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Case Title:
EQUITABLE PCI BANKING
CORPORATION,1 GEORGE L. GO, to the Court of Appeals which is directed to reinstate and
PATRICK D. GO, GENEVIEVE W.J. give due course to the petition for certiorari in CA-G.R. SP
GO, FERDINAND MARTIN G. No. 01734-MIN, and to decide the same on the merits.
ROMUALDEZ, OSCAR P. LOPEZ-DEE, SO ORDERED.
RENE J. BUENAVENTURA, GLORIA L.
TAN-CLIMACO, ROGELIO S. CHUA, Ynares-Santiago (Chairperson), Austria-Martinez,
FEDERICO C. PASCUAL, LEOPOLDO Chico-Nazario and Reyes, JJ., concur.
S. VEROY, WILFRIDO V. VERGARA,
Petition granted, resolutions set aside.
EDILBERTO V. JAVIER, ANTHONY F.
CONWAY, ROMULAD U. DY TANG, Note.·Allowance of the petition on the ground of
WALTER C. WESSMER, and ANTONIO substantial compliance with the rules is not a novel
N. COTOCO, petitioners, vs. RCBC occurrence in our jurisdiction. (Reyes vs. Court of Appeals,
CAPITAL CORPORATION, respondent. 409 SCRA 267 [2003])
Citation: 574 SCRA 585 ··o0o··
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* SECOND DIVISION.
859
, 859
860
861
, 861
the injury of one to whom they were directed and who reasonably
relied on them.·Art. 1431 of the Civil Code, on the subject of
estoppel, provides: „Through estoppel an admission or
representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying
thereon.‰ The doctrine of estoppel is based upon the grounds of
public policy, fair dealing, good faith, and justice; and its purpose
is to forbid one to speak against oneÊs own acts, representations,
or commitments to the injury of one to whom they were directed
and who reasonably relied on them.
Same; Same; Elements of estoppel pertaining to the party
estopped.·The elements of estoppel pertaining to the party
estopped are: (1) conduct which amounts to a false
representation or concealment of material facts, or, at least,
which calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) intention, or at least
expectation, that such conduct shall be acted upon by the other
party; and (3) knowledge, actual or constructive, of the actual
facts.
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45
seeks the reversal of the January 8, 20082 and March 17,
20083 Orders of the Regional Trial Court (RTC), Branch
148 in Makati City in SP Proc. Case No. 6046, entitled In
the Matter of ICC Arbitration Ref. No.
13290/MS/JB/JEM Between RCBC Capital Corporation,
(Claimant), and Equitable PCI Banking Corporation, Inc.,
et al. (Respondents). The assailed January 8, 2008 Order
confirmed the Partial Award dated September 27, 20074
rendered by the International Chamber of
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862
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863
, 863
864
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865
, 865
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866
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867
, 867
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11 Id., at p. 96.
12 Id., at p. 86.
13 Id., at pp. 162-183.
868
869
, 869
Applied to this case, the Claimant cannot seek relief on the
basis that when it paid the purchase price in December 2000, it
was unaware that the accounting practices that went into the
reporting of the 1999 net worth as amounting to P1,387,275,847
were not in conformity with GAAP [generally accepted
accounting principles].‰ (Emphasis added.)
870
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14 Id., at p. 7.
871
, 871
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872
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873
, 873
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18 70 F.3d 418.
874
875
, 875
xxxx
Section 7. Remedies for Breach of Warranties
If any of the representations and warranties of any or all of
the SELLERS or the BUYER (the „Defaulting Party‰) contained
in Sections 5 and 6 shall be found to be untrue when made
and/or as of the Closing Date, the other party, i.e., the BUYER if
the Defaulting is any of the SELLERS and the SELLERS if the
Defaulting Party is the BUYER (hereinafter referred to as the
„Non-Defaulting Party‰) shall have the right to require the
Defaulting Party, at the latterÊs expense, to cure such
breach, and/or seek damages, by providing notice or
presenting a claim to the Defaulting Party, reasonably
specifying therein the particulars of the breach. The foregoing
remedies shall be available to the Non-Defaulting Party only if
the demand therefor is presented in writing to the
Defaulting Party within three (3) years from the Closing
Date, except that the remedy for a breach of the
SELLERSÊ representation and warranty in Section 5 (h)
shall be available only if the demand therefor is
presented to the Defaulting Party in writing together with
schedules and data to substantiate such demand, within six (6)
months from the Closing Date.‰ (Emphasis supplied.)
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877
, 877
the UFS for the first quarter ending 31 March 2000 provided
that the written demand shall be presented within three (3)
years from closing date.‰
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878
, 879
Moreover, the language employed in Sec. 5(g) and Sec.
5(h) is clear and bereft of any ambiguity. The SPAÊs
stipulations reveal that the non-use or waiver of Sec. 5(h)
does not preclude RCBC from availing itself of the second
relief under Sec. 5(g). Article 1370 of the Civil Code is
explicit that „if terms of a contract are clear and leave no
doubt upon the intention of the contracting parties the
literal meaning of its stipulations shall control.‰ Since the
terms of a contract have the force of law between the
parties,22 then the parties must respect and strictly
conform to it. Lastly, it is a long held cardinal rule that
when the terms of an agreement are reduced to writing, it
is deemed to contain all the terms agreed upon and no
evidence of such terms can be admitted other than the
contents of the agreement itself.23 Since the SPA is
unambiguous, and petitioners failed to adduce evidence to
the contrary, then they are legally bound to comply with it.
Petitioners agreed ultimately to the stipulation that:
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22 Co Chien v. Sta. Lucia Realty and Development, Inc., G.R. No.
162090, January 31, 2007, 513 SCRA 570.
23 Baluyut v. Poblete, G.R. No. 144435, February 6, 2007, 514 SCRA
370.
24 Rollo, pp. 198-199.
880
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25 Id., at p. 11.
26 Id., at p. 164.
881
, 881
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882
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28 Id., at p. 89.
29 Id., at p. 13.
883
, 883
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884
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885
, 885
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886
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45 Id.
46 Id., at pp. 887-899.
887
, 887
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888
888 SUPREME COURT REPORTS ANNOTATED
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889
, 889
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890
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891
, 891
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66 G.R. No. 125298, February 11, 1999, 303 SCRA 99, 109-110.
892
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67 G.R. No. 128305, March 28, 2005, 454 SCRA 17, 40.
68 G.R. No. 153166, December 16, 2005, 478 SCRA 210, 226.
69 Id.
70 People v. Escote, Jr., G.R. No. 140756, April 4, 2003, 400 SCRA
603, 618-619.
893
, 893
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71 A.C. No. 6697, July 25, 2006, 496 SCRA 345, 387-388.
894
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895
, 895
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896
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75 Rollo, p. 20.
897
, 897
lieve that the RCBC will forego the filing of a claim under
Sec. 5(g). The allegation that RCBC knew that the
Bankard accounts did not comply with generally accepted
accounting principles before payment and, hence, it cannot
question the financial statements of Bankard is meritless.
Precisely, the SPA explicitly provides that claims for
violation of the warranties under Sec. 5(g) can still be filed
within three (3) years from the closing date. PetitionersÊ
contention that RCBC had full control of Bankard
operations after payment of the price and that an audit
undertaken by the Rubio team did not find anything wrong
with the accounts could not have plausibly misled
petitioners into believing that RCBC will waive its right to
file a claim under Sec. 5(g). After all, the period to file a
claim under Sec. 5(g) is three (3) years under Sec. 7, much
longer than the six (6)-month period under Sec. 5(h).
Petitioners are fully aware that the warranties under Sec.
5(g) (1997 up to March 2000) are of a wider scope than that
of Sec. 5(h) (AFS of 1999 and UFS up to May 31, 2000),
necessitating a longer audit period than the six (6)-month
period under Sec. 5(h).
The third element of estoppel in relation to the party
sought to be estopped is also absent considering that, as
stated, RCBC was still in the process of verifying the
correctness of BankardÊs accounts prior to presenting its
claim of overvaluation to petitioners. RCBC, therefore, had
no sufficient knowledge of the correctness of BankardÊs
accounts.
On another issue, RCBC could not have immediately
changed the Bankard accounting practices until it had
conducted a more extensive and thorough audit of
BankardÊs voluminous records and transactions to uncover
any irregularities. That would be the only logical
explanation why BankardÊs alleged irregular practices
were maintained for more than two (2) years from closing
date. The fact that RCBC continued with the audit of
BankardÊs AFS and records after the termination of the
Rubio audit can only send the clear message to petitioners
that RCBC is still entertaining the possibility of filing a
claim under Sec. 5(g). It cannot then be said that
petitionersÊ reliance on RCBCÊs acts after full payment of
the price could have misled them into believing that no
more claim will be presented by RCBC.
The Arbitral Tribunal explained in detail why estoppel
is not present in the case at bar, thus:
898
, 899
, 901
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902