#128

REPUBLIC OF THE PHILIPPINES VS. COJUANGCO et. al,

G.R. No. 180702, 12 April 2011

FACTS:
Consolidated cases were initiated on various dates by the Republic of the
Philippines (Republic) for alleged anomalous transactions made by the respondents. In
Civil Case No. 0033-F, the individual defendants were Cojuangco, President Marcos
and First Lady Imelda R. Marcos, the ACCRA lawyers, and Ursua. Impleaded as
corporate defendants were Southern Luzon Oil Mills, Cagayan de Oro Oil Company,
Incorporated, Iligan Coconut Industries, Incorporated, San Pablo Manufacturing
Corporation,  Granexport Manufacturing Corporation, Legaspi Oil Company,
Incorporated, collectively referred to herein as the CIIF Oil Mills, and their 14 holding
companies. Allegedly, Cojuangco purchased a block of 33,000,000 shares of SMC
stock through the 14 holding companies owned by the CIIF Oil Mills. For this reason,
the block of 33,133,266 shares of SMC stock shall be referred to as the CIIF block of
shares.c
Also impleaded as defendants in Civil Case No. 0033-F were several
corporations alleged to have been under Cojuangco's control and used by him to
acquire the block of shares of SMC stock. These corporations are referred to as
Cojuangco corporations or companies, to distinguish them from the CIIF Oil Mills.
It was alleged that respondents plotted, devised, schemed, conspired and
confederated with each other in setting up, through the use of coconut levy funds, the
financial and corporate framework and structures that led to the establishment of UCPB,
UNICOM, COCOLIFE, COCOMARK.  CIC, and more than twenty other coconut levy-
funded corporations, including the acquisition of San Miguel Corporation shares and its
institutionalization through presidential directives of the coconut monopoly. According to
the petitioner, the acts of respondents grossly abuse their official position and authority,
flagrantly breach the public trust and fiduciary obligations, 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 the Filipino people.

During the hearing on November 24, 2006, Cojuangco, et al. filed

their Submission and Offer of Evidence of Defendants, formally offering in evidence
certain documents to substantiate their counterclaims, and informing that they found no
need to present countervailing evidence because the Republic's evidence did not prove
the allegations of the Complaint. On December 5, 2006, after the Republic submitted
its Comment, the Sandiganbayan admitted the exhibits offered by Cojuangco, et al., and
granted the parties a non-extendible period within which to file their respective
memoranda and reply-memoranda.Thereafter, on February 23, 2007, the
Sandiganbayan considered the case submitted for decision. The Sandiganbayan lifted
the Writ of Sequestration despite the existence of the basic requisites for the validity of
sequestration. It also denied petitioner’s alternative prayer in its MR for the issuance of
an order of sequestration against all the subject shares of stock.

ISSUE:

Whether or not the Republic have adduced evidence to substantiate its allegations
against the respondents.

RULING:

The Court affirm the decision of November 28, 2007, because the Republic did
not discharge its burden as the plaintiff to establish by preponderance of evidence that
the respondents' SMC shares were illegally acquired with coconut-levy funds.

First, it is notable that the decision of November 28, 2007 did not rule on whether
coconut levy funds were public funds or not. The silence of the Sandiganbayan on the
matter was probably due to its not seeing the need for such ruling following its
conclusion that the Republic had not preponderantly established the source of the funds
used to pay the purchase price of the concerned SMC shares, and whether the shares
had been acquired with the use of coconut levy funds.
Secondly, the ruling in Republic v. COCOFED determined only whether certain
stockholders of the UCPB could vote in the stockholders' meeting that had been called.
The issue now before the Court could not be controlled by the ruling in Republic v.
COCOFED, however, for even as that ruling determined the issue of voting, the Court
was forthright enough about not thereby preempting the Sandiganbayan's decisions on
the merits on ill-gotten wealth in the several cases then pending.

Thirdly, the Republic's assertion that coconut levy funds had been used to source
the payment for the Cojuangco block of SMC shares was premised on its allegation that
the UCPB and the CIIF Oil Mills were public corporations. But the premise was grossly
erroneous and overly presumptuous, because:
(a) The fact of the UCPB and the CIIF Oil Mills being public corporations or government-
owned or government-controlled corporations precisely remained controverted by
Cojuangco, et al. in light of the lack of any competent to that effect being in the records;
(b) Cojuangco explicitly averred in paragraph 2.01.(b) of his Answer that the UCPB was
a "private corporation;" and

(c) The Republic did not competently identify or establish which ones of the Cojuangco
corporations had supposedly received advances from the CIIF Oil Mills.

Fourthly, the Republic asserts that the contested block of shares had been paid
for with "borrowings" from the UCPB and "advances" from the CIIF Oil Mills, and that
such borrowings and advances had been illegal because the shares had not been
purchased for the "benefit of the Coconut Farmers." To buttress its assertion, the
Republic relied on the admissions supposedly made in paragraph 2.01 of
Cojuangco's Answer in relation to paragraph 4 of the Republic's Amended Complaint.

It is basic in remedial law that a defendant in a civil case must apprise the trial
court and the adverse party of the facts alleged by the complaint that he admits and of
the facts alleged by the complaint that he wishes to place into contention. The
defendant does the former either by stating in his answer that they are true or by failing
to properly deny them. There are two ways of denying alleged facts: one is by general
denial, and the other, by specific denial.

Under Section 10, Rule 8 of the Rules of Court, a specific denial of an allegation

of the complaint may be made in any of three ways, namely: (a) a defendant specifies
each material allegation of fact the truth of which he does not admit and, whenever
practicable, sets forth the substance of the matters upon which he relies to support his
denial; (b) a defendant who desires to deny only a part of an averment specifies so
much of it as is true and material and denies only the remainder; and ( c) a defendant
who is without knowledge or information sufficient to form a belief as to the truth of a
material averment made in the complaint states so, which has the effect of a denial.

The express qualifications contained in paragraph 2.01 of

Cojuangco's Answer constituted efficient specific denials of the averments of paragraph
2 of the Republic's Amended Complaint under the first method mentioned in Section 10
of Rule 8. Indeed, the aforequoted paragraphs of the Amended Complaint and of
Cojuangco's Answer indicate that Cojuangco thereby expressly qualified his admission
of having been the President and a Director of the UCPB with the averment that the
UCPB was a "private corporation;" that his Answer's allegation of his being a member of
the Board of Directors of the United Coconut Oil Mills, Inc. did not admit that he was a
member of the Board of Directors of the CIIF Oil Mills, because the United Coconut Oil
Mills, Inc. was not one of the CIIF Oil Mills; and that his Answer nowhere contained any
admission or statement that he had held the various positions in the government or in
the private corporations at the same time and in 1983, the time when the contested
acquisition of the SMC shares of stock took place.

The statements found in the joint Pre-Trial Brief of Cojuangco, et al. were
noticeably written beneath the heading of Proposed Evidence. Such location indicated
that the statements were only being proposed, that is, they were not yet intended or
offered as admission of any fact stated therein. In other words, the matters stated or set
forth therein might or might not be presented at all. Also, the text and tenor of the
statements expressly conditioned the proposal on the Republic ultimately presenting its
evidence in the action. After the Republic opted not to present its evidence, the
condition did not transpire; hence, the proposed admissions, assuming that they were
that, did not materialize.

The burden of proof, according to Section 1, Rule 131 of the Rules of Court, is

"the duty of a party to present evidence on the facts in issue necessary to establish his
claim or defense by the amount of evidence required by law." Here, the Republic, being
the plaintiff, was the party that carried the burden of proof. That burden required it to
demonstrate through competent evidence that the respondents, as defendants, had
purchased the SMC shares of stock with the use of public funds; and that the affected
shares of stock constituted ill-gotten wealth.

#132
Mahilum vs. Spouses Ilano
G.R. No. 197923, June 22, 2015

FACTS:
Ruby Ruth S. Serrano Mahilum is the registered owner of a parcel of land.  She
entrusted the original owner's duplicate copy of TCT 85533 to Teresa Perez (Perez) - a
purported real estate broker - who claimed that she can assist petitioner in obtaining a
loan, with TCT 85533 serving as collateral. After several months, petitioner demanded
the return of the title, but Perez failed to produce the same; after much prodding, Perez
admitted that the title was lost. Thus, in June 2004, petitioner executed an Affidavit of
Loss and caused the same to be annotated upon the original registry copy of TCT
85533 as Entry No. 1668-24 on October 7, 2004.

Petitioner received a letter from the Registry of Deeds of Las Pinas City informing her
that the owner's duplicate copy of TCT 85533 was not lost, but that it was presented to
the registry by respondents, spouses Edilberto and Lourdes Ilano, who claimed that the
property covered by the title was sold to them. In this connection, respondents - instead
of registering the supposed sale in their favor - executed an Affidavit of Non-Loss, which
was entered on TCT 85533 on June 28, 2006 as Entry No. 1875-27.

Petitioner confronted respondents, who showed her a notarized Agreement 9 with right of
repurchase dated December 4, 2003 and an unnotarized and undated Deed of Absolute
Sale, on which documents petitioner's purported signatures were affixed. These
documents indicate that petitioner sold the property covered by TCT 85533 to
respondents for P250,000.00 with right to repurchase the same within a period of 90
days. Petitioner told respondents that she did not execute these documents, and that
her purported signatures therein were in fact falsified and forged. She demanded the
return of TCT 85533, but respondents refused to surrender the title to her. They claimed
that the property was sold to them by Perez and "a companion."

All this time, title to the property remained in petitioner's name, as respondents have not
registered the unnotarized and undated Deed of Absolute Sale.
Petitioner and her husband Richard instituted against respondents and Perez Civil Case
No. LP-07-0109 with the Regional Trial Court of Las Pinas City. Her Complaint for
"annulment of agreement and deed of absolute sale, specific performance, with
damages. The complaint contained this allegations and prayer:

“That by reason of the actuations of the defendants in facilitating the execution of the
aforesaid falsified documents, and adamant refusal to return to plaintiffs the duplicate
original owner's copy of their title, which were all done with evident bad faith, the
plaintiffs suffered and continue to suffer sleepless nights, wounded feelings, besmirched
reputation, serious anxiety and other similar feelings, which, when quantified, can
reasonably be compensated with the sum of Fifty Thousand (P50,000.00) Pesos, as
moral damages;”

Respondents filed a Demurrer to Evidence, arguing that the complaint failed to state a
cause of action in that petitioner failed to allege that respondents were purchasers in
bad faith or with notice of a defect in the title; that in the absence of such an allegation,
the presumption that respondents are purchasers in good faith prevails.

The trial court denied respondents' demurrer. It held that the question of whether
respondents are purchasers in bad faith can only be resolved after the parties present
their respective evidence. Upon appeal, the CA granted the petition of the respondent
nullifying and setting aside the decision of RTC.

ISSUE:
Whether or not failure to allege bad faith in the complaint is a fatal defect considering
that the subject documents were merely simulated, fictitious and forgery hence null and
void ab initio.

RULING:

Petitioner's case is to annul the agreement and deed of sale based on the allegation
that they are forgeries, and that respondents were parties to the fraud; since no new title
was issued in respondents' favor, there is no new title to annul. Indeed, if the agreement
and deed of sale are forgeries, then they are a nullity and convey no title. The
underlying principle is that no one can give what one does not have. Nemo dat quod
non habet. The Court hold that with the presentation of the forged deed, even if
accompanied by the owner's duplicate certificate of title, the registered owner did not
thereby lose his title, and neither does the assignee in the forged deed acquire any right
or title to the said property.

In this case, it is petitioner who must be protected under the Torrens system - as the
registered owner of the subject property. "A certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name
appears therein. The real puipose of the Torrens system of land registration is to quiet
title to land and put a stop forever to any question as to the legality of the title.”

Respondents' Amended Answer with Compulsory Counterclaim, which tends to admit

and indicate that when the December 4, 2003 Agreement with right of repurchase and
unnotarized and undated Deed of Absolute Sale were executed, an individual - who
falsely represented herself to be petitioner - appeared and signed these documents.
Further, respondents admitted, in their petition for certiorari, that they bought the
property not from petitioner, but from their "co-defendants who had a defective title”
presumably Perez and the impostor.

Respondents already knew petitioner's identity and how she looked, having met her
even before the filing of the complaint - when petitioner confronted them and they
showed her the agreement and deed of sale. Thus, they should not have referred to the
supposed seller as "another person herein named as 'Jane Doe' whose identity is yet to
be established who introduced herself as Ruby Ruth Serrano" or "the person who
introduced herself as Ruby Ruth Serrano" if indeed it was petitioner herself who
appeared and signed the agreement and deed of sale in question. They should have
categorically alleged that they bought the property from petitioner herself if indeed this
was so. Their ambiguous allegations constitute a negative pregnant, which is in effect
an admission.

Evidently, this particular denial had the earmark of what is called in the law on pleadings
as a negative pregnant, that is, a denial pregnant with the admission of the substantial
facts in the pleading responded to which are not squarely denied. It was in effect an
admission of the averments it was directed at. Stated otherwise, a negative pregnant is
a form of negative expression which carries with it an affirmation or at least an
implication of some kind favorable to the adverse party. It is a denial pregnant with an
admission of the substantial facts alleged in the pleading. Where a fact is alleged with
qualifying or modifying language and the words of the allegation as so qualified or
modified are literally denied, it has been held that the qualifying circumstances alone
are denied while the fact itself is admitted.

"If an allegation is not specifically denied or the denial is a negative pregnant, the
allegation is deemed admitted." "Where a fact is alleged with some qualifying or
modifying language, and the denial is conjunctive, a 'negative pregnant' exists, and only
the qualification or modification is denied, while the fact itself is admitted." "A denial in
the form of a negative pregnant is an ambiguous pleading, since it cannot be
ascertained whether it is the fact or only the qualification that is intended to be denied."
"Profession of ignorance about a fact which is patently and necessarily within the
pleader's knowledge, or means of knowing as ineffectual, is no denial at all."