Marcelo v. Sandiganbayan
REITERATIONFacts
The Antecedents: The Presidential Commission on Good Government (PCGG) issued a writ of sequestration against Marcelo Fiberglass Corporation (MFC). Subsequently, the Republic filed a complaint with the Sandiganbayan against Edward T. Marcelo (Marcelo), Fabian Ver, and the Marcoses for the recovery of ill-gotten wealth, alleging that Marcelo and Ver, in conspiracy with the Marcoses, obtained a "favored contract" from the Philippine Navy (PN) for the construction of fiberglass boats, collected advances, and secured a foreign loan with a sovereign guarantee. Procedural History: The complaint underwent several amendments, impleading other petitioner corporations as defendants, alleged to be dummies of the individual defendants. Petitioners filed motions for summary judgment, arguing that there were no genuine issues of fact due to the Republic's failure to respond to their requests for admission and written interrogatories. The Sandiganbayan denied these motions, finding genuine issues of fact, and reiterated this denial upon reconsideration. The Petition: Petitioners sought reversal of the Sandiganbayan's resolutions, arguing that the Sandiganbayan committed grave abuse of discretion in denying their motions for summary judgment, as the pleadings, admissions, and evidence showed no genuine issue as to any material fact, entitling them to judgment as a matter of law.
Issue(s)
Whether the Sandiganbayan committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying the motions for summary judgment filed by the petitioners. Whether the Republic's complaint sufficiently stated a cause of action against the petitioners, including whether the veil of corporate fiction should be pierced and whether impleading other petitioner corporations was proper. Whether the Republic's failure to respond to petitioners' requests for admission and written interrogatories resulted in the admission of material facts.
Ruling
The Supreme Court granted the petition, reversed and set aside the resolutions of the Sandiganbayan, and dismissed the complaint against the petitioners.
Ratio Decidendi
On the propriety of summary judgment and the Sandiganbayan's denial: The Court found that the Sandiganbayan committed grave abuse of discretion. Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. The petitioners demonstrated the absence of genuine issues by highlighting the Republic's failure to respond to their requests for admission and written interrogatories. The Republic's complaint itself was found to be defective for lacking specific averments of ultimate facts constituting its causes of action, relying instead on sweeping generalizations and conclusions of law. On the Republic's complaint and cause of action, piercing the corporate veil, and impleading other corporations: The Court held that the Republic's complaint was defective for failing to state with definiteness how the petitioners committed the alleged illegal and fraudulent acts. It lacked specific averments and failed to attach crucial documents like the alleged "favored contract" and loan documents. The complaint was replete with conclusions of fact and law without factual basis, violating fundamental rules of pleading. The Court reiterated that a corporation possesses a personality distinct from its officers and stockholders, and the veil can only be pierced with clear proof of wrongdoing, which was not established. Citing Republic v. Sandiganbayan, the Court held that impleading corporations organized with ill-gotten wealth, but not guilty of illicit conduct, is generally unnecessary, as the complaint lacked specific allegations against them. On the effect of the Republic's failure to respond to discovery requests: The Court emphasized that the Republic's failure to answer MFC's interrogatories and the other petitioner corporations' requests for admission resulted in the admission of the matters inquired into. This failure effectively conceded the regularity of the PN-MFC contract, the absence of wrongdoing in its conclusion, and that MFC's separate corporate personality was not used for unlawful means. The Court noted that the Republic's answers to Marcelo's interrogatories only reiterated conclusions and did not establish personal benefit or wrongdoing beyond his role as President of MFC.
Main Doctrine
The Sandiganbayan committed grave abuse of discretion in denying the motions for summary judgment, as the Republic's complaint lacked specific averments constituting a cause of action, and its failure to respond to petitioners' requests for admission and interrogatories deemed conceded the regularity of the transactions and the distinct corporate personalities involved.