EQUITABLE PCI BANKING CORPORATION v.

RCBC CAPITAL CORPORATION

G.R. No. 182248             December 18, 2008

FACTS:
Petitioners Equitable PCI Bank, Inc. (EPCIB) and the individual shareholders of
Bankard, Inc., as sellers, and respondent RCBC Capital Corporation (RCBC), as buyer,
executed a Share Purchase Agreement (SPA) for the purchase of petitioners’ interests
in Bankard. To expedite the purchase, RCBC agreed to dispense with the conduct of a
due diligence audit on the financial status of Bankard. RCBC deposited the stipulated
down payment amount in an escrow account after which it was given full management
and operational control of Bankard. June 2, 2000 is also considered by the parties as
the Closing Date referred to in the SPA. Sometime in September 2000, RCBC had
Bankard’s accounts audited, creating for the purpose an audit team and the conclusion
was that the warranty, as contained in Section 5(h) of the SPA (simply Sec. 5[h]
hereinafter), was correct. RCBC paid the balance of the contract price. The
corresponding deeds of sale for the shares in question were executed in January 2001.
Thereafter RCBC informed petitioners of its having overpaid the purchase price of the
subject shares, claiming that there was an overstatement of valuation of accounts
amounting to PhP 478 million, resulting in the overpayment of over PhP 616 million.
Thus, RCBC claimed that petitioners violated their warranty, as sellers, embodied in
Sec. 5(g) of the SPA (Sec. 5[g] hereinafter). RCBC, in accordance with Sec. 10 of the
SPA, filed a Request for Arbitration dated May 12, 2004 with the ICC-ICA. In the
request, RCBC charged Bankard with deviating from, contravening and not following
generally accepted accounting principles and practices in maintaining their books.
Arbitration in the ICC-ICA proceeded after the formation of the arbitration tribunal. After
drawn out proceedings with each party alleging deviation and non-compliance by the
other with arbitration rules, the tribunal, with Justice Kapunan dissenting, rendered a
Partial Award.

ISSUE:
Whether petitioners were denied due process.

HELD:
NO. Petitioners assert that "the arbitrators’ partial award admitted and used the
Summaries as evidence, and held on the basis of the ‘information’ contained in them
that petitioners were in breach of their warranty in GAAP compliance." Petitioners’
position is bereft of merit. The petitioners afforded the opportunity to refute the
summaries and pieces of evidence submitted by RCBC which became the bases of the
experts’ opinion. Petitioners’ right to due process was not breached. Sec. 15 of RA 876
or the Arbitration Law provides that: Section 15. Hearing by arbitrators. – Arbitrators
may, at the commencement of the hearing, ask both parties for brief statements of the
issues in controversy and/or an agreed statement of facts. Thereafter the parties may
offer such evidence as they desire, and shall produce such additional evidence as the
arbitrators shall require or deem necessary to an understanding and determination of
the dispute. The arbitrators shall be the sole judge of the relevancy and materiality of
the evidence offered or produced, and shall not be bound to conform to the Rules of
Court pertaining to evidence. Arbitrators shall receive as exhibits in evidence any
document which the parties may wish to submit and the exhibits shall be properly
identified at the time of submission. All exhibits shall remain in the custody of the Clerk
of Court during the course of the arbitration and shall be returned to the parties at the
time the award is made. The arbitrators may make an ocular inspection of any matter or
premises which are in dispute, but such inspection shall be made only in the presence
of all parties to the arbitration, unless any party who shall have received notice thereof
fails to appear, in which event such inspection shall be made in the absence of such
party. The well-settled rule is that administrative agencies exercising quasi-judicial
powers shall not be fettered by the rigid technicalities of procedure, albeit they are, at all
times required, to adhere to the basic concepts of fair play. The right to cross-examine
is not an indispensable aspect of due process.