Go v. Bangko Sentral ng Pilipinas
REITERATIONFacts
The Antecedents: The underlying dispute originated from the financial distress of Orient Commercial Banking Corporation (OCBC), which declared a bank holiday in February 1998 due to its inability to meet its obligations. Subsequently, OCBC was placed under receivership by the Bangko Sentral ng Pilipinas (BSP), with the Philippine Deposit Insurance Corporation (PDIC) designated as Receiver. This action was challenged by Jose C. Go, OCBC's principal stockholder, and affiliated companies. The situation escalated with the BSP initiating a complaint for sum of money with preliminary attachment against Go and his companies to recover a substantial deficiency obligation owed by OCBC, amounting to over P1.2 billion. Procedural History: Following the initial challenges to the receivership and the BSP's complaint, the case reached the Supreme Court. During the pendency of the appeal, the parties entered into a compromise agreement, which was subsequently approved by the Regional Trial Court (RTC) on December 29, 2003. However, Go failed to comply with the terms of this agreement. This non-compliance led the BSP to move for the execution of the compromise agreement, specifically targeting properties of Ever Crest Golf Club Resort, Inc. (Ever Crest) and Mega Heights, Inc. (Mega Heights) that had been pledged as security. After an initial denial, the RTC granted the motion for execution. Petitioners then filed a petition for certiorari with the Court of Appeals (CA), arguing that the execution was improperly directed against Ever Crest's properties. The CA, however, dismissed the petition as moot and academic, a decision later affirmed by the CA upon denial of the motion for reconsideration. The Petition: The petitioners, Jose C. Go and eight affiliated corporations, seek review of the CA's decision dismissing their petition for certiorari. They contend that the CA erred in finding the case moot and academic and in upholding the RTC's order of execution against the properties of Ever Crest. The core of their argument is that Ever Crest was not a party to the compromise agreement and thus its properties should not be subject to execution. The petitioners are asking the Supreme Court to set aside the CA's decision and to declare the execution order against Ever Crest's properties as void. They are essentially appealing the CA's determination that their challenge to the execution was rendered moot by the subsequent sale of Ever Crest's properties to the BSP.
Issue(s)
Whether the Court of Appeals correctly dismissed the petition for certiorari for being moot and academic. Whether the Regional Trial Court committed grave abuse of discretion in issuing a writ of execution against the properties of Ever Crest Golf Club Resort, Inc., despite it not being a signatory to the compromise agreement.
Ruling
The Supreme Court denied the petition for review on certiorari, affirmed the decision of the Court of Appeals, and directed the petitioners to pay the costs of suit.
Ratio Decidendi
On the issue of whether the Court of Appeals correctly dismissed the petition for certiorari for being moot and academic: The Court found that the dismissal by the CA was proper. The sale of Ever Crest's properties at public auction to the BSP, resulting in the cancellation of Ever Crest's titles and the issuance of new titles to the BSP, rendered the petition moot and academic. The subsequent events had overtaken the issues raised in the certiorari petition, making it impossible to grant the relief sought, which was to prevent the execution against Ever Crest's properties. On the issue of whether the Regional Trial Court committed grave abuse of discretion in issuing a writ of execution against the properties of Ever Crest Golf Club Resort, Inc., despite it not being a signatory to the compromise agreement: The Court ruled that the RTC did not commit grave abuse of discretion. The petitioners and Ever Crest, through their explicit commitments in the compromise agreement, were estopped from claiming that Ever Crest's properties could not be subjected to levy. They had voluntarily offered these properties as security and warranted that all necessary corporate approvals were obtained. By executing the compromise agreement, they were bound by its terms, including the provision allowing for execution against Ever Crest's assets in case of default. The Court emphasized that the petitioners were estopped by deed, as they could not deny the material facts stated in the executed compromise agreement. Furthermore, the petitioners were contractually prohibited from challenging the levy on Ever Crest's assets, as they had warranted to defend the BSP's title and possession against all third-party claims. Their attempt to claim Ever Crest as a third party contradicted their own contractual obligations.
Main Doctrine
Parties who voluntarily offer their properties as security for an obligation under a compromise agreement, and obtain corporate approvals for such, are estopped from later claiming that these properties cannot be subjected to a writ of execution to satisfy the said obligation. Such conduct constitutes estoppel by deed, precluding them from denying the material facts stated in the agreement.