Imelda Pilapil-Geiling vs. James Abugan

[SEC-EB NO. 281. September 27, 1991.] IMELDA PILAPIL-GEILING , petitioner , vs . HON. JAMES ABUGAN, ET AL. , respondents . D E C I S I O N This is a petition for certiorari filed by Imelda Pilapil-Geiling, one of the respondents in SEC Case No. 3128 , seeking review of the order of the hearing panel dated March 21, 1991 denying her motion to dismiss the case below. The petitioner also prays for a temporary restraining order and/or a writ of preliminary injunction to enjoin the hearing panel from further hearing the case. It appears from the records of the case that on March 2, 1987 herein private respondent Erich Geiling filed a petition with this Commission against the herein petitioner and four others accusing them with fraudulent transfers of the properties of Olotayan Realty and Development Corporation (ORDC), of which the parties were stockholders, and with misappropriation of corporate funds. On August 27, 1987 the herein petitioner filed her Answer to the petition below traversing the allegations thereof and setting up various defenses such as failure to exhaust corporate remedies, lack of jurisdiction, lack of cause of action and litis pendentia . On January 28, 1991 during the trial on the merits of the case, the herein petitioner filed through counsel a request for admission of facts addressed to private respondent Erich Geiling. On February 12, 1991 the herein petitioner filed a motion to dismiss the case below for alleged failure of herein private respondent Erich Geiling to file an answer to the request for admission of facts. On February 15, 1991 herein private respondent Geiling filed an opposition to the motion to dismiss. Also on the same date, the hearing panel gave private respondent Erich Geiling an additional period of ten more days counted therefrom within which to answer the request for admission of facts. On February 25, 1991 private respondent Erich Geiling filed a manifestation explaining why he could not truthfully either admit or deny the matters contained in the request. On March 5, 1991 the herein petitioner filed a second motion to dismiss the case below on the ground of lack of cause of action, abandonment and lack of interest to pursue the case. LLpr On March 21, 1991 the hearing panel denied the motion to dismiss. Hence, the instant petition for certiorari. The petitioner maintains that the hearing panel exceeded its authority and gravely abused its discretion in treating private respondent Erich Geiling's opposition to the first motion to dismiss and his manifestation as his answer to the request for admission of facts in disregard of the express provision of Section 2, Rule 26 of the Rules of Court. If the ruling of the hearing panel were to remain uncorrected, circumvention of the rule on requests for admission of facts would be made easy by the mere filing of a manifestation such as the kind filed by private respondent Erich Geiling. Having failed to file an answer to the request for admission of facts, the petitioner contends that private respondent Erich Geiling should be deemed to have admitted all the matters stated therein and that, as a consequence, the case below should have been dismissed. After a reading of private respondent Erich Geiling's opposition to the first motion to dismiss and of his manifestation filed February 25, 1991 this Commission en banc finds itself in agreement with the holding of the hearing panel that the aforementioned motion and manifestation may be treated as private respondent Geiling's answer to the request for admission of facts, the same being sufficient compliance with the requirements of Section 2, Rule 26 of the Rules of Court. WHEREFORE, the instant petition for certiorari is hereby DENIED for lack of merit. SO ORDERED. (did not participate) ROSARIO N. LOPEZ Chairman (SGD.) RODOLFO L. SAMARISTA (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner (SGD.) FE ELOISA C. GLORIA Associate Commissioner Separate Opinions Dissenting Opinion : I disagree with the opinion of the majority. The records show that on January 28, 1991 respondent petitioner served upon respondent Erich Geiling a "Request For Admission of Facts." Respondent Erich E. Geiling did not serve upon petitioner a sworn statement either denying specifically or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters of which an admission was requested within ten (10) days after service thereof pursuant to Section 2, Rule 26, Rules of Court. Instead, counsel of Erich E. Geiling filed a "Manifestation" which was not made under oath by Erich E. Geiling nor did counsel deny specifically or set forth in detail the reasons why he could not truthfully either admit or deny those matters of which an admission was requested. Consequently, the following are deemed admitted by respondent Erich E. Geiling: 1. Petitioner Erich E. Geiling filed the instant case not as a derivative suit but in his individual capacity. 2. Erich E. Geiling did not lend P213,000.00 to Olotayan Realty and Development Corporation ("ORDC") in consideration of the purchase by it of a 2-storey, split-level residential house and 2 parcels of land in Olotayan Island, Capiz, payable in 15 years on equal annual installments at 10% per annum interest, on October 10, 1979 or any date for that matter. 3. ORDC did not use the foregoing money to buy properties covered by TCT # 16157 and TCT # 16484. 4. Respondents did not conspire nor did anything illegal like unauthorized, unlawful acts, "fraudulent transfer, misappropriation of corporate property, and other illegal actions" against ORDC. 5. Respondents did not do anything that prejudiced or is prejudicial to ORDC. 6. ORDC's properties did not nor do they depreciate but in fact appreciate in value. 7. Respondents did not and do not mismanage, neglect nor abandon ORDC. 8. The sale of the property covered by TCT#18127 to respondent Imelda Pilapil was made in a lawful, regular, and not tainted by any fraud, trick or any anomaly. 9. The sale of the property covered by TCT#18127 to respondent Imelda Pilapil did not prejudice ORDC nor petitioner Erich E. Geiling in any manner. 10. Petitioner Erich E. Geiling is not interested anymore to continue with the prosecution of the instant case. 11. Petitioner Erich E. Geiling waives and abandons, as he has in fact, waived and abandoned, all his rights, interest, and claims (if any) against respondents. 12. Petitioner Erich E. Geiling now wants the immediate, unconditional dismissal of the aforetitled case. (Annex "C", Petition) There being no issue as to any material fact, the motion to dismiss should have been granted. The "Manifestation" is hardly the "Answer" required under Rule 26 even if it was made under oath by counsel, since his knowledge, by any stretch of the imagination, could only have been on the information of Erich E. Geiling. The Supreme Court in Motor Service Co., Inc. v. Yellow Taxicab Co., Inc. et al., G.R. No. L-7063, March 9, 1955 , 96 Phil. 688, ruled that a party upon whom a request for admission is served is bound to answer. "It is contended that the appellants were not bound to comment on the request for admission, because they had already filed an answer denying the facts recited in said request, and the denial in the answer is effective at all stages of the case. Sec. 2 of Rule 23 of the Rules of Court [now Sec. 2, Rule 26] provides that "Each of the matters of which an admission is requested shall be deemed admitted unless within a period designated in the request, not less than ten days after service thereof or within such further time as the court may allow on motion and notice, the party to whom the request is directed serves upon the party requesting the admission a sworn statement either denying specifically the matter of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matter". On the other hand, Section 1 of Rule 23 provides that a request for admission may be served at anytime after the pleadings are closed. The result is that Section 2 must be given full force even if an answer has already been filed. In other words, the party upon whom a request for admission is served, whether or not an answer has been presented, is bound to serve upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in details the reasons which he cannot truthfully either deny or admit those matters. Otherwise, such matters will be deemed admitted, as in the case at bar. This procedural step was conceived in a way to shorten litigations. It was easy for the appellants to answer the request for admission, thereby definitely apprising the court and the adverse party as to the genuine issue, if any." (Emphasis supplied) It has been said that the party seeking the request must be permitted to rely upon the failure of the other party to answer the Request for Admission and to have such silence construed as an admission of the facts sought to be established, otherwise, beneficial result of the rule would be lost. ". . . The rule [Rule 36 of the Federal Rules of Civil Procedure from which Rule 26, Sec. 2 was taken] requires an answer after the Service of the request, regardless of what may have been previously asserted by the pleadings. . . . The party asking for the admission is entitled to a direct and unequivocal answer to his request in order to properly prepare his case, without being required to search the record for possible denials lurking in papers or instruments previously filed in the record. . . . The beneficial result of the rule would be largely lost if the party making the request was not permitted to rely upon the answer to or failure to answer the request after its Service." ( In Re Independent Distillers of Kentucky , 34 F. Supp. 724, 729) ". . . The plaintiff filed a Request for Admission of Facts, etc. under Rule 36 of the Rules of Civil Procedure. Defendants made no reply to this request for admissions, and the trial court accepted the statements in the request, pursuant to Rule 36 of the Rules of Civil Procedure, 28 USCA, following Section 723 c. . . . Silence was tantamount to an admission and is admissible to prove the fact here sought to be established." ( Adventures in Good Eating, Inc . v . Best Places to Eat , Inc ., 131 Fed. 2d 809, 812) IN VIEW OF THE FOREGOING, it is my considered opinion that contrary to the position taken by my colleagues, the relief prayed for in the petition should be granted. LLphil (SGD.) ARMANDO Z. GONZALES Associate Commissioner