G.R. No. 156505 & 156605; August 28, 2007
EDWARD T. MARCELO, ET AL., Petitioners, vs. SANDIGANBAYAN and THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, Respondents.

FACTS

The Republic, through the PCGG, filed a complaint for recovery of ill-gotten wealth against Edward T. Marcelo and several corporations. The suit alleged that Marcelo, in unlawful concert with Fabian Ver and the Marcoses, obtained a favored contract with the Philippine Navy for constructing fiberglass boats, collected substantial advances, and secured a foreign loan with a sovereign guarantee. The complaint underwent several amendments, ultimately impleading sixteen corporations as Marcelo’s dummies.
During pre-trial, the petitioners (Marcelo and the corporations) filed written interrogatories and requests for admission directed at the Republic. The Republic answered only Marcelo’s set. Subsequently, all petitioners filed separate motions for summary judgment. They argued there was no genuine issue of fact, partly because the Republic’s failure to respond to most of the requests for admission meant the facts therein were deemed admitted under the Rules of Court.

ISSUE

Whether the Sandiganbayan committed grave abuse of discretion in denying the petitioners’ motions for summary judgment.

RULING

The Supreme Court ruled in the negative and upheld the Sandiganbayan. Summary judgment is proper only when there is no genuine issue of material fact. The Court found that the Republic’s failure to reply to the requests for admission of the other petitioner corporations did not automatically warrant summary judgment. The matters subject of those requests were not deemed admitted because they pertained to the corporations’ defenses, not to the Republic’s causes of action. A request for admission under Rule 26 must relate to statements or opinions of fact or the application of law to fact, not to pure conclusions of law or to facts already presumed by law.
Crucially, the core allegations of the complaint—that the contract was “favored” and obtained through conspiracy with the Marcos regime, and that the corporations were dummies used to conceal ill-gotten wealth—presented genuine factual issues requiring a full trial. The determination of whether a contract is grossly disadvantageous and tainted by conspiracy, and whether corporations are mere instruments or alter egos, involves the assessment of evidence and credibility, which is inappropriate for summary adjudication. The Sandiganbayan correctly held that these substantive issues of bad faith, collusion, and corporate veil-piercing must be ventilated in a trial on the merits.