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G.R. No.

114331 May 27, 1997


CESAR E. A. VIRATA,petitioner,
vs.
THE HONORABLE SANDIGANBAYAN and THE REPUBLIC OF THE
PHILIPPINES,respondents.

TORRES, JR., J.:


In times past, when due process was more of a myth empty accusations have had its day. In a more
enlightened age, a sage was heard to say "Strike me if you must, but hear me first!" We have come
a long way, indeed, for in our time one who is required to answer for an alleged wrong must at least
know what is it all about.
This is the case before Us.
In this case, petitioner Cesar E. A. Virata (Virata, for brevity) is one of the defendants in Civil Case
No. 0035, entitled Republic of the Philippines versus Benjamin (Kokoy) Romualdez, et. al.. The case,
which was filed by the Presidential Commission on Good Government in behalf of the Republic of the
Philippines (Republic, for brevity) against fifty three persons (53) 1 including Virata, involves the
recovery of ill-gotten wealth amassed by the defendants during the twenty year reign of former
President Ferdinand Marcos.
The complaint against the defendants was amended three times. The last amended complaint filed with
the Sandiganbayan, hereafter known as the expanded Second Amended Complaint, states, inter alia,
the following relevant allegations against petitioner Virata:
V. SPECIFIC AVERMENTS OF DEFENDANTS' ILLEGAL ACTS
xxx xxx xxx
14. Defendants Benjamin (Kokoy) Romualdez and Juliette Gomez Romualdez, acting by themselves
and/or in unlawful concert with Defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking
undue advantage of their relationship, influence and connection with the latter Defendant spouses,
engaged in devises, schemes and strategems to unjustly enrich themselves at the expense of plaintiff
and the Filipino people, among others:
xxx xxx xxx
(b) gave MERALCO undue advantage (i) by effecting the increase of power rates with automatic
authority to tack into the consumers' electric bills the so-called purchase and currency adjustment, and.
(ii) with the active collaboration of Defendant Cesar E. A. Virata, by reducing the electric franchise tax
from 5% to 2% of gross receipts and the tariff duty on fuel oil imports by public utilities from 20% to
10%, resulting in substantial savings for MERALCO but without any significant benefit to the
consumers of electric power and loss of millions of pesos in much needed revenues to the government;
xxx xxx xxx
(g) secured, in a veiled attempt to justify MERALCO's anomalous acquisition of the electric
cooperatives, with the active collaborations of Defendants Cesar E. A. Virata, Juanito R. Remulla,
Isidro Rodriguez, Jose C. Hernandez, Pedro Dumol, Ricardo C. Galing, Francisco C. Gatmaitan,
Mario D. Camacho and the rest of the Defendants, the approval by Defendant Ferdinand E. Marcos
and his cabinet of the so-called "Three-Year Program for the Extension of MERALCO's Services to
Areas Within the 60-Kilometer Radius of Manila," which required government capital investment
amounting to millions of pesos;
xxx xxx xxx
(m) manipulated, with the support, assistance and collaboration of Philguarantee officials led by
Chairman Cesar E. A. Virata and the senior managers of FMMC/PNI Holdings Incorporated led by
Jose S. Sandejas, Jr., Jose M. Mantecon and Kurt S. Bachman, Jr., among others, the formation of
Erecton Holdings, Inc. without infusing additional capital solely for the purpose of making it assume
the obligation of Erectors Incorporated with Philguarantee in the amount of P527,387,440.71 with
insufficient Securities/collaterals just to enable Erectors Inc. to appear viable and to borrow more
capitals, so much so that its obligation with Philguarantee has reached a total of more than P2 Billion
as of June 30, 1987.
xxx xxx xxx
17. The following Defendants acted as dummies, nominees and/or agents by allowing themselves (i)
to be used as instruments in accumulating ill-gotten wealth through government concessions, orders
and/or policies prejudicial to plaintiff, or (ii) to be incorporators, directors or members of corporations
beneficially held and/or controlled by Defendants Ferdinand E. Marcos, Imelda R. Marcos, Benjamin
(Kokoy) T. Romualdez and Julliette Gomez Ramualdez in order (to) conceal and prevent recovery of
assets illegally obtained: . . . Cesar E. A. Virata . . . .
xxx xxx xxx
18. The acts of Defendants, singly or collectively, and/or in unlawful concern with one another,
constitute gross abuse of official position and authority, flagrant breach of public trust and fiduciary
obligations, acquisition of unexplained wealth, brazen abuse of right and power, unjust enrichment,
violation of the Constitution and laws of the Republic of the Philippines, to the grave and irreparable
damage of Plaintiff and the Filipino people. 2
Asserting that the foregoing allegations are vague and are not averred with sufficient definiteness as to
enable him to effectively prepare his responsive pleading, petitioner Virata filed a motion for a bill of
particulars on January 31, 1992.
In a Resolution promulgated on 4 August 1992, the Sandiganbayan partially granted the said motion
by requiring the Republic to submit a bill of particulars concerning the charges against petitioner
Virata stated only in paragraph 17 (acting as dummy, nominee and/or agent) and paragraph 18 (gross
abuse of authority and violation of laws and the Constitution) of the expanded Second Amended
Complaint. However, as to the other charges, namely: 1) Virata's alleged active collaboration in the
reduction of electric franchise tax and the tariff duty on fuel oil imports, as stated in paragraph 14 b
(ii), 2) his active collaboration in securing the approval by Ferdinand Marcos of the "Three Year
Program for the Extension of MERALCO's Services to Areas within the 60 Kilometer Radius of
Manila," mentioned in paragraph 14 g, and 3) his support, assistance and collaboration in the
formation of Erectors Holdings Incorporated as reflected in paragraph 14 m of the expanded Second
Amended Complaint, the Sandiganbayan declared that these accusations are clear and specific enough
to allow Virata to submit an intelligent responsive pleading, hence, the motion for a bill of particulars
respecting the foregoing three charges was denied.
In view of the Sandiganbayan's order of August 4, 1992 requiring the Republic to amplify the charges
in paragraphs 17 and 18 of the expanded Second Amended Complaint, the Republic through the
Office of the Solicitor General submitted the bill of particulars dated October 22, 1992, hereafter
called as the Limited Bill of Particulars, which was signed by a certain Ramon A. Felipe IV, who was
designated in the bill of particulars as "private counsel", the relevant portion of which provides that:
xxx xxx xxx
1. Defendant Virata, while being one of the members of the Central Bank's Monetary Board, approved
Resolution No. 2320 dated December 14, 1973, allowing the Benpres Corporation, Meralco Securities
Corporation (MSC) and Manila Electric Company (MERALCO) to refinance/restructure their
outstanding loan obligations, a "sweetheart" or "behest" accommodation which enabled Meralco
Foundation, Inc. to acquire ownership and control of Manila Electric Company. Meralco Foundation,
Inc. was then controlled by the Marcos-Romualdez Group with Benjamin (Kokoy) Romualdez being
the beneficial owner and, thereby, expanding the said group's accumulation of ill-gotten wealth.
2. On July 11, 1973 defendant Virata representing the Republic of the Philippines as Finance Minister,
executed an Agreement with the Manila Electric Company (MERALCO) whereby the government
agreed to buy the parcels of land, improvements and facilities known as Gardner Station Unit No. 1,
Gardner Station Unit No. 2, Snyder Station Unit No. 1, Snyder Station Unit No. 2 and Malaya Station
Unit No. 1 for One Billion One Hundred Million Pesos (P1,100,000,000.00), a transaction which was
so disadvantageous to the government and most favorable to MERALCO which gained a total of
P206.2 million. As a result of this transaction, MERALCO is relieved of its heavy burden in servicing
its foreign loans which were assumed by the government. Furthermore, the agreement clearly showed
the "sweetheart" deal and favors being given by the government to MERALCO which was then
owned/and or controlled by Benjamin Romualdez representing the Marcos-Romualdez group, when it
provided that the "sale is subject to the reservation of rights, leases and easements in favor of
Philippine Petroleum Corp., First Philippine Industrial Corp. (formerly MERALCO Securities
Industrial Corp.) and Pilipinas Shell Petroleum Corp. insofar as the same are presently in force and
applicable." This enabled the Marcos-Romualdez Group to further accumulate and expand the ill-
gotten wealth and plunder the nation.
3. At the meeting of the Board of Directors of the Philippine Export and Foreign Loan Guarantee
Corp. held on September 16, 1983 defendant Virata acting as Chairman, together with the other
members of the board, approved the request of Erectors, Inc., a Benjamin Romualdez owned and/or
controlled corporation, for a guarantee to cover 100% of its proposed behest loan of US $33.5 Million
under the Central Bank Consolidated Foreign Borrowing Program with the Philippine National Bank,
Development Bank of the Philippines, Interbank, Philippine Commercial International Bank and
Associated Bank as conduit banks, to refinance Erectors, Inc.'s short term loans guaranteed by
Philguarantee, which at present forms part of the government's huge foreign debt. Such act of
defendant Virata was a flagrant breach of public trust as well as a violation of his duty to protect the
financial condition and economy of the country against, among others, abuses and corruption. 3
On 3 December 1992, a motion to strike out the Limited Bill of Particulars and to defer the filing of
the answer was filed by Virata on the grounds that the Limited Bill of Particulars avers for the first
time new actionable wrongs allegedly committed by him in various official capacities and that the
allegations therein do not indicate that Virata acted as dummy, nominee or agent but rather as a
government officer, acting as such in his own name. This motion was not acted upon by the
Sandiganbayan.
Way back on September 1, 1992, Virata, who was dissatisfied with the Sandiganbayan Resolution of
August 4, 1992, filed a petition for certiorari (G.R. No. 106527) with this Court questioning the
Sandiganbayan's denial of his motion for a bill of particulars as regards the first three charges stated in
paragraph 14 b(ii), paragraph 14g and paragraph 14m of the expanded Second Amended Complaint.
The petition was granted by this Court in our decision promulgated on April 6, 1993. Accordingly, the
Sandiganbayan Resolution of August 4, 1992 to the extent that it denied the motion for a bill of
particulars with respect to the first three (3) charges was set aside and the Republic was required by
this Court to submit to Virata a bill of particulars containing the facts prayed for by the latter insofar as
to these first three (3) 'actionable wrongs' are concerned. 4
On August 20, 1993, the Office of the Solicitor General (OSG) filed a manifestation and motion dated
August 18, 1993 alleging, inter alia, that the OSG and PCGG agreed that the required bill of
particulars would be filed by the PCGG since the latter is the investigating body which has the
complete records of the case, hence, in a better position to supply the required pleading. The
Sandiganbayan took note of this manifestation in a Resolution dated August 26, 1993. On the basis of
this arrangement, the PCGG submitted the bill of particulars dated November 3, 1993, which was
apparently signed by a certain Reynaldo G. Ros, who was named in the bill of particulars as
"deputized prosecutor" of the PCGG. This bill of particulars, which incorporates by reference the
Limited Bill of Particulars of October 22, 1992, states, inter alia:
xxx xxx xxx
1. On the "Specific Averments of Defendant's Illegal Acts a (i)" [paragraph 14 b (ii) of the expanded
Second Amended Complaint]
Immediately after defendants Ferdinand E. Marcos and Benjamin "Kokoy" Romualdez took complete
control of Meralco and its subsidiaries, defendant Ferdinand E. Marcos issued Presidential Decree No.
551 on September 11, 1974 which effected the reduction of electric franchise tax being paid by
Meralco from 5% to 2% as well as lowered tariff duty of fuel oil imports from 20% to 10 % and
allowed Meralco to retain 3% reduction in franchise tax rates thereby allowing it to save as much as
P258 million as of December 31, 1992.
Defendant Cesar Virata then Minister of Finance, supported PD 551 and in fact issued the guidelines
on its implementation which were heavily relied upon by the Board of Energy in its questioned ruling
dated 25 November 1982 by allowing Meralco to continue charging higher electric consumption rates
despite their savings from the aforesaid reduction of franchise tax without any significant benefit to
the consumers of electric power and resulting in the loss of millions of pesos in much needed revenues
to the government.
2. On the "Specific Averments of Defendant's Illegal Acts a (ii)" [par. 14g of the expended Second
Amended Complaint].
Defendant Cesar E.A. Virata, then Prime Minester [sic], caused the issuance of a confidential
memorandum dated October 12, 1982 to then President Ferdinand E. Marcos informing the latter of
the recommendation of the cabinet of the so called Three Year Program for the Extension of Meralco
Services of Areas within the 60 Kilometer Radius of Manila in order to justify Meralco's anomalous
acquisition of electric cooperatives and which later required the Monetary Board and Philguarantee
then headed by defendant Virata to recommend the restructuring of Meralco's foreign and local
obligation which led to the extending of loan accommodations by the Development Bank of the
Philippines and Philippine National Bank in favor of Meralco.
3. On the "Specific Averments of Defendant's Illegal Acts a (iii)" [par. 14m of the expanded Second
Amended Complaint].
Defendant Cesar Virata, as Chairman of Philguarantee and the Senior Managers of FMMC/PNI
Holdings Inc. led by Jose S. Sandejas, J. Jose N. Mantecon and Kurt S. Bachmann, Jr., supported and
assisted the formation of Erectors Holdings, Inc. for the purpose of making it assume the obligation of
Erectors Inc. with Philguarantee in the amount of P527,387,440.71 without sufficient
securities/collateral and despite this outstanding obligation, defendant Virata, as Chairman of
Philguarantee, approved the Erectors Inc. Applications for loan guarantees that reached more than P2
Billion as of June 30, 1987.
4. On the "Specific Averments of Defendant's Illegal Acts a (iv) [par. 17 of the expanded Second
Amended Complaint]
Plaintiff, hereby incorporates by reference plaintiff's Limited Bill of Particulars previously submitted
to this Honorable Court with the qualification that defendant Cesar Virata merely acted as agent. 5
Consequently, Virata filed on November 23, 1993 his comment on the bill of particulars with motion
to dismiss the expanded Second Amended Complaint. He alleges that both the bills of particulars
dated October 22, 1992 and November 3, 1993 are pro forma and should be stricken off the records.
According to him, the bill of particulars dated November 3, 1993 is merely a rehash of the assertions
made in the expanded Second Amended Complaint, hence, it is not the bill of particulars that is
required by this Court in the previous case of Virata vs. Sandiganbayan, et. al. (G.R. No. 106527).
Furthermore, a reading of the Limited Bill of Particulars dated October 22, 1992 shows that it alleges
new imputations which are immaterial to the charge of being a dummy, nominee or agent, and that
Virata acted, not as a dummy, nominee or agent of his co-defendants as what is charged in the
complaint, but as a government officer of the Republic. Virata also questions the authority of PCGG
ad its deputized prosecutor to file the bill of particulars in behalf of the Republic. He asserts that the
legal representation of the Republic by the OSG is mandated by law and that the Sandiganbayan,
through its Resolution dated August 26, 1993, should not have allowed the OSG to abdicate its duty as
the counsel of record for the Republic.
The Republic filed its Opposition to Virata's Comment to Bill of Particulars on December 17, 1993.
Subsequently, Virata filed his Reply to Opposition on January 18, 1994.
After considering the relevant pleadings and motions submitted by the parties, the Sandiganbayan, in a
Resolution of February 16, 1994, admitted the bill of particulars submitted by the Republic and
ordered Virata to file his responsive pleading to the expanded Second Amended Complaint. The
relevant portion of the Resolution states as follows:
In the resolution of this incident, We find that the bill of particulars, filed by the plaintiff on November
3, 1993 in compliance with the Supreme Court's directive, appears to have substantially set out
additional averments and particulars which were not previously alleged in the Expanded Amended
Complaint. We likewise consider these additional averments and particulars to be sufficient enough to
enable defendant Virata to frame his responsive pleading or answer and that what he feels are still
necessary in preparing for trial should be obtained by various modes of discovery, such as
interrogatories, depositions, etc. A bill of particulars is sufficient if matters constituting the causes of
action have already been specified with sufficient particularity and which matters are within the
moving party's knowledge. It cannot be utilized to challenge the sufficiency of the claim asserted.
Simplicity of pleading is the idea of modern procedure, hence, evidentiary facts and details should not
be allowed to clutter a complaint as much as possible, consistent with the right of the moving party to
compel disclosure in instances where it is beyond cavil that He cannot adequately frame a responsive
pleading. In the instant case, the bill of particulars submitted by the plaintiff, in Our considered
opinion, is sufficient and adequate enough to fulfill its mission. 6
Dissatisfied, Virata filed this instant petition for certiorari under Rule 65 of the Rules of Court to
challenge the foregoing Resolution of the Sandiganbayan.
The issues to be resolved in the instant case are as follows:
1. WHETHER OR NOT THE SANDIGANBAYAN COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ADMITTING THE
BILL OF PARTICULARS SUBMITTED BY THE REPUBLIC.
2. WHETHER OR NOT THE OFFICE OF THE SOLICITOR GENERAL AND THE PCGG ARE
AUTHORIZED BY LAW TO DEPUTIZE A COUNSEL TO FILE THE BILL OF PARTICULARS IN
BEHALF OF THE REPUBLIC.
Petitioner maintains the view that the allegations in the bill of particulars of November 3, 1993 remain
vague, general and ambiguous, and the purported illegal acts imputed to Virata have not been averred
with sufficient definiteness so as to inform Virata of the factual and legal basis thereof.
Respecting the Limited Bill of Particulars dated October 22, 1992, which amplifies paragraphs 17 and
18 of the expanded Second Amended Complaint, Virata reiterates his basic arguments that the Limited
Bill of Particulars fails to provide the relevant and material averments sought to be clarified by him
and that it asserts for the first time new matters allegedly committed by him in different official
capacities, to wit: a) as a member of the Central Bank Monetary Board, he, with the other Monetary
Board members, approved Resolution No. 2320 dated December 14, 1973 regarding the restructuring
of the loans of Benpres Corporation, Meralco Securities Corporation, and the Manila Electric
Company, b) as Finance Minister, he executed an agreement with Manila Electric Company in
connection with the sale of lands and facilities of the Gardner Station Unit No. 1, Gardner Station Unit
No. 2, Snyder Station Unit No. 1, Snyder Station Unit No. 2, and Malaya Station Unit No. 1, and, c) as
Chairman of the Board of Directors of the Philippine Export and Foreign Loan Guarantee
Corporation, approved the request of Erector, Incorporated, for a guarantee to cover 100 % of its
proposed behest loan of US $ 33.5 Million under the Central Bank Consolidated Foreign Borrowing
Program. He argues that the thrust of paragraphs 17 and 18 of the expanded Second Amended
Complaint is the charge that Virata acted as "dummy, nominee and/or agent," however, the foregoing
allegations in the Limited Bill of Particulars do not indicate that he acted as dummy, nominee or agent,
but rather, as a government officer.
Invoking Section 3, Rule 17 of the Rules of Court, Virata argued that both the bills of particulars
submitted by the Republic did not follow the Rules of Court and the orders of the Sandiganbayan and
this Honorable Court, as such, the failure to comply with these legal orders is a ground for dismissal of
the action. Additionally, it is asserted that under Rule 12, Section 1(c) of the Rules of Court, if an
order of the court for a bill of particulars is not obeyed, it may order the striking out of the pleading to
which the motion was directed. Accordingly, Virata prayed for the striking out of the bills of
particulars dated October 22, 1992 and November 3, 1993 and the dismissal of the expanded Second
Amended Complaint in so far as he is concerned.
We find the instant petition meritorious.
The rule is that a complaint must contain the ultimate facts constituting plaintiff's cause of action. A
cause of action has the following elements, to wit: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act or omission on the part of such
defendant violative of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 7 As
long as the complaint contains these three elements, a cause of action exists even though the
allegations therein are vague, and dismissal of the action is not the proper remedy when the pleading is
ambiguous because the defendant may ask for more particulars. As such, Section 1, Rule 12 of the
Rules of Court, provides, inter alia, that a party may move for more definite statement or for a bill of
particulars of any matter which is not averred with sufficient definiteness or particularity to enable him
properly to prepare his responsive pleading or to prepare for trial. Such motion shall point out the
defects complained of and the details desired. Under this Rule, the remedy available to a party who
seeks clarification of any issue or matter vaguely or obscurely pleaded by the other party, is to file a
motion, either for a more definite statement or for a bill of particulars. 8 An order directing the
submission of such statement or bill, further, is proper where it enables the party movant intelligently
to prepare a responsive pleading, or adequately to prepare for trial. 9
A bill of particulars is a complementary procedural document consisting of an amplification or more
particularized outline of a pleading, and being in the nature of a more specific allegation of the facts
recited in the pleading. 10 It is the office of the bill of particulars to inform the opposite party and
the court of the precise nature and character of the cause of action or defense which the pleader has
attempted to set forth and thereby to guide his adversary in his preparations for trial, and reasonably to
protect him against surprise at the
trial. 11 It gives information of the specific proposition for which the pleader contends, in respect to
any material and issuable fact in the case, and it becomes a part of the pleading which it supplements.
12 It has been held that a bill of particulars must inform the opposite party of the nature of the
pleader's cause of action or defense, and it must furnish the required items of the claim with
reasonable fullness and precision. 13 Generally, it will be held sufficient if it fairly and substantially
gives the opposite party the information to which he is entitled, as required by the terms of the
application and of the order therefor. It should be definite and specific and not contain general
allegations and conclusions. It should be reasonably certain and as specific as the circumstances will
allow. 14
Guided by the foregoing rules and principles, we are convinced that both the bill of particulars dated
November 3, 1993 and the Limited Bill of Particulars of October 22, 1992 are couched in such general
and uncertain terms as would make it difficult for petitioner to submit an intelligent responsive
pleading to the complaint and to adequately prepare for trial.
Let us examine the bill of particulars dated November 3, 1993:
1. The first paragraph of the foregoing bill of particulars provides that "(I)mmediately after defendants
Ferdinand E. Marcos and Benjamin 'Kokoy' Romualdez took control of Meralco and its subsidiaries,
defendant Ferdinand E. Marcos issued Presidential Decree No. 551 on September 11, 1974 which
effected the reduction of electric franchise tax being paid by Meralco from 5% to 2% as well as
lowered tariff duty of fuel oil imports from 20% to 10% and allowed Meralco to retain the 3%
reduction in franchise tax rates thereby allowing it to save as much as P258 million as of December
31, 1992." Further, it is stated that "(D)efendant Cesar Virata then Minister of Finance, supported PD
551 and in fact issued the guidelines on its implementation which were heavily relied upon by the
Board of Energy in its questioned ruling dated 25 November 1982 by allowing Meralco to continue
charging higher electric consumption rates despite their savings from the aforesaid reduction of
franchise tax without any significant benefit to the consumers of electric power and resulting in the
loss of millions of pesos in much needed revenues to the government."
The abovequoted paragraph of the said bill of particulars is supposed to be the amplification of the
charge against Virata stated in paragraph 14(b) of the expanded Second Amended Complaint-which is
his alleged active collaboration in the reduction of electric franchise tax and tariff duty of fuel oil
imports. Yet, a careful perusal of the said paragraph shows that nothing is said about his alleged active
collaboration in reducing the taxes. Aside from the bare assertion that he "supported PD 551" and
"issued the guidelines on its implementation," the bill of particulars is disturbingly silent as to what are
the particular acts of Virata that establish his active collaboration in the reduction of taxes. The
allegation that he supported PD 551 and issued its implementing guidelines is an insufficient
amplification of the charge because the same is but a general statement bereft of any particulars. It
may be queried-how did Virata support PD 551? What were the specific acts indicating his support?
What were these implementing guidelines issued by him and when were they issued? In supporting
PD 551 and in issuing its implementing guidelines, what law or right, if there is any, is violated by
Virata? It is worthy to note that, until now, PD 551 has not been declared unconstitutional. In fact, this
Court upheld its validity in the case of Philippine Consumer Foundation, Inc. vs. Board of Energy and
Meralco. 15
2. In the second paragraph of the said bill of particulars, it is alleged that "(D)efendant Cesar E.A.
Virata, then Prime Minester [sic], caused the issuance of a confidential memorandum dated October
12, 1982 to then President Ferdinand E. Marcos informing the latter of the recommendation of the
cabinet of the so called Three Year Program for the Extension of Meralco Services of Areas within the
60 Kilometer Radius of Manila in order to justify Meralco's anomalous acquisition of electric
cooperatives and which later required the Monetary Board and Philguarantee then headed by
defendant Virata to recommend the restructuring of Meralco's foreign and local obligation which led
to the extending of loan accommodation by the Development Bank of the Philippines and Philippine
National Bank in favor of Meralco."
The foregoing allegation purportedly amplifies the charge stated in paragraph 14 (g) of the expanded
Second Amended Complaint, that is-Virata's active collaboration in securing the approval by
Ferdinand Marcos and his cabinet of the Three Year Program for the Extension of Meralco's Services
within the Manila Area. However, just like the first paragraph of the said bill of particulars, this Court
finds that the second paragraph failed to set forth particularly or specifically the charge against Virata.
It is an incomplete or floating disclosure of material facts replete with generalizations and indefinite
statements which seemingly ends to nowhere. There are certain matters alleged that need to be
clarified and filled up with details so that Virata can intelligently and fairly contest them and raise
them as cogent issues, to wit: a) In causing the issuance of the said memorandum, what law, duty or
right, if there is any, is violated by Virata?; b) What was the recommendation of the cabinet regarding
the Three Year Program? The Republic should have at least furnish the substantial or important
features of the recommendation; c) What were these electric cooperatives? Were these cooperatives
the same as those enumerated in paragraph 14(e) of the expanded Second Amended Complaint? 16
Why was the acquisition of these cooperatives anomalous?; and d) What were Virata's specific acts as
the head of Philguarantee which led to the restructuring of Meralco's obligation? What was his
participation in recommending the restructuring of Meralco's obligation? What were these foreign and
local obligations? How much of the obligation was recommended for restructuring? What were the
loan accommodations given in favor of Meralco? When were they given and how much were involved
in the transaction?
3. Regarding the third paragraph of the said bill of particulars, We find the same as a mere recast or
restatement of the charge set forth in paragraph 14 (m) of the expanded Second Amended Complaint,
which is Virata's alleged support, assistance and collaboration in the formation of Erectors Holding,
Incorporated. The said paragraph of the bill of particulars states that "(D)efendant Cesar Virata, as
Chairman of Philguarantee and the Senior Managers of FMMC/PNI Holdings Inc. led by Jose S.
Sandejas, J. Jose N. Mantecon and Kurt S. Bachmann, Jr. supported and assisted the formation of
Erectors Holdings, Inc. for the purpose of making it assume the obligation of Erectors Inc. with
Philguarantee in the amount of P527,387,440.71 without sufficient securities/collateral and despite
this outstanding obligation, defendant Virata, as Chairman of Philguarantee, approved the Erectors
Inc. Applications for loan guarantees that reached more than P2 Billion as of June 30, 1987."
Clearly from the foregoing allegation, the Republic failed miserably to amplify the charge against
Virata because, instead of supplying the pertinent facts and specific matters that form the basis of the
charge, it only made repetitive allegations in the bill of particulars that Virata supported and assisted
the formation of the corporation concerned, which is the very same charge or allegation in paragraph
14 (m) of the expanded Second Amended Complaint which requires specifications and unfailing
certainty. As such, the important question as to what particular acts of Virata that constitute support
and assistance in the formation of Erectors Holding, Incorporated is still left unanswered, a product of
uncertainty.
We now take a closer look at the Limited Bill of Particulars dated October 22, 1992.
The said bill of particulars was filed by the Republic to amplify the charge of Virata's being a dummy,
nominee or agent stated in paragraphs 17 and 18 of the expanded Second Amended Complaint. In the
subsequent bill of particulars dated November 3, 1993 the said charge was qualified by the Republic in
the sense that Virata allegedly acted only as an agent. Let us consider each paragraph of the said bill of
particulars:
1. The first paragraph of the Limited Bill of Particulars states that "(D)efendant Virata, while being
one of the members of the Central Bank's Monetary Board, approved Resolution No. 2320 dated
December 14, 1973, allowing the Benpres Corporation, Meralco Securities Corp. (MSG) and Manila
Electric Company (MERALCO) to refinance/restructure their outstanding loan obligations, a
'sweetheart' or 'behest' accommodation which enabled Meralco Foundation, Inc. to acquire ownership
and control of Manila Electric Company." It is stated further that "Meralco Foundation, Inc. was then
controlled by the Marcos-Romualdez Group with Benjamin (Kokoy) Romualdez being the beneficial
owner and, thereby, expanding the said group's accumulation of ill gotten wealth."
It is apparent from the foregoing allegations that the Republic did not furnish Virata the following
material matters which are indispensable for him to be placed in such a situation wherein he can
properly be informed of the charges against him: a) Did Virata, who was only one of the members of
the Board, act alone in approving the Resolution? Who really approved the Resolution, Virata or the
Monetary Board?; b) What were these outstanding loan obligations of the three corporations
concerned? Who were the creditors and debtors of these loan obligations? How much were involved in
the restructuring of the loan obligations? What made the transaction a 'sweetheart' or 'behest'
accommodation?; and c) How was the acquisition of MERALCO by Meralco Foundation, Inc. related
to the Resolution restructuring the loan obligations of the three corporations?
2 The second paragraph provides that "(O)n July 11, 1978 defendant Virata representing the Republic
of the Philippines as Finance Minister, executed an Agreement with the Manila Electric Co.
(MERALCO) whereby the government agreed to buy the parcels of land, improvements and facilities
known as Gardner Station Unit No. 1, Gardner Station Unit No. 2, Snyder Station Unit No. 1, Snyder
Station Unit No. 2 and Malaya Station Unit No. 1 for One Billion One Hundred Million Pesos
(P1,100,000,000.00), a transaction which was so disadvantageous to the government and most
favorable to MERALCO which gained a total of P206.2 million;" that "(A)s a result of this
transaction, MERALCO was relieved of its heavy burden in servicing its foreign loans which were
assumed by the government;" that ". . ., the agreement clearly showed the 'sweetheart' deal and favors
being given by the government to MERALCO which was then owned and/or controlled by Benjamin
Romualdez representing the Marcos-Romualdez group, when it provided that the 'sale is subject to the
reservation of rights, leases and easements in favor of Philippine Petroleum Corp., First Philippine
Industrial Corp. (formerly MERALCO Securities Industrial Corp.) and Pilipinas Shell Petroleum
Corp. insofar as the same are presently in force and applicable'."
There are certain matters in the foregoing allegations which lack in substantial particularity. They are
broad and definitely vague which require specifications in order that Virata can properly define the
issues and formulate his defenses. The following are the specific matters which the Republic failed to
provide, to wit: a) What made the transaction 'disadvantageous' to the government? The allegation that
it was disadvantageous is a conclusion of law that lacks factual basis. How did MERALCO gain the
P206.2 million? The Republic should have provided for more specifics how was the transaction
favorable to MERALCO?; b) What were these foreign obligations of MERALCO which were
assumed by the government? Who were the creditors in these obligations? When were these
obligations contracted? How much were involved in the assumption of foreign obligations by the
government?; and c) By the presence of the provision of the contract quoted by the Republic, what
made the agreement a 'sweetheart' deal? The allegation that the agreement is a 'sweetheart deal' is a
general statement that needs further amplification.
3. The third paragraph states that "(A)t the meeting of the Board of Directors of the Philippine Export
and Foreign Loan Guarantee Corp. held on September 16, 1983 defendant Virata acting as Chairman,
together with the other members of the board, approved the request of Erectors Inc., a Benjamin
Romualdez owned and/or controlled corporation, for a guarantee to cover 100% of its proposed behest
loan of US$ 33.5 Million under the Central Bank Consolidated Foreign Borrowing Program with the
Philippine National Bank, Development Bank of the Philippines, Interbank, Philippine Commercial
International Bank and Associated Bank as conduit banks, to refinance Erectors, Inc.'s short term loans
guaranteed by Philguarantee, which at present forms part of the government's huge foreign debt; that
"(S)uch act of defendant Virata was a flagrant breach of public trust as well as a violation of his duty
to protect the financial condition and economy of the country against, among others, abuses and
corruption".
In like manner, the foregoing paragraph contains incomplete and indefinite statement of facts because
it fails to provide the following relevant matters: a) What was this $33.5 million proposed behest loan?
What were its terms? Who was supposed to be the grantor of this loan?; b) What were these short term
loans? Who were the parties to these transactions? When were these transacted? How was this $ 33.5
million behest loan related to the short term loans?
Furthermore, as correctly asserted by petitioner Virata, the Limited Bill of Particulars contains new
matters which are not covered by the charge that Virata acted as agent of his co-defendants in the
expanded Second Amended Complaint. Apparently, as may be examined from the three paragraphs of
the Limited Bill of Particulars, Virata, in so doing the acts; can not be considered as an agent of any of
his co-defendants, on the contrary, the factual circumstances stated in the said bill of particulars
indicate that Virata acted on behalf of the government, in his official capacity as a government officer.
This observation is established by the allegations that Virata acted as a member of the Central Bank
Monetary Board, as chairman of the Board of Directors of the Philippine Export and Foreign Loan
Guarantee Corporation, and, when he executed the Agreement with Meralco on July 7, 1978
concerning the sale of certain properties, he acted as the Finance Minister of the government and as a
representative of the Republic in the contract. In performing the said acts, he, therefore, acted as an
agent of the government, not as an agent of his co-defendants, which is the charge against him in the
expanded Second Amended Complaint. Accordingly, the allegations in the Limited Bill of Particulars
are irrelevant and immaterial to the charge that Virata acted as an agent of his co-defendants.
As clearly established by the foregoing discussion, the two bills of particulars filed by the Republic
failed to properly amplify the charges leveled against Virata because, not only are they mere
reiteration or repetition of the allegations set forth in the expanded Second Amended Complaint, but,
to the large extent, they contain vague, immaterial and generalized assertions which are inadmissible
under our procedural rules.
It must be remembered that in our decision promulgated on April 6, 1993 (G.R. No. 106527), We
required the Republic to submit a bill of particulars concerning the first three charges against Virata
averred in paragraphs 14 b(ii), 14g, and 14m of the expanded Second Amended Complaint, on the
other hand, as regards the charges stated in paragraphs 17 and 18 of the said complaint, the Republic
was ordered to file the required bill of particulars by the Sandiganbayan through its Resolution dated
August 4, 1992. The Republic purportedly complied with these orders by filing the questioned bill of
particulars dated November 3, 1993 and the Limited Bill of Particulars of October 22, 1992. However,
as shown by the above discussion, the two bills of particulars were not the bills of particulars which
fully complied with the Rules of Court and with the orders of the Sandiganbayan and this Court.
As such, in view of the Republic's failure to obey this Court's directive of April 6, 1993 (G.R. No.
106527) and the Sandiganbayan's order of August 4, 1992 to file the proper bill of particulars which
would completely amplify the charges against Virata, this Court deems it just and proper to order the
dismissal of the expanded Second Amended Complaint, in so far as the charges against Virata are
concerned. This action is justified by Section 3, Rule 17 of the Rules of Court, which provides that:
Sec. 3. Failure to prosecute. If plaintiff fails to appear at the time of the trial, or to prosecute his
action for an unreasonable length of time, or to comply with these rules or any order of the court, the
action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal
shall have the effect of an adjudication upon the merits, unless otherwise provided by court. (emphasis
ours)
Regarding the second issue of the instant case, Virata contends that the Presidential Commission on
Good Government is not authorized by law to deputize a counsel to prepare and file pleadings in
behalf of the Republic. Neither can the Office of the Solicitor General validly deputize an outside
counsel to completely take over the case for the Republic. According to petitioner, only the Office of
the Solicitor General is mandated by law to act counsel for the Republic. Thus, the bill of particulars
filed for the Republic by "private counsel" or "deputized prosecutor" of the PCGG is unauthorized.
This contention is devoid of merit.
We are of the opinion that the Limited Bill of Particulars dated October 22, 1992 signed by Ramon
Felipe IV and the Bill of Particulars dated November 3, 1993 signed by Reynaldo Ros are valid
pleadings which are binding upon the Republic because the two lawyer-signatories are legally
deputized and authorized by the Office of the Solicitor General and the Presidential Commission on
Good Government to sign and file the bills of particulars concerned.
Realizing that it can not adequately respond to this Court's order of April 6, 1993 (G.R. No. 106527)
requiring the Republic to submit the bill of particulars concerning the first three charges against Virata,
the Office of the Solicitor deemed it better to seek the help of the Presidential Commission on Good
Government by availing the services of the latter's lawyer who would directly file the required bill of
particulars in behalf of the Republic. This circumstance prompted the Office of the Solicitor General
to manifest before the Sandiganbayan on August 20, 1993 that it would be the PCGG which would file
the required bill of particulars and move that it be excused from doing so as the PCGG, being in-
charge of investigating the case, was in a better position than the OSG. Armed with this authority
given by the OSG, the PCGG, through one of its deputized prosecutors, Reynaldo Ros, filed the bill of
particulars dated November 3, 1993 to amplify the first three charges against Virata stated in
paragraphs 14 b(ii), 14g, and 14m of the expanded Second Amended Complaint.
The action of the OSG in seeking the assistance of the PCGG is not without legal basis. The
Administrative Code of 1987, which virtually reproduces the powers and functions of the OSG
enumerated in P.D. No. 478 (The Law Defining the Powers and Functions of the Office of the
Solicitor General), provides, inter alia, that:
Sec. 35. Powers and Functions, . . . .
It (the OSG) shall have the following specific powers and functions:
xxx xxx xxx
(8) Deputize legal officers of government departments, bureaus, agencies and offices to assist the
Solicitor General and appear or represent the Government in cases involving their respective offices,
brought before the courts and exercise supervision and control over such legal officers with respect to
such cases.
(9) Call on any department, bureau, office, agency, or instrumentality of the Government for such
service assistance and cooperation as may be necessary in fulfilling its functions and responsibilities
and for this purpose enlist the services of any government official or employee in the pursuit of his
task. . . . . 17
Contrary to Virata's contention, the Solicitor General did not abdicate his function and turn over the
handling of the instant case to the PCGG. Nowhere in the manifestation and motion filed by the OSG
on August 20, 1993 is there an iota or indication that the OSG is withdrawing from the case and that
the PCGG is taking over its prosecution. What the OSG did was merely to call the PCGG for
assistance and authorize it to respond to the motion for a bill of particulars filed by Virata. The OSG
was impelled to act this way because of the existence of the special circumstance that the PCGG,
which has the complete records of the case and being in charge of its investigation, was more
knowledgeable and better informed of the facts of the case than the OSG.
The authority, therefore, of Attorney Reynaldo Ros to sign and submit in behalf of the Republic the
bill of particulars dated November 3, 1993 is beyond dispute because 1) he was duly deputized by the
PCGG in pursuance to its power to prosecute cases of ill-gotten wealth under Executive Order No. 14
of May 14, 1986, 2) the OSG empowered the PCGG to file the bill of particulars as evidenced by the
OSG's manifestation and motion filed on August 20, 1993, and 3) there was no abdication of OSG's
duty by giving the PCGG the authority to file the bill of particulars.
On the other hand, the deputation of Ramon Felipe IV by the Solicitor General to sign and file the
Limited Bill of Particulars is based on Section 3 of Presidential Decree No. 478, which provides that:
Sec. 3. The Solicitor General may, when necessary and after consultation with the Government entity
concerned, employ, retain, and compensate on a contractual basis, in the name of the Government,
such attorneys and experts or technical personnel as he may deem necessary, to assist him in the
discharge of his duties. The compensation and expenses may be charged to the agency or office in
whose behalf the services have to be rendered. (emphasis ours)
The Solicitor General is mandated by law to act as the counsel of the Government and its agencies in
any litigation and matter requiring the services of a lawyer. In providing the legal representation for
the Government, he is provided with vast array of powers, which includes the power to retain and
compensate lawyers on contractual basis, necessary to fulfill his sworn duty with the end view of
upholding the interest of the Government. Thus, the Solicitor General acted within the legal bounds of
its authority when it deputized Attorney Felipe IV to file in behalf of the Republic the bill of
particulars concerning the charges stated in paragraph 17 and 18 of the expanded Second Amended
Complaint.
At any rate, whether or not the lawyer-signatories are duly deputized would not be decisive in the
resolution of this case considering that the two bills of particulars filed by the Republic are mere
scraps of paper which miserably failed to amplify the charges against Virata. For the Republic's failure
to comply with the court's order to file the required bill of particulars that would completely and fully
inform Virata of the charges against him, the dismissal of the action against him is proper based on
Section 3, Rule 17 of the Revised Rules of Court and the relevant jurisprudence thereon. 18 Simple
justice demands that as stated earlier, petitioner must know what the complaint is all about. The law
requires no less.
Although this Court is aware of the Government's laudable efforts to recover ill-gotten wealth
allegedly taken by the defendants, this Court, however, cannot shrink from its duty of upholding the
supremacy of the law under the aegis of justice and fairness. This Court in dismissing the action
against the petitioner has rightfully adhered in the unyielding tenet principia, non homines the
rule of law, not of men.
ACCORDINGLY, the instant petition is hereby GRANTED and the expanded Second Amended
Complaint, in so far as petitioner Virata is concerned, is hereby ordered DISMISSED.
SO ORDERED.

[G.R. No. 115748. August 7, 1996.]

REPUBLIC OF THE PHILIPPINES represented by the PRESIDENTIAL COMMISSION ON


GOOD GOVERNMENT, Petitioner, v. SANDIGANBAYAN (Second Division) and LUCIO C.
TAN, ET AL., Respondents.

RESOLUTION

FRANCISCO, J.:

Assailed in this petition are the Resolutions issued by respondent Sandiganbayan in Civil Case No.
0005, dated January 25, 1994 and March 24, 1994, granting private respondents motion for a bill of
particulars and denying petitioner Philippine Commission on Good Governments (PCGG) motion for
reconsideration, respectively.

Initially, petitioner Republic of the Philippines, as represented by the PCGG and assisted by the Office
of the Solicitor General, filed before the Sandiganbayan on July 17, 1987, a complaint for
Reconveyance, Reversion, Accounting and Damages against Lucio Tan, Ferdinand Marcos and some
other individuals, docketed as Civil Case No. 0005.

The defendants filed their respective answers with the exception of Ferdinand Marcos, Imelda Marcos
and Federico Moreno. Subsequently however, petitioner filed a "Motion for Leave to Amend and for
Admission of Second Amended Complaint", dated August 19, 1991, impleading three(3) more
individuals and forty (40) other corporations as defendants and revising its allegations in the
complaint.
Despite the opposition filed by defendants Lucio Tan, Et Al., the Sandiganbayan in its Resolution
dated April 2, 1992, 1 granted petitioners motion and admitted the Second Amended Complaint dated
September 5, 1991. 2

Thereafter, Manufacturing Services and Trade Corporation and fourteen (14) other corporate
defendants filed a "Motion For a More Definite Statement or a Bill of Particulars" dated May 22,
1991, seeking the following particulars to wit:jgc:chanrobles.com.ph

"1. As to Par. 6-a Who are the Individual defendants referred to in the opening clause of Par. 6-a,
which reads

6-a. Among the companies beneficially owned or controlled by Defendant Lucio Tan, Defendant
Ferdinand and Imelda Marcos and/or the individual Defendants were/are: . . .

(At p. 8)

In what particular manner does defendant Lucio C. Tan, Defendants Ferdinand and Imelda Marcos
and/or the individual defendants each beneficially own or control the corporations listed in Par. 6-a?
Does each of these defendants own shares of stock in each corporations? Or does each of these
defendants control any of these corporations because of voting trust agreement or similar corporate
devices? If so, who of the registered shareholders have executed such voting trust agreement or are
parties to such corporate devices?

2. As to Par. 14-c In what particular manner did the defendant-spouses Ferdinand and Imelda
Marcos support the corporations enumerated therein?

3. As to Pars. 16, 17, 18, 19 and 20. Considering that defendants are juridical persons and not
natural persons and obviously have never held public office, is any act referred to in the foregoing
paragraphs imputed to any of these defendants? If there be any such acts, which particular acts
specifically alleged in the complaint are imputed to each of these defendants?

4. With reference to the complaint in general, the complaint alleges that each defendant had acted
singly or collectively with the other defendants and is sought to be held jointly and severally liable.
Each defendant should be informed as to the particular acts it is alleged to have committed singly
and those acts which it is alleged to have committed collectively with the other defendants.

5. The complaint seeks to recover actual damages to be proven during the trial. Since actual
damages involve damages already sustained, these should be specified." 3

The motion was in turn adopted by the other individual defendants except the Estate of Ferdinand
Marcos, Imelda R. Marcos, Don Ferry, Federico Moreno, Panfilo O. Domingo, Estate of Gregorio
Licaros and Cesar Zalamea.

Petitioner opposed the motion arguing that contrary to the movants claims, the allegations in the
Second Amended Complaint are clear and sufficient for defendants-movants to know the nature and
scope of the causes of action upon which petitioner seeks relief. Moreover, it maintained that the
particulars sought to be obtained pertain to evidentiary matters and therefore not the proper subject of
a bill of particulars.

On January 25, 1994, respondent Sandiganbayan issued the assailed resolution 4 granting private
respondents motion and ruled:jgc:chanrobles.com.ph

"As aptly pointed out by the defendants-movants in their instant motion, Paragraph 6-a of the Second
Amended Complaint does not indicate in what particular manner does defendant Lucio Tan, Ferdinand
E. Marcos, and Imelda R. Marcos as well as the individual defendants impleaded therein each
beneficially own or control the corporations listed therein. Arrayed against the Specific Averments of
Defendants Illegal Acts (Par. 14-c) which constitute the factual backdrop leading to the five(5)
Causes of Action (Pars. 16-20 inclusive), We find the details therein to be inadequate and
insufficient, the particulars or specifications not having been patently clear therein, hence defendants-
movants would be unable to fully understand and comprehend the hows, whys and wherefores by
which they are being sued and held liable. In other words, the allegations in the complaint are,
therefore, deficient in that they merely articulate conclusions of law and presumptions unsupported by
factual premises." 5

From the aforestated resolution, petitioner filed a motion for reconsideration but respondent
Sandiganbayan denied the same in its Resolution dated March 24, 1994. 6 Hence, the instant petition.

The sole issue to be resolved is whether or not respondent Sandiganbayan acted with grave abuse of
discretion in granting private respondents "Motion for a More Definite Statement or a Bill of
Particulars" .

As to the object and function of a bill of particulars, the same has been declared as
follows:jgc:chanrobles.com.ph

"It is the office or function, as well as the object or purpose, of a bill of particulars to amplify or limit a
pleading, specify more minutely and particularly a claim or defense set up and pleaded in general
terms, give information, not contained in the pleading, to the opposite party and the court as to the
precise nature, character, scope, and extent of the cause of action or defense relied on by the pleader,
and apprise the opposite party of the case which he has to meet, to the end that the proof at the trial
may be limited to the matter specified, and in order that surprise at, and needless preparations for, the
trial may be avoided, and that the opposite party may be aided in framing his answering pleading and
preparing for trial. It has also been stated that it is the function or purpose of a bill of particulars to
define, clarify, particularize, and limit or circumscribe the issues in the case, to expedite the trial, and
assist the court. A general function or purpose of a bill of particulars is to prevent injustice or do
justice in the case when that cannot be accomplished without the aid of such a bill." 7

The issue before us is not one of first impression. Similar complaints commenced by petitioner thru
the PCGG have previously been the object of a motion for a bill of particulars filed by the defendants.

In Tan et el. v. Sandiganbayan, et. al., 8 therein petitioner Lucio Tan filed a motion for a bill of
particulars against PCGGs expanded complaint on the ground that PCGGs averments are made up of
bare allegations, presumptuous conclusions of fact and law, and plain speculations. Upholding the
denial of the motion, this Court ruled that the expanded complaint, though confusingly put in print, is
sufficient in form to support the charges against Lucio Tan. 9

Subsequently however, in the cases of Tantuico, Jr. v. Republic 10 and Virata v. Sandiganbayan, 11 the
motions for a bill of particulars filed by Tantuico, Jr. and Virata were granted upon finding that with
respect to both petitioners, the allegations in PCGGs amended complaints are couched in general
terms, vague and mere conclusions of law.

But in Romualdez v. Sandiganbayan, 12 petitioner Romualdezs motion for a more definite statement
was struck down, with this Court ruling that the amended complaint was sufficient and in fact too
specific to enable the petitioner to make the proper admissions or denials and set out his affirmative
defenses. The Tantuico case was held to be inapplicable because there was no strict similarity between
the situation of Tantuico and petitioner Romualdez.
As expected, PCGG invokes in this petition the ruling in the case of Tan, Et. Al. v. Sandiganbayan, Et.
Al. 13 and Romualdez v. Sandiganbayan, 14 while private respondents maintain that it is the decision
in Tantuico, Jr. v. Sandiganbayan 15 and Virata v. Republic 16 that is controlling.

Upon careful scrutiny of the allegations in petitioners Second Amended Complaint, as well as the
particulars sought by private respondents in their motion for a bill of particulars, we find no grave
abuse of discretion on the part of respondent Sandiganbayan in granting private respondents motion.

Under paragraph 6-A of the Amended Complaint, the Companies alleged to be beneficially owned or
controlled by defendants Lucio Tan, Ferdinand and Imelda Marcos and/or the other individual
defendants were identified and enumerated, including herein corporate respondents. 17 But except for
this bare allegation, the complaint provided no further information with respect to the manner by
which herein corporate respondents are beneficially owned or controlled by the individual defendants.
Clearly, the allegation is a conclusion of law that is bereft of any factual basis.

In paragraph 14-C it is alleged that improper payments were given to Ferdinand and Imelda Marcos in
the form of gifts, bribes, commissions and dividends in various sums in consideration of the Marcoses
continued support to defendant Lucio Tans diversified ventures and/or the formers ownership or
interests in said business ventures. 18 But in like manner, no factual allegation was made as to the
form and extent of support given by the Marcos spouses to the corporations alleged to be owned by
Lucio Tan. Again the allegation is a mere conclusion with no basis in fact.

Equally wanting in specificity is petitioners allegation that private respondents should be held jointly
and severally liable for actual damages respecting the pecuniary loss sustained by petitioner as a result
of private respondents unlawful acts. Without specifying the amount and extent of damages suffered,
private respondents cannot be expected to properly respond to this allegation since there is no basis
from which to determine whether petitioners claim for actual damages is justified or not.

The aforementioned particulars sought by private respondents are material facts, which as previously
held, "should be clearly and definitely averred in the complaint in order that the defendant may, in
fairness, be informed of the claims made against him to the end that he may be prepared to meet the
issues at the trial." 19

There is no merit to the contention that the particulars sought by the private respondents in their
motion refer to mere details or evidentiary matters whose proper place is during the pre-trial and trial
proper. A partys right to move for a bill of particulars in accordance with Section 1 of Rule 12 when
the allegations of the complaint are vague and uncertain is intended to afford a party not only a chance
to properly prepare a responsive pleading but also an opportunity to prepare an intelligent answer. This
is to avert the danger where the opposition party will find difficulty in squarely meeting the issues
raised against him and plead the corresponding defenses which is not timely raised in the answer will
be deemed waived. Thus, it was pronounced in Virata v. Sandiganbayan 20
that:jgc:chanrobles.com.ph

"The proper preparation of an intelligent answer requires information as to the precise nature,
character, scope and extent of the cause of action in order that the pleader may be able to squarely
meet the issues raised, thereby circumscribing them within determined confines and preventing
surprises during the trial, and in order that he may set forth his defenses which may not be so readily
availed of if the allegations controverted are vague, indefinite, uncertain or are mere general
conclusions. The latter task assumes added significance because defenses not pleaded (save those
excepted in Section 2, Rule 9 of the Revised Rules of Court and, whenever appropriate, the defense of
prescription) in a motion to dismiss or in the answer are deemed waived. . . ." cralaw virtua1aw
library
With respect however to paragraphs 16, 17, 18, 19 and 20 of the Amended Complaint, we do not find
it necessary for petitioner to specify whether any of the acts referred therein pertain to herein corporate
respondents on account of petitioners admission that by the very nature of the causes of action, it is
clear that the specified acts referred to in said paragraphs are imputed to the individual defendants. 21

In the same vein, the particular acts alleged to have been committed singly or collectively with the
other defendants are already laid out in detail under petitioners Specific Averments of Defendants
Illegal Acts in the Amended Complaint, 22 hence, need no further clarification.

ACCORDINGLY, subject to the foregoing modifications with respect to paragraphs 3 and 4 of private
respondents Motion for a More Definite Statement or a Bill of Particulars, the assailed resolutions of
respondent Sandiganbayan are hereby AFFIRMED and the instant petition is ordered DISMISSED.

SO ORDERED.

G.R. No. 160354 August 25, 2005


BANCO DE ORO UNIVERSAL BANK, Petitioners,
vs.
THE HON. COURT OF APPEALS and SPS. GABRIEL G. LOCSIN and MA. GERALDINE R.
LOCSIN, Respondents.
DECISION
CARPIO MORALES, J.:
Subject of the present Petition for Review is the Court of Appeals June 5, 2003 Decision 1 annulling
and setting aside the Orders2 of the Regional Trial Court (RTC) of Mandaluyong denying
respondents spouses Gabriel and Ma. Geraldine Locsins Motion to Dismiss the complaint of
petitioner, Banco de Oro Universal Bank.
The following antecedent facts are not disputed:
On September 28, 1995, respondents Locsins entered into a Term Loan Agreement (TLA) with
petitioner under which they obtained a loan of 700,000.00 which was secured by a Real Estate
Mortgage of their property covered by TCT No. N-138739 (1st TLA).
On February 29, 1996, the Locsins obtained a 2nd TLA from petitioner in the amount of 800,000.00,
to secure which they executed a Real Estate Mortgage over their property covered by TCT No. 67286.
This 2nd TLA was eventually settled on July 2, 1996, on account of which the mortgage was cancelled
and the title was released on July 8, 1996.
On November 6, 1996, the parties entered into a Credit Line Agreement (CLA) under which the
Locsins obtained a credit line of 2.5 Million, to secure which their business partners, the spouses
Juanito and Anita Evidente, executed a Real Estate Mortgage of their (the Evidentes) properties
covered by TCT Nos. N-166336 and N-166637. Monthly amortization of the obligation appears to
have been religiously paid until October of 1997.
The Locsins having failed to comply with their obligation under the CLA, petitioner filed before the
Quezon City Regional Trial Court (RTC) Executive Judge an application dated May 4, 1998 for the
extra-judicial foreclosure of the mortgage which encumbered the Evidente properties under the CLA,
as well as the mortgage of the Locsin property covering TCT N-67286 which secured the 2ndTLA. The
application was granted and public auction of these properties was scheduled, and was actually carried
out on July 23, 1998.
The public auction was later nullified, however, on petitioners move, the Locsin property covered by
TCT No. 67286 which secured the 2nd TLA having been erroneously included. An amended
application for extrajudicial foreclosurewas thus filed by petitioner, this time covering the same
Evidente properties and TCT No. 138739, the property of the Locsins which secured the 1st TLA.
Public auction of these properties was scheduled on August 26, 1998.
Two days before the scheduled public auction or on August 24, 1998, the Locsins filed before the
Quezon City Regional Trial Court (RTC) a complaint against petitioner, the RTC Clerk of Court and
Ex-Oficio Sheriff of Quezon City, and Sheriff VI Marino V. Cahero, for Specific Performance, Tort
and Damageswith Prayer for the Issuance of a Temporary Restraining Order (TRO) and a Writ of
Preliminary Injunction, docketed as Civil Case No. Q-98-35337.3 The pertinent allegations of the
Locsins complaint are as follows:
xxx
15. Defendant bank, through its Assistant Vice-President-Combank II, Agnes C. Tuason, told plaintiffs
that the loan valuation of the two aforementioned properties [of the spouses Evidente securing the
CLA] is PHP2.5 Million, and this was in fact the amount received by plaintiff from defendant
bank . . .
16. The spouses Evidente, through plaintiffs, paid for the monthly installments due on the [CLA] until
October, 1997, as evidenced by OR No. 167588 dated October 31, 1997 issued by defendant bank. . . .
17. The spouses Evidente were unable to make subsequent payments and the real estate mortgage over
the Evidente properties was recommended for foreclosure.
xxx
19. . . . [P]laintiffs advised defendant bank that they will be settling their 1st TLA in full and shall be
taking the property covered by TCT No. N-138739 out of the mortgage.
20. However, to the shock of plaintiffs, defendant bank through its Account Officer, Nelia Umbal,
refused to release the said property because the Evidente properties, the mortgage of which secures. . .
the CLA dated November 6, 1996, will be insufficient to cover the balance of the said CLA.
21. Plaintiffs were surprised to learn that defendant bank capriciously, recklessly and oppressively
gave a loan valuation of only PHP900,000.00 for each of [the] two Evidente properties, or a total of
PHP1.8 Million. This valuation is unfair and unreasonable considering that the fair market value of
these properties is around PHP5 Million. Furthermore, no reason was given by defendant bank for the
sudden and unjust change in the valuation, which was originally pegged by defendant at PHP2.5
Million.
22. In effect, the mortgaged property covered by TCT No. N-138739, which secures the 1st TLA dated
September 28, 1995, and which has a loan valuation of PHP700,000.00, was also made a collateral for
the CLA. Worse, the whole amount of the loan under the 1st TLA was declared due and demandable,
although plaintiffs faithfully and regularly paid for the monthly amortization there[of].
23. Thus, to complete, rather suspiciously, the security for the CLA which is for PHP2.5 Million,
defendant bank further informed plaintiffs that it would cost them PHP1.4 Million to take the property
covered by TCT No. N-138739 [which secured the first TLA] out of the mortgage, because the
deficiency in the CLA secured by the Evidente properties must also be paid. This amount is
preposterous considering that at the time, the remaining balance of the 1st TLA was only around
PHP450,000,00. Moreover, plaintiffs were suffering from financial difficulties because of the sharp
decline of the pesos purchasing power.
xxx
26. Defendant bank filed with the Executive Judge of Quezon City, through public defendants herein,
an Application for Extra-Judicial foreclosure of Real Estate Mortgage under Act No, 3135, as
amended, dated May 4, 1998. The application sought the sale in a public auction of the Evidente
properties and plaintiffs property covered by TCT No. 67286 [which secured the second TLA and
which TLA had been settled]. . . .
xxx
31. Yet, defendant bank and public defendants allowed the public auction to proceed as scheduled [on
July 23, 1998].
xxx
35. In the meantime, without making any effort to cancel the effects of the public auction held on July
23, 1998, defendant bank filed with public defendants an Amended Application for Extra-Judicial
Foreclosure of Real Estate Mortgage under Act No. 3135, as amended. The amended application
sought the sale in a public auction of the same Evidente properties and plaintiffs property covered by
TCT No. N-138739 [which secured the first TLA].
36. Acting upon the said application, public defendants issued another notice of Sheriff Sale dated July
28, 1998 which scheduled the public auction of the aforementioned real properties on August 26, 1998
...
37. Plaintiffs property covered by TCT No. N-138739 is erroneously included in the amended
applicationand in the Notice of the Sheriffs Sale. The said mortgaged property secures the 1st TLA
dated September 28, 1995, for which plaintiffs have faithfully and regularly paid for the monthly
amortization due. On the other hand, defendant bank is foreclosing the said property and the two
Evidente properties for alleged failure to pay the monthly installments due on the CLA dated
November 8, 1996.
xxx
38. Furthermore, defendant bank acted in bad faith and in willful breach of its contractual obligations
to plaintiffs in understating the loan valuation of the two Evidente properties, and in effect declaring
the property covered by TCT No. N-133739 [which secured the first TLA] as additional collateral for
the said CLA. (Emphasis and underscoring supplied).
The plaintiffs Locsins thus prayed that:
A. Upon filing of this complaint, a temporary restraining order (TRO) be immediately issued ex-parte,
enjoining defendants, their agents and/or representatives from enforcing the Notice of Sheriffs Sale
dated July 28, 1998, and from proceeding with the scheduled public auction of the properties included
therein, particularly plaintiffs real property covered by TCT No. N-138739, on August 26, 1998, or on
any date thereafter, until further orders from the Honorable Court.
B. After appropriate proceedings, a writ of preliminary injunction be issued, under the same tenor as
above, and upon payment of such bond as may be fixed by the Honorable Court.
C. After trial on the merits, judgment be rendered:
1. On the First Cause of Action, ordering defendant bank to faithfully comply with its obligations
under the 1st TLA and the CLA, revert the loan valuation of the two Evidente properties covered by
TCTs Nos. N-166336 and 166337 to PHP2.5 Million, and allow plaintiffs to take its property covered
by TCT No. N-138739 out of the mortgage by paying the balance thereon, minus interests and
penalties accruing from February 1998;
2. On the First and Second Causes of Action, ordering defendant bank to pay plaintiffs PHP500,000.00
in actual damages;
3. On the Third Cause of Action, ordering defendant bank to pay plaintiffs PHP1 Million in actual
damages;
4. On the Fourth Cause of Action, ordering defendant bank to pay plaintiffs PHP500,000.00 in moral
damages;
5. On the Fifth Cause of Action, ordering defendant bank to pay plaintiffs PHP300,000.00 in
exemplary damages;
6. On the Sixth Cause of Action, ordering defendant bank to [pay] plaintiffs PHP200,[000].00 for
attorneys fees and litigation expenses;
7. Making the injunction issued against defendants permanent; and
8. Ordering defendants to pay costs of suit.
Other reliefs which are just and equitable are likewise prayed for. 4 (Emphasis and underscoring in
the original; italics supplied).
Branch 233 of the Quezon City RTC denied the Locsins prayer for the issuance of a TRO, by Order of
August 25, 1998.
In its September 8, 1998 ANSWER 5 with Compulsory Counterclaim filed on September 11, 1998,
petitioner denied that its Asst. Vice President Agnes Tuason had told the Locsins that the loan
valuation of the Evidente properties was 2.5 million for it in fact told them that the 2.5 million loan
was approved "inspite of the deficiency of the Evidente properties because of their [Locsins] good
paying record with [it]." And it denied (specifically) too the Locsins complaints-allegations in
paragraphs 19-25, alleging as follows:
8.2 All the promissory notes signed by [the Locsins] uniformly provide:
Upon the occurrence as to Maker or any Co-Maker of this Promissory Note of any of the following
events of default, the outstanding principal, accrued interest and any other sum payable hereunder or
under any related agreement shall become immediately due and payablewithout presentment, demand,
protest or notice of any kind (other than notice of the event and fact of default) all of which are hereby
expressly waived by the Maker and all of the Co-Makers, if any:
xxx
3) Failure by the Maker or any Co-Maker to perform or the violation of any provision of this
Promissory Note or any related agreement;
xxx
6) The Maker or any Co-Maker fails to pay any money due under any other agreement, standby letter
of credit or document evidencing, securing, guaranteeing or otherwise relating to indebtedness of the
Maker or any Co-Maker to any other creditor, or there occurs, any event of default or any event which,
but for the passage of time or the giving of notice, or both, would constitute under any such
agreement, stand by letter of credit or document (and which has not been remedied within any
applicable grace period):
xxx
8.3 The letter of approval of the 2.5 million loan of [the Locsins] has a cross-default provision, which
reads:
3.6 A default on any availment under this credit line facility shall automatically mean a default on [the
Locsins] existing term loan under Promissory Note No. 29-01-9080-95 [covering the first TLA] and
vice versa (Emphasis and underscoring supplied),6
on which letter the Locsins affixed their conformity; that in light of the Locsins default in the
settlement of their monthly obligations under the CLA, it sent them a January 7, 1998 demand letter
advising them of the Past Due Status of their promissory note covering the 2.5 million account to
thereby "automatically mean that [said promissory note] and the other loan account under [the
promissory note covering the 1st TLA] with an outstanding balance of 460,652.95 are considered
Due and Demandable already;" that after a follow up letter and a final letter of demand, the Locsins
requested, by letter of February 26, 1998, that the promissory note under the 1st TLA and that under
the CLA be treated separately and that one of their titles be released upon payment of 1.8 million;
that by letter of March 5, 1998, it advised the Locsins that their request in their February 26, 1998
letter "regarding the release of one of the [two Evidente titles]" was approved, "subject to the partial
payment on Principal plus all interests and charges amounting to 1,934,465.79 as of March 20,
1998"; that to its March 5, 1998 letter, the Locsins, by letter of March ___, (sic) 1998, replied as
follows:
We would like to request for a thirty day extension on the deadline given us today for the payment of
1,900,000.00, or(sic) the release of one title under PN No. 11-01-0586-96 [covering the CLA] as the
person very much interested in purchasing it has asked us for the same. At the same time we are also
going to take out the property under PN No. 29-01-9080-95 [covering the first TLA], so that only one
property under the fire (sic) account mentioned shall be left mortgaged to your bank.
Thank you for your kind consideration.7 (Underscoring supplied);
that despite the grant of the Locsins request for extension of 30 days or up to April 20, 1998 to pay
1.9 million as a condition "for the release of the title," the Locsins failed to come up therewith; and
that the inclusion of the Locsins mortgaged title covering the 1st TLA in the amended application for
extra-judicial foreclosure was "not erroneous because of the cross-default provisions and acceleration
clauses in the loan documents which [the Locsins] signed."
As Compulsory Counterclaim petitioner alleged that on account of the filing of the baseless and
malicious suit, it was constrained to engage the services of its counsel at an agreed fee of 200,000.00.
It thus prayed for the dismissal of the Locsins complaint and the grant of its counterclaim.
En passant,it does not appear that the Locsins filed a Reply8 to petitioners Answer with
Compulsory Counterclaim.
On March 26, 1999, the Locsins filed an Omnibus Motion 9 (To Amend the Designation of the
Plaintiffs; and to Admit Supplemental Complaint), which appears to have been granted by the Quezon
City RTC. In their Supplemental Complaint, 10 they repleaded in toto the allegations in their August
24, 1998 Complaint and additionally alleged that petitioner proceeded with the public auction of the
properties covered by the mortgage in the 1st TLA and the mortgage in the CLA on September 23,
1998, "contrary to law."
The Locsins thus prayed in their Supplemental Complaint as follows:
1. Ordering the cancellation of the public auction of TCT Nos. N-138739, N-166336 and N-166337 on
September 23, 1998;
2. Declaring said auction of no legal force and effect; and
3. Granting the following reliefs prayed for by plaintiffs in their [original] Complaint, to wit:
x x x11 (Emphasis and underscoring supplied).
By Answer12 (To Supplemental Complaint) dated June 1, 1999, petitioner admitted that the public
auction (which was originally scheduled on August 26, 1998) did take place on September 23, 1998. It
denied, however, that it was contrary to law.
More than eight months after the Locsins filed their Supplemental Complaint reflecting their prayer
for the nullification of the September 23, 1998 public auction sale or on November 29, 1999,
petitioner filed a complaint against the Locsins before the RTC of Mandaluyong where it was
docketed as Civil Case No. MC-99-935,13 for Collection of Sum of Money, alleging as follows:
xxx
5. Defendants failed to satisfy their obligations under the . . . Promissory Notes [covering the first TLA
& the CLA] and Plaintiff deemed them in default;
xxx
11. The [amended] extrajudicial sale was conducted on 23 September 1998 and Plaintiff was again
declared the highest bidder . . .
12. The total outstanding obligation of Defendants at the time of the foreclosure was PESOS: FIVE
MILLION TWENTY THREE THOUSAND FOUR HUNDRED NINETY SIX & 64/100
(P5,023.496.64). However, the appraised value of the properties was only P3,879,406.80 and plaintiff
thus submitted a bid of PESOS: THREE MILLION EIGHT HUNDRED SEVENTY NINE
THOUSAND FOUR HUNDRED SIX & 80/100 (P3,879.406.80);
13. After all expenses for the foreclosure and registration of the Certificate of Sale have been deducted
from the aforementioned bid, there still remains an outstanding balance in the amount of PESOS:
ONE MILLION ONE HUNDRED FORTY FOUR THOUSAND EIGHTY NINE & 84/100
(1,144,089.84), EXCLUSIVE OF INTEREST AT THE RATE OF TWENTY FIVE AND A HALF
PERCENT (25.5%) per annum, which Plaintiff is entitled to recover from Defendants;
14. On 09 February 1999, counsel for plaintiff sent a letter to defendants dated 05 February 1999,
demanding from the latter the payment of said deficiency but Defendants refused and failed and
continue to refuse and fail to pay said obligation . . .
15. Due to Defendants unreasonable refusal and failure to comply with Plaintiffs just demands,
Plaintiff was compelled to institute the present action and to engage the services of counsel to whom it
bound itself to pay the sum of P130,000.00, plus appearance fee of P2,000.00 and other legal costs and
expenses.14 (Emphasis in the original; underscoring supplied).
Petitioner accordingly prayed in its complaint that the Locsins be ordered to pay it jointly and
severally
1. the outstanding obligation in the sum of PESOS: ONE MILLION ONE HUNDRED FORTY FOUR
THOUSAND EIGHTY NINE & 84/100 (1,144,089.84), plus interest thereon at the rate of twenty five
and a half percent (25.5%) per annum from 23 September 1998, the date of the foreclosure sale, until
the obligation has been fully paid;
2. attorneys fees in the sum of P130,000.00, plus appearance fee of P2,000.00; and
3. costs of suit and expenses of litigation.
Other just and equitable reliefs under the premises are likewise prayed for. 15 (Emphasis in the
original).
To petitioners complaint (for sum of money), the Locsins filed a Motion to Dismiss 16 on the
ground that it should have been raised as compulsory counterclaim in their (the Locsins) complaint
(for specific performance, damages and nullification of the public auction), and by failing to raise it as
such, it is now "barred by the rules." To the Motion, petitioner filed its Opposition which merited the
Locsins filing of a Reply to Opposition.17
Branch 213 of the Mandaluyong RTC denied the Locsins Motion to Dismiss petitioners Complaint,
by Order of September 18, 2000,18 in this wise:
The motion to dismiss is premised on the ground that plaintiffs claim in the instant case should have
been raised in the previous case, [C]ivil [C]ase No. Q98-35337, wherein plaintiff herein was the
defendant, said claim being a compulsory counterclaim and for failure to raise the same, it is now
barred by the rules.
It is noted, however, that the instant case is one for collection of alleged deficiency amount as the
proceeds of the foreclosure sale of defendants properties are not sufficient to cover the entire
indebtedness. In effect, such claim did not arise as a consequence of [C]ivil Case No. 098-353337 but
was already existing(sic) even before the institution of that earlier case.
Without necessarily delving into the veracity of plaintiffs claim but merely considering its origin and
nature as alleged in the complaint, said claim is merely permissive and not compulsory. Thus, such a
claim can stand as an independent action.19 (Underscoring supplied).
The Locsins Motion for Reconsideration having been denied by the Mandaluyong RTC by Order of
March 21, 2001,20 they appealed to the Court of Appeals which, by the present assailed decision of
June 5, 2003,21 reversed the Orders of the Mandaluyong RTC, it finding that petitioners complaint
was a compulsory counterclaim which should have been raised in its Answer to the Locsins
complaint, and having failed to do so, it is now barred; that litis pendentiaand res judicataapply to the
case; and that petitioner violated the rule on forum shopping, hence, the dismissal of its complaint is
warranted. Explained the appellate court:
[The Locsins] complaint in Civil Case No. Q-98-35337, pending before Branch 223 of the Regional;
Trial Court of Quezon City asks specific performance by private respondent Banco de Oro of its
obligations under the very same loan agreements covered by Real Estate Mortgages mentioned in
private respondents Complaint in Civil Case No. MC-99-935 before the Mandaluyong City Trial
Court. In both cases, the real properties involved are those covered by TCT Nos. N-138739, [N-
166336] and N-166337. The basis of the parties respective complaints arose from the very same
transactions, the Term Loan Agreement, dated September 28, 1995 and the Credit Line Agreement,
dated November 6, 1996. Clearly, there is a logical connection between both claims which arose from
the same transaction and are necessarily connected and it does not require the presence of third parties
for its adjudication. A counterclaim is logically related to the opposing partys claim where separate
trials of each of their respective claims would involve substantial duplication of effort and time by the
parties and the courts.
Moreover, Sec. 2, Rule 9 of the Rules of Court provides:
"Sec. 2. Compulsory counterclaim, or cross-claim, not set up barred. - A compulsory counterclaim. or
a cross claim, not set up shall be barred."
Private respondent should have raised its complaint as compulsory counterclaim in the Regional Trial
Court of Quezon City. Failing to do so, it is now barred. The reason for the rule relating to
counterclaims is to avoid multiplicity of suits and to enable the Courts to dispose of the whole matter
in controversy in one action, and adjustment of defendants demand by counterclaim rather than by
independent suit. (Reyes vs. Court of Appeals, 38 SCRA 138).
[The Locsins] second argument is that private respondents complaint in Civil Case No. MC-99-935
constitutes litis pendentia,and therefore should have been dismissed by the trial court. For litis
pendentiato be a ground for dismissal of an action, three elements must concur: (a) identity of parties,
or at least such parties who represent the same interest in both actions; (b) identity of rights asserted
and relief prayed for being founded on the same facts; and (c) the identity, with respect to the two
preceding particulars in the two cases, is such that any judgment that may be rendered in the pending
case, regardless of which party is successful, would amount to res judicatain the other.
Applying this test, the principle of litis pendentiaand res judicatawill certainly apply to the instant
case, all three requisites are present. The parties are the same and what is involved in both Civil Case
No. Q-98-35337 pending before the Quezon City Trial Court and Civil Case No. MC-99-935 before
the Mandaluyong City Trial Court are the same subject matter and set of circumstances, which would
entail presentation of the same evidence. Judgment in favor of one of the parties in Civil Case No. Q-
9835337 would bar the institution of the case filed before the Mandaluyong City Trial Court.
Finally, [the Locsins] assert that Civil Case MC-99-935 should be dismissed since private respondent
is guilty of willful and deliberate forum shopping. Jurisprudence has defined forum-shopping as the
filing of multiple suits involving the same parties for the same cause of action, either simultaneously
or successively, for the purpose of obtaining a favorable judgment. Forum shopping exists where the
elements of litis pendentiaare present, and where the a final judgment in one case will amount to res
judicata in the other. (Heirs of Victorina Motus Penaverde v. Heirs of Mariano Penaverde, 344 SCRA
69). Thus, there is forum shopping when there exist: a) identity of parties, or at least such parties as
represent the same interest in both actions, b) identity of rights asserted and relief prayed for, the relief
being founded on the same facts, and c) the identity of the two preceding particulars is such that any
judgment rendered in the other action, will amount to res judicatain the action under consideration.
(Prubankers Association vs. Prudential Bank and Trust Company, 302 SCRA 83). As discussed earlier,
the elements of litis pendentiabeing present and that res judicata will eventually result, a decision by
the Quezon City Trial Court would bar the institution of the Civil Case in the Mandaluyong City Trial
Court for the collection of deficiency claim in the foreclosure sale of the petitioners properties.
Private respondent violated the rule on forum shopping and therefore, the summary dismissal of their
action is warranted.22 (Italics in the original; underscoring supplied).
Hence, the present Petition for Review on Certiorari, 23 petitioner raising the following assignment
of errors:
I. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANKS COMPLAINT
FOR COLLECTION OF SUM OF MONEY BASED ON DEFICIENCY CLAIM UNDER CIVIL
CASE No. MC-99-935 IS A COMPULSORY COUNTERCLAIM AND SHOULD HAVE BEEN SET
UP BY PETITIONER BANK IN PRIVATE RESPONDENTS COMPLAINT FOR SPECIFIC
PERFORMANCE, TORT AND DAMAGES, AND ANNULMENT OF FORECLOSURE IN CIVIL
CASE NO. Q-98-35337.
II. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE IS LITIS PENDENTIA AND
THUS, CIVIL CASE No. MC-99-935 SHOULD BE DISMISSED.
III. THE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER BANK IS
GUILTY OF FORUM SHOPPING.24
Petitioner argues that the Locsins complaint is one based on tort, whereas its complaint before the
Mandaluyong RTC is based on contract and law, hence, the two causes of action are separate and
distinct; that under the test for the determination of whether the counterclaim is compulsory or
permissive, its suit before the RTC of Mandaluyong for collection of deficiency judgment is not a
compulsory, but permissive counterclaim and may, therefore, proceed independently of the Locsins
complaint.
Petitioner adds that its claim arises from the loan agreement, whereas the Locsins claim arises from
the annulment of the foreclosure sale; that litis pendentiaand res judicatado not apply as grounds for
dismissal of its complaint as a perusal of both complaints reveals different causes of action, and the
rights asserted and the reliefs prayed for are different, and the rule on lis pendens "is applicable only
when the judgment to be rendered in the action first instituted will be such that regardless of which
party is successful, it will amount to res judicataas to the second action," it citing Hongkong &
Shanghai Bank v. Aldecon & Co.25
Citing Enriquez, et al. v. Ramos, et al., 26 petitioner further argues that an action for collection of a
mortgage loan does not bar another for rescission of the mortgage if such is based on the non-
compliance by the mortgagor of the mortgage contract.
Petitioner further cites Roa v. PH Credit Corporation,27 wherein this Court ruled that the pendency
of a replevin suit does not bar a proceeding for deficiency claim as there is no identity of subject
matter, cause of action and reliefs prayed for.
Finally, petitioner cites Bangko Silangan Development Bank v. Court of Appeals,28 wherein this
Court held that:
The test to determine identity of the causes of action is to ascertain whether the same evidence
necessary to sustain the second cause of action is sufficient to authorize a recovery in the first, even if
the form or nature of the two (2) actions are different from each other. If the same facts or evidence
would sustain both, the two (2) actions are considered the same within the rule that the judgment in
the former is a bar to the subsequent action; otherwise, it is not. This method has been considered the
most accurate test as to whether a former judgment is a bar in subsequent proceedings between the
same parties. It has even been designated as infallible.
While it is true that the two (2) cases are founded in practically the same set of facts, as correctly
observed by the Court of Appeals, it cannot be said that exactly the same evidence are needed to prove
the causes of action in both cases. Thus, in Civil Case No, 91-56185 of the RTC of Manila, the
evidence needed to prove that petitioner sustained damage to its reputation and goodwill is not the
same evidence needed in Civil Case No. 221 of the RTC of Batangas to prove the allegation that a
substantial amount of respondent Bausas bank deposit in petitioners bank was illegally withdrawn
without her consent or authority, The RTC of Batangas and the Court of Appeals, therefore, did not
abuse their discretion in denying petitioners motion to dismiss which was based on the ground of litis
pendentia.29 (Emphasis and underscoring supplied).
By their Comment,30 the Locsins maintain that petitioners claim in Civil Case No. MC-99-935 is
"logically related" to their claim in Civil Case No. Q-98-35337, as they involve the same parties, rely
on the same facts, subject matter and series of
transactions and, therefore, would entail presentation of the same evidence; that petitioner having
failed to set up its claim as a compulsory counterclaim 31 in Civil Case No. Q-98-35337, it is now
barred from setting it up in Civil Case No. MC-99-935; and that litis pendentiaand res judicata
proscribe the filing of a separate complaint by petitioner which is guilty of "willful and deliberate
forum shopping."
The petition is impressed with merit.
It bears noting that when petitioner filed its Answer with Counterclaim to the Locsins complaint on
September 11, 1998, the Real Estate Mortgages covering the 1st TLA and the CLA had not been
extrajudicially foreclosed, the extra-judicial foreclosure having taken place subsequent thereto or on
September 23, 1998.
It bears noting too that until after the Locsins allegedly refused and failed to settle the alleged
deficiency amount of their outstanding obligation, despite petitioners February 5, 1999 letter of
demand sent to the Locsins on February 9, 1999, petitioners cause of action had not arisen.
Petitioner could not, therefore, have set its claim subject of its complaint in Civil Case No. MC-99-
935 as, assuming arguendothat it is, a compulsory counterclaim when it filed on September 11, 1998
its Answer with Compulsory Counterclaim to the Locsins complaint. 32
The counterclaim must be existing at the time of filing the answer, though not at the commencement
of the action for under Section 3 of the former Rule 10, the counterclaim or cross-claim which a party
may aver in his answer must be one which he may have "at the time" against the opposing party. That
phrase can only have reference to the time of the answer. Certainly a premature counterclaim cannot
be set up in the answer. This construction is not only explicit from the language of the aforecited
provisions but also serves to harmonize the aforecited sections of Rule 10, with section 4 of the same
rule which provides that "a counterclaim . . . which either matured or was acquired by a party after
serving his pleadingmay, with the permission of the court, be presented as a counterclaim . . . by
supplemental pleading before judgment."
Thus a party who fails to interpose a counterclaim although arising out of or is necessarily connected
with the transaction or occurrence of the plaintiffs suit but which did not exist or mature at the time
said party files his answer is not thereby barred from interposing such claim in a future litigation. . . 33
(Emphasis and underscoring supplied).
While petitioner could have, after the Locsins filed on March 26, 1999 a Supplemental Complaint in
Civil Case No. Q-98-35337, set up, in its Supplemental Answer, its claim subject of Civil Case No.
MC-99-935, again assuming arguendothat it is a Compulsory
Counterclaim, the setting up of such "after-acquired counterclaim," is merely permissive, not
compulsory.34
At all events, even if the claim of petitioner - subject of its complaint in Civil Case No. MC-99-935 is
a compulsory counterclaim which should have been set up in its Answer to the Locsins Supplemental
Complaint, technicality should give way to justice and equity to enable petitioner to pursue its "after-
acquired" claim against the Locsins.
As for the issue of whether petitioners complaint is dismissible on the grounds of litis pendentiaor
auter action pendant,and forum shopping, the above-quoted and recited allegations of the pleadings of
the parties do not reflect identity of rights asserted and reliefs sought, as well as basis thereof, to a
degree sufficient to give rise to the abatement of petitioners complaint on any of these grounds.
WHEREFORE, the petition is hereby GRANTED.
The assailed decision of the Court of Appeals is SET ASIDE.
Let the case be REMANDED to the court of origin, Branch 213 of the Regional Trial Court of
Mandaluyong, which is hereby DIRECTED to continue with dispatch the proceedings in Civil Case
No. MC-99-935.
No costs.
SO ORDERED.