Article 1206 to Article1211

8/9/2019 Article 1206 to Article1211

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Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. !" # $une %&' %&&%

RE(N)*DO C. HONR)DO' $R.' petitione+',s.COURT O- )PPE)*S an $)RDINE/M)NI*) -IN)NCE' INC.' +espon ent.

).M. Na,a++o *a0 O1ce fo+ petitione+.

I.M. 2a++e o 3 )ssociates *a0 O1ce fo+ p+i,ate +espon ent.

-ERN)N' C.$.4p

In this petition fo+ +e,ie0 on ce+tio+a+i' petitione+ Re5nal o C. Hon+a o' $+. see6s the +e,e+sal of the ecision of the Cou+t of)ppeals ate )u7ust 8' %& 9 % 0hich a1+:e the ecision ate $anua+5 ;;' %& # of the Re7ional T+ial Cou+t' 2+anch Cu 7:ent is he+eb5 +en e+e o+ e+in7 efen ant Re5nal o C. Hon+a o' $+.' to pa5 plainti? M2 -inance' fo+:e+l5 $a+ ine/Manila -inance Co+po+ation' as follo0s4

%. P %'!;8."8' of 0hich P@"'9#&."" +ep+esentin7 balance of the p+incipal a:ount ue shall ea+n inte+est of %@A pe+annu: f+o: $anua+5 %& @B

;. P@'"9#."" as li ui ate a:a7esB

!. P#'%%8.!8 as atto+ne5 s feesB an

@. The costs of suit. ;

The factual bac67+oun of this case as foun b5 the t+ial cou+t an a1+:e b5 the Cou+t of )ppeals is as follo0s4

On )u7ust ;%' %&9 ' Ha Const+uction an T+a in7 Co+po+ation HCTC fo+ b+e,it5F pu+chase on install:ent basis a To5otaCo+olla Ha+ top' ; Doo+' %&9 Mo el 0ith En7ine No. ! /98%8#" ' Se+ial No. E !8/&%8@"&' Plate No. 2/(E/;&" f+o: C+essi aSales Co+po+ation C+essi a fo+ b+e,it5F. HCTC +ep+esente b5 petitione+ Re5nal o C. Hon+a o' $+. as p+esi ent' e ecute ap+o:isso+5 note in fa,o+ of C+essi a' in the a:ount of P@&'%;".;"' pa5able at the +ate of P%'!#@.@8 a :onth fo+ thi+t5 si !#F:onths be7innin7 Septe:be+ ;8' %&9 an e,e+5 ;8th a5 of the :onth the+eafte+ until full pa5:ent. In sai p+o:isso+5note' HCTC a7+ee to a 0ai,e+ of fo+:al e:an an p+esent:ent as 0ell as notices of p+otest an ishono+' a:on7 othe+s.Petitione+ Hon+a o si7ne the p+o:isso+5 note a secon ti:e as co/:a6e+ of HCTC. ! ) chattel :o+t7a7e on the :oto+,ehicle 0as also e ecute b5 HCTC in fa,o+ of C+essi a.

On Septe:be+ @' %&9 ' C+essi a e ecute a ee of assi7n:ent of the p+o:isso+5 note 0ith 0a++ant5 of soun ness in fa,o+of $a+ ine/Manila -inance' Inc. fo+ an in consi e+ation of P!"'& 8.8@. This 0as e ecute 0ith HCTC s confo+:it5' +ep+esentea7ain b5 petitione+ as its p+esi ent. Petitione+ Hon+a o li6e0ise si7ne this ee of assi7n:ent as co/:a6e+. @

-o+ failu+e of HCTC to pa5 the :onthl5 a:o+ti ation as stipulate in the p+o:isso+5 note' p+i,ate +espon ent $a+ ine/Manila-inance' Inc. Jle on Ma5 ;;' %&9& an action fo+ +eple,in an a:a7es 0ith the Re7ional T+ial Cou+t of Ma6ati' 2+anch Cu ice on the 7+oun that su::onscoul not be se+,e on sai efen ant co+po+ation since it 0as no lon7e+ hol in7 o1ce at its 7i,en a +ess an its p+esenta +ess coul not be asce+taine . This :otion 0as 7+ante b5 the t+ial cou+t on Octobe+ !' %& !.

In ue ti:e' the t+ial cou+t +en e+e the assaile ecision a7ainst petitione+ 0ho seasonabl5 appeale to the Cou+t of )ppeals.On )u7ust 8' %& 9' the Cou+t of )ppeals p+o:ul7ate its ecision a1+:in7 that of the t+ial cou+t.

Hence the p+esent +ecou+se of petitione+.

To suppo+t his p+a5e+ fo+ +e,e+sal of the appellate cou+t s ecision' petitione+ a+7ues that he si7ne the p+o:isso+5 note anee of chattel :o+t7a7e in his o1cial capacit5 as p+esi ent of HCTC onl5. He ne,e+ inten e to si7n these ocu:ents as co/:a6e+. Thus' petitione+ in his Me:o+an u: +aises the follo0in7 issues4

%F =)S PRIV)TE RESPONDENT CORRECT IN ITS CONTENTION TH)T PETITIONER =)S ) CO/M) ER O- HCTC IN THEE


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On the J+st issue' petitione+ Hon+a o ,ehe:entl5 enies an5 liabilit5 as co/:a6e+ of HCTC on the 7+oun that the bo 5 of theocu:ents in uestion' na:el5' the p+o:isso+5 note an ee of chattel :o+t7a7e' in icates that the cont+act 0as bet0eenHCTC an C+essi a onl5. In a ition' petitione+ cites the testi:on5 of M+. Geo+7e Ca+uncho' the sales a7ent of C+essi a' 0hostate that petitione+ 0as as6e to si7n these ocu:ents in his o1cial capacit5 as p+esi ent of HCTC.

=e Jn no :e+it in the abo,e contention. Petitione+ Hon+a o cannot plea that he si7ne these ocu:ents in his o1cialcapacit5 onl5 as p+esi ent of HCTC an not as co/:a6e+ 0ith HCTC. The ocu:ents in uestion' inclu in7 the ee ofassi7n:ent 0hich contains petitione+ s si7natu+es as co/:a6e+' 0hose 7enuineness an ue e ecution 0e+e a :itte b5petitione+' clea+l5 in icate othe+0ise. )s state b5 +espon ent Cou+t of )ppeals4

The p+o:isso+5 note E hibit ) F clea+l5 sho0s on its face that the appellant si7ne the sa:e in his capacit5 as P+esi ent of

the Ha Const+uction 3 T+a in7 Co+p. an a7ain as co/:a6e+ in his p+i,ate capacit5 E hibits )/; 3 )/! F. )ppellant alsosi7ne the Dee of Chattel Mo+t7a7e an the )1 a,it of Goo -aith fou+ @F ti:esB t0ice as P+esi ent an t0ice as co/:a6e+E hibit 2 F. )n the appellant lastl5 si7ne his confo+:it5 to the Dee of )ssi7n:ent E hibit C F as p+esi ent an a7ain asco/:a6e+.

-+o: the abo,e facts' petitione+' b5 si7nin7 these ocu:ents se,e+al ti:es as co/:a6e+' is p+esu:e to be a0a+e of theconse uences of his actions. Consi e+in7 that petitione+ Hon+a o is of a7e an a business:an' hol in7 the hi7hest position inHa Const+uction T+a in7 Co+po+ation' he is p+esu:e to ha,e acte 0ith ue ca+e' an to ha,e si7ne the ocu:ents inuestion 0ith full 6no0le 7e of its contents as 0ell as the atten ant obli7ations an +esponsibilities. )s aptl5 obse+,e b5 thet+ial cou+t4

. . . efen ant Hon+a o is p+esu:e to ha,e inten e the o+ ina+5 conse uences of his ,olunta+5 act an ta6en o+ ina+5 ca+eof his conce+ns. =hen efen ant si7ne ei7ht ti:es on th+ee ocu:ents' an al0a5s as p+esi ent an as co/:a6e+' it isp+esu:e that he ha e e+cise ca+e in ,e+if5in7 his in,ol,e:ent in the t+ansaction' consi e+in7 his a7e' business life'intelli7ence an the fact that he occupie the hi7hest o1ce in the co+po+ation. #

-u+the+:o+e' the+e is no e,i ence of f+au . Petitione+ on c+oss/e a:ination testiJe as follo0s4

K )t the left han :a+7in of the p+o:isso+5 note the+e appea+s a si7natu+e o,e+ the na:e Re5nal o C. Hon+a o $+.'P+esi ent' Ha Const+uction an T+a in7 Co+p. =ill 5ou 6in l5 tell us if this is 5ou+ si7natu+eL

) (es' si+.

K )lso' at the +i7ht han :a+7in of the p+o:isso+5 note the+e appea+s a si7natu+e abo,e the t5pe0+itten na:eRe5nal o C. Hon+a o' $+.' co/:a6e+' is this 5ou+ si7natu+eL

) (es' si+' that is :5 si7natu+e. 9

Since petitione+ Hon+a o i not uestion an in fact a :itte the 7enuineness an ue e ecution of these ocu:ents'

inclu in7 the 7enuineness of his si7natu+es' then these ocu:ents :ust be 7i,en le7al e?ects.

The testi:on5 of the sales a7ent' M+. Ca+uncho' can not chan7e the le7al e?ect of these ocu:ents. G+antin7 that he tolpetitione+ to si7n these ocu:ents in his o1cial capacit5 as p+esi ent of HCTC the :e+e fact that petitione+ also si7ne,olunta+il5 as co/:a6e+ p+o,es his pa+ticipation in the t+ansactions as a co/:a6e+. -u+the+:o+e' M+. Ca+uncho testiJe that0hen petitione+ si7ne these ocu:ents' all the t5pe/0+itten 0o+ s al+ea 5 appea+e the+ein.

On the :atte+ of inte+p+etation of cont+acts' it is basic an fun a:ental that if the te+:s of the cont+act a+e clea+' the lite+al:eanin7 of the stipulation shall cont+ol. The intention of the pa+ties to a cont+act :ust be ete+:ine f+o: the cont+actitself. =hen petitione+ Hon+a o si7ne se,e+al ti:es on these ocu:ents as p+esi ent of HCTC an as co/:a6e+' the+e is noothe+ inte+p+etation but to conclusi,el5 p+esu:e that he boun hi:self also as co/:a6e+. He cannot the+efo+e +ene7e on theobli7ations an liabilities attache to a co/:a6e+. =hen the te+:s of a cont+act a+e clea+ an o not lea,e +oo: fo+ oubt asto the intention of the cont+actin7 pa+ties' it is not necessa+5 to inte+p+et the sa:e' the lite+al :eanin7 of its clauses shoulbe follo0e . &

The p+o:isso+5 note clea+l5 stipulates a soli a+5 obli7ation as sho0n b5 the follo0in7 clause -o+ ,alue +ecei,e I =e >ointl5an se,e+all5 p+o:ise to pa5 C+essi a Moto+ Sales Co+p. . . . Si7ne 4 Ha Const+uction 3 T+a in7 Co+po+ation b5 Re5nal oC. Hon+a o' $+.' P+esi ent an Re5nal o C. Hon+a o' $+.' Co/:a6e+ . In the case of Pa+ot ,s. Ge:o+a' %" this Cou+t ha occasionto state4

=he+e a p+o:isso+5 note is si7ne b5 t0o o+ :o+e pe+sons p+o:issin7 to pa5 the a:ount of the sai note >untos osepa+a a:ente' such co/:a6e+s a+e in i,i uall5 liable fo+ the pa5:ent of the full a:ount of the obli7ation of such cont+act.

The+efo+e' petitione+ Hon+a o is soli a+il5 liable to pa5 the full a:ount of the obli7ation as stipulate in the p+o:isso+5 noteto 0hich p+i,ate +espon ent is entitle .

Ho0e,e+' the a0a+ of P %'!;8."" base on the State:ent of )ccount as of Dece:be+ %"' %& !' %% p+epa+e b5 p+i,ate+espon ent inclu es othe+ cha+7es asi e f+o: the p+incipal obli7ation. These cha+7es ha,e not been satisfacto+il5 p+o,eu+in7 the t+ial. Mo+eo,e+' a ca+eful e a:ination of the +eco+ s of the case faile to suppo+t these cha+7es. The +eco+ s a+ebe+eft of an5 e,i ence to sho0 ho0 these cha+7es 0e+e co:pute no+ is the+e an a e uate sho0in7 that p+i,ate +espon entis entitle the+eto. ) :e+e :ention of the outstan in7 obli7ation of petitione+ in the a:ount of P %'9@9."8 as of Dece:be+

%"' %& 8 in the testi:on5 of )lfonso -lo+es' p+i,ate +espon ent s :ana7e+ fo+ collection' %; is not su1cient 0ithout p+oofp+esente befo+e the cou+t of the e penses an othe+ cha+7es i:pute to petitione+. Thus' in the inte+est of >ustice ane uit5' petitione+ shoul be liable onl5 fo+ the outstan in7 balance base on the p+o:isso+5 note in the a:ount ofP@"'9#&."". This is co:pute b5 e uctin7 the total pa5:ents e ui,alent to fou+ @F :onthl5 install:ents :a e b5 HCTC inthe a:ount of P '!8%.;" f+o: the p+incipal a:ount of the p+o:isso+5 note of P@&'%;".;". In a ition' this a:ount ofP@"'9#&."" shall ea+n inte+est at the +ate of %@A pe+ annu: to be co:pute f+o: Ma+ch %"' %&9& 0hen the total a:ount ofthe p+incipal obli7ation beca:e ue an e:an able %! until actual pa5:ent. The a0a+ of %"A li ui ate a:a7es an%8A atto+ne5 s fees base on the p+incipal obli7ation is foun to be e uitable.

=HERE-ORE' the assaile ecision is he+eb5 )--IRMED' 0ith :o iJcation as in icate belo0' o+ e+in7 petitione+ Hon+a o topa5 p+i,ate +espon ent M2 -inance' fo+:e+l5 $a+ ine/Manila -inance Co+po+ation as follo0s4

%F P@"'9#&."" 0ith %@ A inte+est pe+ annu: f+o: Ma+ch %"' %&9& until actual pa5:entB


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;F P@'"9#.&" as li ui ate a:a7esB

!F P#'%%8.!8 as atto+ne5 s feesB an

@F The costs of the suit.

SO ORDERED.Republic of the PhilippinesSUPREME COURTManila

EN 2)NC

G.R. No. */!"%%8 Septe:be+ ; ' %&9!

-E PERE ' plainti?/appellant',s.

$OSE-IN) GUTIERRE ' efen ant thi+ /pa+t5 plainti?/appellee' P)N-I*O )*)$)R' thi+ /pa+t5 efen ant/appellee.

$ulian C. Gon ales' $+. fo+ plainti?/appellant.

Ge+a+ o E. )n7eles fo+ efen ant/thi+ /pa+t5 plainti?/appellee.

)posta e+a' Palab+ica an Mu5co fo+ thi+ /pa+t5 efen ant/appellee.

C)STRO' $.4

This appeal f+o: the ecision ate $une &' % of the Cou+t of -i+st Instance of Da,ao in its ci,il case !%#! posesob>ections to the :anne+ the t+ial cou+t a >u icate the clai: fo+ a:a7es Jle b5 the plainti?/appellant -e Pe+ea7ainst the efen ant/thi+ /pa+t5 plainti?/appellee $oseJna Gutie++e .

The co:plaint late+ a:en e F Jle on Octobe+ ;&' %&8& b5 -e Pe+e 0ith the Cou+t of -i+st Instance of Da,ao a7ainst $oseJna Gutie++e ' fo+ b+each of cont+act of ca++ia7e' alle7es that on Septe:be+ #' %&8& 0hile she' to7ethe+ 0ith nineco/teache+s' 0as a passen7e+ of an )C >eepne5 +e7iste+e un e+ the na:e of the efen ant Gutie++e ' the sai ,ehicle'ue to the +ec6less ne7li7ence of its +i,e+ *eopol o Co+ e+o' :et 0ith an acci ent' +esultin7 in in>u+ies to he+self0hich +e ui+e he+ hospitali ation. In he+ ans0e+' $oseJna Gutie++e a,e++e that if the clai: of -e Pe+e is at all

>ustiJe ' +esponsibilit5 the+efo+ shoul e,ol,e on one PanJlo )la>a+' the actual o0ne+' b5 pu+chase' of the saipassen7e+ >eepne5 0hen the acci ent occu++e an a7ainst 0ho: she has Jle a thi+ /pa+t5 co:plaint.

The ee of sale attache to the thi+ /pa+t5 co:plaint +ecites' inte+ alia'

That it is :utuall5 a7+ee b5 the he+ein ,en o+ an ,en ee that the TIT*E to the afo+e:entione ,ehicle shall +e:ain0ith the VENDOR' pen in7 app+o,al of the he+ein S)*E b5 the Public Se+,ice Co::ission' sai :oto+ ,ehicle bein7+e7iste+e as a public utilit5 auto/calesa un e+ )C eno:inationB ...

That the ,en ee he+ein' b5 these p+esents' o sicQ he+eb5 bin s hi:self an o sicQ he+eb5 assu:e' sicQ+esponsibilit5 fo+ all actions' clai:s' e:an s' an +i7hts of action' an 0hate,e+ 6in an natu+e' that :a5 he+eafte+e,elop as a conse uence of o+ in the cou+se of ope+ation of the afo+e:entione ,ehicleB ...

In his ans0e+ to the thi+ /pa+t5 co:plaint' PanJlo )la>a+ isclai:e +esponsibilit5 fo+ the acci ent' alle7in7 that aF the:entione ee of sale is null an ,oi because it has not been +e7iste+e 0ith the Public Se+,ice Co::ission espite+epeate e:an s on the !+ /pa+t5 co:plainant to o soB bF the sai passen7e+ >eepne5 +e:aine in the cont+ol of

the !+ /pa+t5 co:plainant 0ho' to7ethe+ 0ith he+ la05e+/husban ' ha been collectin7 +entals f+o: hi: fo+ the use ofthe sai ,ehicleB an cF b5 e p+ess a7+ee:ent' title to the sai ,ehicle +e:aine 0ith the !+ /pa+t5 co:plainantpen in7 app+o,al of the sale b5 the Public Se+,ice Co::ission.

The efen ant *eopol o Co+ e+o 0as ecla+e in efault an i not appeal.

On $une &' %' afte+ t+ial on the :e+its' the cou+t a uo +en e+e its ecision' in the :ain Jn in7 *eopol o Co+ e+o7uilt5 of +ec6less i:p+u ence' an Jn in7 that PanJlo )la>a+ o0ne an ope+ate the auto calesa in uestion an ' infact' afte+ the acci ent' e,en assu:e +esponsibilit5 fo+ the pa5:ent of the hospital bil ls ue to the 2+o6enshi+eMe:o+ial Hospital fo+ t+eat:ent of the in>u+ies su?e+e b5 -e Pe+e . 2ase on these Jn in7s as 0ell as the p+oof of thea:a7es su?e+e b5 -e Pe+e ' the cou+t a >u 7e as follo0s4

=HERE-ORE' p+e:ises consi e+e ' >u 7:ent is he+eb5 +en e+e o+ e+in7 thi+ /pa+t5 efen ant PanJlo )la>a+ to pa5plainti? the a:ount of P%'88;.;" hospital e pensesB P;'""".""' actual a:a7esB P8'"""."" :o+al a:a7esB P8"".""inci ental e pensesB an P;'"""."" atto+ne5 s fees.

O+ e+in7 li6e0ise PanJlo )la>a+ to pa5 efen ant thi+ /pa+t5 plainti? $oseJna Gutie++e P8""."" :o+al a:a7esB anP%'"""."" atto+ne5 s fees' an to pa5 the costs of the p+ocee in7s on both cases.

The p+esent appeal uestions the co++ectness of the ispositi,e po+tion of the ecision a uo 0hich a >u 7e PanJlo)la>a+' instea of $oseJna Gutie++e ' as the pa+t5 liable to he+ fo+ the pa5:ent of the a:a7es a >u icate in he+ fa,o+.SpeciJcall5' -e Pe+e a+7ues that the +e7iste+e o0ne+ of a :oto+ ,ehicle shoul be the one hel liable fo+ a:a7es+esultin7 f+o: b+each of cont+act of ca++ia7e b5 a co::on ca++ie+.

=e Jn the appeal :e+ito+ious an in acco+ 0ith settle la0 on the :atte+.

In Pe+alta ,s. Man7usan7 % this Cou+t' in app+obation of a si:ila+ a+7u:ent' sai 4


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The la0 Sec. ;" 7Q' Public Se+,ice )ctF +eall5 +e ui+es the app+o,al of the Public Se+,ice Co::ission in o+ e+ that af+anchise' o+ an5 p+i,ile7es pe+tainin7 the+eto' :a5 be sol o+ lease 0ithout inf+in7in7 the ce+tiJcate issue to the7+antee. The +eason is ob,ious. Since a f+anchise is pe+sonal in natu+e an5 t+ansfe+ o+ lease the+eof shoul besub:itte fo+ app+o,al of the Public Se+,ice Co::ission' so that the latte+ :a5 ta6e p+ope+ safe7ua+ s to p+otect theinte+est of the public. It follo0s that if the p+ope+t5 co,e+e b5 the f+anchise is t+ansfe++e o+ lease to anothe+ 0ithoutobtainin7 the +e uisite app+o,al' the t+ansfe+ is not bin in7 on the Public Se+,ice Co::ission an ' in conte:plation ofla0' the 7+antee continues to be +esponsible un e+ the f+anchise in +elation to the Co::ission an to the public fo+ theconse uences inci ent to the ope+ation of the ,ehicle' one of the: bein7 the collision un e+ consi e+ation. Monto5a ,.I7nacio' 8" O.G. No. %. %" B V a. e Me ina' et al. ,. C+esencia' et al.' 8; O.G. No. %"' @#"@B E+e o ,. $epte' et al.' G.R.No. */"8' Sept. !"' %&89B Ta:a5o ,. ) uino' 8# O.G. No. !#'8#%9F.

In the ea+lie+ case of E+e o ,s. $epte' ; 0hich is cite in the fo+e7oin7 opinion' this Cou+t hel that the oct+ine :a6in7the +e7iste+e o0ne+ of a co::on ca++ie+ ans0e+able to the public fo+ ne7li7ence in>u+ies to its passen7e+s o+ thi+pe+sons' e,en thou7h the ,ehicle ha al+ea 5 been t+ansfe++e to anothe+' is base upon the p+inciple

... that in ealin7 0ith ,ehicles +e7iste+e un e+ the Public Se+,ice *a0' the public has the +i7ht to assu:e o+ p+esu:ethat the +e7iste+e o0ne+ is the actual o0ne+ the+eof' fo+ it 0oul be i1cult fo+ the public to enfo+ce the actions thatthe5 :a5 ha,e fo+ in>u+ies cause to the: b5 the ,ehicles bein7 ne7li7entl5 ope+ate if the public shoul be +e ui+eto p+o,e 0ho the actual o0ne+ is. Ho0 0oul the public o+ thi+ pe+sons 6no0 a7ainst 0ho: to enfo+ce thei+ +i7hts incase of subse uent t+ansfe+s of the ,ehiclesL =e o not i:pl5 b5 this oct+ine' ho0e,e+' that the +e7iste+e o0ne+:a5 not +eco,e+ 0hate,e+ a:ount he ha pai b5 ,i+tue of his liabilit5 to thi+ pe+sons f+o: the pe+son to 0ho: heha actuall5 sol ' assi7ne o+ con,e5e the ,ehicle.

In Ta:a5o ,s. ) uino' ! also cite in Man7usan7' sup+a' this Cou+t' +eite+atin7 0hat 0as state en passant in $epte'sup+a' esc+ibe the natu+e of the liabilit5 of the actual t+ansfe+ee of a ,ehicle the ne7li7ent ope+ation of 0hich 7i,es

+ise to in>u+ies to its passen7e+s4

The uestion that is pose ' the+efo+e' is ho0 shoul the hol e+ of the ce+tiJcate of public con,enience Ta:a5opa+ticipate 0ith his t+ansfe+ee ope+ato+ Ra5os' in the a:a7es +eco,e+able b5 the hei+s of the ecease passen7e+' ifthei+ liabilit5 is not that of >oint to+tfeaso+s in acco+ ance 0ith )+ticle ;%&@ of the Ci,il Co e. The follo0in7consi e+ations :ust be bo+ne in :in in ete+:inin7 this uestion. )s Ta:a5o is the +e7iste+e o0ne+ of the t+uc6' his+esponsibilit5 to the public o+ to an5 passen7e+ +i in7 in the ,ehicle o+ t+uc6 :ust be i+ect' fo+ the +easons 7i,en inou+ ecision in the case of E+e o ,s. $epte' sup+a' as uote abo,e. 2ut as the t+ansfe+ee' 0ho ope+ate the ,ehicle0hen the passen7e+ ie ' is the one i+ectl5 +esponsible fo+ the acci ent an eath' he shoul in tu+n be :a e+esponsible to the +e7iste+e o0ne+ fo+ 0hat the latte+ :a5 ha,e been a >u 7e to pa5. In ope+atin7 the t+uc6 0ithoutt+ansfe+ the+eof ha,in7 been app+o,e b5 the Public Se+,ice Co::ission' the t+ansfe+ee acte :e+el5 as a7ent of the+e7iste+e o0ne+ an shoul be +esponsible to hi: the +e7iste+e o0ne+F' fo+ an5 a:a7es that he :a5 cause thelatte+ b5 his ne7li7ence.

Upon the fo+e7oin7' it is uite clea+ that the cou+t belo0 e++e in hol in7 PanJlo )la>a+' +athe+ than $oseJna Gutie++e 'as the one i+ectl5 liable to -e Pe+e fo+ the latte+ s in>u+ies an the co++espon in7 a:a7es incu++e . This Cou+t notes:o+eo,e+' that the cou+t belo0 ine plicabl5 faile to hol the +i,e+ *eopol o Co+ e+oF' 0ho: it foun 7uilt5 of+ec6less i:p+u ence' >ointl5 an soli a+il5 liable 0i th $oseJna Gutie++e to -e Pe+e in acco+ ance 0ith the p+o,isions of a+ticle ;% @ in +elation to a+ticle ;% " of the ne0 Ci,il Co e. @

)CCORDING*(' the >u 7:ent belo0 is he+eb5 :o iJe in the sense that $oseJna Gutie++e an *eopol o Co+ e+o a+ehe+eb5 a >u 7e i+ectl5 an >ointl5 an soli a+il5 liable to -e Pe+e fo+ the su:s a >u icate in the >u 7:ent belo0 inhe+ -e Pe+e F fa,o+' 0hile PanJlo )la>a+ is' in tu+n' he+eb5 hel ans0e+able to $oseJna Gutie++e fo+ such a:ount asthe latte+ :a5 pa5 to -e Pe+e in satisfaction of the >u 7:ent appeale f+o:. Costs a7ainst both the efen ant/thi+pa+t5 plainti?/appellee $oseJna Gutie++e an the thi+ pa+t5 efen ant/appellee PanJlo )la>a+.

Ma6alintal' )ct7.. C.$.' al i,a+' -e+nan o' Teehan6ee' 2a++e o' Ma6asia+' )ntonio an Es7ue++a' $$.' concu+.

-ootnotes

% */% %%"' $ul5 !%' %@' %% SCR) 8& .

; %"; Phil. %"#. See also Ro ue ,s. Maliba5 T+ansit' Inc. &9 Phil. %""@F.

! %"8 Phil. &@&.

@ Viluan ,s. Cou+t of )ppeals' */;%@99/ %' )p+il ;&' %#.

The *a0phil P+o>ect / )+ellano *a0 -oun ation


5/21

Thi+ Di,ision M)RSM)N DR(SD)*E *)ND' INC.' Petitione+'

/ ,e+sus /

PHI*IPPINE GEO)N)*(TICS' INC. )ND GOTESCO PROPERTIES' INC.' Respon ents.////////////////////////////////////////////GOTESCO PROPERTIES' INC.' Petitione+'

/ ,e+sus /

M)RSM)N DR(SD)*E *)ND' INC. )ND PHI*IPPINE GEO)N)*(TICS' INC.'Respon ents.

G.R. No. % !!9@

P+esent4

C)RPIO'C)RPIO MOR)*ES' Chai+pe+son'2RION')2)D' anVI**)R)M)' $R.' $$. G.R. No. % !!9#

P+o:ul7ate 4

$une ;&' ;"%"

/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / D E C I S I O N C)RPIO MOR)*ES' $.4 On -eb+ua+5 %;' %&&9' Ma+s:an D+5s ale *an ' Inc. Ma+s:an D+5s aleF an Gotesco P+ope+ties' Inc. GotescoFente+e into a $oint Ventu+e )7+ee:ent $V)F fo+ the const+uction an e,elop:ent of an o1ce buil in7 on a lano0ne b5 Ma+s:an D+5s ale in Ma6ati Cit5. %Q

The $V) containe the follo0in7 pe+tinent p+o,isions4

SECTION @. C)PIT)* O- THE $V

It is the esi+e of the Pa+ties he+ein to i:ple:ent this )7+ee:ent b5 in,estin7 in the PRO$ECT on a -I-T( 8"AFPERCENT/ -I-T( 8"AF PERCENT basis.

@.%. Cont+ibution of Ma+s:an D+5s aleQ/ Ma+s:an D+5s aleQ shall cont+ibute the P+ope+t5.

The total app+aise ,alue of the P+ope+t5 is PESOS4 -OUR HUNDRED T=ENT( MI**ION P@;"'"""'""".""F.

-o+ this pu+pose' Ma+s:an D+5s aleQ shall eli,e+ the P+ope+t5 in a buil able con ition 0ithin ninet5 &"F a5sf+o: si7nin7 of this )7+ee:ent ba++in7 an5 unfo+eseen ci+cu:stances o,e+ 0hich Ma+s:an D+5s aleQ has no cont+ol.2uil able con ition shall :ean that the ol buil in7 st+uctu+e 0hich stan s on the P+ope+t5 is e:olishe an ta6en to7+oun le,el.


6/21

@.;. Cont+ibution of GotescoQ/ GotescoQ shall cont+ibute the a:ount of PESOS4 -OUR HUNDRED T=ENT( MI**IONP@;"'"""'""".""F in cash 0hich shall be pa5able as follo0s4

@.;.%. The a:ount of PESOS4 -I-T( MI**ION P8"'"""'""".""F upon si7nin7 of this )7+ee:ent.

@.;.;. The balance of PESOS4 THREE HUNDRED SEVENT( MI**ION P!9"'"""'""".""F shall be pai base onp+o7+ess billin7s' +elati,e to the e,elop:ent an const+uction of the 2uil in7' but shall in no case e cee ten %"F:onths f+o: eli,e+5 of the P+ope+t5 in a 2uil able con ition as eJne in section @.%.

) >oint account shall be opene an :aintaine b5 both Pa+ties fo+ han lin7 of sai balance' a:on7 othe+ P+o>ectconce+ns. @.!. -un in7 an -inancin7

@.!.% Const+uction fun in7 fo+ the P+o>ect shall be obtaine f+o: the cash cont+ibution of GotescoQ. @.!.; Subse uent fun in7 shall be obtaine f+o: the p+e/sellin7 of units in the 2uil in7 o+' 0hen necessa+5' f+o:loans f+o: ,a+ious ban6s o+ Jnancial institutions. GotescoQ shall a++an7e the +e ui+e fun in7 f+o: such ban6s o+Jnancial institutions' un e+ such te+:s an con itions 0hich 0ill p+o,i e Jnancin7 +ates fa,o+able to the Pa+ties.

@.!.! Ma+s:an D+5s aleQ shall not be obli7ate to fun the P+o>ect as its cont+ibution is li:ite to the P+ope+t5.

@.!.@ If the cost of the P+o>ect e cee s the cash cont+ibution of GotescoQ' the p+ocee s obtaine f+o: the p+e/sellin7 of units an p+ocee s f+o: loans' the Pa+ties shall a7+ee on othe+ sou+ces an te+:s of fun in7 such e cess assoon as p+acticable.

@.!.8 . @.!.# . @.!.9 . @.!. )ll fun s a ,ance b5 a Pa+t5 o+ b5 thi+ pa+ties in substitution fo+ a ,ances f+o: a Pa+t5F shall be +epaib5 the $V. @.!.& If an5 Pa+t5 a7+ees to :a6e an a ,ance to the P+o>ect but fails to o so in 0hole o+ in pa+tF the othe+ pa+t5:a5 a ,ance the sho+tfall an the Pa+t5 in efault shall in e:nif5 the Pa+t5 :a6in7 the substitute a ,ance on e:anfo+ all of its losses' costs an e penses incu++e in so oin7. e:phasis supplie B un e+sco+in7 in the o+i7inalF

Via Technical Se+,ices Cont+act TSCF ate $ul5 %@' %&&9' ;Q the >oint ,entu+e en7a7e the se+,ices of PhilippineGeoanal5tics' Inc. PGIF to p+o,i e subsu+face soil e plo+ation' labo+ato+5 testin7' seis:ic stu 5 an 7eotechnicalen7inee+in7 fo+ the p+o>ect. PGI' 0as' ho0e,e+' able to +ill onl5 fou+ of J,e bo+eholes nee e to con uct itssubsu+face soil e plo+ation an labo+ato+5 testin7' >ustif5in7 its failu+e to +ill the +e:ainin7 bo+ehole to the failu+e onthe pa+t of the >oint ,entu+e pa+tne+s to clea+ the a+ea 0he+e the +illin7 0as to be :a e. !Q PGI 0as able to co:pleteits seis:ic stu 5 thou7h.PGI then bille the >oint ,entu+e on No,e:be+ ;@' %&&9 fo+ P; @'88!.8" +ep+esentin7 the cost of pa+tial subsu+face soile plo+ationB an on $anua+5 %8' %&& fo+ P;8"' "" +ep+esentin7 the cost of the co:plete seis:ic stu 5. @Q

Despite +epeate e:an s f+o: PGI' 8Q the >oint ,entu+e faile to pa5 its obli7ations. Mean0hile' ue to unfa,o+able econo:ic con itions at the ti:e' the >oint ,entu+e 0as cut sho+t an the plannebuil in7 p+o>ect 0as e,entuall5 shel,e . #Q

PGI subse uentl5 Jle on No,e:be+ %%' %&&& a co:plaint fo+ collection of su: of :one5 an a:a7es at the Re7ional T+ial Cou+t RTCF of Kue on Cit5 a7ainst Ma+s:an D+5s ale an Gotesco.

In its )ns0e+ 0ith Counte+clai: an C+oss/clai:' Ma+s:an D+5s ale passe the +esponsibilit5 of pa5in7 PGI to Gotesco0hich' un e+ the $V)' 0as solel5 liable fo+ the :oneta+5 e penses of the p+o>ect. 9Q

Gotesco' on the othe+ han ' counte+e that PGI has no cause of action a7ainst it as PGI ha 5et to co:plete these+,ices enu:e+ate in the cont+actB an that Ma+s:an D+5s ale faile to clea+ the p+ope+t5 of eb+is 0hichp+e,ente PGI f+o: co:pletin7 its 0o+6. Q

25 Decision of $une ;' ;""@' &Q 2+anch ;;# of the Kue on Cit5 RTC +en e+e >u 7:ent in fa,o+ of PGI' isposin7 asfollo0s4 =HERE-ORE' in ,ie0 of all the fo+e7oin7' >u 7:ent is he+eb5 +en e+e in fa,o+ of plainti? PGIQ.

The efen ants GotescoQ an Ma+s:an D+5s aleQ a+e o+ e+e to pa5 plainti?' >ointl54 %F the su: of P8!8'!8!.8" 0ith le7al inte+est f+o: the ate of this ecision until full5 pai B ;F the su: of P;""'"""."" as e e:pla+5 a:a7esB


7/21

!F the su: of P;""'"""."" as an fo+ atto+ne5 s feesB an @F costs of suit.

The c+oss/clai: of efen ant Ma+s:an D+5s aleQ a7ainst efen ant GotescoQ is he+eb5 GR)NTED as follo0s4

aF Defen ant GotescoQ is o+ e+e to +ei:bu+se co/ efen ant Ma+s:an D+5s aleQ in the a:ount ofP8!8'!8!. 8"Q in acco+ ance 0ith the $V)Q.

bF Defen ant GotescoQ is fu+the+ o+ e+e to pa5 co/ efen ant Ma+s:an D+5s aleQ the su: of P%""'""".""as an fo+ atto+ne5 s fees.

SO ORDERED. un e+sco+in7 in the o+i7inalB e:phasis supplie F Ma+s:an D+5s ale :o,e fo+ pa+tial +econsi e+ation' conten in7 that it shoul not ha,e been hel >ointl5 liable 0i thGotesco on PGI s clai: as 0ell as on the a0a+ s of e e:pla+5 a:a7es an atto+ne5 s fees. The :otion 0as' b5Resolution of Octobe+ ; ' ;""8' enie . 2oth Ma+s:an D+5s ale an Gotesco appeale to the Cou+t of )ppeals 0hich' b5 Decision of $anua+5 ; ' ;"" ' %"Qa1+:e 0ith :o iJcation the ecision of the t+ial cou+t. Thus the appellate cou+t ispose 4 =HERE-ORE' p+e:ises consi e+e ' the instant appeal is P)RT*( GR)NTED. The assaile Decision ate $une ;' ;""@an the Resolution ate Octobe+ ; ' ;""8 of the RTC of Kue on Cit5' 2+anch ;;#' in Ci,il Case No. K&&/!&;@ a+e

he+eb5 )--IRMED 0ith MODI-IC)TION eletin7 the a0a+ of e e:pla+5 a:a7es in fa,o+ of PGIQ an the P%""'""".""atto+ne5 s fees in fa,o+ of Ma+s:an D+5s aleQ an o+ e+in7 efen ant/appellant GotescoQ to REIM2URSE Ma+s:anD+5s aleQ 8"A of the a77+e7ate su: ue PGIQ' instea of the lu:p su: P8!8'!8!."" a0a+ e b5 the RTC. The +est ofthe Decision stan s.

SO ORDERED. capitali ation an e:phasis in the o+i7inalB un e+sco+in7 supplie F

In pa+tl5 a1+:in7 the t+ial cou+t s ecision' the appellate cou+t +atiocinate that not0ithstan in7 the te+:s of the $V)'the >oint ,entu+e cannot a,oi pa5:ent of PGI s clai: since the $V)Q coul not a?ect thi+ pe+sons li6e PGIQ becauseof the basic ci,il la0 p+inciple of +elati,it5 of cont+acts 0hich p+o,i es that cont+acts can onl5 bin the pa+ties 0hoente+e into it' an it cannot fa,o+ o+ p+e>u ice a thi+ pe+son' e,en if he is a0a+e of such cont+act an has acte 0ith6no0le 7e the+eof. %%Q

Thei+ :otions fo+ pa+tial +econsi e+ation ha,in7 been enie ' %;Q Ma+s:an D+5s ale an Gotesco Jle sepa+atepetitions fo+ +e,ie0 0ith the Cou+t 0hich 0e+e oc6ete as G.R. Nos. % !!9@ an % !!9#' +especti,el5. 25 Resolutionof Septe:be+ ' ;"" ' the Cou+t consoli ate the petitions. In G.R. No. % !!9@' Ma+s:an D+5s ale i:putes e++o+ on the appellate cou+t in

). W)D$UDGING M)RSM)N DR(SD)*EQ =ITH $OINT *I)2I*IT( )-TER CONCEDING TH)T GOTESCOQ SHOU*DU*TIM)TE*( 2E SO*E*( *I)2*E TO PGIQ. 2. W)=)RDING )TTORNE( S -EES IN -)VOR O- PGIQW C. WIGNORING THE -)CT TH)T PGIQ DID NOT COMP*( =ITH THE REKUIREMENT O- S)TIS-)CTOR( PER-ORM)NCE O-ITS PREST)TION =HICH' PURSU)NT TO THE TECHNIC)* SERVICES CONTR)CT' IS THE CONDITION SINE KU) NON TOCOMPENS)TION.

D. WDISREG)RDING C*E)R EVIDENCE SHO=ING M)RSM)N DR(SD)*E SQ ENTIT*EMENT TO )N )=)RD O-)TTORNE( S -EES. %!QOn the othe+ han ' in G.R. No. % !!9#' Gotesco pe les that the appellate cou+t co::itte e++o+ 0hen it WORDERED GOTESCOQ TO P)( P8!8'!8!.8" )S COST O- THE =OR PER-ORMED 2( PGIQ )ND P%""'"""."" )SQ)TTORNE( S -EES W )NDQ TO REIM2URSE M)RSM)N DR(SD)*EQ 8"A O- P8!8'!8!.8" )ND P)( M)RSM)NDR(SD)*EQ P%""'"""."" )S )TTORNE( S -EES. %@Q

On the issue of 0hethe+ PGI 0as in ee entitle to the pa5:ent of se+,ices it +en e+e ' the Cou+t sees no i:pe+ati,eto +e/e a:ine the con7+uent Jn in7s of the t+ial an appellate cou+ts the+eon. Un oubte l5' the e e+cise in,ol,es ane a:ination of facts 0hich is no+:all5 be5on the a:bit of the Cou+t s functions un e+ a petition fo+ +e,ie0' fo+ it is

0ell/settle that this Cou+t is not a t+ie+ of facts. =hile this >u icial tenet a :its of e ceptions' such as 0hen theJn in7s of facts of the appellate cou+t a+e cont+a+5 to those of the t+ial cou+t s' o+ 0hen the >u 7:ent is base on a:isapp+ehension of facts' o+ 0hen the Jn in7s of facts a+e cont+a icte b5 the e,i ence on +eco+ ' %8Q thesee tenuatin7 7+oun s Jn no application in the p+esent petitions.

)T )** EVENTS' the Cou+t is con,ince that PGI ha :o+e than su1cientl5 establishe its clai:s a7ainst the >oint,entu+e. In fact' Ma+s:an D+5s ale ha lon7 +eco7ni e PGI s cont+actual clai:s 0hen it PGIF +ecei,e a Ce+tiJcate of Pa5:ent %#Q f+o: the >oint ,entu+e s p+o>ect :ana7e+ %9Q 0hich 0as en o+se to Gotesco fo+ p+ocessin7 anpa5:ent. % Q

The co+e issue to be +esol,e then is 0hich bet0een >oint ,entu+e+s Ma+s:an D+5s ale an Gotesco bea+s the liabilit5to pa5 PGI its unpai clai:s.


8/21

To Ma+s:an D+5s ale' it is Gotesco since' un e+ the $V)' const+uction fun in7 fo+ the p+o>ect 0as to be obtaine f+o:Gotesco s cash cont+ibution' as its Ma+s:an D+5s ale sF pa+ticipation in the ,entu+e 0as li:ite to the lan .

Gotesco :aintains' ho0e,e+' that it has no liabilit5 to pa5 PGI since it 0as ue to the fault of Ma+s:an D+5s ale thatPGI 0as unable to co:plete its un e+ta6in7.

The Cou+t Jn s Ma+s:an D+5s ale an Gotesco >ointl5 liable to PGI. PGI e ecute a technical se+,ice cont+act 0ith the >oint ,entu+e an 0as ne,e+ a pa+t5 to the $V). =hile the $V) clea+l5spelle out' inte+ alia' the capital cont+ibutions of Ma+s:an D+5s ale lan F an Gotesco cashF as 0ell as the fun in7an Jnancin7 :echanis: fo+ the p+o>ect' the sa:e cannot be use to efeat the la0ful clai: of PGI a7ainst the t0o

>oint ,entu+e+s/pa+tne+s.

The TSC clea+l5 liste the >oint ,entu+e+s Ma+s:an D+5s ale an Gotesco as the beneJcial o0ne+ of the p+o>ect' %&Qan all billin7 in,oices in icate the conso+tiu: the+ein as the client.

)s the appellate cou+t hel ' )+ticles %;"9 an %;" of the Ci,il Co e' 0hich +especti,el5 +ea 4)+t. %;"9. The concu++ence of t0o o+ :o+e c+e ito+s o+ of t0o o+ :o+e ebto+s in one an the sa:e obli7ation oesnot i:pl5 that each one of the fo+:e+ has a +i7ht to e:an ' o+ that each one of the latte+ is boun to +en e+' enti+eco:pliance 0ith the p+estations. The+e is a soli a+5 liabilit5 onl5 0hen the obli7ation e p+essl5 so states' o+ 0hen thela0 o+ natu+e of the obli7ation +e ui+es soli a+it5. )+t. %;" . If f+o: the la0' o+ the natu+e o+ the 0o+ in7 of the obli7ations to 0hich the p+ece in7 a+ticle +efe+s thecont+a+5 oes not appea+' the c+e it o+ ebt shall be p+esu:e to be i,i e into as :an5 e ual sha+es as the+e a+ec+e ito+s o+ ebto+s' the c+e its o+ ebts bein7 consi e+e istinct f+o: one anothe+' sub>ect to the Rules of Cou+t7o,e+nin7 the :ultiplicit5 of suits. e:phasis an un e+sco+in7 supplie F'

p+esu:e that the obli7ation o0in7 to PGI is >oint bet0een Ma+s:an D+5s ale an Gotesco.

The onl5 ti:e that the $V) :a5 be :a e to appl5 in the p+esent petitions is 0hen the liabilit5 of the >oint ,entu+e+s toeach othe+ 0oul set in.

) >oint ,entu+e bein7 a fo+: of pa+tne+ship' it is to be 7o,e+ne b5 the la0s on pa+tne+ship. ;"Q )+ticle %9&9 of theCi,il Co e p+o,i es4 )+t. %9&9. The losses an p+oJts shall be ist+ibute in confo+:it5 0ith the a7+ee:ent. If onl5 the sha+e of each

pa+tne+ in the p+oJts has been a7+ee upon' the sha+e of each in the losses shall be in the sa:e p+opo+tion.

In the absence of stipulation' the sha+e of each in the p+oJts an losses shall be in p+opo+tion to 0hat he :a5 ha,econt+ibute ' but the in ust+ial pa+tne+ shall not be liable fo+ the losses. )s fo+ the p+oJts' the in ust+ial pa+tne+ shall+ecei,e such sha+e as :a5 be >ust an e uitable un e+ the ci+cu:stances. If besi es his se+,ices he has cont+ibutecapital' he shall also +ecei,e a sha+e in the p+oJts in p+opo+tion to his capital. e:phasis an un e+sco+in7 supplie F

In the $V)' Ma+s:an D+5s ale an Gotesco a7+ee on a 8"/8" +atio on the p+ocee s of the p+o>ect. ;%Q The5 i notp+o,i e fo+ the splittin7 of losses' ho0e,e+. )ppl5in7 the abo,e/ uote p+o,ision of )+ticle %9&9 then' the sa:e +atioapplies in splittin7 the P8!8'!8!.8" obli7ation/loss of the >oint ,entu+e.

The appellate cou+t s ecision :ust be :o iJe ' ho0e,e+. Ma+s:an D+5s ale an Gotesco bein7 >ointl5 liable' the+eis no nee fo+ Gotesco to +ei:bu+se Ma+s:an D+5s ale fo+ 8"A of the a77+e7ate su: ue to PGI.

)llo0in7 Ma+s:an D+5s ale to +eco,e+ f+o: Gotesco 0hat it pai to PGI 0oul not onl5 be cont+a+5 to the la0 onpa+tne+ship on i,ision of losses but 0oul pa+ta6e of a clea+ case of un>ust en+ich:ent at Gotesco s e pense. The7+ant b5 the lo0e+ cou+ts of Ma+s:an D+5s ale c+oss/clai: a7ainst Gotesco 0as thus e++oneous. Ma+s:an D+5s ale s supplication fo+ the a0a+ of atto+ne5 s fees in its fa,o+ :ust be enie . It cannot clai: that it0as co:pelle to liti7ate o+ that the ci,il action o+ p+ocee in7 a7ainst it 0as clea+l5 unfoun e ' fo+ the $V) p+o,i ethat' in the e,ent a pa+t5 a ,ances fun s fo+ the p+o>ect' the >oint ,entu+e shall +epa5 the a ,ancin7 pa+t5. ;;Q

Ma+s:an D+5s ale 0as thus not p+eclu e f+o: a ,ancin7 fun s to pa5 fo+ PGI s cont+acte se+,ices to abate an5le7al action a7ainst the >oint ,entu+e itself. It 0as in fact ha+ line insistence on Gotesco ha,in7 sole +esponsibilit5 topa5 fo+ the obli7ation' espite the fact that PGI s se+,ices +e oun e to the beneJt of the >oint ,entu+e' that spa0nethe le7al action a7ainst it an Gotesco.

-inall5' an inte+est of %;A pe+ annu: on the outstan in7 obli7ation :ust be i:pose f+o: the ti:e of e:an ;!Q asthe ela5 in pa5:ent :a6es the obli7ation one of fo+bea+ance of :one5' confo+:abl5 0ith this Cou+t s +ulin7 inEaste+n Shippin7 *ines' Inc. ,. Cou+t of )ppeals. ;@Q Ma+s:an D+5s ale an Gotesco shoul bea+ le7al inte+est on thei++especti,e obli7ations.

=HERE-ORE' the assaile Decision an Resolution of the Cou+t of )ppeals a+e )--IRMED 0ith MODI-IC)TION in thatthe o+ e+ fo+ Gotesco to +ei:bu+se Ma+s:an D+5s ale is DE*ETED' an inte+est of %;A pe+ annu: on the +especti,eobli7ations of Ma+s:an D+5s ale an Gotesco is i:pose ' co:pute f+o: the last e:an o+ on $anua+5 8' %&&& up tothe Jnalit5 of the Decision.

If the a >u 7e a:ount an the inte+est +e:ain unpai the+eafte+' the inte+est +ate shall be %;A pe+ annu: co:putef+o: the ti:e the >u 7:ent beco:es Jnal an e ecuto+5 until it is full5 satisJe . The appeale ecision is' in all othe++espects' a1+:e .


9/21


10/21


11/21

Manila/Hon76on7 Xi7ht at 4"" a.:. to Racil Co+cue+a. )cco+ in7 to Ge::a' she calle up P)* :e+el5 to in ui+5 sicFas to the a,ailabilit5 of seats fo+ the 84"" p.:. Manila/Hon76on7 Xi7ht on ;# -eb+ua+5 %&&%. She 0as ta6en b5 su+p+ise0hen Racil i::e iatel5 cancelle the conJ+:e boo6in7s e,en if the+e 0as no inst+uction on he+ pa+t to o so.Ge::a i::e iatel5 info+:e Rub5 *i: of the e++oneous cancellation an espite all thei+ e?o+ts to +einstate theo+i7inal conJ+:e boo6in7s' the sa:e coul not be one.

On % $une %&' the cou+t a uo RTC +en e+e a Decision 0ith the follo0in7 ispositi,e po+tion4

=HERE-ORE' >u 7:ent is he+eb5 +en e+e sentencin7 the efen ant Philippine )i+lines an thi+ /pa+t5 efen antRainbo0 Tou+s an T+a,el' Inc. to >ointl5 an se,e+all5 pa5 unto the plainti? -+ancis *ao *i: the su: of SEVENT(/-IVE

THOUS)ND PESOS P98'""".""F' in concept of +easonable te:pe+ate o+ :o e+ate a:a7es' an a li6e o+ si:ila+ su:to the substitute plainti?/hei+s of the late Hen+5 Go' li6e0ise b5 0a5 of +easonable te:pe+ate o+ :o e+ate a:a7esplus the a77+e7ate su: of T=ENT(/-IVE THOUS)ND PESOS P;8'""".""F as an fo+ atto+ne5 s fees.

Costs a7ainst efen ant Philippine )i+lines an thi+ /pa+t5 efen ant Rainbo0 Tou+s an T+a,el Inco+po+ate .

SO ORDERED.

)77+ie,e b5 the cou+t a uo s +ulin7' plainti?s an P)* inte+pose thei+ +especti,e appeals.!

On Ma+ch ;;' ;""8' the C) p+o:ul7ate its Decision' hol in7 that petitione+ clea+l5 b+eache its cont+act of ca++ia7e0ith M+. *ao *i: an M+. Go. The C) ispose as follo0s4

=HERE-ORE' base on the fo+e7oin7 p+e:ises' the % $une %& Decision of the cou+t a uo is MODI-IED' to 0it4

%. Defen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines an thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el' Inc. a+e >ointl5 an se,e+all5 liable to pa5 plainti?s/appellants -+ancisco *ao *i: the su: of PESOS4-ift5 Thousan P8"'""".""F in concept of :o+al a:a7es an PESOS4 -ift5 Thousan P8"'""".""F b5 0a5 ofe e:pla+5 a:a7es fo+ b+each of cont+act of ca++ia7eB

;. Defen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines an thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el Inc. a+e >ointl5 an se,e+all5 liable to pa5 the substitute hei+s of plainti?/appellant of the late Hen+5Go sicF the su: of PESOS4 -ift5 Thousan P8"'""".""F in concept of :o+al a:a7es an PESOS4 -ift5 ThousanP8"'""".""F b5 0a5 of e e:pla+5 a:a7es fo+ b+each of cont+act of ca++ia7eB

!. Defen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines an thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el Inc. a+e >ointl5 an se,e+all5 liable to pa5 each of the plainti?s/appellants the su: of PESOS4 OneHun +e Thousan P%""'""".""F b5 0a5 of te:pe+ate o+ :o e+ate a:a7esB

@. Defen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines an thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el Inc. a+e >ointl5 an se,e+all5 liable to pa5 the a77+e7ate su: of PESOS4 Si t5 Thousan P#"'""".""Fas an fo+ atto+ne5 s feesB

8. Defen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines clai: fo+ cont+ibution' in e:nit5'sub+o7ation an othe+ +eliefs f+o: thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el Inc. is DENIED fo+ lac6 of:e+itB

#. Costs a7ainst efen ant/appellant an thi+ /pa+t5 plainti?/appellee Philippine )i+lines an thi+ /pa+t5 efen ant/appellee Rainbo0 Tou+s an T+a,el Inco+po+ate .

SO ORDERED.@

Petitione+ s :otion fo+ +econsi e+ation of the C) Decision 0as enie pe+ Resolution ate $ul5 %8' ;""8.

Hence' this petition befo+e the Cou+t' 0ith petitione+ alle7in7 that4I

THE M)RCH ;;' ;""8 DECISION )ND $U*( %8' ;""8 RESO*UTION O- THE COURT O- )PPE)*S DID NOT RESO*VE THEPETITIONER S NOVEM2ER !' %&& MOTION TO SUSPEND PROCEEDINGS ON THE GROUND O- THE *)TTER SREH)2I*IT)TION RECEIVERSHIP.

II

RESPONDENTS -R)NCISCO *)O *IM )ND THE *)TE HENR( GO =ERE NOT HO*DING CON-IRMED 2OO INGS ORRESERV)TION ON P)* S PR!"" M)NI*)/HONG ONGF ON -E2RU)R( ;#' %&&% SINCE THE S)ME =)S C)NCE**EDPURSU)NT TO THE C)TEGORIC)* INSTRUCTION O- GEMM) DING)* O- RESPONDENT R)IN2O= TOURS.

III

THE *)TE RESPONDENT HENR( GO OR HIS HEIRS DID NOT TESTI-( IN COURT. HENCE' HE IS NOT ENTIT*ED TO THE)=)RDS O- P8"'""" )S MOR)* D)M)GES )ND P8"'""" )S E


12/21

THE )=)RD O- TEMPER)TE OR MODER)TE D)M)GES O- P%""'""" TO E)CH O- THE OTHER INDIVIDU)*S IS 2ERE-TO- -)CTU)* )ND *EG)* SUPPORT.

VI

RESPONDENT R)IN2O= TOURS )ND TR)VE*' INC. SHOU*D 2E M)DE *I)2*E TO THE INDIVIDU)* RESPONDENTS )NDPETITIONER SHOU*D 2E )2SO*VED O- )N( *I)2I*IT(. 8

The petition ese+,es so:e consi e+ation.

-i+st' the issue of 0hethe+ p+ocee in7s shoul be suspen e on the 7+oun that petitione+ is un e+ +ehabilitation+ecei,e+ship' is no0 :oot an aca e:ic. Petitione+ is no lon7e+ un e+ such status e?ecti,e Septe:be+ ; ' ;""9'pu+suant to the O+ e+ ate Septe:be+ ; ' ;""9 issue b5 the Secu+ities an E chan7e Co::ission.# The+efo+e' thiscan no lon7e+ be an obstacle to le7al p+ocee in7s a7ainst petitione+.

Goin7 into the :e+its of the case' it is best to set it a7ainst the bac6 +op of the basic tenet that in an action base ona b+each of cont+act of ca++ia7e' the a77+ie,e pa+t5 oes not ha,e to p+o,e that the co::on ca++ie+ 0as at fault o+0as ne7li7ent. )ll that he has to p+o,e is the e istence of the cont+act an the fact of its non/pe+fo+:ance b5 theca++ie+. 9

Petitione+ then uestions J+st' 0hethe+ +espon ents -+ancisco *ao *i: an the late Hen+5 Go ha conJ+:e boo6in7son petitione+ s Xi7ht PR!"" Manila/Hon76on7F on -eb+ua+5 ;#' %&&%. Petitione+ insists that +espon ents *ao *i: s anGo s boo6in7s 0e+e cancelle because of the inst+uctions of Ms. Din7al of the t+a,el a7enc5 Rainbo0 Tou+s' 0ith 0ho:+espon ents 0e+e t+ansactin7. Petitione+ points out suppose inconsistencies in the testi:on5' a1 a,its an othe+ocu:ents of Ms. Din7al' a+7uin7 that he+ testi:on5' i.e.' that the e++oneous cancellation of +espon ents *ao *i: s

an Go s boo6in7s 0e+e one b5 P)* s e:plo5ee' Racil' 0ithout an5 inst+uction f+o: he+ o+ +espon ent *ao *i:' shoulnot be 7i,en c+e ence as she appea+s to be a coache 0itness.

) close e a:ination of the suppose inconsistencies' ho0e,e+' +e,eals that the sa:e a+e too inconse uential to 7i,ean5 se+ious consi e+ation. Mo+eo,e+' petitione+ p+esente this :atte+ +e7a+ in7 the alle7e inconsistencies in thestate:ents of 0itnesses befo+e the t+ial cou+t' an 5et sai cou+t still foun the 0itness an he+ testi:on5 / that the+e0as no inst+uction 7i,en to cancel +espon ents boo6in7s fo+ the PR!"" Xi7ht on -eb+ua+5 ;#' %&&% / to be 0o+th5 ofbelief. The Cou+t a7ain e:phasi es that Jn in7s of the t+ial cou+t on the :atte+ of c+e ibilit5 of 0itnesses a+e entitleto the hi7hest e7+ee of +espect an 0ill not be istu+be on appeal' because sai lo0e+ cou+t ha the oppo+tunit5to obse+,e' J+sthan ' ho0 the 0itnesses testiJe .& The t+ial cou+t +ule that +espon ents *ao *i: an Hen+5 Go 0e+ein ee hol in7 conJ+:e tic6ets fo+ PR!"" on -eb+ua+5 ;#' %&&%' as the5 i not ha,e thei+ boo6in7s cancelle . Suchfactual Jn in7 0as uphel b5 the appellate cou+t. Petitione+ shoul bea+ in :in that Jn in7s of fact of the t+ial cou+t'0hen a1+:e b5 the C)' a+e bin in7 an conclusi,e on this Cou+t' as it is not a t+ie+ of facts.%" )lthou7h the+e a+eaccepte e ceptions to this 7ene+al +ule' this case oes not fall un e+ an5 such e ceptions. Thus' the Jn in7s of thelo0e+ cou+ts that +espon ents -+ancisco *ao *i: an Hen+5 Go 0e+e hol in7 conJ+:e plane tic6ets an 5et 0e+e nott+anspo+te b5 petitione+' a+e bin in7 on this Cou+t. Ha,in7 p+o,en the e istence of a cont+act of ca++ia7e bet0een+espon ents *ao *i: an Go' an the fact of non/pe+fo+:ance b5 petitione+ of i ts obli7ation as a co::on ca++ie+' it isclea+ that petitione+ b+eache its cont+act of ca++ia7e 0ith +espon ents *ao *i: an Go.

The ne t uestion pose b5 petitione+ is' a+e the appellate cou+t s a0a+ s fo+ a:a7es in fa,o+ of +espon ents p+ope+L The Cou+t Jn s so:e of petitione+ s a+7u:ents :e+ito+ious.

Petitione+ assails the a0a+ of P8"'"""."" as :o+al a:a7es 7+ante to the hei+s of Hen+5 Go espite the fact thatneithe+ Hen+5 Go no+ an5 of his hei+s testiJe on :atte+s that coul be the basis fo+ such :oneta+5 a0a+ . InPhilippine Sa,in7s 2an6 ,s. Manalac' $+.'%% the Cou+t +ule ' thus4

The a0a+ of :o+al a:a7es :ust be ancho+e on a clea+ sho0in7 that the co:plainant actuall5 e pe+ience:ental an7uish' bes:i+che +eputation' sleepless ni7hts' 0oun e feelin7s o+ si:ila+ in>u+5. The+e 0as no bette+0itness to this e pe+ience than co:plainant hi:self. Since co:plainant faile to testif5 on the 0itness stan ' the t+ial

cou+t i not ha,e an5 factual basis to a0a+ :o+al a:a7es to hi:. Me+e alle7ations o not su1ceB the5 :ustbe substantiate b5 clea+ an con,incin7 p+oof.%; E:phasis supplie F

In ee ' in this case' since +espon ent Hen+5 Go 0as not able to testif5' the+e is then no e,i ence on +eco+ to p+o,ethat he su?e+e :ental an7uish' bes:i+che +eputation' sleepless ni7hts' 0oun e feelin7s o+ si:ila+ in>u+5 b5 +easonof petitione+ s con uct. Thus' on the a0a+ of :o+al a:a7es in fa,o+ of ecease +espon ent Go' substitute b5 hishei+s' the Cou+t Jn s the sa:e i:p+ope+ as it lac6s the +e ui+e factual basis.

Ho0e,e+' the+e 0as no e++o+ co::itte b5 the lo0e+ cou+ts 0ith +e7a+ to the a0a+ of te:pe+ate o+ :o e+atea:a7es of P%""'"""."" to +espon ents *ao *i: an Go. The Ne0 Ci,il Co e p+o,i es4

)+t. ;;;@. Te:pe+ate o+ :o e+ate a:a7es' 0hich a+e :o+e than no:inal but less than co:pensato+5 a:a7es' :a5be +eco,e+e 0hen the cou+t Jn s that so:e pecunia+5 loss has been su?e+e but its a:ount cannot' f+o: the natu+eof the case' be p+o,e ' 0ith ce+taint5.

He+e' the t+ial an appellate cou+ts also :a e the factual Jn in7s that the pu+pose fo+ +espon ents *ao *i: s' Hen+5Go s' an Manuel *i:ton7 s t+ip to Hon76on7 0as to con uct business ne7otiations' but +espon ents *ao *i: anHen+5 Go 0e+e not able to :eet thei+ counte+pa+ts as the5 0e+e not allo0e to boa+ the PR!"" Xi7ht on -eb+ua+5 ;#'%&&%. )s iscusse ea+lie+' sai factual Jn in7 is ee:e conclusi,e an the ci+cu:stances appea+in7 on +eco+con,ince this Cou+t that +espon ents *ao *i: an Hen+5 Go su?e+e so:e pecunia+5 loss ue to thei+ failu+e to :eet0ith thei+ business associates. Un e+stan abl5' it is i1cult' if not i:possible' to a uce soli p+oof of the lossessu?e+e b5 +espon ents ue to thei+ failu+e to :a6e it to thei+ business :eetin7s. Ce+tainl5' +espon ents ti:e ane?o+t 0e+e 0aste 0hen the5 left thei+ businesses in Cebu' all fo+ nau7ht' as the business ne7otiations the5 0e+esuppose to con uct in Hon76on7 i not push th+ou7h. One cannot iscount the fact that business oppo+tunities 0e+elost. Thus' it is onl5 >ust that +espon ents *ao *i: an Hen+5 Go be a0a+ e te:pe+ate o+ :o e+ate a:a7es.

)s to the a0a+ of e e:pla+5 a:a7es in fa,o+ of +espon ent Go' Gat:aitan ,s. Gon ales'%! is inst+ucti,e' to 0it4


13/21

)+ticle ;;;& of the Ci,il Co e p+o,i es that e e:pla+5 o+ co++ecti,e a:a7es a+e i:pose in a ition to the:o+al' te:pe+ate' li ui ate o+ co:pensato+5 a:a7es. E e:pla+5 a:a7es a+e not +eco,e+able as a :atte+ of +i7ht.

The +e ui+e:ents of an a0a+ of e e:pla+5 a:a7es a+e4 %F the5 :a5 be i:pose b5 0a5 of e a:ple in a ition toco:pensato+5 a:a7es' an onl5 afte+ the clai:ant s +i7ht to the: has been establishe B ;F that the5 cannot be+eco,e+e as a :atte+ of +i7ht' thei+ ete+:ination epen in7 upon the a:ount of co:pensato+5 a:a7es that :a5be a0a+ e to the clai:antB !F the act :ust be acco:panie b5 ba faith o+ one in a 0anton' f+au ulent' opp+essi,eo+ :ale,olent :anne+. %@ E:phasis supplie F

Since +espon ent Go is entitle to te:pe+ate a:a7es' then the cou+t :a5 also a0a+ e e:pla+5 a:a7es in hisfa,o+.%8 In ee ' e e:pla+5 a:a7es a+e in o+ e+ because petitione+ an Rainbo0 Tou+s' th+ou7h thei+ +especti,ee:plo5ees' acte in ba faith b5 not info+:in7 +espon ents *ao *i: an Go of the e++oneous cancellation of thei+boo6in7s on the PR!"" Xi7ht on -eb+ua+5 ;#' %&&%. 2oth the t+ial an appellate cou+ts a+e co++ect in thei+inte+p+etation that Ms. Mancao' petitione+ s e:plo5ee' an Rainbo0 Tou+s Ms. Din7al acte in conce+t in not tellin7+espon ents *ao *i: an Go of the p+oble:s +e7a+ in7 thei+ boo6in7s. Ms. Mancao in e?ect +einfo+ce an a7+ee toMs. Din7al s ecision not to tell +espon ents *ao *i: an Go' b5 tellin7 Ms. Din7al that if 5ou tell the passen7e+s' it:i7ht >ust c+eate fu+the+ p+oble:s. %#

Ho0e,e+' the Cou+t a7+ees 0ith petitione+ that +espon ent Manuel *i:ton7 is not entitle to an5 a0a+ fo+ a:a7esbecause' as to sai +espon ent' petitione+ faithfull5 co:plie 0ith thei+ cont+act of ca++ia7e. Respon ent *i:ton7 0asable to boa+ PR!"" on -eb+ua+5 ;#' %&&%' as state in his conJ+:e plane tic6et. The cont+act of ca++ia7e oes notca++5 0ith it an assu+ance that he 0ill be t+a,ellin7 on the sa:e Xi7ht 0ith his chosen co:panions. E,en if petitione+faile to t+anspo+t +espon ents *ao *i: an Go on the sa:e Xi7ht as +espon ent *i:ton7' the+e is absolutel5 nob+each of the cont+act of ca++ia7e bet0een the latte+ an petitione+. Hence' petitione+ shoul not be :a e liable fo+an5 a:a7es in fa,o+ of +espon ent *i:ton7.

Petitione+ is also liable fo+ atto+ne5 s fees' because +eco+ s sho0 that +espon ents e:an e pa5:ent fo+ a:a7esf+o: petitione+ but it 0as onl5 afte+ +espon ents Jle a case in cou+t that petitione+ o?e+e so:e fo+: of +estitution to+espon ents' 0hich the latte+ foun insu1cient. Clea+l5' +espon ents 0e+e fo+ce to obtain se+,ices of counsel toenfo+ce a >ust clai:' fo+ 0hich the5 shoul be a0a+ e atto+ne5 s fees.

*astl5' the Cou+t Jn s petitione+ s clai: that onl5 he+ein +espon ent' thi+ /pa+t5 efen ant befo+e the t+ial cou+tFRainbo0 Tou+s an T+a,el' Inc.' shoul be :a e liable to +espon ents *ao *i: an Go' to be untenable. The5 ha,eacte to7ethe+ in c+eatin7 the confusion lea in7 to the e++oneous cancellation of afo+e:entione +espon entsconJ+:e boo6in7s an the failu+e to info+: +espon ents of such fact. )s such' the5 ha,e beco:e >oint to+tfeaso+s'an in *oa :aste+s Custo:s Se+,ices' Inc. ,s. Glo el 2+o6e+a7e Co+po+ation'%9 the Cou+t eluci ate thus4

=he+e the+e a+e se,e+al causes fo+ the +esultin7 a:a7es' a pa+t5 is not +elie,e f+o: liabili t5' e,en pa+tiall5. It issu1cient that the ne7li7ence of a pa+t5 is an e1cient cause 0ithout 0hich the a:a7e 0oul not ha,e +esulte . It isno efense to one of the concu++ent to+tfeaso+s that the a:a7e 0oul not ha,e +esulte f+o: his ne7li7ence alone'0ithout the ne7li7ence o+ 0+on7ful acts of the othe+ concu++ent to+tfeaso+. )s state in the case of -a+ Easte+nShippin7 ,. Cou+t of )ppeals'

. =he+e se,e+al causes p+o ucin7 an in>u+5 a+e concu++ent an each is an e1cient cause 0ithout 0hich the in>u+50oul not ha,e happene ' the in>u+5 :a5 be att+ibute to all o+ an5 of the causes an +eco,e+5 :a5 be ha a7ainstan5 o+ all of the +esponsible pe+sons althou7h un e+ the ci+cu:stances of the case' it :a5 appea+ that one of the:0as :o+e culpable' an that the ut5 o0e b5 the: to the in>u+e pe+son 0as not the sa:e. No acto+ s ne7li7enceceases to be a p+o i:ate cause :e+el5 because it oes not e cee the ne7li7ence of othe+ acto+s. Each 0+on7 oe+ is+esponsible fo+ the enti+e +esult an is liable as thou7h his acts 0e+e the sole cause of the in>u+5.%Y0phi%

The+e is no cont+ibution bet0een >oint to+tfeaso+s 0hose liabilit5 is soli a+5 since both of the: a+e liable fo+ the totala:a7e. =he+e the concu++ent o+ successi,e ne7li7ent acts o+ o:issions of t0o o+ :o+e pe+sons' althou7h actin7in epen entl5' a+e in co:bination the i+ect an p+o i:ate cause of a sin7le in>u+5 to a thi+ pe+son' it is i:possible toete+:ine in 0hat p+opo+tion each cont+ibute to the in>u+5 an eithe+ of the: is +esponsible fo+ the 0hole in>u+5.=he+e thei+ concu++in7 ne7li7ence +esulte in in>u+5 o+ a:a7e to a thi+ pa+t5' the5 beco:e >oint to+tfeaso+s an a+e

soli a+il5 liable fo+ the +esultin7 a:a7e un e+ )+ticle ;%&@ of the Ci,il Co e. E:phasis supplie Q% Thus' petitione+ an Rainbo0 Tou+s an T+a,el' Inc. a+e >ointl5 an soli a+il5 liable fo+ a:a7es a0a+ e to +espon ents*ao *i: an Go.

IN VIE= O- THE -OREGOING' the Decision of the Cou+t of )ppeals' ate Ma+ch ;;' ;""8' is he+eb5 MODI-IED b5DE*ETING the a0a+ fo+ :o+al a:a7es in fa,o+ of the substitute hei+s of the late Hen+5 Go' an DE*ETING the a0a+of te:pe+ate o+ :o e+ate a:a7es in fa,o+ of +espon ent Manuel *i:ton7.

SO ORDERED.

To a5 is Tues a5' $anua+5 ;"' ;"%8

sea+ch


14/21

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. */!@9#9 Octobe+ ;!' %& 9

OPER)TORS INCORPOR)TED' petitione+',s.)MERIC)N 2ISCUIT CO.' INC.' +espon ent.

No. */!8";@ Octobe+ ;!' %& 9

)SSOCI)TED 2ISCUIT' INC.' petitione+',s.)MERIC)N 2ISCUIT CO.' INC.' an OPER)TORS INCORPOR)TED' +espon ents.

No. */!8"9! Octobe+ ;!' %& 9

)MERIC)N 2ISCUIT CO.' INC.' petitione+',s.)SSOCI)TED 2ISCUIT CO.' INC.' an OPER)TORS INCORPOR)TED +espon ents.

S)RMIENTO' $.4

These appeals b5 ce+tio+a+i' a+e the +esult of a th+ee/co+ne+e cont+o,e+s5 in,ol,in7 the ):e+ican 2iscuit Co:pan5'Inc.' the Ope+ato+s Inco+po+ate ' an the )ssociate 2iscuit' Inc.' in connection 0ith the ope+ation of ):e+ican2iscuit s business b5 Ope+ato+s an )ssociate . The t+ial cou+t is:isse the clai:S of the pa+ties a7ainst each othe+.

The Cou+t of )ppeals +en e+e a :o iJe ecision con e:nin7 )ssociate to +espon 0ith ce+tain a:a7es.Not0ithstan in7 such a :o iJcation' an th+ee pa+ties ca:e to this Cou+t on sepa+ate petitions.

=e consoli ate the th+ee cases an 7a,e ue cou+se the+eto.

The facts' as foun b5 the Cou+t of )ppeals' a+e not ispute 4

-+o: the e,i ence a uce b5 the pa+ties' it appea+s that plainti? ):e+ican 2iscuit Co:pan5 0as' befo+e =o+l =a+ II'a :anufactu+e+ of biscuit' can 5 an bubble 7u: p+o ucts. )fte+ the libe+ation' it +eopene its can 5 epa+t:ent.-inancial i1culties an +e,e+ses' ho0e,e+' fo+ce it to iscontinue its business ope+ations.

To bail itself out of this Jnancial ist+ess' plainti?' on Septe:be+ ;#' %&8!' ente+e into an a7+ee:ent 0ith efen antOpe+ato+s' Inc. Un e+ this a7+ee:ent' it ce e the enti+e' total an co:plete p+esent ope+ation of its business toefen ant Ope+ato+s' Inc.' in consi e+ation fo+ 0hich Ope+ato+s' Inc. un e+too6 to ans0e+ fo+ e istin7 obli7ations of theplainti? to its se,e+al c+e ito+s an to co:pensate plainti? 0ith a pe+centa7e of the 7+oss p+oJts +eali e in the cou+seof its ope+ations. Insofa+ as a+e pe+tinent to this case' the te+:s of this a7+ee:ent' othe+0ise 6no0n as the Ope+atin7Cont+act' p+o,i es as follo0s4

l. )2C 7i,es' 7+ants an ce es the enti+e' total an co:plete p+esent ope+ation of the )2C unto the OPER)TORan the OPER)TOR in tu+n a7+ees an accepts to ope+ate sai business of the )2CB

#. This cont+act shall +e:ain in full fo+ce an e?ect fo+ a pe+io of ten %"F 5ea+s e ten able to anothe+ ten %"F5ea+s at the option of the OPER)TOR he+einB an an5 b+each of the te+:s an con itions of this a7+ee:ent' thesuspension' cancellation' o+ esistance on the pa+t of the )2C 0ith +espect to the continuance of this ope+atin7cont+act shall +en e+ the latte+ liable fo+ a:a7es unto the OPER)TOR in a su: not less than P!""'"""."" b5 0a5 ofli ui ate a:a7es' besi es othe+ a:a7es that :a5 be e:an able an such fu+the+ su:s as b5 then theOPER)TOR :a5 ha,e isbu+se on account of the in ebte ness of the )2C +eco,e+able 0ith t0el,e %;AF pe+ centu:inte+est pe+ annu:B

%". That as afo+esai the )2C is p+esentl5 in ebte in the su: of P;;"'"""."" :o+e o+ less an that the )2Che+eb5 7i,es full po0e+ an autho+it5 unto the OPER)TOR to settle sai obli7ations th+ou7h pa+tial pa5:ents aniscountsB

%;. )2C shall +ecei,e f+o: the 7+oss p+oJts +eali e b5 the OPER)TOR an a:ount e ui,alent to T=ENT( ;"AF pe+cent' the +e:ainin7 EIGHT( "AF pe+ cent to be the p+ope+t5 of the OPER)TORSB

The ;"A he+ein set asi e fo+ the )2C shall ho0e,e+ be J+st use to a:o+ti e an5 an all a ,ances' pa5:ents anisbu+se:ents :a e b5 the OPER)TOR on account of the )2C s obli7ations as un e+ this cont+act to be a ,ance 'pai an isbu+se b5 the OPER)TOR' 0hate,e+ shall be +e:ainin7 afte+ e uctin7 sai a:o+ti ation shall be eli,e+eto the )2CB


15/21

IT 2EING UNDERSTOOD' that the ;"A he+ein +ese+,e fo+ the )2C shall be inc+ease to !"A lea,in7 9"A to theOPER)TOR as soon as the OPER)TOR has full5 +ei:bu+se itself f+o: the isbu+se:ents 0hich it has :a e in pa5:entof the in ebte ness of the )2C an of othe+ ite:s he+ein :entione .

%!. Shoul an5 i?e+ent o+ isa7+ee:ent a+ises bet0een the pa+ties he+eto on the :eanin7 o+ e?ect of thiscont+act o+ an5 clause the+eof' o+ in +espect to the a:ount of pe+centa7e acc+uin7 to both pa+ties' such i?e+ence o+isa7+ee:ent shall be +efe++e to a 2oa+ of )+bit+ato+s to be co:pose of one a+bit+ato+ appointe b5 the )2C'

one b5 the OPER)TOR' an a thi+ to be selecte b5 the t0o afo+e:entione a+bit+ato+s' the ecision of saia+bit+ato+s to be bin in7 a:on7 the pa+ties he+ein in so fa+ as the sa:e is pe+:itte b5 la0. No action shall beinstitute in an5 cou+t b5 an5 pa+t5 he+eto a+isin7 out of an5 such i?e+ence o+ isa7+ee:ent' unless the sa:e shallha,e been sub:itte to sai 2oa+ of )+bit+ato+s' an an5 such action shall be base onl5 upon the a0a+ soobtaine . Ope+atin7 Cont+act' E h. )B E h. &/)ssociate F.

On $une %;' %&8@' o+ ba+el5 %" :onths the+eafte+' plainti? an Ope+ato+s' Inc.' ente+e into anothe+ a7+ee:ent' thisti:e 0ith efen ant )ssociate 2iscuit Ope+ato+s' Inc.' 0ith the consent of plainti?' 0ho 0as a fo+:al pa+t5 the+eto. Inthis a7+ee:ent' 6no0n as the T+ipa+tite )7+ee:ent' )ssociate a7+ee to en7a7e in the :anufactu+e an :a+6etin7 of the biscuit p+o ucts of ):e+ican 2iscuit Co:pan5' Inc.' un e+ the te+:s an con itions of the Ope+atin7 Cont+act ofSepte:be+ ;#' %&8!. This )7+ee:ent in tu+n' a:on7 othe+s' contains the follo0in7 pe+tinent co,enants anstipulations4

l. G+ant of Ri7ht.

The ):e+ican 2iscuit Co.' Inc.' 0ith full 6no0le 7e an consent of the Ope+ato+s Inco+po+ate ' he+eb5 7+ants unto the)ssociate 2iscuit Ope+ato+ s Inc.' the e clusi,e an i++e,ocable +i7ht to :anufactu+e an :a+6et the biscuit p+o ucts

of all 6in s an eno:inations of sai ):e+ican 2iscuit Co.' an fo+ such ualit5 an uantit5 an u+in7 the pe+iohe+einbelo0 speciJe ' sub>ect to the sa:e te+:s an con itions' stipulations an a7+ee:ents containe in thecont+act bet0een the ):e+ican 2iscuit Co.' Inc.' an the Ope+ato+s Inco+po+ate of Septe:be+ ;#' %&8! an thefu+the+ a7+ee:ents an stipulations he+einbelo0 state .

@. Capitali ation.

The su: of T=O HUNDRED THOUS)ND PESOS P;""'""".""F :ini:u: 0ill be spent b5 the )ssociate 2iscuitOpe+ato+s' Inc. e clusi,el5 fo+ the :anufactu+e an :a+6etin7 of biscuit p+o ucts' the const+uction of buil in7s ani:p+o,e:ents an the pu+chase of :achine+ies' e uip:ents' appliances' fu+nitu+es an J tu+es nee e annecessa+5 an +e ui+e fo+ the biscuit business sub>ect of this cont+act' the )ssociate 2iscuit Ope+ato+s Inc.'+ep+esentin7 he+eb5 that it 0ill in,est an5 an all othe+ capital necessa+5 shoul ci+cu:stances so e:an B

#. Machine+ies an E uip:ents

)ll :achine+ies' appliances' e uip:ent' fu+nitu+es an J tu+es an an5 all that :a5 be necessa+5 an +e ui+e fo+ thebusiness ope+ation p+o,i e fo+ un e+ this cont+act shall be ac ui+e an pu+chase b5 the )ssociate 2iscuitOpe+ato+s Inc.' at thei+ o0n e penses an fo+ thei+ o0n account 0ithout an5 cha+7es 0hatsoe,e+ a7ainst the ):e+ican2iscuit Co.' Inc.B

The )ssociate 2iscuit Ope+ato+s Inc.' shall 6eep sai :achine+ies' e uip:ents' appliances' fu+nitu+es an J tu+esinsu+e an in the e,ent of thei+ est+uction b5 J+e o+ othe+0ise' the )ssociate 2iscuit Ope+ato+s' Inc.' shalli::e iatel5 +eplace the sa:e fo+ pu+poses a7+ee upon un e+ this Cont+actB

9. Ope+ation.

The )ssociate 2iscuit Ope+ato+s Inc. shall co::ence ope+ation as a7+ee upon un e+ this cont+act an b5 ,i+tuehe+eof 0ithin SI< #F MONTHS afte+ olla+ allocations ha,e been 7+ante to the )ssociate 2iscuit Ope+ato+s Inc.'an o+ the ):e+ican 2iscuit Co.' Inc.' an the pu+chase an i:po+tation of necessa+5 :achine+ies an e uip:entsB

&. )llo0ances.

)F Upon si7nin7 of this a7+ee:ent' the )ssociate 2iscuit Ope+ato+s Inc.' shall a ,ance to the ):e+ican 2iscuitCo.' Inc.' the su: of ONE THOUS)ND -IVE HUNDRED PESOS Pl'8"".""F an e,e+5 :onth sF the+eafte+ u+in7 thee istence of this cont+act' a :ini:u: allo0ance of -IVE HUNDRED PESOS P8"".""F' 0hich :a5 be inc+ease f+o:ti:e to ti:e as the pa+ties he+eto :a5 a7+eeB

2F It shall be the obli7ation of the )ssociate 2iscuit Ope+ato+s Inc. to sha+e e uall5 0ith the Ope+ato+sInco+po+ate in the pa5:ent of an5 an all obli7ations an e penses in connection the+e0ith of the ):e+ican 2iscuitCo.' Inc.' e istin7 as of Septe:be+ ;#' %&8! an as stipulate in the a7+ee:ent of the sa:e ate' e uctible' ho0e,e+'f+o: the ):e+ican 2iscuit Co.' Inc. s pa+ticipation as he+einbelo0 stipulate . E h. 2B E h. %"/)ssociate F.

On $une %9' %&8@' o+ 8 a5s afte+ the conclusion of the T+ipa+tite )7+ee:ent' the efen ants' Ope+ato+s an)ssociate ' ente+e into an a7+ee:ent in application of thei+ +i7ht sF an obli7ations ac ui+e un e+ the te+:s of thefo+e7oin7 a7+ee:ents. The efen ants a7+ee

%. That the )ssociate 2iscuit Ope+ato+s Inc.' shall be entitle to the sa:e +i7ht an p+i,ile7es ac ui+e b5 theOpe+ato+s Inco+po+ate un e+ the o+i7inal cont+act. It is un e+stoo an a7+ee that the )ssociate 2iscuit Ope+ato+sInc.' sha7 ha,e full an e clusi,e cont+ol an supe+,ision o,e+ the :ana7e:ent of its business a?ai+s.


16/21

;. That as p+o,i e fo+ in Pa+a7+aph # of the o+i7inal cont+act' this a7+ee:ent shall +e:ain in full fo+ce an e?ectfo+ a pe+io of TEN %"F (E)RS e ten ible fo+ anothe+ pe+io of TEN %"F (E)RS at the option of the )ssociate 2iscuitOpe+ato+s Inc.

!. That an5 buil in7 o+ buil in7s that :a5 be const+ucte ' an an5 an a+e :achine+ies' e uip:ents' fu+nitu+esan J tu+es that :a5 be installe the+ein' b5 the )ssociate 2iscuit Ope+ato+s' Inc.' shall +e:ain the p+ope+t5 of saico+po+ation' sub>ect onl5 to the +i7ht of the ):e+ican 2iscuit Co.' Inc.' to ac ui+e an pu+chase the sa:e as p+o,i efo+ in the o+i7inal an supple:enta+5 cont+acts.

@. That i::e iatel5 upon the si7nin7 of this a7+ee:ent' the )ssociate 2iscuit Ope+ato+s' Inc.' shall pa5 unto theOpe+ato+s Inc.' -I-T( 8"AF PER CENTUM of an5 an all a ,ances an pa5:ents :a e b5 the latte+ fo+ the account ofthe ):e+ican 2iscuit Co.' Inc.' p+io+ to the si7nin7 of this cont+act4 an ' the+eafte+' as p+o,i e fo+ in thesupple:enta+5 cont+act' the )ssociate 2iscuit Ope+ato+s' Inc.' shall pa5 an eli,e+ unto the Ope+ato+s Inco+po+ate-I-T( 8"AF PER CENTUM of the :onthl5 cash a ,ances an pa5:ents to be :a e fo+ the account of the obli7ationsof the ):e+ican 2iscuit Co.' Inc.' still +e:ainin7 unpai .

8. That the )ssociate 2iscuit Ope+ato+s Inc.' he+eb5 fu+the+ a7+ee 0ith the Ope+ato+s Inco+po+ate to pa5 thelatte+ -I-T( 8"AF PER CENTUM of the :onthl5 cash a ,ance of ONE THOUS)ND Pl'""".""F PESOS' PhilippineCu++enc5' pa5able to the ):e+ican 2iscuit Co.' Inc.' un e+ pa+a7+aph 9' subpa+a7+aph ! of the o+i7inal cont+act ananothe+ -I-T( 8"AF pe+ centu: of the -IVE HUNDRED P8"".""F PESOS :onthl5 cash a ,ance to the ):e+ican 2iscuitCo.' Inc.' as p+o,i e fo+ in sub/pa+a7+aph ) of pa+a7+aph & of the supple:enta+5 cont+actB it bein7 un e+stoo thatthe +e:ainin7 -I-T( 8"AF PER CENTUM of the afo+esai -IVE HUNDRED P8"".""F PESOS :onthl5 cash a ,ance shallbe pai b5 the Ope+ato+s Inco+po+ate to the ):e+ican 2iscuit Co.' Inc.

#. That in the const+uction of the facto+5 o+ an5 othe+ buil in7' the )ssociate 2iscuit Ope+ato+s Inc. shall lea,e

unoccupie ce+tain space on the lot' 0he+e sai facto+5 o+ buil in7 shall be built' fo+ the use an occupation of theOpe+ato+s Inc. Such ,acant space to be +ese+,e shall be ete+:ine b5 the pa+ties he+eto befo+e the sta+t of theconst+uction of the facto+5 o+ buil in7.

9. That the )ssociate 2iscuit Ope+ato+s' Inc.' shall be entitle to the use an occupation of -I-T( 8"AF PERCENTUM of ):e+ican 2iscuit Co.' Inc. buil in7 at the facto+5 site p+esentl5 occupie b5 the Ope+ato+s Inco+po+ate 'inclu in7 such fu+nitu+e' J tu+es an +ollin7 e uip:ents o0ne b5 the ):e+ican 2iscuit Co.' Inc.' 0hich a+e p+esentl5in the possession of' an a+e bein7 use b5' the Ope+ato+s Inco+po+ate . E h. %%/)ssociate F.

Mean0hile' afte+ the conclusion of the o+i7inal ope+atin7 cont+act bet0een )2C an Ope+ato+s Inc.' it appea+s thatOpe+ato+s Inc. co::ence 0ith its ope+ations in the :anufactu+e of plainti? s chiclet an bubble 7u: p+o ucts'utili in7 fo+ this pu+pose the plainti? s site an establish:ent. In Dece:be+ %&8@' Eu C. *eh beca:e the 7ene+al:ana7e+ of Ope+ato+s Inc. *eh +eo+7ani e the Ope+ato+s Inc.' i:p+o,in7 the ualit5 of the che0in7 7u: 0hich it 0as:anufactu+in7. -o+ this pu+pose' Ope+ato+s Inc. too6 o,e+ the :achine+5 use fo+ the :anufactu+e of che0in7 7u:onl5' such as 7u: cutte+' :i e+' pul,e+i e+s an :o,in7 fans.

In Ma+ch %&88 i.e.' so:e ei7ht F :onths afte+ the conclusion of the T+ipa+tite )7+ee:ent it appea+s thati?e+ences ha a+isen bet0een the t0o efen ants on the utili ation of plainti? s establish:ent an e uip:ent. )confe+ence 0as hel in plainti? s p+e:ises in Pa+ana ue' upon the inst+uctions of its p+esi ent' M+. $o+7e Va+7as. In thesai confe+ence' Ope+ato+s Inc. 0as +ep+esente b5 Eu C. *eh' $u 7e Rafael Din7lasan an Go he 2in7. P+esi ent fo+)ssociate 0e+e $uan =on7 *ocsin' its p+esi entB (an =on Can' its :ana7e+B an )tt5. De:et+io Sale:. In saiconfe+ence the pa+ties a7+ee to i,i e the facto+5 buil in7 into t0o po+tions' the no+the+n/po+tion ha,in7 beenassi7ne to Ope+ato+s Inc. an the southe+n/po+tion to )ssociate . The pa+ties also i,i e the )2C s facilities'e uip:ent an fu+nitu+e. The Che,+olet t+uc6 0as assi7ne to 0as onl5 fo+ the :anufactu+e of che0in7 7u:' 0asassi7ne to efen ant Ope+ato+s. The a++an7e:ent 0as app+o,e b5 the plainti?. )ssociate 2iscuit 0as allo0e theuse of the su7a+ pul,e+i e+' the 0ate+ pu:p an the ai+con itionin7 facilities' on con ition that it 0oul pa5 thee penses of :aintenance' befo+e the a++i,al of its o0n :achine+5. )fte+ the fo+e7oin7 i,ision of facto+5 p+e:ises'e uip:ent an fu+nitu+e' the pa+ties too6 possession of thei+ +especti,e sha+es. Ope+ato+s continue 0ith its:anufactu+e of chiclet an che0in7 7u:. )ssociate co::ence its :anufactu+e of biscuits 0ith the :achine+5 it ha

i:po+te f+o: Hon76on7' a0aitin7 :ean0hile the a++i,al of the :achine+5 the5 un e+too6 to i :po+t f+o: thei+pu+pose f+o: the Unite States th+u the olla+ allocation secu+e f+o: the: b5 the ):e+ican 2iscuit.

Mean0hile also' since the t0o efen ants ope+ato+s an )ssociate /ha both un e+ta6en to pa5 )2C s obli7ation'o0in7 to its ,a+ious c+e ito+s/accounts 0hich ha been outstan in7 befo+e the ent+5 into the a7+ee:ents an 0hich'in fact' 0e+e the :oti,atin7 facto+s fo+ the ent+5 of the plainti? into the ope+atin7 a7+ee:ents a++an7e:ents 0e+e:a e bet0een the pa+ties 0ith the China 2an6in7 Co+po+ation 0he+eb5 the efen ants 0oul sha+e Jft5/Jft5 in thepa5:ent b5 :onthl5 install:ents of the P%%"'"""."" unpai balance of the loan b5 the ban6 to plainti? E h. !/)/Ope+ato+sF. This a++an7e:ent 0as +eli7iousl5 co:plie 0ith b5 Ope+ato+s Inc. 0hich pai Pl'8""."" :onthl5' :a6in7 atotal pa5:ent of :o+e than P%""'"""."" inclu in7 inte+est. Defen ant )ssociate in tu+n' faile to :a6e 7oo itsco::it:ents to pa5 its sha+e of P88'"""."".

)s a +esult of )ssociate s failu+e to obse+,e its co::it:ents to0a+ s the li ui ation of )2C s pen in7 accounts' China2an6in7 Co+po+ation Jle a7ainst plainti?/Ci,il Case No. !9"@8 E hs. -' -/%' -/;' -/!B E h. @ Ope+ato+sF. This case0as a7ain is:isse on >oint :otion of the pa+ties' upon the un e+ta6in7 of Ope+ato+s Inc.' to pa5 the obli7ations 0iththe app+o,al of M+. $o+7e Va+7as. Ope+ato+s Inc. thus full5 co:plie 0ith its obli7ation un e+ the cont+acts' an thenplainti?' in Octobe+ %!' upon the te+:ination of the ope+atin7 cont+acts' ente+e into a cont+act of lease E h. %@ Ope+ato+sF 0ith Ope+ato+s Inc.' fo+ the continue use of the p+e:ises an the e uip:ent of the plainti? fo+ anothe+te+: of %" 5ea+s' +ene0able fo+ the sa:e pe+io . It also appea+s that in )u7ust %&8 Chua Tee +e/Jle the o+i7inalcases Jle in the Cou+t of -i+st Instance of Ri al' i.e.' Ci,il Cases Nos. 8%;! an 8%;@ E hs. G an sub/pa+ts an ansub/pa+tsF %

In a ition' the Cou+t of )ppeals obse+,e 4

... It is t+ue that Ope+ato+s an )ssociate :a e pe+io ical pa5:ents so as to pa+tiall5 satisf5 the clai:s of thec+e ito+s' but the5 0e+e not enou7hB the c+e ito+s 0e+e not satisJe ' that 0as 0h5 on ;! $une' %&88' E h. P ):e+ican


17/21

2iscuit as6e Ope+ato+s an )ssociate to 0a6e up an 0a+ne the: of +escission' an )ssociate ' 0hich 0as thepa+t5 that ha faile to pe+fo+:' +eplie in E h. % )ssociate that'

0e 0ish to info+: 5ou that the settle:ent of the obli7ation of the China 2an6in7 Co+po+ation is un e+ ne7otiation 0ithsai ban6 an 0e a+e >ust 0aitin7 fo+ the action of the 2oa+ of sai 2an6 on ou+ p+oposal.

but nothin7 tan7ible ca:e out of that' so :uch so that on ;! )u7ust' %&88' a th+ee co+ne+e confe+ence too6 place inthe o1ce of ):e+ican 2iscuit' f+o: 0hich == be seen that ):e+ican 2iscuit confesse its pli7ht 0ith China 2an6in7unto both )ssociate an Ope+ato+s' an the+efo+e 0a+ne of +escission' see tsn. E h. (B ... ;

;n . )7ain' un e+ E h. ) in connection 0ith E h. 2' )ssociate ha boun itself to pa5 to ):e+ican 2iscuit as:onthl5 a ,ances' the su: of P8""."" a :onth f+o: $ul5' %&8@' pa+. &' E h. 2' as 0ell as bin in7 itself soli a+it5 0ithOpe+ato+s to a ,ance the :onthl5 o,e+hea of P%'""".""' pa+. 9' E h. )B this 0as e:an e f+o: )ssociate not onl5in the latte+' E h. P of ;! $une' %&88' but :o+e e:phaticall5 in the confe+ence' the t+ipa+tite confe+ence' on ;! )u7ust'%&88' E h/ (' a7ain acco+ in7 to E h. )) an ))/% an as a :itte b5 $uan *ocsin =on7' )ssociate s 0itness')ssociate pai onl5 up to -eb+ua+5' %&88 an this onl5 in Octobe+' %&88B ... !

... IQt is not enie that )ssociate +e:o,e a Hu son Sha+p 2iscuit C+ac6e+ =+appe+ an a San 0ich Machine on %&an ;@ $une' %&89' as 0ell as a cuttin7 :achine an a :i e+' ha,in7 sol the Hu son 2iscuit C+ac6e+ an the San 0ichMachine to one on7 Nian of Cebu' E h. %; an %! )ssociate B +ep+esentin7 the: to beB

f+ee f+o: all liens an encu:b+ances' :ost cont+a+5 to pa+. # of E h. 2 that ha :a e the: pa+tial secu+ities in fa,o+of ):e+ican 2iscuit ... @

):i this settin7' ):e+ican 2iscuit Jle a co:plaint a7ainst Ope+ato+s Inco+po+ate an )ssociate 2iscuit fo+ thecancellation of the Ope+atin7 Cont+act an the T+ipa+tite )7+ee:ent' 0ith p+a5e+s to put )ssociate 2iscuit un e++ecei,e+ship an fo+ a:a7es. The co:plaint alle7e that the+e 0as a b+each of the afo+esai a7+ee:ents o0in7 tothe failu+e of )ssociate 2iscuit to pa5 its sha+e in ):e+ican 2iscuit s in ebte ness to its ):e+ican 2iscuit sF c+e ito+s'an the failu+e of )ssociate 2iscuit to pa5 its sha+e in the :onthl5 o,e+hea e penses of ):e+ican 2iscuit' in a itionto the +e:o,al b5 )ssociate 2iscuit of :achine+ies use in the business. ):e+ican 2iscuit :aintaine that thepa5:ent of its in ebte ness an of its o,e+hea e penses 0as a >oint an soli a+5 obli7ation of Ope+ato+s an)ssociate 2iscuit.

Ope+ato+s sub:itte in its ans0e+ that the Ope+atin7 Cont+act ha been no,ate b5 the T+ipa+tite )7+ee:ent 0hichalle7e l5 se,e+e its obli7ation f+o: )ssociate 2iscuit s o0n liabilities' an since it ha full5 co:plie 0ith itsobli7ations' ):e+ican 2iscuit ha no cause of action a7ainst it. Ope+ato+s counte+clai:e fo+ a:a7es fo+ alle7eb+each b5 ):e+ican 2iscuit of the a+bit+ation p+o,isions of the T+ipa+tite )7+ee:ent b5 co:in7 to cou+t i+ectl5.

-o+ its pa+t' )ssociate 2iscuit a,e++e that i t ha pai a substantial po+tion of its obli7ations un e+ the T+ipa+tite)7+ee:ent an that it stoppe pa5:ent onl5 because ):e+ican 2iscuit ha ep+i,e i t of its cont+actual sha+e in thelatte+ s olla+ allocations. )ssociate 2iscuit li6e0ise sub:itte a counte+clai: on the contention that it 0as ):e+ican2iscuit that b+eache the T+ipa+tite )7+ee:ent. It Jle a c+oss/clai: a7ainst Ope+ato+s fo+ the latte+ s alle7e failu+e toco:pl5 0ith thei+ a7+ee:ent a?o+ in7 )ssociate 2iscuit the +i7ht to half of ):e+ican 2iscuit s buil in7s' fu+nitu+e'J tu+es' an +ollin7 e uip:ent. )ssociate 2iscuit li6e0ise alle7e that Ope+ato+s ha conni,e 0ith ):e+ican 2iscuitin en5in7 it of its sha+e in the sai olla+ allocations.

)s 0e sai ' the t+ial cou+t is:isse the clai:s of all the pa+ties a7ainst each othe+.

The Cou+t of )ppeals on the othe+ han ' hel 4

... TQhe Jnal +esult :ust be that bet0een ):e+ican 2iscuit an Ope+ato+s' 0hile Ope+ato+s shoul be liable soli a+it5fo+ b+each of E h. 2 b5 )ssociate ' an :ust the+efo+e to7ethe+ 0ith )ssociate ' pa5 unto ):e+ican 2iscuit theli ui ate a:a7es of P!"".""".""' 5et' ):e+ican 2iscuit :ust also be liable unto Ope+ato+s fo+ b+each of the sa:econt+act in +e7a+ to the a+bit+ation clause an be liable the+efo+ fo+ the sa:e a:ount of P!""'""".""' so that theseclai:s 0ill o?set each othe+' but as to )ssociate ' it ha,in7 been so clea+l5 sho0n to be the t+ans7+esso+' it :ust+espon unto ):e+ican 2iscuit in the li ui ate a:a7es of P!""'""".""' but as these li ui ate a:a7es ue to):e+ican 2iscuit f+o: )ssociate an Ope+ato+s as soli a+5 ebto+s a+e al+ea 5 o?set b5 ):e+ican 2iscuit s liabilit5 toOpe+ato+s fo+ the sa:e a:ount of li ui ate a:a7es b5 +eason of ):e+ican 2iscuit s o0n b+each of cont+act asa7ainst Ope+ato+s' the+efo+e ):e+ican 2iscuit can no lon7e+ +eco,e+ f+o: Ope+ato+s no+ )ssociate but as of the t0osoli a+5 ebto+s' )ssociate an Ope+ato+s' it 0as )ssociate that 0as solel5 at fault an ha 7i,en occasion fo+):e+ican 2iscuit to i:pose the li ui ate a:a7es' the+efo+e' Ope+ato+ shoul in tu+n be entitle to shift the+esponsibilit5 the+efo+ upon )ssociate ' thus pe+:ittin7 it to +eco,e+ f+o: )ssociate the P!""'"""."" it ha o?seta7ainst ):e+ican 2iscuitB an e,en as bet0een )ssociate an Ope+ato+s' as the+e has not been sho0n an5 cause no++eason fo+ )ssociate to co:plain a7ainst Ope+ato+s' once' a7ain un e+ )+t. ;;" ' this Cou+t Jn s it onl5 >ust to 7+antatto+ne5 s fees unto Ope+ato+s the+efo+' 0hich it 0in J at P8'""".""B 8

an +ule that4

IN VIE= =HEREO-' >u 7:ent 0ill ha,e to be as it is he+eb5 :o iJe so that a ne0 one is ictate as follo0s4)ssociate is con e:ne to pa5 Ope+ato+s the su: of P!""'"""."" plus atto+ne5 s fees in the su: of P8'"""."" pluscostsB an as a7ainst )ssociate ' E h. ) an 2 a+e ecla+e +escin e B costs of ):e+ican 2iscuit to be pai b5)ssociate . #

In G.R. No. */!8";@' )ssociate 2iscuit sub:its the follo0in74

)SSIGNMENT O- ERRORS

I


18/21

THE COURT O- )PPE)*S ERRED IN NOT HO*DING )MERIC)N 2ISCUIT COMP)N(' INC.' *I)2*E -OR 2RE) ING THE TEN/ (E)R TERM O- THE TRIP)RTITE )GREEMENT IN P*)CING PETITIONER S 2ISCUIT 2USINESS UNDER RECEIVERSHIP=ITHOUT $UST C)USE.

II

THE COURT O- )PPE)*S ERRED IN REVERSING THE CONC*USION O- THE TRI)* COURT TH)T PETITIONER S USE O- THEPRODUCERS DO**)R KUOT) O- RESPONDENT )MERIC)N 2ISCUIT COMP)N(' INC. =)S ) CONTR)CTU)* RIGHTUNDER THE TRIP)RTITE )GREEMENT.

III

THE COURT O- )PPE)*S ERRED IN REVERSING THE TRI)* COURT S CONC*USION TH)T RESPONDENTS 2RO EPETITIONER S CONTR)CTU)* RIGHT TO THE DO**)R KUOT) )ND )2SO*VING THEM -ROM *I)2I*IT( THERE-ROM.

IV

THE COURT O- )PPE)*S ERRED IN $USTI-(ING RESPONDENTS 2RE)CH O- PETITIONER S CONTR)CTU)* RIGHT TO THEDO**)R KUOT) 2( HO*DING TH)T PETITIONER H)D -)I*ED TO S)TIS-( THE CREDITORS O- )MERIC)N 2ISCUITCOMP)N(' INC. SINCE )UGUST' %&88.

V

THE COURT O- )PPE)*S ERRED IN NOT HO*DING TH)T PETITIONER H)D -U*-I**ED ITS O2*IG)TIONS REG)RDING THE

INDE2TEDNESS O- )MERIC)N 2ISCUIT COMP)N(' INC.

VI

THE COURT O- )PPE)*S ERRED IN RU*ING TH)T PETITIONER VIO*)TED THE TRIP)RTITE )GREEMENT 2EC)USE CHIN)2)N ING CORPOR)TION' CHU) TEE )ND CHU) TEE 3 CO.' -I*ED SUITS )G)INST )MERIC)N 2ISCUIT COMP)N(' INC. IN)UGUST' %&8 ' INSTE)D O- CONDEMNING )MERIC)N 2ISCUIT COMP)N(' INC. TO P)( MOR)* D)M)GES -OR ITS-R)UDU*ENT COMP*)INT.

VII

THE COURT O- )PPE)*S ERRED IN RU*ING TH)T PETITIONER S DISCONTINU)NCE O- ITS MONTH*( )**O=)NCE -OROVERHE)D E


19/21

I.

THE COURT O- )PPE)*S ERRED IN HO*DING TH)T PETITIONER S )CCUS)TION O- 2RE)CH =)S' PURSU)NT TO THEGOVERNING CONTR)CTS' RE-ER)2*E TO )R2ITR)TION' CONSIDERING TH)T THE S)ME IS 2)SED ON THE -)I*URE O-DE-END)NT )SSOCI)TED 2ISCUIT' INC. TO C)RR( OUT THEIR TERMS )ND CONDITIONS' ESPECI)**( ITS -)I*URE TOS)TIS-( THE INDE2TEDNESS O- PETITIONER MENTIONED THEREIN' =HICH' UNDER S)ID GOVERNING )GREEMENTS'Eu 7:ent no+ e ecution on those cases Jle b5the c+e ito+s of ):e+ican 2iscuit a7ainst the latte+Q befo+e ):e+ican 2iscuit Co:pan5' Inc.' co::ence the instantcaseQ Ci,il Case No. !98@" on o+ about Septe:be+ %;' %&8 . %@

The theo+5 then' of )ssociate 2iscuit is that pa+a7+aph & of the Ope+atin7 Cont+act stipulatin7 that4

&. The OPER)TOR he+eb5 a7+ees' 7ua+antees an +ep+esents that it 0ill at all ti:es p+otect an safe7ua+ the ) 2C f+o: la0suits a+isin7 f+o: the clai:s of its p+esent c+e ito+s b5 an th+ou7h the pa5:ent an satisfaction of thelatte+ s clai:s.

is ,iolate onl5 upon an actual e ecution of an5 >u 7:ent a7ainst ):e+ican 2iscuit an a ph5sical ta6eo,e+ of theco:pan5 s p+ope+ties.


20/21

Such a stan is not onl5 patentl5 a7ainst the clea+ 0o+ in7s of the Ope+atin7 Cont+act' it is absu+ . It shoul beobse+,e that )ssociate 2iscuit itself outline in its b+ief that ):e+ican 2iscuit ha ente+e into the Ope+atin7Cont+act at a ti:e 0hen its c+e ito+s ha al+ea 5 co::ence fo+eclosu+e p+ocee in7s upon its p+ope+ties an at ati:e 0hen its e uip:ent an :achine+ies 0e+e al+ea 5 in an7e+ of bein7 sol at public auction.%8 That 0as 0h5Ope+ato+s an )ssociate 2iscuit' un e+ pa+a7+aph & of the Ope+atin7 Cont+act' obli7ate the:sel,es to p+otect ansafe7ua+ the )2C f+o: la0suits ... b5 an th+ou7h the pa5:ent an satisfaction of the c+e ito+s Q clai:s. Thee ecution of >u 7:ents an the conse uent closu+e of the can 5 epa+t:ent 0e+e p+ecisel5 the conse uences):e+ican 2iscuit ha fea+e an fo+eseen' fo+ 0hich Ope+ato+s an )ssociate 2iscuit 0e+e :a e to assu:e theliabilities the5 no0 en5. Clea+l5' 0hen the+e is insu1cient pa5:ent' as factuall5 sho0n in the cases at ba+' the+e is a,iolation of the Ope+atin7 Cont+act.

-o+ one of the essential in7+e ients of pa5:ent as a :o e of e tin7uishin7 obli7ations is inte7+it5' that is' the pa5:ent:ust be co:plete o+ full. )+ticle %;!! of the Ci,il Co e states4 ) ebt sha7 not be un e+stoo to ha,e been paiunless the thin7 o+ se+,ice in 0hich the obli7ation consists has been co:pletel5 eli,e+e o+ +en e+e ' as the case:a5 be.

)ssociate 2iscuit cannot clai: that its sha+e in the olla+ uota of ):e+ican 2iscuit is a cont+actual +i7ht. The fact isthat' as foun b5 the appellate cou+t' ):e+ican 2iscuit i not +efuse to sha+e the uota 0ith )ssociate 2iscuit.-u+the+:o+e' in its ,e+5 b+ief' )ssociate 2iscuit a,e+s4

Hono+in7 the a >ust:ents' ):e+ican 2iscuit Co:pan5' Inc. allo0e petitione+ to use half of its olla+ uota aspetitione+ p+epa+e to ope+ate the biscuit epa+t:ent in %&88B an petitione+ ha en>o5e the uota e uall5 0ith theOpe+ato+s Inco+po+ate until $une %&89' 0hen the uota 0as suspen e b5 the Cent+al 2an6 fo+ failu+e of ):e+ican2iscuit Co:pan5' Inc. to Jle the +e ui+e p+o uction +epo+t. %#

)s the Cou+t of )ppeals co++ectl5 note ' afte+ the Ope+atin7 Cont+act an the T+ipa+tite )7+ee:ent ha 7one intoe?ect' ):e+ican 2iscuit 0ent into inacti,it5' an since Ope+ato+s an )ssociate 2iscuit ha then ta6en cha+7e of thebusiness' it 0as thei+ fo+e:ost obli7ation to see that the p+o uction +epo+t 0as ul5 Jle .

=e a7+ee 0ith the Cou+t of )ppeals that )ssociate ha faile to e e+cise ue ili7ence 0ith +espect to the ):e+ican2iscuit s uota allocations. It 0as a pa+t of its cont+actual un e+ta6in7 an i ts e?o+ts 0e+e 0antin7 in that +e7a+ .Mo+eo,e+' e,en as )ssociate 2iscuit 0as actuall5 sha+in7 in the uota allocations until $une' %&89' it' as late as Ma+ch'%&89' ha continuousl5 faile to satisf5 the of ):e+ican 2iscuit s c+e ito+s an to pa5 the o,e+hea e penses of thebiscuit co:pan5. These a+e ha+ facts )ssociate 2iscuit cannot no0 isa,o0 b5 a to+tu+e of the 0o+ s of thecont+acts.

The position of Ope+ato+s that un e+ the Ope+atin7 Cont+act an the T+ipa+tite )7+ee:ent it is not ans0e+able fo+ the:isfeasance of )ssociate ' is belie b5 the ,e+5 p+o,isions of the T+ipa+tite )7+ee:ent' thus4

%". Inco+po+atin7 Clauses.

Pa+a7+aphs &' %"' %%' the p+o,isions on 2oa+ of )+bit+ato+s' %@' %8' %# an %9 of the cont+act of Septe:be+ ;#' %&8!bet0een the ):e+ican 2iscuit Co.' Inc. an Ope+ato+s Inco+po+ate a+e he+eb5 inco+po+ate into this Cont+act b5 0a5of +efe+ence an :a e an essential pa+t he+eofB an the 0o+ OPER)TORS :entione in sai pa+a7+aphs is to beun e+stoo as to inclu e the )ssociate 2iscuit Ope+ato+s Inc.' fo+ pu+poses of this Cont+actB an both the Ope+ato+sInco+po+ate an the )ssociate 2iscuit Ope+ato+s Inc.' in so fa+ as liabilities an obli7ations the+ein containe in saipa+a7+aphs shall be :a e ans0e+able to the ):e+ican 2iscuit Co.' Inc.' >ointl5 an se,e+all5. %9

The+e is thus no :ista6in7 the fact that Ope+ato+s an )ssociate ha assu:e ' pe+ thei+ a7+ee:ents' ):e+ican sliabilities to its c+e ito+s in soli u:.

)+ticle %;"9 of the ne0 Ci,il Co e states that4 the+e is a soli a+5 liabili t5 0hen the obli7ation e p+essl5 so states .... %

=hat :a5 ha,e le Ope+ato+s in en5in7 the soli a+5 cha+acte+ of its obli7ations 0as the fact that i t 0as en7a7e inthe :anufactu+e of can 5 0he+eas )ssociate 2iscuit 0as suppose to :anufactu+e biscuits' an the fact that the t0oope+ato+s 0e+e +e ui+e to in,est i?e+ent :ini:u: a:ounts in the ,entu+e. 2ut these con itions o not alte+ thesoli a+5 natu+e of thei+ obli7ations as e p+essl5 p+o,i e . )cco+ in7 to )+ticle %;%% of the Ci,il Co e' soli a+it5 :a5e ist althou7h the ebto+s :a5 not be boun in the sa:e :anne+ an b5 the sa:e pe+io s an con itions. %&)cco+ in7l5' the ispa+it5 in thei+ functions un e+ the cont+acts oes not ,a+5 the fact that the5 0e+e boun ' inconnection 0ith ):e+ican s liabilities' >ointl5 an se,e+all5.

):e+ican 2iscuit s o0n sub:ission' ho0e,e+' that4

The Cou+t of )ppeals e++e in hol in7 that petitione+ s accusation of b+each 0as' pu+suant to the efen ant)ssociate 2iscuit' Inc. to ca++5 out thei+ te+:s an con itions' especiall5 its failu+e to satisf5 the in ebte ness ofpetitione+ :entione the+ein' 0hich' un e+ sai 7o,e+nin7 a7+ee:ents' e p+essl5 7+ants petitione+ the +i7ht to Jle suitfo+ the cancellation o+ ab+o7ation of the sa:e. ;"

lac6s :e+it.

) close+ sc+utin5 of the cont+acts in uestion 0ill sho0 that' cont+a+5 to the contention of ):e+ican 2iscuit' the+e 0as'as bet0een itself an Ope+ato+s' a isa7+ee:ent as to the :eanin7 an e?ect of the 7o,e+nin7 cont+acts' aisa7+ee:ent +efe+able' in ee ' to a 2oa+ of )+bit+ato+s pu+suant to the a+bit+ation clause. )n this 0as ,iolate b5):e+ican 2iscuit 0hen it :a e Ope+ato+s a co/ efen ant in the co:plaint fo+ the cancellation of the afo+esaia7+ee:ents.

To be su+e' e,en if the soli a+5 natu+e of Ope+ato+s liabilit5 is self/e,i ent' ):e+ican 2iscuit cannot is+e7a+ such ana+bit+ation clause stipulate in the cont+acts. Soli a+it5 oes not :a6e a soli a+5 obli7o+ an in ispensable pa+t5 in asuit Jle b5 the c+e ito+. )+ticle %;%# of the Ci,il Co e sa5s that the c+e ito+ :a5 p+ocee a7ainst an5one of thesoli a+5 ebto+s o+ so:e o+ all of the: si:ultaneousl5. ;%


21/21

)t the ,e+5 least then' the inclusion of Ope+ato+s in the case Jle belo0 is a ea issue. The ispute bet0een thepa+ties shoul ha,e been the sub>ect of a+bit+ation as a7+ee upon.

IN VIE= O- THE -OREGOING' the ecision appeale f+o: is he+eb5 a1+:e in toto. No costs.

IT IS SO ORDERED.

(ap' )ct7. C.$.' Chai+:anF' Melencio/He++e+a' Pa+as an Pa illa' $$.' concu+.

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