Republic Glass VS Qua

EVIDENCE REPORT:
REPUBLIC GLASS VS. LAWRENCE QUA (JULY 30, 2004)
Facts:
Petitioners Republic Glass Corporation ("RGC") and Gervel, Inc. ("Gervel") together with respondent
Lawrence C. Qua ("Qua") were stockholders of Ladtek, Inc. ("Ladtek"). Ladtek obtained loans from
Metropolitan Bank and Trust Company ("Metrobank") 5 and Private Development Corporation of the
Philippines6 ("PDCP") with RGC, Gervel and Qua as sureties. Among themselves, RGC, Gervel and Qua
executed Agreements for Contribution, Indemnity and Pledge of Shares of Stocks ("Agreements").
The Agreements all state that in case of default in the payment of Ladtek’s loans, the parties would
reimburse each other the proportionate share of any sum that any might pay to the creditors.
Under the same Agreements, Qua pledged 1,892,360 common shares of stock of General Milling
Corporation ("GMC") in favor of RGC and Gervel. The pledged shares of stock served as security for the
payment of any sum which RGC and Gervel may be held liable under the Agreements.
Ladtek defaulted on its loan obligations to Metrobank and PDCP. Hence, Metrobank filed a collection
case against Ladtek, RGC, Gervel and Qua docketed as Civil Case No. 8364 ("Collection Case No. 8364").
During the pendency of Collection Case No. 8364, RGC and Gervel paid Metrobank P7 million. Later,
Metrobank executed a waiver and quitclaim dated 7 September 1988 in favor of RGC and Gervel. Based
on this waiver and quitclaim, 9 Metrobank, RGC and Gervel filed on 16 September 1988 a joint motion to
dismiss Collection Case No. 8364 against RGC and Gervel. Accordingly, RTC-Branch 149 dismissed the
case against RGC and Gervel, leaving Ladtek and Qua as defendants. 10
In a letter dated 7 November 1988, RGC and Gervel’s counsel, Atty. Antonio C. Pastelero, demanded that
Qua pay P3,860,646, or 42.22% of P8,730,543.55, 11 as reimbursement of the total amount RGC and
Gervel paid to Metrobank and PDCP. Qua refused to reimburse the amount to RGC and Gervel.
Subsequently, RGC and Gervel furnished Qua with notices of foreclosure of Qua’s pledged shares.
Trial in Foreclosure Case No. 88-2643 ensued. RGC and Gervel offered Qua’s Motion to Dismiss 13 in
Collection Case No. 8364 as basis for the foreclosure of Qua’s pledged shares. Qua’s Motion to Dismiss
states:
8. The foregoing facts show that the payment of defendants Republic Glass Corporation and Gervel,
Inc. was for the entire obligation covered by the Continuing Surety Agreements which were Annexes
"B" and "C" of the Complaint, and that the same naturally redound[ed] to the benefit of defendant Qua
herein, as provided for by law, specifically Article 1217 of the Civil Code, which states that:
Issue:
WHETHER THE PRINCIPLE OF ESTOPPEL APPLIES TO QUA’S JUDICIAL STATEMENTS THAT RGC AND
GERVEL PAID THE ENTIRE OBLIGATION.
Held:
RGC and Gervel further invoke Section 4 of Rule 129 of the Rules of Court to support their stance:
Sec. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made.
A party may make judicial admissions in (a) the pleadings filed by the parties, (b) during the trial either
by verbal or written manifestations or stipulations, or (c) in other stages of the judicial proceeding. 27
The elements of judicial admissions are absent in this case. Qua made conflicting statements in
Collection Case No. 8364 and in Foreclosure Case No. 88-2643, and not in the "same case" as required in
Section 4 of Rule 129. To constitute judicial admission, the admission must be made in the same case in
which it is offered. If made in another case or in another court, the fact of such admission must be
proved as in the case of any other fact, although if made in a judicial proceeding it is entitled to greater
weight.28
RGC and Gervel introduced Qua’s Motion to Dismiss and the Order dismissing Collection Case No. 8364
to prove Qua’s claim that the payment was for the entire obligation. Qua does not deny making such
statement but explained that he "honestly believed and pleaded in the lower court and in CA-G.R. CV
No. 58550 that the entire debt was fully extinguished when the petitioners paid P7 million to
Metrobank."29
We find Qua’s explanation substantiated by the evidence on record. As stated in the Agreements,
Ladtek’s original loan from Metrobank was only P6.2 million. Therefore, Qua reasonably believed that
RGC and Gervel’s P7 million payment to Metrobank pertained to the entire obligation. However,
subsequent facts indisputably show that RGC and Gervel’s payment was not for the entire obligation.

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EVIDENCE REPORT:

REPUBLIC GLASS VS. LAWRENCE QUA (JULY 30, 2004)

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