A lack of diligence by a party claiming an estoppel is generally fatal.

Substantially, FAT KEE primarily argues there was neither any agreement to enter into a foreign currency-based transaction, nor to use a dollar exchange rate of P37:US$1.  The invoice receipts denominated in US dollars were unilaterally prepared by ONLINE.  Similarly, the Accounting Department of ONLINE required that the Purchase Order to be submitted by FAT KEE be denominated in US dollars and Frederick Huang, Jr. merely complied with the same upon the instructions of Payoyo.  Contrary to ONLINE’s claim, it issued the SOA dated December 9, 1997 with the alleged unpaid obligation of FAT KEE quoted in Philippine pesos.  FAT KEE also takes issue with the ruling of the Court of Appeals that it assented to the payment in US dollars of the transactions covered under Invoice Nos. 4680, 4838, 5090 and 5096.  Lastly, FAT KEE reiterates the ruling of the RTC that ONLINE was estopped from seeking payment in US dollars since the outstanding obligation of FAT KEE was denominated in Philippine pesos in the SOA dated December 9, 1997.  Claiming that the SOA was its only basis for payment, FAT KEE allegedly paid its obligations in accordance therewith and ONLINE duly accepted the payments.

After a meticulous review of the records, we resolve to deny the petition.

FAT KEE subscribes to the rulings of the RTC in the Decision dated November 7, 2000 and the Order dated July 25, 2001.  The trial court found that there was no agreement as to the exchange rate for the conversion of the outstanding balance of FAT KEE to Philippine pesos.  A reading of the RTC rulings reveals that the trial court principally relied on the SOA dated December 9, 1997 and the testimony of Frederick Huang, Jr. in setting the exchange rate at P34:US$1.  The RTC ruled that ONLINE was estopped from claiming otherwise since FAT KEE actually paid its outstanding balance in accordance with the SOA.  Furthermore, the RTC determined that ONLINE failed to undertake any action to correct the SOA, which the latter claimed was unauthorized.  No disciplinary action was likewise taken against Edwin Morales, the employee who allegedly issued the SOA without authority.

In British American Tobacco v. Camacho,[66] the Court emphasized the doctrine of estoppel as follows:

Estoppel, an equitable principle rooted in natural justice, prevents persons from going back on their own acts and representations, to the prejudice of others who have relied on them.  The principle is codified in Article 1431 of the Civil Code, which 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.

Estoppel can also be found in Rule 131, Section 2 (a) of the Rules of Court, viz:

Sec. 2.  Conclusive presumptions. — The following are instances of conclusive presumptions:

(a)        Whenever a party has by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission be permitted to falsify it.

The elements of estoppel are: first, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a reasonable person in the actor’s position would expect or foresee such action.[67]

In the instant case, we find that FAT KEE cannot invoke estoppel against ONLINE for the latter’s issuance of the SOA on December 9, 1997.  The Court agrees with the Court of Appeals’ ruling that any misconception on the part of FAT KEE engendered by the issuance of the SOA should have already been rectified when the parties subsequently met on January 15, 1998.  The testimonial evidence of both ONLINE and FAT KEE establish that, during the meeting, the parties tried but failed to reach an agreement as regards the payment of FAT KEE’s outstanding obligation and the exchange rate to be applied thereto.  Whether or not FAT KEE was duly informed of the fact that the SOA was unauthorized is no longer of much importance.  By their act of submitting their respective proposals and counter-proposals on the mode of payment and the exchange rate, FAT KEE and ONLINE demonstrated that it was not their intention to be further bound by the SOA, especially with respect to the exchange rate to be used.  Moreover, FAT KEE only started making payments vis-à-vis the subject invoice receipts on March 17, 1998, or two months after the aforementioned meeting.

At this point, Mijares v. Court of Appeals[68] is instructive in declaring that:

One who claims the benefit of an estoppel on the ground that he has been misled by the representations of another must not have been misled through his own want of reasonable care and circumspection.  A lack of diligence by a party claiming an estoppel is generally fatal.  If the party conducts himself with careless indifference to means of information reasonably at hand, or ignores highly suspicious circumstances, he may not invoke the doctrine of estoppel.  Good faith is generally regarded as requiring the exercise of reasonable diligence to learn the truth, and accordingly estoppel is denied where the party claiming it was put on inquiry as to the truth and had available means for ascertaining it, at least where actual fraud has not been practised on the party claiming the estoppel.[69]

Thus, after participating in the meeting on January 15, 1998, submitting its own proposals and further renegotiating for the lowering of the exchange rate, FAT KEE cannot anymore insist that it was completely under the impression that the applicable exchange rate was P34:US$1 as purportedly indicated in the December 9, 1997 SOA.

Anent the proper exchange rate to be applied in this case, we likewise uphold the ruling of the Court of Appeals that estoppel finds application in this case as regards the implied acquiescence of ONLINE to the use of the P37:US$1 exchange rate.  On March 2, 1998, after a series of proposals on the conversion rate to be applied, FAT KEE finally offered to settle its outstanding balance at the rate of P37:US$1.  To this offer, ONLINE did not respond.  Thereafter, on March 17, 1998, FAT KEE began remitting payments continuously, which ONLINE duly accepted.  Following the dictum stated in British American Tobacco, ONLINE communicated, through its silence and acceptance of payments, that it was agreeable to the P37:US$1 rate.  Indeed, ONLINE should not be allowed to adopt a contrary position to the detriment of FAT KEE.

Premises considered, we find therefore that the applicable exchange rate to determine the outstanding balance of FAT KEE is P37:US$1.  We note, however, that the Court of Appeals inadvertently erred in computing the remaining balance to be paid by FAT KEE.  According to Invoice Nos. 4680, 4838, 5090 and 5096, the total unpaid amount is US$136,149.43.  By applying P37:US$1 rate on the unpaid amount, the resulting balance is P5,037,528.91, not P5,148,528.91 as determined by the Court of Appeals.  As FAT KEE has already paid a total amount of P4,758,574.18,[70] the total unpaid amount owed to ONLINE is P278,954.73.

http://sc.judiciary.gov.ph/jurisprudence/2011/february2011/171238.htm

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About Erineus

Born on December 28, 1965, Surallah, South Cotabato, Southern Mindanao, Philippines.
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