pointed out, during the pre-trial conference, respondent Marcoses denied knowledge as well as ownership of the Swiss funds. Anyway we look at it, respondent Marcoses have put forth no real defense. The "facts" pleaded by respondents, while ostensibly raising important questions or issues of fact, in reality comprised mere verbiage that was evidently wanting in substance and constituted no genuine issues for trial. We therefore rule that, under the circumstances, summary judgment is proper. In fact, it is the law itself which determines when summary judgment is called for. Under the rules, summary judgment is appropriate when there are no genuine issues of fact requiring the presentation of evidence in a full-blown trial. Even if on their face the pleadings appear to raise issue, if the affidavits, depositions and admissions show that such issues are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law.56 In sum, mere denials, if unaccompanied by any fact which will be admissible in evidence at a hearing, are not sufficient to raise genuine issues of fact and will not defeat a motion for summary judgment. 57 A summary judgment is one granted upon motion of a party for an expeditious settlement of the case, it appearing from the pleadings, depositions, admissions and affidavits that there are no important questions or issues of fact posed and, therefore, the movant is entitled to a judgment as a matter of law. A motion for summary judgment is premised on the assumption that the issues presented need not be tried either because these are patently devoid of substance or that there is no genuine issue as to any pertinent fact. It is a method sanctioned by the Rules of Court for the prompt disposition of a civil action where there exists no serious controversy.58 Summary judgment is a procedural device for the prompt disposition of actions in which the pleadings raise only a legal issue, not a genuine issue as to any material fact. The theory of summary judgment is that, although an answer may on its face appear to tender issues requiring trial, if it is established by affidavits, depositions or admissions that those issues are not genuine but fictitious, the Court is justified in dispensing with the trial and rendering summary judgment for petitioner.59 In the various annexes to the petition for forfeiture, petitioner Republic attached sworn statements of witnesses who had personal knowledge of the Marcoses' participation in the illegal acquisition of funds deposited in the Swiss accounts under the names of five groups or foundations. These sworn statements substantiated the illgotten nature of the Swiss bank deposits. In their answer and other subsequent pleadings, however, the Marcoses merely made general denials of the allegations against them without stating facts admissible in evidence at the hearing, thereby failing to raise any genuine issues of fact. Under these circumstances, a trial would have served no purpose at all and would have been totally unnecessary, thus justifying a summary judgment on the petition for forfeiture. There were no opposing affidavits to contradict the sworn declarations of the witnesses of petitioner Republic, leading to the inescapable conclusion that the matters raised in the Marcoses' answer were false. Time and again, this Court has encountered cases like this which are either only half-heartedly defended or, if the semblance of a defense is interposed at all, it is only to delay disposition and gain time. It is certainly not in the interest of justice to allow respondent Marcoses to avail of the appellate remedies accorded by the Rules of Court to litigants in good faith, to the prejudice of the Republic and ultimately of the Filipino people. From the beginning, a candid demonstration of respondents' good faith should have been made to the court below. Without the deceptive reasoning and argumentation, this protracted litigation could have ended a long time ago. Since 1991, when the petition for forfeiture was first filed, up to the present, all respondents have offered are foxy responses like "lack of sufficient knowledge or lack of privity" or "they cannot recall because it happened a long time ago" or, as to Mrs. Marcos, "the funds were lawfully acquired." But, whenever it suits them, they also claim ownership of 90% of the funds and allege that only 10% belongs to the Marcos estate. It has been an incredible charade from beginning to end. In the hope of convincing this Court to rule otherwise, respondents Maria Imelda Marcos-Manotoc and Ferdinand R. Marcos Jr. contend that "by its positive acts and express admissions prior to filing the motion for summary judgment on March 10, 2000, petitioner Republic had bound itself to go to trial on the basis of existing issues. Thus, it had legally waived whatever right it had to move for summary judgment." 60

We do not think so. The alleged positive acts and express admissions of the petitioner did not preclude it from filing a motion for summary judgment. Rule 35 of the 1997 Rules of Civil Procedure provides: Rule 35 Summary Judgment Section 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof. Section 2. Summary judgment for defending party. - A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits, depositions or admissions for a summary judgment in his favor as to all or any part thereof. (Emphasis ours)61 Under the rule, the plaintiff can move for summary judgment "at any time after the pleading in answer thereto (i.e., in answer to the claim, counterclaim or cross-claim) has been served." No fixed reglementary period is provided by the Rules. How else does one construe the phrase "any time after the answer has been served?" This issue is actually one of first impression. No local jurisprudence or authoritative work has touched upon this matter. This being so, an examination of foreign laws and jurisprudence, particularly those of the United States where many of our laws and rules were copied, is in order. Rule 56 of the Federal Rules of Civil Procedure provides that a party seeking to recover upon a claim, counterclaim or cross-claim may move for summary judgment at any time after the expiration of 20 days from the commencement of the action or after service of a motion for summary judgment by the adverse party, and that a party against whom a claim, counterclaim or cross-claim is asserted may move for summary judgment at any time. However, some rules, particularly Rule 113 of the Rules of Civil Practice of New York, specifically provide that a motion for summary judgment may not be made until issues have been joined, that is, only after an answer has been served.62 Under said rule, after issues have been joined, the motion for summary judgment may be made at any stage of the litigation.63 No fixed prescriptive period is provided. Like Rule 113 of the Rules of Civil Practice of New York, our rules also provide that a motion for summary judgment may not be made until issues have been joined, meaning, the plaintiff has to wait for the answer before he can move for summary judgment.64 And like the New York rules, ours do not provide for a fixed reglementary period within which to move for summary judgment. This being so, the New York Supreme Court's interpretation of Rule 113 of the Rules of Civil Practice can be applied by analogy to the interpretation of Section 1, Rule 35, of our 1997 Rules of Civil Procedure. Under the New York rule, after the issues have been joined, the motion for summary judgment may be made at any stage of the litigation. And what exactly does the phrase "at any stage of the litigation" mean? In Ecker vs. Muzysh,65 the New York Supreme Court ruled: "PER CURIAM. Plaintiff introduced her evidence and the defendants rested on the case made by the plaintiff. The case was submitted. Owing to the serious illness of the trial justice, a decision was not rendered within sixty days after the final adjournment of the term at which the case was tried. With the approval of the trial justice, the plaintiff moved for a new trial under Section 442 of the Civil Practice Act. The plaintiff also moved for summary judgment under Rule 113 of the Rules of Civil Practice. The motion was opposed mainly on the ground that, by proceeding to trial, the plaintiff had waived her right to summary judgment and that the answer and the opposing affidavits raised triable issues. The amount due and unpaid under the contract is not in dispute. The Special Term granted both motions and the defendants have appealed.

The Special Term properly held that the answer and the opposing affidavits raised no triable issue. Rule 113 of the Rules of Civil Practice and the Civil Practice Act prescribe no limitation as to the time when a motion for summary judgment must be made. The object of Rule 113 is to empower the court to summarily determine whether or not a bona fide issue exists between the parties, and there is no limitation on the power of the court to make such a determination at any stage of the litigation." (emphasis ours) On the basis of the aforequoted disquisition, "any stage of the litigation" means that "even if the plaintiff has proceeded to trial, this does not preclude him from thereafter moving for summary judgment." 66 In the case at bar, petitioner moved for summary judgment after pre-trial and before its scheduled date for presentation of evidence. Respondent Marcoses argue that, by agreeing to proceed to trial during the pre-trial conference, petitioner "waived" its right to summary judgment. This argument must fail in the light of the New York Supreme Court ruling which we apply by analogy to this case. In Ecker,67 the defendant opposed the motion for summary judgment on a ground similar to that raised by the Marcoses, that is, "that plaintiff had waived her right to summary judgment" by her act of proceeding to trial. If, as correctly ruled by the New York court, plaintiff was allowed to move for summary judgment even after trial and submission of the case for resolution, more so should we permit it in the present case where petitioner moved for summary judgment before trial. Therefore, the phrase "anytime after the pleading in answer thereto has been served" in Section 1, Rule 35 of our Rules of Civil Procedure means "at any stage of the litigation." Whenever it becomes evident at any stage of the litigation that no triable issue exists, or that the defenses raised by the defendant(s) are sham or frivolous, plaintiff may move for summary judgment. A contrary interpretation would go against the very objective of the Rule on Summary Judgment which is to "weed out sham claims or defenses thereby avoiding the expense and loss of time involved in a trial."68 In cases with political undertones like the one at bar, adverse parties will often do almost anything to delay the proceedings in the hope that a future administration sympathetic to them might be able to influence the outcome of the case in their favor. This is rank injustice we cannot tolerate. The law looks with disfavor on long, protracted and expensive litigation and encourages the speedy and prompt disposition of cases. That is why the law and the rules provide for a number of devices to ensure the speedy disposition of cases. Summary judgment is one of them. Faithful therefore to the spirit of the law on summary judgment which seeks to avoid unnecessary expense and loss of time in a trial, we hereby rule that petitioner Republic could validly move for summary judgment any time after the respondents' answer was filed or, for that matter, at any subsequent stage of the litigation. The fact that petitioner agreed to proceed to trial did not in any way prevent it from moving for summary judgment, as indeed no genuine issue of fact was ever validly raised by respondent Marcoses. This interpretation conforms with the guiding principle enshrined in Section 6, Rule 1 of the 1997 Rules of Civil Procedure that the "[r]ules should be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every action and proceeding."69 Respondents further allege that the motion for summary judgment was based on respondents' answer and other documents that had long been in the records of the case. Thus, by the time the motion was filed on March 10, 2000, estoppel by laches had already set in against petitioner. We disagree. Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it.70 In effect, therefore, the principle of laches is one of estoppel because "it prevents people who have slept on their rights from prejudicing the rights of third parties who have placed reliance on the inaction of the original parties and their successors-in-interest".71 A careful examination of the records, however, reveals that petitioner was in fact never remiss in pursuing its case against respondent Marcoses through every remedy available to it, including the motion for summary judgment. Petitioner Republic initially filed its motion for summary judgment on October 18, 1996. The motion was denied because of the pending compromise agreement between the Marcoses and petitioner. But during the pre-trial conference, the Marcoses denied ownership of the Swiss funds, prompting petitioner to file another motion for

summary judgment now under consideration by this Court. It was the subsequent events that transpired after the answer was filed, therefore, which prevented petitioner from filing the questioned motion. It was definitely not because of neglect or inaction that petitioner filed the (second) motion for summary judgment years after respondents' answer to the petition for forfeiture. In invoking the doctrine of estoppel by laches, respondents must show not only unjustified inaction but also that some unfair injury to them might result unless the action is barred.72 This, respondents failed to bear out. In fact, during the pre-trial conference, the Marcoses disclaimed ownership of the Swiss deposits. Not being the owners, as they claimed, respondents did not have any vested right or interest which could be adversely affected by petitioner's alleged inaction. But even assuming for the sake of argument that laches had already set in, the doctrine of estoppel or laches does not apply when the government sues as a sovereign or asserts governmental rights. 73 Nor can estoppel validate an act that contravenes law or public policy.74 As a final point, it must be emphasized that laches is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted. 75 Equity demands that petitioner Republic should not be barred from pursuing the people's case against the Marcoses. (2) The Propriety of Forfeiture The matter of summary judgment having been thus settled, the issue of whether or not petitioner Republic was able to prove its case for forfeiture in accordance with the requisites of Sections 2 and 3 of RA 1379 now takes center stage. The law raises the prima facie presumption that a property is unlawfully acquired, hence subject to forfeiture, if its amount or value is manifestly disproportionate to the official salary and other lawful income of the public officer who owns it. Hence, Sections 2 and 6 of RA 137976 provide: xxx xxx

Section 2. Filing of petition. Whenever any public officer or employee has acquired during his incumbency an amount or property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. xxx xxx

Sec. 6. Judgment If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property in question, forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become the property of the State.Provided, That no judgment shall be rendered within six months before any general election or within three months before any special election. The Court may, in addition, refer this case to the corresponding Executive Department for administrative or criminal action, or both. From the above-quoted provisions of the law, the following facts must be established in order that forfeiture or seizure of the Swiss deposits may be effected: (1) ownership by the public officer of money or property acquired during his incumbency, whether it be in his name or otherwise, and (2) the extent to which the amount of that money or property exceeds, i. e., is grossly disproportionate to, the legitimate income of the public officer. That spouses Ferdinand and Imelda Marcos were public officials during the time material to the instant case was never in dispute. Paragraph 4 of respondent Marcoses' answer categorically admitted the allegations in paragraph 4 of the petition for forfeiture as to the personal circumstances of Ferdinand E. Marcos as a public official who served without interruption as Congressman, Senator, Senate President and President of the Republic of the Philippines from December 1, 1965 to February 25, 1986.77 Likewise, respondents admitted in their answer the contents of paragraph 5 of the petition as to the personal circumstances of Imelda R. Marcos who once served as a member of the Interim Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor, concurrently Minister of Human Settlements, from June 1976 to February 1986.78

Respondent Mrs. Marcos also admitted in paragraph 10 of her answer the allegations of paragraph 11 of the petition for forfeiture which referred to the accumulated salaries of respondents Ferdinand E. Marcos and Imelda R. Marcos.79 The combined accumulated salaries of the Marcos couple were reflected in the Certification dated May 27, 1986 issued by then Minister of Budget and Management Alberto Romulo. 80 The Certification showed that, from 1966 to 1985, Ferdinand E. Marcos and Imelda R. Marcos had accumulated salaries in the amount of P1,570,000 and P718,750, respectively, or a total of P2,288,750: Ferdinand E. Marcos, as President 1966-1976 1977-1984 1985 at P60,000/year P660,000 at P100,000/year at P110,000/year 800,000 110,000 P1,570,00 Imelda R. Marcos, as Minister June 1976-1985 at P75,000/year P718,000 In addition to their accumulated salaries from 1966 to 1985 are the Marcos couple's combined salaries from January to February 1986 in the amount of P30,833.33. Hence, their total accumulated salaries amounted to P2,319,583.33. Converted to U.S. dollars on the basis of the corresponding peso-dollar exchange rates prevailing during the applicable period when said salaries were received, the total amount had an equivalent value of $304,372.43. The dollar equivalent was arrived at by using the official annual rates of exchange of the Philippine peso and the US dollar from 1965 to 1985 as well as the official monthly rates of exchange in January and February 1986 issued by the Center for Statistical Information of the Bangko Sentral ng Pilipinas. Prescinding from the aforesaid admissions, Section 4, Rule 129 of the Rules of Court provides that: Section 4. Judicial admissions An admission, verbal or written, made by a party in the course of the proceedings in the same case does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.81 It is settled that judicial admissions may be made: (a) in the pleadings filed by the parties; (b) in the course of the trial either by verbal or written manifestations or stipulations; or (c) in other stages of judicial proceedings, as in the pre-trial of the case.82 Thus, facts pleaded in the petition and answer, as in the case at bar, are deemed admissions of petitioner and respondents, respectively, who are not permitted to contradict them or subsequently take a position contrary to or inconsistent with such admissions.83 The sum of $304,372.43 should be held as the only known lawful income of respondents since they did not file any Statement of Assets and Liabilities (SAL), as required by law, from which their net worth could be determined. Besides, under the 1935 Constitution, Ferdinand E. Marcos as President could not receive "any other emolument from the Government or any of its subdivisions and instrumentalities". 84 Likewise, under the 1973 Constitution, Ferdinand E. Marcos as President could "not receive during his tenure any other emolument from the Government or any other source."85 In fact, his management of businesses, like the administration of foundations to accumulate funds, was expressly prohibited under the 1973 Constitution: Article VII, Sec. 4(2) The President and the Vice-President shall not, during their tenure, hold any other office except when otherwise provided in this Constitution, nor may they practice any profession, participate directly or indirectly in the management of any business, or be financially interested directly or indirectly in any contract with, or in any franchise or special privilege granted by the Government or any other subdivision, agency, or instrumentality thereof, including any government owned or controlled corporation. Article VII, Sec. 11 No Member of the National Assembly shall appear as counsel before any court inferior to a court with appellate jurisdiction, x x x. Neither shall he, directly or indirectly, be interested financially in any contract with, or in any franchise or special privilege granted by the Government, or any subdivision, agency, or instrumentality thereof including any government owned or controlled

corporation during his term of office. He shall not intervene in any matter before any office of the government for his pecuniary benefit. Article IX, Sec. 7 The Prime Minister and Members of the Cabinet shall be subject to the provision of Section 11, Article VIII hereof and may not appear as counsel before any court or administrative body, or manage any business, or practice any profession, and shall also be subject to such other disqualification as may be provided by law. Their only known lawful income of $304,372.43 can therefore legally and fairly serve as basis for determining the existence of a prima facie case of forfeiture of the Swiss funds. Respondents argue that petitioner was not able to establish a prima facie case for the forfeiture of the Swiss funds since it failed to prove the essential elements under Section 3, paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal statute, its provisions are mandatory and should thus be construed strictly against the petitioner and liberally in favor of respondent Marcoses. We hold that it was not for petitioner to establish the Marcoses' other lawful income or income from legitimately acquired property for the presumption to apply because, as between petitioner and respondents, the latter were in a better position to know if there were such other sources of lawful income. And if indeed there was such other lawful income, respondents should have specifically stated the same in their answer. Insofar as petitioner Republic was concerned, it was enough to specify the known lawful income of respondents. Section 9 of the PCGG Rules and Regulations provides that, in determining prima facie evidence of ill-gotten wealth, the value of the accumulated assets, properties and other material possessions of those covered by Executive Order Nos. 1 and 2 must be out of proportion to the known lawful income of such persons. The respondent Marcos couple did not file any Statement of Assets and Liabilities (SAL) from which their net worth could be determined. Their failure to file their SAL was in itself a violation of law and to allow them to successfully assail the Republic for not presenting their SAL would reward them for their violation of the law. Further, contrary to the claim of respondents, the admissions made by them in their various pleadings and documents were valid. It is of record that respondents judicially admitted that the money deposited with the Swiss banks belonged to them. We agree with petitioner that respondent Marcoses made judicial admissions of their ownership of the subject Swiss bank deposits in their answer, the General/Supplemental Agreements, Mrs. Marcos' Manifestation and Constancia dated May 5, 1999, and the Undertaking dated February 10, 1999. We take note of the fact that the Associate Justices of the Sandiganbayan were unanimous in holding that respondents had made judicial admissions of their ownership of the Swiss funds. In their answer, aside from admitting the existence of the subject funds, admitted ownershipthereof. Paragraph 22 of respondents' answer stated: respondents likewise

22. Respondents specifically DENY PARAGRAPH 23 insofar as it alleges that respondents clandestinely stashed the country's wealth in Switzerland and hid the same under layers and layers of foundations and corporate entities for being false, the truth being that respondents' aforesaid properties were lawfully acquired. (emphasis supplied) By qualifying their acquisition of the Swiss bank deposits as lawful, respondents unwittingly admitted their ownership thereof. Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits by failing to deny under oath the genuineness and due execution of certain actionable documents bearing her signature attached to the petition. As discussed earlier, Section 11, Rule 886 of the 1997 Rules of Civil Procedure provides that material averments in the complaint shall be deemed admitted when not specifically denied. The General87 and Supplemental88 Agreements executed by petitioner and respondents on December 28, 1993 further bolstered the claim of petitioner Republic that its case for forfeiture was proven in accordance with the requisites of Sections 2 and 3 of RA 1379. The whereas clause in the General Agreement declared that: WHEREAS, the FIRST PARTY has obtained a judgment from the Swiss Federal Tribunal on December 21, 1990, that the $356 million belongs in principle to the Republic of the Philippines provided certain conditionalities are met, but even after 7 years, the FIRST PARTY has not been able to procure a final judgment of conviction against the PRIVATE PARTY.

While the Supplemental Agreement warranted, inter alia, that: In consideration of the foregoing, the parties hereby agree that the PRIVATE PARTY shall be entitled to the equivalent of 25% of the amount that may be eventually withdrawn from said $356 million Swiss deposits. The stipulations set forth in the General and Supplemental Agreements undeniably indicated the manifest intent of respondents to enter into a compromise with petitioner. Corollarily, respondents' willingness to agree to an amicable settlement with the Republic only affirmed their ownership of the Swiss deposits for the simple reason that no person would acquiesce to any concession over such huge dollar deposits if he did not in fact own them. Respondents make much capital of the pronouncement by this Court that the General and Supplemental Agreements were null and void.89 They insist that nothing in those agreements could thus be admitted in evidence against them because they stood on the same ground as an accepted offer which, under Section 27, Rule 13090of the 1997 Rules of Civil Procedure, provides that "in civil cases, an offer of compromise is not an admission of any liability and is not admissible in evidence against the offeror." We find no merit in this contention. The declaration of nullity of said agreements was premised on the following constitutional and statutory infirmities: (1) the grant of criminal immunity to the Marcos heirs was against the law; (2) the PCGG's commitment to exempt from all forms of taxes the properties to be retained by the Marcos heirs was against the Constitution; and (3) the government's undertaking to cause the dismissal of all cases filed against the Marcoses pending before the Sandiganbayan and other courts encroached on the powers of the judiciary. The reasons relied upon by the Court never in the least bit even touched on the veracity and truthfulness of respondents' admission with respect to their ownership of the Swiss funds. Besides, having made certain admissions in those agreements, respondents cannot now deny that they voluntarily admitted owning the subject Swiss funds, notwithstanding the fact that the agreements themselves were later declared null and void. The following observation of Sandiganbayan Justice Catalino Castaeda, Jr. in the decision dated September 19, 2000 could not have been better said: x x x The declaration of nullity of the two agreements rendered the same without legal effects but it did not detract from the admissions of the respondents contained therein. Otherwise stated, the admissions made in said agreements, as quoted above, remain binding on the respondents.91 A written statement is nonetheless competent as an admission even if it is contained in a document which is not itself effective for the purpose for which it is made, either by reason of illegality, or incompetency of a party thereto, or by reason of not being signed, executed or delivered. Accordingly, contracts have been held as competent evidence of admissions, although they may be unenforceable.92 The testimony of respondent Ferdinand Marcos, Jr. during the hearing on the motion for the approval of the Compromise Agreement on April 29, 1998 also lent credence to the allegations of petitioner Republic that respondents admitted ownership of the Swiss bank accounts. We quote the salient portions of Ferdinand Jr.'s formal declarations in open court: ATTY. FERNANDO: Mr. Marcos, did you ever have any meetings with PCGG Chairman Magtanggol C. Gunigundo? F. MARCOS, JR.: Yes. I have had very many meetings in fact with Chairman. ATTY. FERNANDO: Would you recall when the first meeting occurred? PJ GARCHITORENA: In connection with what? ATTY. FERNANDO:

In connection with the ongoing talks to compromise the various cases initiated by PCGG against your family? F. MARCOS, JR.: The nature of our meetings was solely concerned with negotiations towards achieving some kind of agreement between the Philippine government and the Marcos family. The discussions that led up to the compromise agreement were initiated by our then counsel Atty. Simeon Mesina x x x.93 xxx xxx xxx

ATTY. FERNANDO: What was your reaction when Atty. Mesina informed you of this possibility? F. MARCOS, JR.: My reaction to all of these approaches is that I am always open, we are always open, we are very much always in search of resolution to the problem of the family and any approach that has been made us, we have entertained. And so my reaction was the same as what I have always why not? Maybe this is the one that will finally put an end to this problem. 94 xxx xxx xxx

ATTY. FERNANDO: Basically, what were the true amounts of the assets in the bank? PJ GARCHITORENA: So, we are talking about liquid assets here? Just Cash? F. MARCOS, JR.: Well, basically, any assets. Anything that was under the Marcos name in any of the banks in Switzerland which may necessarily be not cash.95 xxx xxx xxx

PJ GARCHITORENA: x x x What did you do in other words, after being apprised of this contract in connection herewith? F. MARCOS, JR.: I assumed that we are beginning to implement the agreement because this was forwarded through the Philippine government lawyers through our lawyers and then, subsequently, to me. I was a little surprised because we hadn't really discussed the details of the transfer of the funds, what the bank accounts, what the mechanism would be. But nevertheless, I was happy to see that as far as the PCGG is concerned, that the agreement was perfected and that we were beginning to implement it and that was a source of satisfaction to me because I thought that finally it will be the end.96 Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were a confirmation of respondents' recognition of their ownership of the Swiss bank deposits. Admissions of a party in his testimony are receivable against him. If a party, as a witness, deliberately concedes a fact, such concession has the force of a judicial admission.97 It is apparent from Ferdinand Jr.'s testimony that the Marcos family agreed to negotiate with the Philippine government in the hope of finally putting an end to the problems besetting the Marcos family regarding the Swiss accounts. This was doubtlessly an acknowledgment of ownership on their part. The rule is

that the testimony on the witness stand partakes of the nature of a formal judicial admission when a party testifies clearly and unequivocally to a fact which is peculiarly within his own knowledge.98 In her Manifestation99 dated May 26, 1998, respondent Imelda Marcos furthermore revealed the following: That respondent Imelda R. Marcos owns 90% of the subject matter of the above-entitled case, being the sole beneficiary of the dollar deposits in the name of the various foundations alleged in the case; That in fact only 10% of the subject matter in the above-entitled case belongs to the estate of the late President Ferdinand E. Marcos; xxx xxx xxx

Respondents' ownership of the Swiss bank accounts as borne out by Mrs. Marcos' manifestation is as bright as sunlight. And her claim that she is merely a beneficiary of the Swiss deposits is belied by her own signatures on the appended copies of the documents substantiating her ownership of the funds in the name of the foundations. As already mentioned, she failed to specifically deny under oath the authenticity of such documents, especially those involving "William Saunders" and "Jane Ryan" which actually referred to Ferdinand Marcos and Imelda Marcos, respectively. That failure of Imelda Marcos to specifically deny the existence, much less the genuineness and due execution, of the instruments bearing her signature, was tantamount to a judicial admission of the genuineness and due execution of said instruments, in accordance with Section 8, Rule 8100 of the 1997 Rules of Civil Procedure. Likewise, in her Constancia101 dated May 6, 1999, Imelda Marcos prayed for the approval of the Compromise Agreement and the subsequent release and transfer of the $150 million to the rightful owner. She further made the following manifestations: xxx xxx xxx

2. The Republic's cause of action over the full amount is its forfeiture in favor of the government if found to be ill-gotten. On the other hand, the Marcoses defend that it is a legitimate asset. Therefore, both parties have an inchoate right of ownership over the account. If it turns out that the account is of lawful origin, the Republic may yield to the Marcoses. Conversely, the Marcoses must yield to the Republic. (underscoring supplied) xxx xxx xxx

3. Consistent with the foregoing, and the Marcoses having committed themselves to helping the less fortunate, in the interest of peace, reconciliation and unity, defendant MADAM IMELDA ROMUALDEZ MARCOS, in firm abidance thereby, hereby affirms her agreement with the Republic for the release and transfer of the US Dollar 150 million for proper disposition, without prejudice to the final outcome of the litigation respecting the ownership of the remainder. Again, the above statements were indicative of Imelda's admission of the Marcoses' ownership of the Swiss deposits as in fact "the Marcoses defend that it (Swiss deposits) is a legitimate (Marcos) asset." On the other hand, respondents Maria Imelda Marcos-Manotoc, Ferdinand Marcos, Jr. and Maria Irene Marcos-Araneta filed a motion102 on May 4, 1998 asking the Sandiganbayan to place the res (Swiss deposits) in custodia legis: 7. Indeed, the prevailing situation is fraught with danger! Unless the aforesaid Swiss deposits are placed in custodia legis or within the Court's protective mantle, its dissipation or misappropriation by the petitioner looms as a distinct possibility. Such display of deep, personal interest can only come from someone who believes that he has a marked and intimate right over the considerable dollar deposits. Truly, by filing said motion, the Marcos children revealed their ownership of the said deposits. Lastly, the Undertaking103 entered into by the PCGG, the PNB and the Marcos foundations on February 10, 1999, confirmed the Marcoses' ownership of the Swiss bank deposits. The subject Undertaking brought to light their readiness to pay the human rights victims out of the funds held in escrow in the PNB. It stated:

WHEREAS, the Republic of the Philippines sympathizes with the plight of the human rights victimsplaintiffs in the aforementioned litigation through the Second Party, desires to assist in the satisfaction of the judgment awards of said human rights victims-plaintiffs, by releasing, assigning and or waiving US$150 million of the funds held in escrow under the Escrow Agreements dated August 14, 1995, although the Republic is not obligated to do so under final judgments of the Swiss courts dated December 10 and 19, 1997, and January 8, 1998; WHEREAS, the Third Party is likewise willing to release, assign and/or waive all its rights and interests over said US$150 million to the aforementioned human rights victims-plaintiffs. All told, the foregoing disquisition negates the claim of respondents that "petitioner failed to prove that they acquired or own the Swiss funds" and that "it was only by arbitrarily isolating and taking certain statements made by private respondents out of context that petitioner was able to treat these as judicial admissions." The Court is fully aware of the relevance, materiality and implications of every pleading and document submitted in this case. This Court carefully scrutinized the proofs presented by the parties. We analyzed, assessed and weighed them to ascertain if each piece of evidence rightfully qualified as an admission. Owing to the farreaching historical and political implications of this case, we considered and examined, individually and totally, the evidence of the parties, even if it might have bordered on factual adjudication which, by authority of the rules and jurisprudence, is not usually done by this Court. There is no doubt in our mind that respondent Marcoses admitted ownership of the Swiss bank deposits. We have always adhered to the familiar doctrine that an admission made in the pleadings cannot be controverted by the party making such admission and becomes conclusive on him, and that all proofs submitted by him contrary thereto or inconsistent therewith should be ignored, whether an objection is interposed by the adverse party or not.104 This doctrine is embodied in Section 4, Rule 129 of the Rules of Court: SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made.105 In the absence of a compelling reason to the contrary, respondents' judicial admission of ownership of the Swiss deposits is definitely binding on them. The individual and separate admissions of each respondent bind all of them pursuant to Sections 29 and 31, Rule 130 of the Rules of Court: SEC. 29. Admission by co-partner or agent. The act or declaration of a partner or agent of the party within the scope of his authority and during the existence of the partnership or agency, may be given in evidence against such party after the partnership or agency is shown by evidence other than such act or declaration. The same rule applies to the act or declaration of a joint owner, joint debtor, or other person jointly interested with the party.106 SEC. 31. Admission by privies. Where one derives title to property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former.107 The declarations of a person are admissible against a party whenever a "privity of estate" exists between the declarant and the party, the term "privity of estate" generally denoting a succession in rights. 108 Consequently, an admission of one in privity with a party to the record is competent.109 Without doubt, privity exists among the respondents in this case. And where several co-parties to the record are jointly interested in the subject matter of the controversy, the admission of one is competent against all.110 Respondents insist that the Sandiganbayan is correct in ruling that petitioner Republic has failed to establish aprima facie case for the forfeiture of the Swiss deposits. We disagree. The sudden turn-around of the Sandiganbayan was really strange, to say the least, as its findings and conclusions were not borne out by the voluminous records of this case. Section 2 of RA 1379 explicitly states that "whenever any public officer or employee has acquired during his incumbency an amount of property which is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property, said property shall be presumed prima facie to have been unlawfully acquired. x x x"

The elements which must concur for this prima facie presumption to apply are: (1) the offender is a public officer or employee; (2) he must have acquired a considerable amount of money or property during his incumbency; and (3) said amount is manifestly out of proportion to his salary as such public officer or employee and to his other lawful income and the income from legitimately acquired property. It is undisputed that spouses Ferdinand and Imelda Marcos were former public officers. Hence, the first element is clearly extant. The second element deals with the amount of money or property acquired by the public officer during his incumbency. The Marcos couple indubitably acquired and owned properties during their term of office. In fact, the five groups of Swiss accounts were admittedly owned by them. There is proof of the existence and ownership of these assets and properties and it suffices to comply with the second element. The third requirement is met if it can be shown that such assets, money or property is manifestly out of proportion to the public officer's salary and his other lawful income. It is the proof of this third element that is crucial in determining whether a prima facie presumption has been established in this case. Petitioner Republic presented not only a schedule indicating the lawful income of the Marcos spouses during their incumbency but also evidence that they had huge deposits beyond such lawful income in Swiss banks under the names of five different foundations. We believe petitioner was able to establish the prima facie presumption that the assets and properties acquired by the Marcoses were manifestly and patently disproportionate to their aggregate salaries as public officials. Otherwise stated, petitioner presented enough evidence to convince us that the Marcoses had dollar deposits amounting to US $356 million representing the balance of the Swiss accounts of the five foundations, an amount way, way beyond their aggregate legitimate income of only US$304,372.43 during their incumbency as government officials. Considering, therefore, that the total amount of the Swiss deposits was considerably out of proportion to the known lawful income of the Marcoses, the presumption that said dollar deposits were unlawfully acquired was duly established. It was sufficient for the petition for forfeiture to state the approximate amount of money and property acquired by the respondents, and their total government salaries. Section 9 of the PCGG Rules and Regulations states: Prima Facie Evidence. Any accumulation of assets, properties, and other material possessions of those persons covered by Executive Orders No. 1 and No. 2, whose value is out of proportion to their known lawful income is prima facie deemed ill-gotten wealth. Indeed, the burden of proof was on the respondents to dispute this presumption and show by clear and convincing evidence that the Swiss deposits were lawfully acquired and that they had other legitimate sources of income. A presumption is prima facie proof of the fact presumed and, unless the fact thus prima facie established by legal presumption is disproved, it must stand as proved.111 Respondent Mrs. Marcos argues that the foreign foundations should have been impleaded as they were indispensable parties without whom no complete determination of the issues could be made. She asserts that the failure of petitioner Republic to implead the foundations rendered the judgment void as the joinder of indispensable parties was a sine qua non exercise of judicial power. Furthermore, the non-inclusion of the foreign foundations violated the conditions prescribed by the Swiss government regarding the deposit of the funds in escrow, deprived them of their day in court and denied them their rights under the Swiss constitution and international law.112 The Court finds that petitioner Republic did not err in not impleading the foreign foundations. Section 7, Rule 3 of the 1997 Rules of Civil Procedure,113 taken from Rule 19b of the American Federal Rules of Civil Procedure, provides for the compulsory joinder of indispensable parties. Generally, an indispensable party must be impleaded for the complete determination of the suit. However, failure to join an indispensable party does not divest the court of jurisdiction since the rule regarding indispensable parties is founded on equitable considerations and is not jurisdictional. Thus, the court is not divested of its power to render a decision even in the absence of indispensable parties, though such judgment is not binding on the non-joined party.114 An indispensable party115 has been defined as one:

[who] must have a direct interest in the litigation; and if this interest is such that it cannot be separated from that of the parties to the suit, if the court cannot render justice between the parties in his absence, if the decree will have an injurious effect upon his interest, or if the final determination of the controversy in his absence will be inconsistent with equity and good conscience. There are two essential tests of an indispensable party: (1) can relief be afforded the plaintiff without the presence of the other party? and (2) can the case be decided on its merits without prejudicing the rights of the other party?116 There is, however, no fixed formula for determining who is an indispensable party; this can only be determined in the context and by the facts of the particular suit or litigation. In the present case, there was an admission by respondent Imelda Marcos in her May 26, 1998 Manifestation before the Sandiganbayan that she was the sole beneficiary of 90% of the subject matter in controversy with the remaining 10% belonging to the estate of Ferdinand Marcos. 117 Viewed against this admission, the foreign foundations were not indispensable parties. Their non-participation in the proceedings did not prevent the court from deciding the case on its merits and according full relief to petitioner Republic. The judgment ordering the return of the $356 million was neither inimical to the foundations' interests nor inconsistent with equity and good conscience. The admission of respondent Imelda Marcos only confirmed what was already generally known: that the foundations were established precisely to hide the money stolen by the Marcos spouses from petitioner Republic. It negated whatever illusion there was, if any, that the foreign foundations owned even a nominal part of the assets in question. The rulings of the Swiss court that the foundations, as formal owners, must be given an opportunity to participate in the proceedings hinged on the assumption that they owned a nominal share of the assets.118 But this was already refuted by no less than Mrs. Marcos herself. Thus, she cannot now argue that the ruling of the Sandiganbayan violated the conditions set by the Swiss court. The directive given by the Swiss court for the foundations to participate in the proceedings was for the purpose of protecting whatever nominal interest they might have had in the assets as formal owners. But inasmuch as their ownership was subsequently repudiated by Imelda Marcos, they could no longer be considered as indispensable parties and their participation in the proceedings became unnecessary. In Republic vs. Sandiganbayan,119 this Court ruled that impleading the firms which are the res of the action was unnecessary: "And as to corporations organized with ill-gotten wealth, but are not themselves guilty of misappropriation, fraud or other illicit conduct in other words, the companies themselves are not the object or thing involved in the action, the res thereof there is no need to implead them either. Indeed, their impleading is not proper on the strength alone of their having been formed with ill-gotten funds, absent any other particular wrongdoing on their part Such showing of having been formed with, or having received ill-gotten funds, however strong or convincing, does not, without more, warrant identifying the corporations in question with the person who formed or made use of them to give the color or appearance of lawful, innocent acquisition to illegally amassed wealth at the least, not so as place on the Government the onus of impleading the former with the latter in actions to recover such wealth. Distinguished in terms of juridical personality and legal culpability from their erring members or stockholders, said corporations are not themselves guilty of the sins of the latter, of the embezzlement, asportation, etc., that gave rise to the Government's cause of action for recovery; their creation or organization was merely the result of their members' (or stockholders') manipulations and maneuvers to conceal the illegal origins of the assets or monies invested therein. In this light, they are simply the res in the actions for the recovery of illegally acquired wealth, and there is, in principle, no cause of action against them and no ground to implead them as defendants in said actions." Just like the corporations in the aforementioned case, the foreign foundations here were set up to conceal the illegally acquired funds of the Marcos spouses. Thus, they were simply the res in the action for recovery of illgotten wealth and did not have to be impleaded for lack of cause of action or ground to implead them. Assuming arguendo, however, that the foundations were indispensable parties, the failure of petitioner to implead them was a curable error, as held in the previously cited case of Republic vs. Sandiganbayan:120 "Even in those cases where it might reasonably be argued that the failure of the Government to implead the sequestered corporations as defendants is indeed a procedural abberation, as where said firms were allegedly used, and actively cooperated with the defendants, as instruments or conduits for conversion of public funds and property or illicit or fraudulent obtention of favored government

contracts, etc., slight reflection would nevertheless lead to the conclusion that the defect is not fatal, but one correctible under applicable adjective rules e.g., Section 10, Rule 5 of the Rules of Court [specifying the remedy of amendment during trial to authorize or to conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in relation to the rule respecting omission of so-called necessary or indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. It is relevant in this context to advert to the old familiar doctrines that the omission to implead such parties "is a mere technical defect which can be cured at any stage of the proceedings even after judgment"; and that, particularly in the case of indispensable parties, since their presence and participation is essential to the very life of the action, for without them no judgment may be rendered, amendments of the complaint in order to implead them should be freely allowed, even on appeal, in fact even after rendition of judgment by this Court, where it appears that the complaint otherwise indicates their identity and character as such indispensable parties."121 Although there are decided cases wherein the non-joinder of indispensable parties in fact led to the dismissal of the suit or the annulment of judgment, such cases do not jibe with the matter at hand. The better view is that non-joinder is not a ground to dismiss the suit or annul the judgment. The rule on joinder of indispensable parties is founded on equity. And the spirit of the law is reflected in Section 11, Rule 3122 of the 1997 Rules of Civil Procedure. It prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of parties and allows the amendment of the complaint at any stage of the proceedings, through motion or on order of the court on its own initiative.123 Likewise, jurisprudence on the Federal Rules of Procedure, from which our Section 7, Rule 3 124 on indispensable parties was copied, allows the joinder of indispensable parties even after judgment has been entered if such is needed to afford the moving party full relief.125 Mere delay in filing the joinder motion does not necessarily result in the waiver of the right as long as the delay is excusable. 126 Thus, respondent Mrs. Marcos cannot correctly argue that the judgment rendered by the Sandiganbayan was void due to the non-joinder of the foreign foundations. The court had jurisdiction to render judgment which, even in the absence of indispensable parties, was binding on all the parties before it though not on the absent party.127 If she really felt that she could not be granted full relief due to the absence of the foreign foundations, she should have moved for their inclusion, which was allowable at any stage of the proceedings. She never did. Instead she assailed the judgment rendered. In the face of undeniable circumstances and the avalanche of documentary evidence against them, respondent Marcoses failed to justify the lawful nature of their acquisition of the said assets. Hence, the Swiss deposits should be considered ill-gotten wealth and forfeited in favor of the State in accordance with Section 6 of RA 1379: SEC. 6. Judgment. If the respondent is unable to show to the satisfaction of the court that he has lawfully acquired the property in question, then the court shall declare such property forfeited in favor of the State, and by virtue of such judgment the property aforesaid shall become property of the State x x x. THE FAILURE TO PRESENT AUTHENTICATED TRANSLATIONS OF THE SWISS DECISIONS Finally, petitioner Republic contends that the Honorable Sandiganbayan Presiding Justice Francis Garchitorena committed grave abuse of discretion in reversing himself on the ground that the original copies of the authenticated Swiss decisions and their authenticated translations were not submitted to the court a quo. Earlier PJ Garchitorena had quoted extensively from the unofficial translation of one of these Swiss decisions in hisponencia dated July 29, 1999 when he denied the motion to release US$150 Million to the human rights victims. While we are in reality perplexed by such an incomprehensible change of heart, there might nevertheless not be any real need to belabor the issue. The presentation of the authenticated translations of the original copies of the Swiss decision was not de rigueur for the public respondent to make findings of fact and reach its conclusions. In short, the Sandiganbayan's decision was not dependent on the determination of the Swiss courts. For that matter, neither is this Court's. The release of the Swiss funds held in escrow in the PNB is dependent solely on the decision of this jurisdiction that said funds belong to the petitioner Republic. What is important is our own assessment of the sufficiency of the evidence to rule in favor of either petitioner Republic or respondent Marcoses. In this instance, despite the absence of the authenticated translations of the Swiss decisions, the evidence on hand tilts convincingly in favor of petitioner Republic.

WHEREFORE, the petition is hereby GRANTED. The assailed Resolution of the Sandiganbayan dated January 31, 2002 is SET ASIDE. The Swiss deposits which were transferred to and are now deposited in escrow at the Philippine National Bank in the estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus interest, are hereby forfeited in favor of petitioner Republic of the Philippines. SO ORDERED.

G.R. No. 159938

March 31, 2006

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners, vs. DEVELOPERS GROUP OF COMPANIES, INC., Respondent. DECISION GARCIA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the Decision dated May 15, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution2 of September 15, 2003 which effectively affirmed with modification an earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat commenced by respondent Developers Group of Companies, Inc. (DGCI) against the herein petitioners. The facts: At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims ownership of said mark and logo in the Philippines on the strength of its prior use thereof within the country. As DGCI stresses at every turn, it filed on October 18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4 of Republic Act (RA) No. 166, 3 as amended, an application for registration covering the subject mark and logo. On May 31, 1983, the BPTTT issued in favor of DGCI the corresponding certificate of registration therefor, i.e., Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S" logo in its restaurant business. On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and hotelrelated transactions since 1969. As far back as 1962, it adopted the name "Shangri-La" as part of the corporate names of all companies organized under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used the name "Shangri-La" in all Shangri-La hotels and hotel-related establishments around the world which the Kuok Family owned. To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong Kong and Singapore, among other places, several companies that form part of the Shangri-La International Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put up by the Kuok Group in Mandaluyong and Makati, Metro Manila. All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and used the distinctive lettering of the name "Shangri-La" as part of their trade names. From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the logo of the Shangri-La hotels. During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following explanation for the logo, to wit: The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as keep to the legendary Shangri-la theme with the mountains on top being reflected on waters below and the connecting centre [sic] line serving as the horizon. This logo, which is a bold, striking definitive design, embodies both modernity and sophistication in balance and thought. Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently and continuously by all Shangri-La hotels and companies in their paraphernalia, such as stationeries, envelopes, business forms, menus, displays and receipts. The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the "Shangri-La" mark and "S" logo in the patent offices in different countries around the world.

On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No. 3145, praying for the cancellation of the registration of the "Shangri-La" mark and "S" logo issued to respondent DGCI on the ground that the same were illegally and fraudulently obtained and appropriated for the latter's restaurant business. They also filed in the same office Inter Partes Case No. 3529, praying for the registration of the same mark and logo in their own names. Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they advertised their hotels abroad since 1972 in numerous business, news, and/or travel magazines widely circulated around the world, all readily available in Philippine magazines and newsstands. They, too, maintained reservations and booking agents in airline companies, hotel organizations, tour operators, tour promotion organizations, and in other allied fields in the Philippines. It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for Infringement and Damages with the RTC of Quezon City against the herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-918476 and eventually raffled to Branch 99 of said court. The complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8) years, been the prior exclusive user in the Philippines of the mark and logo in question and the registered owner thereof for its restaurant and allied services. As DGCI alleged in its complaint, SLIHM, et al., in promoting and advertising their hotel and other allied projects then under construction in the country, had been using a mark and logo confusingly similar, if not identical, with its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo, from using the "Shangri-La" mark and "S" logo in their hotels in the Philippines. In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using the "Shangri-La" mark and "S" logo, adding that the legal and beneficial ownership thereof pertained to SLIHM and that the Kuok Group and its related companies had been using this mark and logo since March 1962 for all their corporate names and affairs. In this regard, they point to the Paris Convention for the Protection of Industrial Property as affording security and protection to SLIHM's exclusive right to said mark and logo. They further claimed having used, since late 1975, the internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the hotels in their hotel chain. Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary Injunction enjoining the petitioners from using the subject mark and logo. The preliminary injunction issue ultimately reached the Court in G.R. No. 104583 entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a decision4 dated March 8, 1993, the Court nullified the writ of preliminary injunction issued by the trial court and directed it to proceed with the main case and decide it with deliberate dispatch. While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on account of the pendency before the BPTTT of Inter Partes Case No. 3145 for the cancellation of DGCI's certificate of registration. For its part, respondent DGCI filed a similar motion in that case, invoking in this respect the pendency of its infringement case before the trial court. The parties' respective motions to suspend proceedings also reached the Court via their respective petitions in G.R. No. 114802, entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R. No. 111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al., which were accordingly consolidated. In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of whether, despite the petitioners' institution of Inter Partes Case No. 3145 before the BPTTT, herein respondent DGCI "can file a subsequent action for infringement with the regular courts of justice in connection with the same registered mark," ruled in the affirmative, but nonetheless ordered the BPTTT to suspend further proceedings in said inter partes case and to await the final outcome of the main case. Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone witness was Ramon Syhunliong, President and Chairman of DGCI's Board of Directors. Among other things, this witness testified that: 1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant businesses but only the restaurant business bears the name "Shangri-La" and uses the same and the "S-logo" as service marks. The restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly known as the "Carvajal Restaurant" until December 1982, when respondent took over said restaurant business. 2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La Hotel in Hong Kong as early as August 1982.

3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a piece of paper by a jeepney signboard artist with an office somewhere in Balintawak. The unnamed artist supposedly produced the two designs after about two or three days from the time he (Syhunliong) gave the idea of the design he had in mind. 4. On October 15, 1982, or before the unknown signboard artist supposedly created the "Shangri-La" and "S" designs, DGCI was incorporated with the primary purpose of "owning or operating, or both, of hotels and restaurants". 5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI filed an application for trademark registration of the mark "SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On said date, respondent DGCI amended its Articles of Incorporation to reflect the name of its restaurant, known and operating under the style and name of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained Certificate of Registration No. 31904 for the "Shangri-La" mark and "S" logo. Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's, use of the mark and logo in dispute constitutes an infringement of DGCI's right thereto, came out with its decision 6 on March 8, 1996 rendering judgment for DGCI, as follows: WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et al.] a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in the name of [respondent]; b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right thereto; c) Ordering [petitioners], their representatives, agents, licensees, assignees and other persons acting under their authority and with their permission, to permanently cease and desist from using and/or continuing to use said mark and logo, or any copy, reproduction or colorable imitation thereof, in the promotion, advertisement, rendition of their hotel and allied projects and services or in any other manner whatsoever; d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials and paraphernalia used by them and/or destroy any and all prints, signs, advertisements or other materials bearing said mark and logo in their possession and/or under their control; and e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's fee and expenses of litigation. Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and Technology Transfer for his information and appropriate action in accordance with the provisions of Section 25, Republic Act No. 166 Costs against [petitioners]. SO ORDERED. [Words in brackets added.] Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA G.R. SP No. 53351. As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003, 7 affirmed that of the lower court with the modification of deleting the award of attorney's fees. The appellate court predicated its affirmatory action on the strength or interplay of the following premises: 1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows that the bulk use of the tradename was abroad and not in the Philippines (until 1987). Since the Kuok Group does not have proof of actual use in commerce in the Philippines (in accordance with Section 2 of R.A. No. 166), it cannot claim ownership of the mark and logo in accordance with the holding in Kabushi Kaisha Isetan v. IAC8, as reiterated in Philip Morris, Inc. v. Court of Appeals.9

2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in the Philippines and the issuance of Certificate of Registration No. 31904. 3. The use of the mark or logo in commerce through the bookings made by travel agencies is unavailing since the Kuok Group did not establish any branch or regional office in the Philippines. As it were, the Kuok Group was not engaged in commerce in the Philippines inasmuch as the bookings were made through travel agents not owned, controlled or managed by the Kuok Group. 4. While the Paris Convention protects internationally known marks, R.A. No. 166 still requires use in commerce in the Philippines. Accordingly, and on the premise that international agreements, such as Paris Convention, must yield to a municipal law, the question on the exclusive right over the mark and logo would still depend on actual use in commerce in the Philippines. Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally assailed Resolution of September 15, 2003.10 As formulated by the petitioners, the issues upon which this case hinges are: 1. Whether the CA erred in finding that respondent had the right to file an application for registration of the "Shangri-La" mark and "S" logo although respondent never had any prior actual commercial use thereof; 2. Whether the CA erred in finding that respondent's supposed use of the identical "Shangri-La" mark and "S" logo of the petitioners was not evident bad faith and can actually ripen into ownership, much less registration; 3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations; 4. Whether the CA erred in refusing to consider that petitioners are entitled to protection under both R.A. No. 166, the old trademark law, and the Paris Convention for the Protection of Industrial Property; 5. Whether the CA erred in holding that SLIHM did not have the right to legally own the "Shangri-La" mark and "S" logo by virtue of and despite their ownership by the Kuok Group; 6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes actionable infringement; 7. Whether the CA erred in awarding damages in favor of respondent despite the absence of any evidence to support the same, and in failing to award relief in favor of the petitioners; and 8. Whether petitioners should be prohibited from continuing their use of the mark and logo in question. There are two preliminary issues, however, that respondent DGCI calls our attention to, namely: 1. Whether the certification against forum-shopping submitted on behalf of the petitioners is sufficient; 2. Whether the issues posed by petitioners are purely factual in nature hence improper for resolution in the instant petition for review on certiorari. DGCI claims that the present petition for review should be dismissed outright for certain procedural defects, to wit: an insufficient certification against forum shopping and raising pure questions of fact. On both counts, we find the instant petition formally and substantially sound. In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners was insufficient, and that he was not duly authorized to execute such document. Respondent further alleged that since petitioner SLIHM is a foreign entity based in Hong Kong, the Director's Certificate executed by Mr. Madhu Rama Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and execute the certification against forum shopping, should contain the authentication by a consular officer of the Philippines in Hong Kong.

In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum shopping may be signed, for and in behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document. The reason for this is that a corporation can only exercise its powers through its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose.12 Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum shopping does not require any consular certification if the petitioner is a foreign entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM furnished this Court with a consular certification dated October 29, 2003 authenticating the Director's Certificate authorizing Atty. Lerma to execute the certification against forum shopping, together with petitioners' manifestation of February 9, 2004. Respondent also attacks the present petition as one that raises pure questions of fact. It points out that in a petition for review under Rule 45 of the Rules of Court, the questions that may properly be inquired into are strictly circumscribed by the express limitation that "the petition shall raise only questions of law which must be distinctly set forth."13 We do not, however, find that the issues involved in this petition consist purely of questions of fact. These issues will be dealt with as we go through the questions raised by the petitioners one by one. Petitioners' first argument is that the respondent had no right to file an application for registration of the "Shangri-La" mark and "S" logo because it did not have prior actual commercial use thereof. To respondent, such an argument raises a question of fact that was already resolved by the RTC and concurred in by the CA. First off, all that the RTC found was that respondent was the prior user and registrant of the subject mark and logo in the Philippines. Taken in proper context, the trial court's finding on "prior use" can only be interpreted to mean that respondent used the subject mark and logo in the country before the petitioners did. It cannot be construed as being a factual finding that there was prior use of the mark and logo before registration. Secondly, the question raised is not purely factual in nature. In the context of this case, it involves resolving whether a certificate of registration of a mark, and the presumption of regularity in the performance of official functions in the issuance thereof, are sufficient to establish prior actual use by the registrant. It further entails answering the question of whether prior actual use is required before there may be a valid registration of a mark. Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to December 31, 1997, hence, the law in force at the time of respondent's application for registration of trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law requires that before a trademark can be registered, it must have been actually used in commerce and service for not less than two months in the Philippines prior to the filing of an application for its registration. Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case.14 Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v. Macagba, 15 are: 1. Registration in the Principal Register gives rise to a presumption of the validity of the registration, the registrant's ownership of the mark, and his right to the exclusive use thereof. x x x 2. Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein pass on the issue of ownership, which may be contested through opposition or interference proceedings, or, after registration, in a petition for cancellation. xxx [Emphasis supplied]1avvphil.et Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership.16

While the present law on trademarks17 has dispensed with the requirement of prior actual use at the time of registration, the law in force at the time of registration must be applied, and thereunder it was held that as a condition precedent to registration of trademark, trade name or service mark, the same must have been in actual use in the Philippines before the filing of the application for registration.18 Trademark is a creation of use and therefore actual use is a pre-requisite to exclusive ownership and its registration with the Philippine Patent Office is a mere administrative confirmation of the existence of such right.19 By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the same. Registration merely creates a prima faciepresumption of the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use thereof.20 Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary. Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to create the mark and logo submitted his designs only in December 1982. 21 This was two-anda-half months after the filing of the respondent's trademark application on October 18, 1982 with the BPTTT. It was also only in December 1982 when the respondent's restaurant was opened for business.22 Respondent cannot now claim before the Court that the certificate of registration itself is proof that the two-month prior use requirement was complied with, what with the fact that its very own witness testified otherwise in the trial court. And because at the time (October 18, 1982) the respondent filed its application for trademark registration of the "Shangri-La" mark and "S" logo, respondent was not using these in the Philippines commercially, the registration is void. Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in evident bad faith and cannot therefore ripen into ownership, much less registration. While the respondent is correct in saying that a finding of bad faith is factual, not legal, 23 hence beyond the scope of a petition for review, there are, however, noted exceptions thereto. Among these exceptions are: 1. When the inference made is manifestly mistaken, absurd or impossible;24 2. When there is grave abuse of discretion;25 3. When the judgment is based on a misapprehension of facts;26 4. When the findings of fact are conflicting;27 and 5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent.28 And these are naming but a few of the recognized exceptions to the rule. The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel before he caused the registration of the mark and logo, and surmised that he must have copied the idea there: Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor of [petitioners'] hotel abroad at one time (September 27, 1982) establishes [petitioners'] allegation that he got the idea there.29 Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have been copied, the CA tries to make it appear that the adoption of the same mark and logo could have been coincidental: The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a (a) remote beautiful imaginary place where life approaches perfection or (b) imaginary mountain land depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and popular novel written in 1976. It is not impossible that the parties, inspired by the novel, both adopted the mark for their business to conjure [a] place of beauty and pleasure. The S-logo is, likewise, not unusual. The devise looks like a modified Old English print.30 To jump from a recognition of the fact that the mark and logo must have been copied to a rationalization for the possibility that both the petitioners and the respondent coincidentally chose the same name and logo is not

only contradictory, but also manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old English" print that the CA makes it out to be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the parties would come up with the exact same lettering for the word "Shangri-La" and the exact same logo to boot. As correctly observed by the petitioners, to which we are in full accord: x x x When a trademark copycat adopts the word portion of another's trademark as his own, there may still be some doubt that the adoption is intentional. But if he copies not only the word but also the word's exact font and lettering style and in addition, he copies also the logo portion of the trademark, the slightest doubt vanishes. It is then replaced by the certainty that the adoption was deliberate, malicious and in bad faith. 31 It is truly difficult to understand why, of the millions of terms and combination of letters and designs available, the respondent had to choose exactly the same mark and logo as that of the petitioners, if there was no intent to take advantage of the goodwill of petitioners' mark and logo.32 One who has imitated the trademark of another cannot bring an action for infringement, particularly against the true owner of the mark, because he would be coming to court with unclean hands.33 Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take advantage of the goodwill established by the true owner. This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation of marks registered or used in bad faith.34 This is precisely why petitioners had filed an inter partes case before the BPTTT for the cancellation of respondent's registration, the proceedings on which were suspended pending resolution of the instant case. Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in nature, namely, whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations. The question, however, is not whether there had been widespread prior use, which would have been factual, but whether that prior use entitles the petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in nature. It has already been established in the two courts below, and admitted by the respondent's president himself, that petitioners had prior widespread use of the mark and logo abroad: There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies abroad used the name and logo for one purpose or another x x x.35 [Emphasis supplied] In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo but held that such use did not confer to them ownership or exclusive right to use them in the Philippines." 36 To petitioners' mind, it was error for the CA to rule that their worldwide use of the mark and logo in dispute could not have conferred upon them any right thereto. Again, this is a legal question which is well worth delving into. R.A. No. 166, as amended, under which this case was heard and decided provides: Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons, corporations, partnerships or associations domiciled in the Philippines and by persons, corporations, partnerships or associations domiciled in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said trademarks trade names, or service marks are actually in use in commerce and services not less than two months in the Philippines before the time the applications for registration are filed: And provided, further, That the country of which the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially certified, with a certified true copy of the foreign law translated into the English language, by the government of the foreign country to the Government of the Republic of the Philippines. Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to his exclusive use a trademark, a trade name, or a servicemark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or services of others. The ownership or possession of a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as are other property rights known to this law. [Emphasis supplied]

Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the said trade name and "S" logo in the Philippines. Hence, consistent with its finding that the bulk of the petitioners' evidence shows that the alleged use of the Shangri-La trade name was done abroad and not in the Philippines, it is understandable for that court to rule in respondent's favor. Unfortunately, however, what the CA failed to perceive is that there is a crucial difference between the aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides for what is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts. Under Section 2, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for 2 months prior to the application for registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a trademark must be within the Philippines. Hence, under R.A. No. 166, as amended, one may be an owner of a mark due to actual use thereof but not yet have the right to register such ownership here due to failure to use it within the Philippines for two months. While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2-month actual use requirement. What is worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must not have been already appropriated (i.e., used) by someone else. At the time of respondent DGCI's registration of the mark, the same was already being used by the petitioners, albeit abroad, of which DGCI's president was fully aware. It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo as a mere corporate name or as the name of their hotels, instead of using them as a trademark or service mark, then such name and logo are not trademarks. The two concepts of corporate name or business name and trademark or service mark, are not mutually exclusive. It is common, indeed likely, that the name of a corporation or business is also a trade name, trademark or service mark. Section 38 of R.A. No. 166 defines the terms as follows: Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary is plainly apparent from the context - The term "trade name" includes individual names and surnames, firm names, trade names, devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify their business, vocations or occupations; the names or titles lawfully adopted and used by natural or juridical persons, unions, and any manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or commerce. The term "trade mark" includes any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in by others. The term "service mark" means a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others and includes without limitation the marks, names, symbols, titles, designations, slogans, character names, and distinctive features of radio or other advertising. [Emphasis supplied] Clearly, from the broad definitions quoted above, the petitioners can be considered as having used the "Shangri-La" name and "S" logo as a tradename and service mark. The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm resolve of the Philippines to observe and follow the Paris Convention by incorporating the relevant portions of the Convention such that persons who may question a mark (that is, oppose registration, petition for the cancellation thereof, sue for unfair competition) include persons whose internationally well-known mark, whether or not registered, is identical with or confusingly similar to or constitutes a translation of a mark that is sought to be registered or is actually registered.37 However, while the Philippines was already a signatory to the Paris Convention, the IPC only took effect on January 1, 1988, and in the absence of a retroactivity clause, R.A. No. 166 still applies. 38 Under the prevailing law and jurisprudence at the time, the CA had not erred in ruling that:

The Paris Convention mandates that protection should be afforded to internationally known marks as signatory to the Paris Convention, without regard as to whether the foreign corporation is registered, licensed or doing business in the Philippines. It goes without saying that the same runs afoul to Republic Act No. 166, which requires the actual use in commerce in the Philippines of the subject mark or devise. The apparent conflict between the two (2) was settled by the Supreme Court in this wise "Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement of actual use in the Philippines must subordinate an international agreement inasmuch as the apparent clash is being decided by a municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not superior, to national legislative enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)." 39 [Emphasis supplied] Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity of lack of two-month prior use, as well as bad faith in the respondent's registration of the mark, it is evident that the petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of infringing a mark when they are actually the originator and creator thereof. Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the enforcement of their rights as part of the Kuok Group of Companies and as official repository, manager and operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party seeking relief to be the owner of the mark but "any person who believes that he is or will be damaged by the registration of a mark or trade name." 40 WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and the Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is ordered DISMISSED. SO ORDERED.