REPUBLIC OF THE PHILIPPINES vs.

SANDIGANBAYAN
G.R. NO. 152154
15 JULY 2003

(Propriety of the Forfeiture / Proving Marcos’ Ownership of the Swiss Bank Deposits)

This is a petition for certiorari filed by the Republic seeking the Court‟s
decision to reinstate its earlier decision which forfeited in favor of the Republic
the amount held in escrow in the Philippine National Bank (PNB) in the
aggregate amount of US$658,175,373.60 as of January 31, 2002.

FACTS

On 17 December 1991, the Republic through the PCGG and represented by

the OSG, filed a petition for forfeiture before the Sandiganbayan (Civil Case No.
0141) entitled Republic of the Philippines vs. Ferdinand E. Marcos, pursuant to
RA 13791 in relation to Executive Order Nos. 1,2 2,3 144 and 14-A.

In said case, petitioner sought the declaration of the aggregate amount of

US$356 million (now estimated to be more than US$658 million inclusive of
interest) deposited in escrow in the PNB, as ill-gotten wealth. The funds were
previously held by the following five account groups, using various foreign
foundations in certain Swiss banks:

(1) Azio-Verso-Vibur Foundation accounts;

(2) Xandy-Wintrop: Charis-Scolari-Valamo-Spinus-
Avertina Foundation accounts;
(3) Trinidad-Rayby-Palmy Foundation accounts;
(4) Rosalys-Aguamina Foundation accounts and
(5) Maler Foundation accounts.

In addition, the petition sought the forfeiture of US$25 million and US$5
million in treasury notes which exceeded the Marcos couple's salaries, other
lawful income as well as income from legitimately acquired property. The
treasury notes are frozen at the Bangko Sentral ng Pilipinas, by virtue of the
freeze order issued by the PCGG.

Petitioner filed a motion for summary judgment and/or judgment on the

pleadings. The Sandiganbayan in its 20 November 1997 resolution denied
petitioner's motion for summary judgment and/or judgment on the pleadings on
the ground that the motion to approve the compromise agreement 1 took
precedence over the motion for summary judgment.

Respondent Mrs. Marcos filed a manifestation on 26 May 1998 claiming

she was not a party to the motion for approval of the Compromise Agreement and
that she owned 90% of the funds with the remaining 10% belonging to the
Marcos estate.

Meanwhile, on 10 August 1995, petitioner filed with the District Attorney

in Zurich, Switzerland, an additional request for the immediate transfer of the
deposits to an escrow account in the PNB. The request was granted.

1General Agreement and the Supplemental Agreements6 dated December 28, 1993
Declared null and void by this Court on December 9, 1998 in the case of "Francisco I. Chavez vs.
PCGG and Magtanggol Gunigundo", docketed as G.R. No. 130716.

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 On appeal by the Marcoses, the Swiss Federal Supreme Court, in a
decision dated 10 December 1997, upheld the ruling of the District Attorney of
Zurich granting the request for the transfer of the funds.

In 1998, the funds were remitted to the Philippines in escrow.

Subsequently, respondent Marcos children moved that the funds be

placed in custodia legis because the deposit in escrow in the PNB was allegedly in
danger of dissipation by petitioner. The Sandiganbayan, in its resolution dated 8
September 1998, granted the motion.

Petitioner contended that, after the pre-trial conference, certain facts

were established, warranting a summary judgment on the funds sought to be
forfeited. On 24 March 2000, a hearing on the motion for summary judgment
was conducted.

In a decision dated 19 September 2000, the Sandiganbayan granted

petitioner's motion for summary judgment, concluding that there is no issue of
fact which calls for the presentation of evidence, and therefore the Swiss deposits
which were transmitted to and now held in escrow at the PNB are deemed
unlawfully acquired as ill-gotten wealth.

The Court declared the Swiss deposits which were transferred to and now
deposited in escrow at the Philippine National Bank in the total aggregate value
equivalent to US$627,608,544.95 as of 31 August 2000 together with the
increments thereof forfeited in favor of the State.

Respondent Mrs. Marcos filed a motion for reconsideration dated 26

September 2000. Subsequently, petitioner filed its opposition thereto.

In a resolution dated 31 January 2002, the Sandiganbayan reversed its 19

September 2000 decision, thus denying petitioner's motion for summary
judgment, concluding that the evidence offered for summary judgment of the
case did not prove that the money in the Swiss Banks belonged to the Marcos
spouses because no legal proof exists in the record as to the ownership by the
Marcoses of the funds in escrow from the Swiss Banks.

In this instant petition, petitioner argues that the Sandiganbayan, in

reversing its 19 September 2000 decision, committed grave abuse of discretion
amounting to lack or excess of jurisdiction.

ISSUE

Whether or not petitioner Republic was able to prove its case for
forfeiture in accordance with Sections 2 and 3 of RA 1379.

RULING

The Supreme Court held that:

1. Petitioner Republic was able to prove its case for forfeiture in

accordance with Sections 2 and 3 of RA 1379.

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 The law raises the prima facie presumption that a property is unlawfully
acquired, hence subject to forfeiture, if its amount or value is manifestly
disproportionate to the official salary and other lawful income of the public
officer who owns it.

Based on Sections 2 and 3 of RA 1379, the following facts must be established

in order that forfeiture or seizure of the Swiss deposits may be effected:

(1) ownership by the public officer of money or property acquired during

his incumbency, whether it be in his name or otherwise, and
(2) the extent to which the amount of that money or property exceeds, i.
e., is grossly disproportionate to, the legitimate income of the public
officer.

That spouses Ferdinand and Imelda Marcos were public officials during the
time material to the instant case was never in dispute.

Respondent Marcoses in its answer categorically admitted the allegations set

forth by the petitioner in its petition for forfeiture, as to the personal
circumstances of Ferdinand E. Marcos as a public official who served without
interruption as Congressman, Senator, Senate President and President of the
Republic of the Philippines from 1 December 1965 to 25 February 1986.

Likewise, respondents admitted in their answer as to the personal

circumstances of Imelda R. Marcos who once served as a member of the Interim
Batasang Pambansa from 1978 to 1984 and as Metro Manila Governor,
concurrently Minister of Human Settlements, from June 1976 to February 1986.

Respondent Mrs. Marcos also admitted in her answer the allegations which
referred to the accumulated salaries of respondents Ferdinand E. Marcos and
Imelda R. Marcos. The combined accumulated salaries of the Marcos couple were
reflected in the Certification dated 27 May 1986 issued by then Minister of
Budget and Management Alberto Romulo. The Certification showed that, from
1966 to 1985, Ferdinand E. Marcos and Imelda R. Marcos had accumulated
salaries in the amount of P1,570,000 and P718,750, respectively, or a total of
P2,288,750.

In addition to their accumulated salaries from 1966 to 1985 are the Marcos
couple's combined salaries from January to February 1986 in the amount of
P30,833.33. Hence, their total accumulated salaries amounted to P2,319,583.33.
Converted to U.S. dollars on the basis of the corresponding peso-dollar exchange
rates prevailing during the applicable period when said salaries were received,
the total amount had an equivalent value of $304,372.43.

The dollar equivalent was arrived at by using the official annual rates of
exchange of the Philippine peso and the US dollar from 1965 to 1985 as well as
the official monthly rates of exchange in January and February 1986 issued by
the Center for Statistical Information of the Bangko Sentral ng Pilipinas.

The sum of $304,372.43 should be held as the only known lawful income of
respondents since they did not file any Statement of Assets and Liabilities (SAL),
as required by law, from which their net worth could be determined.

Besides, under the 1935 Constitution, Ferdinand E. Marcos as President could

not receive any other emolument from the Government or any of its subdivisions

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and instrumentalities. Likewise, under the 1973 Constitution, Ferdinand E.
Marcos as President could not receive during his tenure any other emolument
from the Government or any other source. In fact, his management of businesses,
like the administration of foundations to accumulate funds, was expressly
prohibited under the Article VII, Sec 4 (2) of the 1973 Constitution. Also, Article
VII, Sec. 11 of the 1973 Constitution prohibits him to appear as counsel before any
court inferior to a court with appellate jurisdiction, as well as to intervene in any
matter before any office of the government for his pecuniary benefit.

Their only known lawful income of $304,372.43 can therefore legally and
fairly serve as basis for determining the existence of a prima facie case of
forfeiture of the Swiss funds.

2. It was not for the petitioner to establish the Marcoses’ other lawful
income or income from legitimately acquired property.

The presumption that the subject properties of the forfeiture case are
legitimately acquired cannot be applied since it is the respondents who are in a
better position to know if there were such other sources of lawful income. And if
indeed there was such other lawful income, respondents should have specifically
stated the same in their answer. Insofar as petitioner Republic was concerned, it
was enough to specify the known lawful income of respondents.

Respondents argue that petitioner was not able to establish a prima facie case
for the forfeiture of the Swiss funds since it failed to prove the essential elements
under Section 3, paragraphs (c), (d) and (e) of RA 1379. As the Act is a penal
statute, its provisions are mandatory and should thus be construed strictly
against the petitioner and liberally in favor of respondent Marcoses.

Section 9 of the PCGG Rules and Regulations provides that, in determining

prima facie evidence of ill-gotten wealth, the value of the accumulated assets,
properties and other material possessions of those covered by Executive Order
Nos. 1 and 2 must be out of proportion to the known lawful income of such
persons.

The respondent Marcos couple did not file any Statement of Assets and
Liabilities (SAL) from which their net worth could be determined. Their failure to
file their SAL was in itself a violation of law and to allow them to successfully
assail the Republic for not presenting their SAL would reward them for their
violation of the law.

Further, contrary to the claim of respondents, the admissions made by them

in their various pleadings and documents were valid. It is of record that
respondents judicially admitted that the money deposited with the Swiss banks
belonged to them.

3. Respondent Marcoses made judicial admissions of their ownership of the

subject Swiss bank deposits in their answer, the General/Supplemental
Agreements, Mrs. Marcos' Manifestation and Constancia dated May 5,
1999, and the Undertaking dated February 10, 1999.

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 The Court took note of the fact that the Associate Justices of the
Sandiganbayan were unanimous in holding that respondents had made judicial
admissions of their ownership of the Swiss funds.

In their answer, aside from admitting the existence of the subject funds,
respondents likewise admitted ownership thereof, through paragraph 22 of
respondents' answer which stated that, “Respondents specifically DENY
paragraph 23 insofar as it alleges that respondents clandestinely stashed the
country's wealth in Switzerland and hid the same under layers and layers of
foundations and corporate entities for being false, the truth being
that respondents' aforesaid properties were lawfully acquired.”

By qualifying their acquisition of the Swiss bank deposits as lawful,

respondents unwittingly admitted their ownership thereof.

Respondent Mrs. Marcos also admitted ownership of the Swiss bank deposits
by failing to deny under oath the genuineness and due execution of certain
actionable documents bearing her signature attached to the petition. As discussed
earlier, Section 11, Rule 886 of the 1997 Rules of Civil Procedure provides that
material averments in the complaint shall be deemed admitted when not
specifically denied.

The General and Supplemental Agreements executed by petitioner and

respondents on 28 December 1993 further bolstered the claim of petitioner
Republic that its case for forfeiture was proven in accordance with the requisites
of Sections 2 and 3 of RA 1379.

The stipulations set forth in the General and Supplemental Agreements

undeniably indicated the manifest intent of respondents to enter into a
compromise with petitioner. Corollarily, respondents' willingness to agree to an
amicable settlement with the Republic only affirmed their ownership of the Swiss
deposits for the simple reason that no person would acquiesce to any concession
over such huge dollar deposits if he did not in fact own them.

4. There is no merit in the contention that since the General and

Supplemental Agreements were declared null and void by the Court,
nothing in those agreements could thus be admitted in evidence against
them because they stood on the same ground as an accepted offer which,
under Section 27, Rule 13090 of the 1997 Rules of Civil Procedure,
provides that "in civil cases, an offer of compromise is not an admission
of any liability and is not admissible in evidence against the offeror."

The declaration of nullity of said agreements was premised on the following

constitutional and statutory infirmities:

(1) the grant of criminal immunity to the Marcos heirs was against the law;
(2) the PCGG's commitment to exempt from all forms of taxes the properties
to be retained by the Marcos heirs was against the Constitution; and
(3) the government's undertaking to cause the dismissal of all cases filed
against the Marcoses pending before the Sandiganbayan and other courts
encroached on the powers of the judiciary.

The reasons relied upon by the Court never in the least bit even touched on
the veracity and truthfulness of respondents' admission with respect to their

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ownership of the Swiss funds. Besides, having made certain admissions in those
agreements, respondents cannot now deny that they voluntarily admitted owning
the subject Swiss funds, notwithstanding the fact that the agreements themselves
were later declared null and void.

Sandiganbayan Justice Catalino Castañeda, Jr. in his observation in the

decision dated 19 September 2000 said that, the declaration of nullity of the two
agreements rendered the same without legal effects but it did not detract from
the admissions of the respondents contained therein. Otherwise stated, the
admissions made in said agreements, as quoted above, remain binding on the
respondents.

5. The testimony of respondent Ferdinand Marcos, Jr. during the hearing

on the motion for the approval of the Compromise Agreement on 29
April 1998 also lent credence to the allegations of petitioner Republic
that respondents admitted ownership of the Swiss bank accounts.

When asked by Atty. Fernando on what were the true amounts of the assets in
the Swiss bank, Marcos Jr. answered, “Well, basically, any assets. Anything that
was under the Marcos name in any of the banks in Switzerland which may
necessarily be not cash.”

Ferdinand Jr.'s pronouncements, taken in context and in their entirety, were

a confirmation of respondents' recognition of their ownership of the Swiss bank
deposits. Admissions of a party in his testimony are receivable against him. If a
party, as a witness, deliberately concedes a fact, such concession has the force of a
judicial admission. It is apparent from Ferdinand Jr.'s testimony that the Marcos
family agreed to negotiate with the Philippine government in the hope of finally
putting an end to the problems besetting the Marcos family regarding the Swiss
accounts. This was doubtlessly an acknowledgment of ownership on their part.
The rule is that the testimony on the witness stand partakes of the nature of a
formal judicial admission when a party testifies clearly and unequivocally to a
fact which is peculiarly within his own knowledge.

6. Respondents' ownership of the Swiss bank accounts as borne out by Mrs.

Marcos' manifestation is as bright as sunlight.

In her Manifestation dated 26 May 1998, respondent Imelda Marcos

furthermore revealed that she owns 90% of the subject matter of the above-
entitled case, being the sole beneficiary of the dollar deposits in the name of the
various foundations alleged in the case; and that in fact only 10% of the subject
matter in the above-entitled case belongs to the estate of the late President
Ferdinand E. Marcos.

Her claim that she is merely a beneficiary of the Swiss deposits is belied by
her own signatures on the appended copies of the documents substantiating her
ownership of the funds in the name of the foundations. As already mentioned,
she failed to specifically deny under oath the authenticity of such documents,
especially those involving "William Saunders" and "Jane Ryan" which actually
referred to Ferdinand Marcos and Imelda Marcos, respectively. That failure of
Imelda Marcos to specifically deny the existence, much less the genuineness and
due execution, of the instruments bearing her signature, was tantamount to a

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judicial admission of the genuineness and due execution of said instruments, in
accordance with Section 8, Rule 8100 of the 1997 Rules of Civil Procedure.

Likewise, in her Constancia dated 6 May 1999, Imelda Marcos prayed for the
approval of the Compromise Agreement and the subsequent release and transfer
of the $150 million to the rightful owner.

She further made the following manifestations that, “the Republic's cause of
action over the full amount is its forfeiture in favor of the government if found to
be ill-gotten. On the other hand, the Marcoses defend that it is a legitimate asset.
Therefore, both parties have an inchoate right of ownership over the account. If it
turns out that the account is of lawful origin, the Republic may yield to the
Marcoses. Conversely, the Marcoses must yield to the Republic. x x x Consistent
with the foregoing, and the Marcoses having committed themselves to helping
the less fortunate, in the interest of peace, reconciliation and unity, defendant
madam imelda romualdez marcos, in firm abidance thereby, hereby affirms her
agreement with the Republic for the release and transfer of the US Dollar 150
million for proper disposition, without prejudice to the final outcome of the
litigation respecting the ownership of the remainder.

Again, the above statements were indicative of Imelda's admission of the

Marcoses' ownership of the Swiss deposits as in fact "the Marcoses defend that it
(Swiss deposits) is a legitimate (Marcos) asset."

7. The motion filed by respondents Maria Imelda Marcos-Manotoc,

Ferdinand Marcos, Jr. and Maria Irene Marcos-Araneta on 4 May 4,
1998 asking the Sandiganbayan to place the res (Swiss deposits)
in custodia legis revealed their ownership of the said deposits.

“Indeed, the prevailing situation is fraught with danger! Unless the aforesaid
Swiss deposits are placed in custodia legis or within the Court's protective
mantle, its dissipation or misappropriation by the petitioner looms as a distinct
possibility.”

Such display of deep, personal interest can only come from someone who
believes that he has a marked and intimate right over the considerable dollar
deposits. Truly, by filing said motion, the Marcos children revealed their
ownership of the said deposits.

8. The Undertaking entered into by the PCGG, the PNB and the Marcos
foundations on 10 February 1999, confirmed the Marcoses' ownership of
the Swiss bank deposits.

The subject Undertaking brought to light their readiness to pay the human
rights victims out of the funds held in escrow in the PNB.

It stated the respondents‟ desires to assist in the satisfaction of the judgment

awards of said human rights victims-plaintiffs, by releasing, assigning and or
waiving US$150 million of the funds held in escrow under the Escrow
Agreements dated 14 August 1995, although the Republic is not obligated to do so
under final judgments of the Swiss courts dated 10 and 19 of December 1997, and
8 January 1998; and that the respondents are likewise willing to release, assign

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and/or waive all its rights and interests over said US$150 million to the
aforementioned human rights victims-plaintiffs.

All told, the foregoing disquisition negates the claim of respondents that
"petitioner failed to prove that they acquired or own the Swiss funds" and that "it
was only by arbitrarily isolating and taking certain statements made by private
respondents out of context that petitioner was able to treat these as judicial
admissions." The Court is fully aware of the relevance, materiality and
implications of every pleading and document submitted in this case. This Court
carefully scrutinized the proofs presented by the parties. The Court analyzed,
assessed and weighed them to ascertain if each piece of evidence rightfully
qualified as an admission. Owing to the far-reaching historical and political
implications of this case, the Court considered and examined, individually and
totally, the evidence of the parties, even if it might have bordered on factual
adjudication which, by authority of the rules and jurisprudence, is not usually
done by this Court. There is no doubt that respondent Marcoses admitted
ownership of the Swiss bank deposits.

9. The Court disagrees in the contention of respondents that the

Sandiganbayan is correct in ruling that petitioner Republic has failed to
establish a prima facie case for the forfeiture of the Swiss deposits.

The sudden turn-around of the Sandiganbayan was really strange, to say the
least, as its findings and conclusions were not borne out by the voluminous
records of this case.

Section 2 of RA 1379 explicitly states that "whenever any public officer or

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

The elements which must concur for this prima facie presumption to apply are:

(1) the offender is a public officer or employee;

(2) he must have acquired a considerable amount of money or property
during his incumbency; and
(3) said amount is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income from
legitimately acquired property.

It is undisputed that spouses Ferdinand and Imelda Marcos were former

public officers. Hence, the first element is clearly extant.

The second element deals with the amount of money or property acquired by
the public officer during his incumbency. The Marcos couple indubitably
acquired and owned properties during their term of office. In fact, the five groups
of Swiss accounts were admittedly owned by them. There is proof of the existence
and ownership of these assets and properties and it suffices to comply with the
second element.

The third requirement is met if it can be shown that such assets, money or
property is manifestly out of proportion to the public officer's salary and his other

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lawful income. It is the proof of this third element that is crucial in determining
whether a prima facie presumption has been established in this case.

Petitioner Republic presented not only a schedule indicating the lawful

income of the Marcos spouses during their incumbency but also evidence that
they had huge deposits beyond such lawful income in Swiss banks under the
names of five different foundations. We believe petitioner was able to establish
the prima facie presumption that the assets and properties acquired by the
Marcoses were manifestly and patently disproportionate to their aggregate
salaries as public officials. Otherwise stated, petitioner presented enough
evidence to convince us that the Marcoses had dollar deposits amounting to US
$356 million representing the balance of the Swiss accounts of the five
foundations, an amount way, way beyond their aggregate legitimate income of
only US$304,372.43 during their incumbency as government officials.

Considering, therefore, that the total amount of the Swiss deposits was
considerably out of proportion to the known lawful income of the Marcoses, the
presumption that said dollar deposits were unlawfully acquired was duly
established. It was sufficient for the petition for forfeiture to state the
approximate amount of money and property acquired by the respondents, and
their total government salaries.

Section 9 of the PCGG Rules and Regulations states that any accumulation of
assets, properties, and other material possessions of those persons covered by
Executive Orders No. 1 and No. 2, whose value is out of proportion to their
known lawful income is prima facie deemed ill-gotten wealth.

Indeed, the burden of proof was on the respondents to dispute this

presumption and show by clear and convincing evidence that the Swiss deposits
were lawfully acquired and that they had other legitimate sources of income. A
presumption is prima facie proof of the fact presumed and, unless the fact
thus prima facie established by legal presumption is disproved, it must stand as
proved.

10. The Court finds that petitioner Republic did not err in not impleading the
foreign foundations.

Respondent Mrs. Marcos argues that the foreign foundations should have
been impleaded as they were indispensable parties without whom no complete
determination of the issues could be made. She asserts that the failure of
petitioner Republic to implead the foundations rendered the judgment void as
the joinder of indispensable parties was a sine qua non exercise of judicial power.
Furthermore, the non-inclusion of the foreign foundations violated the
conditions prescribed by the Swiss government regarding the deposit of the funds
in escrow, deprived them of their day in court and denied them their rights under
the Swiss constitution and international law.

Section 7, Rule 3 of the 1997 Rules of Civil Procedure, taken from Rule 19b of
the American Federal Rules of Civil Procedure, provides for the compulsory
joinder of indispensable parties. Generally, an indispensable party must be
impleaded for the complete determination of the suit. However, failure to join an
indispensable party does not divest the court of jurisdiction since the rule
regarding indispensable parties is founded on equitable considerations and is not
jurisdictional. Thus, the court is not divested of its power to render a decision

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even in the absence of indispensable parties, though such judgment is not
binding on the non-joined party.
In the present case, there was an admission by respondent Imelda Marcos in her
26 May 1998 Manifestation before the Sandiganbayan that she was the sole
beneficiary of 90% of the subject matter in controversy with the remaining 10%
belonging to the estate of Ferdinand Marcos.

Viewed against this admission, the foreign foundations were not

indispensable parties. Their non-participation in the proceedings did not prevent
the court from deciding the case on its merits and according full relief to
petitioner Republic. The judgment ordering the return of the $356 million was
neither inimical to the foundations' interests nor inconsistent with equity and
good conscience. The admission of respondent Imelda Marcos only confirmed
what was already generally known: that the foundations were established
precisely to hide the money stolen by the Marcos spouses from petitioner
Republic. It negated whatever illusion there was, if any, that the foreign
foundations owned even a nominal part of the assets in question.

The rulings of the Swiss court that the foundations, as formal owners,
must be given an opportunity to participate in the proceedings hinged on the
assumption that they owned a nominal share of the assets. But this was already
refuted by no less than Mrs. Marcos herself. Thus, she cannot now argue that the
ruling of the Sandiganbayan violated the conditions set by the Swiss court. The
directive given by the Swiss court for the foundations to participate in the
proceedings was for the purpose of protecting whatever nominal interest they
might have had in the assets as formal owners. But inasmuch as their ownership
was subsequently repudiated by Imelda Marcos, they could no longer be
considered as indispensable parties and their participation in the proceedings
became unnecessary.

The foreign foundations here were set up to conceal the illegally acquired
funds of the Marcos spouses. Thus, they were simply the res in the action for
recovery of ill-gotten wealth and did not have to be impleaded for lack of cause of
action or ground to implead them.

Assuming arguendo, however, that the foundations were indispensable

parties, the failure of petitioner to implead them was a curable error.

Although there are decided cases wherein the non-joinder of

indispensable parties in fact led to the dismissal of the suit or the annulment of
judgment, such cases do not jibe with the matter at hand. The better view is that
non-joinder is not a ground to dismiss the suit or annul the judgment. The rule
on joinder of indispensable parties is founded on equity. And the spirit of the law
is reflected in Section 11, Rule 3122 of the 1997 Rules of Civil Procedure. It
prohibits the dismissal of a suit on the ground of non-joinder or misjoinder of
parties and allows the amendment of the complaint at any stage of the
proceedings, through motion or on order of the court on its own initiative.

Likewise, jurisprudence on the Federal Rules of Procedure, from which

our Section 7, Rule 3 on indispensable parties was copied, allows the joinder of
indispensable parties even after judgment has been entered if such is needed to
afford the moving party full relief. Mere delay in filing the joinder motion does
not necessarily result in the waiver of the right as long as the delay is excusable.

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 Thus, respondent Mrs. Marcos cannot correctly argue that the judgment
rendered by the Sandiganbayan was void due to the non-joinder of the foreign
foundations. The court had jurisdiction to render judgment which, even in the
absence of indispensable parties, was binding on all the parties before it though
not on the absent party. If she really felt that she could not be granted full relief
due to the absence of the foreign foundations, she should have moved for their
inclusion, which was allowable at any stage of the proceedings. She never did.
Instead she assailed the judgment rendered.

In the face of undeniable circumstances and the avalanche of documentary

evidence against them, respondent Marcoses failed to justify the lawful nature of
their acquisition of the said assets. Hence, the Swiss deposits should be
considered ill-gotten wealth and forfeited in favor of the State in accordance with
Section 6 of RA 1379.

11. The Sandiganbayan's decision was not dependent on the determination

of the Swiss courts, neither is the Supreme Court’s decision.

Petitioner Republic contends that the Honorable Sandiganbayan Presiding

Justice Francis Garchitorena committed grave abuse of discretion in reversing
himself on the ground that the original copies of the authenticated Swiss
decisions and their authenticated translations were not submitted to the court a
quo. Earlier PJ Garchitorena had quoted extensively from the unofficial
translation of one of these Swiss decisions in his ponencia dated July 29, 1999
when he denied the motion to release US$150 Million to the human rights
victims.

While the Court in reality is perplexed by such an incomprehensible change of

heart, there might nevertheless not be any real need to belabor the issue. The
presentation of the authenticated translations of the original copies of the Swiss
decision was not de rigueur for the public respondent to make findings of fact
and reach its conclusions.

The release of the Swiss funds held in escrow in the PNB is dependent solely
on the decision of this jurisdiction that said funds belong to the petitioner
Republic. What is important is assessment by the Court of the sufficiency of the
evidence to rule in favor of either petitioner Republic or respondent Marcoses. In
this instance, despite the absence of the authenticated translations of the Swiss
decisions, the evidence on hand tilts convincingly in favor of petitioner Republic.

The Court granted the petition for certiorari, and has set aside the
assailed Resolution of the Sandiganbayan dated 31 January 31, 2002.
The Swiss deposits which were transferred to and are now deposited
in escrow at the Philippine National Bank in the estimated aggregate
amount of US$658,175,373.60 as of 31 January 2002, plus interest,
were ordered to be forfeited in favor of petitioner Republic of the
Philippines.

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FERDINAND R. MARCOS, JR. VS. REPUBLIC OF THE PHILIPPINES
G.R. NO. 189434
25 APRIL 2012

(Arelma Funds)

This case is comprised of two consolidated petitions filed under Rule 45 of

the 1997 Rules of Civil Procedure praying for the reversal of the 2 April 2009
Decision of the Sandiganbayan in Civil Case No. 0141, which ordered the
forfeiture of all assets, investments, securities, properties, shares, interests and
fund of Arelma, Inc. presently under management of and/or in an account at the
Merryl Lynch Asset Management, New York, USA, in the estimated aggregate
amount of US$ 3,369,975.00 as of 1983, plus all interests and all other income
that accrued thereon until the time or specific day that all money or monies are
released and/or transferred to the possession of the Republic.

FACTS

On 16 July 2004, the Republic filed a Motion for Partial Summary

Judgment (2004 Motion) to declare the funds, properties, shares in and interests
of ARELMA, wherever they may be located, as ill-gotten assets and forfeited in
favor of the Republic of the Philippines pursuant to R.A. 1379 in the same
manner (that) the Honorable Supreme Court forfeited in favor of the petitioner
the funds and assets of similar Marcos foundations such as AVERTINA, VIBUR,
AGUAMINA, MALER and PALMY.

The Republic contends that:

(1) respondents are deemed to have admitted the allegations of the

Petition as regards Arelma; and

(2) there is no dispute that the combined lawful income of the

Marcoses is grossly disproportionate to the deposits of their
foundations and dummy corporations, including Arelma.

Ferdinand Marcos, Jr., Imelda Marcos, and Imee Marcos-Manotoc filed

their respective Oppositions. Irene Marcos-Araneta filed a Motion to Expunge on
the ground that the proceedings in Civil Case No. 0141 had already terminated.

On 2 April 2009, the Sandiganbayan rendered the assailed Decision

granting respondents Motion for Partial Summary Judgment.

It found that the proceedings in Civil Case No. 0141 had not yet
terminated, as the Petition for Forfeiture included numerous other properties,
which the Sandiganbayan and Supreme Court had not yet ruled upon.

The Republic‟s 1996 Motion was merely held in abeyance to await the
outcome of the global settlement of the Marcos assets. Further, this development
had prompted the Republic to file the 2000 Motion, which was clearly limited
only to the Swiss accounts amounting to USD 356 million.

Thus, according to the Sandiganbayan, its 19 September 2000 Decision as

affirmed by the Supreme Court in G.R. No. 152154, was in the nature of a

12
separate judgment over the Swiss accounts and did not preclude a subsequent
judgment over the other properties subject of the same Petition for Forfeiture,
such as those of Arelma.

On 22 October 2009, Ferdinand R. Marcos, Jr. filed the instant Rule 45

Petition, questioning the said Decision. One week later, Imelda Marcos filed a
separate Rule 45 Petition on essentially identical grounds.

ISSUE

Whether Civil Case No. 0141 has been terminated such that a motion for
partial summary judgment may no longer be allowed.

RULING

Civil Case No. 0141 has not yet terminated

Petitioners argue that the law of the case doctrine should be applied, not
to the ruling affirming the forfeiture, but to the grant of the summary judgment
over the Swiss accounts as affirmed by the Supreme Court in the Swiss Deposits
Decision. They contend that since the Courts Decision mentioned only the
deposits under the five Swiss foundations, then the Republic can no longer seek
partial summary judgment for forfeiture over the Arelma account. And since the
said Decision has long become final and has in fact been executed, they insist that
the Sandiganbayan has lost its jurisdiction over the case.

Petitioners are under the mistaken impression that the Swiss Deposits
Decision serves as the entire judgment in Civil Case No. 0141. Just because
respondent Republic succeeded in obtaining summary judgment over the Swiss
accounts does not mean it is precluded from seeking partial summary judgment
over a different subject matter covered by the same petition for forfeiture.

In fact, Civil Case No. 0141 pertains to the recovery of all the assets
enumerated therein, such as:

(3) holding companies, agro-industrial ventures and other

investments;
(4) landholdings, buildings, condominium units, mansions;
(5) New York properties;
(6) bills amounting to Php 27,744,535, time deposits worth Php 46.4
million, foreign currencies and jewelry seized by the United States
customs authorities in Honolulu, Hawaii;
(7) USD 30 million in the custody of the Central Bank in dollar-
denominated Treasury Bills; shares of stock, private vehicles, and
real estate in the United States, among others.

In the enumeration of properties included in the Petition, the Arelma

assets were described as Assets owned by Arelma, Inc., a Panamanian
corporation organized in Liechtenstein, for sole purpose (sic) of maintaining an
account in Merrill Lynch, New York.

When the Marcos family fled Manila in 1986, they left behind several
documents that revealed the existence of secret bank deposits in Switzerland and

13
other financial centers. These papers, referred to by respondent as Malacanang
documents, detailed how Arelma, Inc. was established.

The Swiss Deposits Decision dealt only with the summary judgment as to
the five Swiss accounts, because the 2000 Motion for Partial Summary Judgment
dated 7 March 2000 specifically identified the five Swiss accounts only. It did not
include the Arelma account. There was a prayer for general reliefs in the 1996
Motion, but as has been discussed, this prayer was dismissed by the
Sandiganbayan. The dismissal was based solely on the existence of the
Compromise Agreements for a global settlement of the Marcos assets, which the
Supreme Court later invalidated. The 2000 Motion for Summary Judgment was
confined only to the five accounts amounting to USD 356 million held by five
Swiss foundations.

The Court‟s discussion clearly did not include the Arelma account. The
dispositive portion of the Swiss Deposits Decision states that, “WHEREFORE,
the petition is hereby GRANTED. The assailed Resolution of the Sandiganbayan
dated January 31, 2002 is SET ASIDE. The Swiss deposits which were transferred
to and are now deposited in escrow at the Philippine National Bank in the
estimated aggregate amount of US$658,175,373.60 as of January 31, 2002, plus
interest, are hereby forfeited in favor of petitioner Republic of the Philippines.”

Thus, the other properties, which were subjects of the Petition for
Forfeiture, but were not included in the 2000 Motion, can still be subjects of a
subsequent motion for summary judgment. To rule otherwise would run counter
to this Courts long established policy on asset recovery which, in turn, is
anchored on considerations of national survival.

With the myriad of properties and interconnected accounts used to hide

these assets that are in danger of dissipation, it would be highly unreasonable to
require the government to ascertain their exact locations and recover them
simultaneously, just so there would be one comprehensive judgment covering the
different subject matters.

In any case, the Sandiganbayan rightly characterized their ruling on the

2004 Motion as a separate judgment, which is allowed by the Rules of Court
under Section 5 of Rule 36.

Rule 35 on summary judgments, admits of a situation in which a case is

not fully adjudicated on motion, and judgment is not rendered upon all of the
reliefs sought. In Philippine Business Bank v. Chua, this Court had occasion to
rule that a careful reading of its Section 4 reveals that a partial summary
judgment was never intended to be considered a final judgment, as it does not
[put] an end to an action at law by declaring that the plaintiff either has or has
not entitled himself to recover the remedy he sues for.

In this case, there was never any final or complete adjudication of Civil
Case No. 0141, as the Sandiganbayan‟s partial summary judgment in the Swiss
Deposits Decision made no mention of the Arelma account.

Section 4 of Rule 35 pertains to a situation in which separate judgments

were necessary because some facts existed without controversy, while others were
controverted. However, there is nothing in this provision or in the Rules that
prohibits a subsequent separate judgment after a partial summary judgment on
an entirely different subject matter had earlier been rendered. There is no legal

14
basis for petitioner‟s contention that a judgment over the Swiss accounts bars a
motion for summary judgment over the Arelma account.

Thus, the Swiss Deposits Decision has finally and thoroughly disposed of
the forfeiture case only as to the five Swiss accounts. Respondents 2004 Motion
is in the nature of a separate judgment, which is authorized under Section 5 of
Rule 36.

The Court denied the herein petition. It also affirmed the Sandiganbayan
Decision dated 2 April 2009 of the Sandiganbayan, and ordered all assets,
properties, and funds belonging to Arelma, S.A., with an estimated aggregate
amount of USD 3,369,975 as of 1983, plus all interests and all other income that
accrued thereon, until the time or specific day that all money or monies are
released and/or transferred to the possession of the Republic of the Philippines,
as forfeited in favor of Respondent Republic of the Philippines.

15
 CHAVEZ V. PCGG
G.R. NO. 130716
DECEMBER 9, 1998

(Compromise Agreement between PCGG and Marcoses)

Francisco I. Chavez filed an action to prohibit and enjoin PCGG and other
respondents from privately entering into, perfecting and/or executing any
agreement with the heirs of the late President Marcos relating to and concerning
his properties and assets. The PCGG did not deny entering into a General and
Supplemental Agreement, both dated December 28, 1993 with the Marcoses.

The Supreme Court held:

1. PCGG is required to disclose to the public such Compromise Agreements.

Sec. 28 of Article II of the Constitution states that, “Subject to reasonable

conditions prescribed by law, the State adopts and implements a policy of full
public disclosure of all its transactions involving public interest.”

„Public concern‟ like „public interest‟ both embrace a broad spectrum of

subjects which the public may want to know, either because these directly affect
their lives, or simply because such matters naturally arouse the interest of an
ordinary citizen. It is for the courts to determine on a case by case basis whether
the matter at issue is of interest or importance, as it relates to or affects the
public.”2

By virtue of the pronouncements in EO Nos. 1, 2 and 14, whose authority

emanates from the people, the recovery of the Marcoses‟ alleged ill-gotten wealth
is a matter of public concern and imbued with public interest.

“Ill-gotten wealth,” by its very nature, assumes a public character. These

supposedly originated from the government itself, hence, they belong to the
people.

Lastly, the Compromise Agreements do not fall under the recognized

restrictions, namely: (1) national security matters and intelligence information,
(2) trade secrets and banking transactions, (3) criminal matters, and (4) other
confidential information.

2. Both Agreements the PCGG entered into with the Marcos heirs, are
violative of the Constitution and the laws aforementioned hence, null
and void. Reasons:

a) The Agreements do not conform to the requirements of EO Nos. 14 and

14-A. Criminal immunity under Section 5 cannot be granted to the
Marcoses, who are the principal defendants in the pending ill-gotten
wealth cases. Section 5 is applicable mainly to witnesses who provide

2 SC cited Legaspi v. Civil Service Commission, G.R. No. L-72119, May 29, 1987.

16
 information or testify against a respondent, defendant or accused in an ill-
gotten wealth case.

There is no indication that any of the Marcos heirs has provided vital
information against any respondent or defendant regarding unlawfully
acquired public property.

b. Granting tax exemptions to the Marcoses is a clear violation of the

Constitution. The power to tax and to grant tax exemptions is vested in
Congress and, to a certain extent, in the local legislative bodies. The PCGG
has absolutely no power to grant tax exemptions, even under the cover of
its authority to compromise ill-gotten wealth cases.

c. The PCGG, as the government prosecutor of ill-gotten wealth cases,

cannot guarantee the dismissal of all such criminal cases against the
Marcoses pending in the courts, for said dismissal is not within its sole
power and discretion. This is a direct encroachment on judicial powers,
particularly in regard to criminal jurisdiction.

d. The provision where the government waives all claims and counterclaims,
“whether past, present, or future, matured or inchoate,” against the
Marcoses is an all-encompassing stipulation contrary to law. Under the
Civil Code, an action for future fraud may not be waived. It is a virtual
warrant for public officials to amass public funds illegally, since there is
an open option to compromise their liability in exchange for only a
portion of their ill-gotten wealth.

e. Agreements do not provide for a definite or determinable period within

which the parties shall fulfill their respective prestations. It may take a
lifetime before the Marcoses submit an inventory of their total assets.

f. Agreements do not state with specificity the standards for determining

which assets shall be forfeited by the government and which shall be
retained by the Marcoses. Public officers entering into an arrangement
appearing to be manifestly and grossly disadvantageous to the
government is in violation of the Anti-Graft and Corrupt Practices Act.

g. The absence of then President Ramos‟ approval of the principal

Agreement, an express condition therein, renders the compromise
incomplete and unenforceable.

17
 SANDIGANBAYAN RESOLUTION 8 AUGUST 2014

In a Resolution promulgated on 8 August 2014, the Sandiganbayan granted

PCGG‟s Motion for Execution of Partial Summary Judgment dated 22 July 2014
in view of the finality of the SC Decision in G.R. Nos. 189434 and 189505 and the
recording thereof in the Book of Entries of Judgments. The court then issued the
corresponding writs of execution upon the PNB, the escrow agent of the Arelma
assets, and the Republic.

The Sheriff and Security Division of the Sandiganbayan directed the PNB to:

a. Turn over certificates/muniments of title such as the bearer certificates of

stock of Arelma, S.A., Inc.

b. Render an accounting of all assets, securities, properties, investments,

shares, interests, and funds of Arelma presently under the management and/or in
an account at Meryll Lynch Asset Management, NYC, USA, in the estimated
amount of US $3,369,975.00 as of 1983 plus all interest and all other income that
accrued thereon, and undertake steps for its repatriation;

c. Physically turn-over the same to the Republic.

In response, the PNB informed the court that is coordinating with PCGG
insofar as the above-enumerated instructions are concerned; that the subject
funds are currently under custodial legis by the NYC Department of Finance
pursuant to a Petition for Writ of Execution and Turnover filed by Osqugama
Swezey and Jose Duran (on their behalf and as representatives of the human
rights victims) against Meryll Lynch, New York City Department of Finance, et al.
with the New York Supreme Court (and with Bank of America as intervenors);
that the balance of the funds as of 30 June 2012 is in the amount of US$
40,320,541.95 and PNB has yet to receive the updated balance.

Also, the Estate/Heirs of former President Ferdinand E. Marcos and Imelda

R. Marcos were ordered to render an accounting of all assets, investments,
securities, properties, shares, interests, and funds of Arelma and to physically
turnover the same to the Republic of the Philippines. F Marcos, Jr. replied that he
is not in a position to comply with the said order.

18
 REPUBLIC OF THE PHILIPPINES VS. EDUARDO M. COJUANGCO
Civil Case 0033-A

(Coconut Planters Bank)

The complaint is against Eduardo Cojuangco, Jr and seven (7) individual

defendants including the Marcos Spouses involving the manipulation made by
the defendants in the purchase by the Philippine Coconut Authority (PCA) of the
outstanding capital stock of the First United Ban (FUB) through the use of the
Coconut Consumers Stabilization Fund (CCSF). The bank was subsequently
converted into a universal bank and renamed into United Coconut Planters Bank
(UCPB).

In a Decision promulgated on 24 January 2012 in G.R. Nos. 177857-58

and 178193, as affirmed with modification in 4 September 2012 Resolution, the
Supreme Court affirmed Part A and B of the Sandiganbayan‟s 11 July 2003
Partial Summary Judgment which ruled among others that:

“3. Lobregat, COCOFED, et al. and Ballares, et al. have not legally and
validly obtained title of ownership over the subject UCPB shares virtue of
P.D. No. 755, the Agreement dated May 25, 1975 between the PCA and
defendant Cojuangco, and PCA implementing rules, namely, Adm. Order
No. 1, s. 1975 and Resolution No. 074-78.

4. The so-called “Farmers‟ UCPB shares” covered by 64.98% of the UCPB

shares of stock, which formed part of the 72.2% of the shares of stock of
the former FUB and now of the UCPB, the entire consideration of which
was charged by PCA to the CCSF, are hereby declared conclusively owned
by, the Plaintiff Republic of the Philippines.”

This judgment became final and executory on 10 December 2014 and

accordingly recorded in the Book of Entries of Judgments.

On the other hand, in a Decision promulgated on 27 November 2012 in

G.R. No. 180705, the Supreme Court affirmed with modification Part C of the
said Partial Summary Judgment dated 11 July 2003 and declared among others
that the following UCPB shares delivered to Eduardo Cojuangco, Jr. by PCA are
conclusively owned by the Republic of the Philippines to be used only for the
benefit of all coconut farmers and for the development of the coconut industry
which ruled among others that:

1. The Agreement between PCA and defendant Eduardo M. Cojuangco, Jr.

dated May 25, 1975 is a valid contract for having the requisite
consideration under Article 1318 of the Civil Code.

2. The transfer by PCA to defendant Eduardo M. Cojuangco, Jr. of 14,400

shares of stock of FUB (later UCPB) from the “Option Shares” and the
additional FUB shares subscribed and paid by PCA is declared
unconstitutional hence null and void, which consists of:

a) Fifteen Thousand Eight Hundred Eighty-Four (15,884) shares out

of the authorized but unissued shares of the bank, subscribed and
paid by PCA;

19
 b) Sixty Four Thousand Nine Hundred Eighty (64,980) shares of the
increased capital stock subscribed and paid by PCA; and

c) Stock dividends declared pursuant to paragraph 5 and paragraph

11 (iv) (d) of the PCA-Cojuangco Agreement dated May 25, 1975.
or the so-called “Cojuangco-UCPB shares”.

3. The above-mentioned shares of stock of the FUB/UCPB transferred to

defendant Cojuangco are declared conclusively owned by the Republic of
the Philippines to be used only for the benefit of all coconut farmers and
for the development of the coconut industry, and ordered reconveyed to
the Government.

4. The UCPB shares of stock of the alleged fronts, nominees and dummies of
defendant Eduardo M. Cojuangco, Jr. which form part of the 72.2% shares
of the FUB/UCPB paid for by the PCA with public funds later charged to
the coconut levy funds, particularly the CCSF, belong to the plaintiff
Republic of the Philippines as their true and beneficial owner.

 The aforesaid judgment became final and executory on 1 October

2013 and accordingly recorded in the Book of Entries of
Judgments.

 RP filed a Motion for Execution implementing the above-

mentioned Decisions which was granted by the Sandiganbayan in
a Resolution dated 23 October 2015. The corresponding writ has
yet to be issued by the court.

 ECJ filed a Manifestation and Motion dated 9 December 2015

enumerating therein certain UCPB shares for confirmation by the
UCPB Corporate Secretary.

Meanwhile, pre-trial proceedings with respect to the complaint-in-

intervention filed by Subic International Air Charter is on-going. Both RP and
Subic Air filed their respective Pre-Trial brief. Pre-trial is scheduled on 15
January 2016. After several cancellations, pre-trial is re-set to 13 Feb. 2017.

20
 ANTECEDENTS OF THE ARELMA ACCOUNT

(Republic of the Philippines v. Pimentel, a case filed by human rights victims in the United States
decided by the US Supreme Court only in 2008)

In 1972, Ferdinand Marcos, then President of the Republic, incorporated

Arelma, S.A. (Arelma), under Panamanian law. Around the same time, Arelma
opened a brokerage account with Merrill Lynch, Pierce, Fenner & Smith Inc.
(Merrill Lynch) in New York, in which it deposited $2 million. As of the year
2000, the account had grown to approximately $35 million.

Alleged crimes and misfeasance by Marcos during his presidency became

the subject of worldwide attention and protest. A class action by and on behalf of
some 9,539 of his human rights victims was filed against Marcos and his estate,
among others. The class action was tried in the United States District Court for
the District of Hawaii and resulted in a nearly $2 billion judgment for the class.
We refer to that litigation as the Pimentel case and to its class members as the
Pimentel class. In a related action, the Estate of Roger Roxas and Golden Budha
[sic] Corporation (the Roxas claimants) claim a right to execute against the assets
to satisfy their own judgment against Marcos' widow, Imelda Marcos.

The Pimentel class claims a right to enforce its judgment by attaching the
Arelma assets held by Merrill Lynch. The Republic and the Commission claim a
right to the assets under a 1955 Philippine law providing that property derived
from the misuse of public office is forfeited to the Republic from the moment of
misappropriation. See An Act Declaring Forfeiture in Favor of the State Any
Property Found To Have Been Unlawfully Acquired by Any Public Officer or
Employee and Providing for the Proceedings Therefor, Rep. Act No. 1379, 51:9
O.G. 4457 (June 18, 1955).

After Marcos fled the Philippines in 1986, the Commission was created to
recover any property he wrongfully took. Almost immediately the Commission
asked the Swiss Government for assistance in recovering assets-including shares
in Arelma-that Marcos had moved to Switzerland. In compliance the Swiss
Government froze certain assets and, in 1990, that freeze was upheld by the Swiss
Federal Supreme Court. In 1991, the Commission asked the Sandiganbayan, a
Philippine court of special jurisdiction over corruption cases, to declare forfeited
to the Republic any property Marcos had obtained through misuse of his office.
That litigation is still pending in the Sandiganbayan. (Citations omitted.)

The pursuit of the Arelma account encountered several hindrances, as it

was subject to not one, but two claims of human rights victims in foreign courts:
the Pimentel class and the Roxas claimants. The government and the PCGG were
able to obtain a Stay Order at the appellate level, but the trial court judge vacated
the stay and awarded the Arelma assets to the Pimentel class of human rights
victims.

As early as 1986, the PCGG had already sought assistance from the Swiss
government to recover the Arelma assets; however, it was only in 2000 that the
Swiss authorities turned over two Stock Certificates, which were assets of Arelma.
The transfer by Switzerland of the Stock Certificates to the Republic was made
under the same conditions as the bank deposits of the five Swiss foundations.

Meanwhile, the Pimentel case was tried as a class action before Judge
Manuel Real of the United States District Court for the Central District of

21
California. Judge Real was sitting by designation in the District of Hawaii after
the Judicial Panel on Multidistrict Litigation consolidated the various human
rights Complaints against Marcos in that court. Judge Real directed Merrill
Lynch to file an action for interpleader in the District of Hawaii, where he
presided over the matter, and where the Republic and the PCGG were named as
defendants. In Pimentel, the Court further narrates how Judge Real ruled that
the pending litigation in Philippine courts could not determine entitlement to the
Arelma assets:

After being named as defendants in the interpleader action, the Republic

and the Commission asserted sovereign immunity under the Foreign Sovereign
Immunities Act of 1976 (FSIA), 28 U.S.C. 1604. They moved to dismiss pursuant
to Rule 19(b), based on the premise that the action could not proceed without
them Judge Real initially rejected the request by the Republic and the
Commission to dismiss the interpleader action. They appealed, and the Court of
Appeals reversed. It held the Republic and the Commission are entitled to
sovereign immunity and that under Rule 19(a) they are required parties (or
necessary parties under the old terminology). The Court of Appeals entered a stay
pending the outcome of the litigation in the Sandiganbayan over the Marcos
assets.

After concluding that the pending litigation in the Sandiganbayan could

not determine entitlement to the Arelma assets, Judge Real vacated the stay,
allowed the action to proceed, and awarded the assets to the Pimentel class. A
week later, in the case initiated before the Sandiganbayan in 1991, the Republic
asked that court to declare the Arelma assets forfeited, arguing the matter was
ripe for decision. The Sandiganbayan has not yet ruled. In the interpleader case
the Republic, the Commission, Arelma, and PNB appealed the District Court's
judgment in favor of the Pimentel claimants. This time the Court of Appeals
affirmed. Dismissal of the interpleader suit, it held, was not warranted under
Rule 19(b) because, though the Republic and the Commission were required
(necessary) parties under Rule 19(a), their claim had so little likelihood of success
on the merits that the interpleader action could proceed without them. One of the
reasons the court gave was that any action commenced by the Republic and the
Commission to recover the assets would be barred by New York's 6-year statute
of limitations for claims involving the misappropriation of public property.
(Citations omitted)

The American Supreme Court reversed the judgment of the Court of

Appeals for the Ninth Circuit and remanded the case with instructions to order
the District Court to dismiss the interpleader action. The former held that the
District Court and the Court of Appeals failed to give full effect to sovereign
immunity when they held that the action could proceed without the Republic and
the Commission:

Comity and dignity interests take concrete form in this case. The claims of
the Republic and the Commission arise from events of historical and political
significance for the Republic and its people. The Republic and the Commission
have a unique interest in resolving the ownership of or claims to the Arelma
assets and in determining if, and how, the assets should be used to compensate
those persons who suffered grievous injury under Marcos. There is a comity
interest in allowing a foreign state to use its own courts for a dispute if it has a
right to do so. The dignity of a foreign state is not enhanced if other nations
bypass its courts without right or good cause. Then, too, there is the more specific

22
affront that could result to the Republic and the Commission if property they
claim is seized by the decree of a foreign court.

Thus it was only in 2008 that the Republic was finally able to obtain a
favorable judgment from the American Supreme Court with regard to the
different claims against the Arelma assets. Petitioners never intervened or lifted a
finger in any of the litigation proceedings involving the enforcement of judgment
against the Arelma assets abroad. We find merit in respondents observation that
petitioner Imelda Marcoss participation in the proceedings in the Philippines,
particularly her invocation of her right against undue deprivation of property, is
inconsistent with her and Ferdinand Marcos, Jr.s insistence that the properties in
question do not belong to them, and that they are mere beneficiaries.

Indeed, it is clear that the Arelma assets are in danger of dissipation. Even
as the United States Supreme Court gave weight to the likely prejudice to be
suffered by the Republic when it dismissed the interpleader in Pimentel, it also
considered that the balance of equities may change in due course. One relevant
change may occur if it appears that the Sandiganbayan cannot or will not issue its
ruling within a reasonable period of time. If the Sandiganbayan rules that the
Republic and the Commission have no right to the assets, their claims in some
later interpleader suit would be less substantial than they are now.

23