Republic
of the
Supreme
Court
FIRST DIVISION
|
MCA-MBF COUNTDOWN CARDS PHILIPPINES INC., AMABLE
R. AGUILUZ V, AMABLE C. AGUILUZ IX, CIELO C. AGUILUZ, ALBERTO L. BUENVIAJE,
VICENTE ACSAY and MCA HOLDINGS AND
MANAGEMENT CORPORATION, Petitioners, - versus - MBf CARD INTERNATIONAL LIMITED and MBf DISCOUNT
CARD LIMITED, Respondents. |
|
G.R. No. 173586 Present: Chairperson, LEONARDO-DE CASTRO, BERSAMIN, VILLARAMA, JR., and PERLAS-BERNABE,* JJ. Promulgated: March
14, 2012 |
x-
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
LEONARDO-DE
CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Resolutions of
the Court of Appeals in CA-G.R. CV No. 84370 dated March 20, 2006[1] and July 6, 2006.[2]
Herein respondents MBf Card
International Limited (MBf Card) and MBf Discount Card Limited (MBf Discount
Card), both foreign corporations not doing business in the Philippines, filed a
complaint for Recovery of Money, Unfair Competition and Damages, with
Application for Preliminary Injunction against herein petitioners MCA-MBF
Countdown Cards Phils., Inc. (MCA-MBF), Amable R. Aguiluz V (Aguiluz V), Amable
C. Aguiluz IX, Cielo C. Aguiluz, Alberto L. Buenviaje, Vicente Acsay and MCA Holdings and Management Corporation (MCA
Holdings). The complaint alleged that sometime
in the second half of 1993, respondent MBf Card and petitioner MCA Holdings,
the latter principally acting through petitioner Aguiluz V, entered into
negotiations for the execution of a Joint Venture Agreement wherein: (1) they
would establish a Joint Venture Company (JVC) in the Philippines with MBf Card
owning about 40% and MCA Holdings owning 60% of the capital stock thereof, and
(2) said JVC would execute a Countdown Country License Agreement with
respondent MBf Discount Card, under which the JVC would conduct the business of
discount cards in the Philippines under the Countdown mark, and use the
distinctive business format and method for the operation of the Countdown
Discount Card.[3]
The Complaint further alleged that even
before respondent MBf Card and petitioner MCA Holdings could agree on drafts of
the Joint Venture and Licensing Agreement, and pending negotiations thereon,
petitioner Aguiluz V, on January 3, 1994, wrote respondent MBf Card that he had
already incorporated on October 18, 1993, a company which would later be
converted into the proposed JVC upon the execution and approval of the
pertinent Agreements. The company
incorporated by Aguiluz V with the Securities and Exchange Commission (SEC) was
stated in the letter as MBF-MCA Discount Card Corp. Philippines, but is
actually named MCA-MBF Countdown Cards Philippines, Inc., i.e., petitioner MCA-MBF. Acceding to a request in the same letter,
respondent MBf Card remitted on January 21, 1994 the amount of US$74,074.04 to Account
No. 838-06 (Metrobank, Quezon Avenue Branch), which, as it turned out, belongs
to petitioner MCA-MBF. The understanding
was that such amount was to be applied as MBf Cards payment of its 40%
shareholding in the JVC upon the execution and approval of the Joint Venture
and Licensing Agreements.[4] However, without the prior
authority of the respondents, and while the parties were still discussing and
negotiating on the terms and conditions of the Joint Venture and Licensing
Agreements, petitioners, through the intended JVC (petitioner MCA-MBF), began
to promote, market and sell the Countdown Discount Cards to the public, using
the Countdown name, logo and trademark.[5]
The Complaint then alleged the
facts that led up to respondents decision to end its negotiations with
petitioners:
8. Accordingly, [respondent] MBf card advised
[petitioners] not to promote, market and sell Countdown Discount Cards to the
public until the Joint Venture Agreement and the License Agreement (for the use
of the tradename Countdown and the format and method for the operation of the
Countdown Discount Card) had been signed and, thereafter, approved by the
appropriate government agency.
9. In particular, on March 8 and 17, 1994,
[respondent] MBf Card wrote [petitioner] MCA-MBFs Ruby Pearl M. Shan to freeze
all selling activities on the Countdown Discount Card until after the pertinent
Agreements had been signed and approved. x x x.
10. In reply to [respondent] MBf Cards freeze
advice, [petitioner] Amable R. Aguiluz V promised that they would comply
therewith. This was confirmed by Ruby
Pearl M. Shan, who wrote [respondent] MBf Card on March 19, 1994 to confirm
that selling activities of Discount Card have been ordered [frozen]
temporarily, effective 10th March 1994. x x x.
11. On March 30 and April 3, 1994, before any of
the Joint Venture and License Agreements had been signed and approved, and with
malice, bad faith and in breach of [petitioners] promise to [respondent] MBf
Card, the [petitioners] illegally caused the publication of two advertisements
in the Manila Bulletin, promoting, marketing and selling the Countdown Discount
Card. x x x.
11.1 In
the said ads, [petitioners] fraudulently misrepresented to the public that they
have already been authorized by [respondents] to promote, market and sell the
Countdown Discount Card and that the discount cards they offer are valid and
enforceable, and as such would be honored in various establishments in the
Philippines and elsewhere.
11.2
Moreover, in the said advertisements, [petitioners] offered to the public,
aside from the regular features of the Countdown Discount Card, a purchase
protection plan and even personal accident insurance. This caused great concern for [respondents]
as, to their knowledge, these have not been firmed up with any insurance
company.
12. What is worse, in his column appearing in the
April 15, 1994 issue of the Philippine Star[,] [petitioner] Amable R. Aguiluz V
misrepresented to the public that he, representing the MCA Holdings had
actually signed a joint venture agreement with Mr. Gordon Yuen, Chairman, of
the Malaysia Borneo Finance. No such
joint venture agreement has to date been signed and Mr. Gordon Yuen is
president and chief executive officer of [respondent] MBf Card and not the
chairman of Malaysia Borneo Finance.
13. On April 20, 1994, [respondent] MBf Card
wrote [petitioners], advising them that it had decided not to proceed with the
joint venture project on the Countdown Discount Card, and demanding that
[petitioners] immediately:
(a)
refund to [respondent] MBf Card the US$74,074.04 it had remitted;
(b) cease
and desist from using the MBf and Countdown names, logos and trademarks; and
(c)
delete MBf and Countdown from MCA-MBFs corporate name as registered with
the Securities and Exchange Commission.
x x x x
14. To date, to the damage and prejudice of
[respondents], the [petitioners] continue to promote, market and sell the
Countdown Discount Card, thereby misrepresenting to the public that they have
been authorized to do so, and that the Countdown Discount Card they offer are
valid and binding against [respondents].
These acts of [petitioners], including their continued use of Countdown
and MBf in the corporate name and business of MCA-MBF, are in violation of
[respondents] lawful and exclusive proprietary rights to such names. Furthermore, they are in fraud of the public
and constitute unfair competition which should be enjoined and for which
[petitioners] are liable to [respondents] in damages.[6]
Respondents prayed before the trial
court that petitioners be enjoined from promoting, marketing and selling
Countdown Discount Cards and from using the MBf and Countdown names, logos
and trademarks. They also prayed that
petitioners be ordered to refund to respondent MBf Card the sum of
US$74,074.04, and to pay P2,000,000.00 as moral damages, and P500,000.00
as attorneys fees and expenses of litigation.
On April 22, 1994, the trial court
issued a temporary restraining order enjoining petitioners, particularly
MCA-MBF, to refrain and desist from promoting, marketing and selling Countdown
Discount Cards and from using the MBf and Countdown names, logos and
trademarks.
After hearings on April 28 and 29,
and March 4, 1994, the trial court, in an Order dated May 6, 1994, granted
respondents prayer for a preliminary injunction.
On August 8, 1994, petitioner
MCA-MBF filed its Answer with Counterclaim, claiming that the contract between
the parties had already been perfected.
The parties allegedly agreed that (1) they jointly undertook the task of
marketing the MBf Discount Card in the Philippines; (2) MBf Card was solely
responsible for securing the necessary selling paraphernalia from the main
Licensor, Countdown of London, England; and (3) Gordon Yuen and T.K. Wong were
elected as members of the Board of Directors of the Joint Venture Corporation. Petitioner MCA-MBF asserted that MBf Card did
not suffer any damage from the introduction and marketing of the MBf Countdown
Discount Card in the Philippines since all acts pertaining to the business were
jointly undertaken by the parties. In
its Counterclaim, petitioner MCA-MBF prayed for damages in the amount of P22,500,000.00,
and an order directing respondents to execute, sign and submit the form of the
Joint Venture Agreement as allegedly approved and accepted by petitioners on
March 16, 1994.
On August 10, 1994, the trial court
issued the Writ of Preliminary Injunction on account of the posting by the
respondents of the required bond.
On October 18, 1996, petitioners
Vicente R. Acsay, Amable R. Aguiluz V, Amable C. Aguiluz IX, Cielo C. Aguiluz,
Alberto Buenviaje and MCA Holdings filed their Answer, alleging practically the
same defenses as those raised by petitioner MCA-MBF.
On June 8, 1998, the law firm of
Castillo Laman Tan Pantaleon & San Jose (CLTPSJ) filed a Motion to Record
Attorneys Lien. However, while CLTPSJ
did not withdraw its appearance in the case, the law firm of Poblador Bautista
& Reyes (PBR) entered its appearance in October 1994 and has since then
been the firm representing respondents.
On August 27, 1998, the trial court noted the prayer to record
attorneys lien and held that the same shall be considered in the adjudication
of the case.
On March 8, 2000, the trial court
rendered its Decision in favor of respondents.
The dispositive portion of the Decision reads:
WHEREFORE,
premises considered, judgment is hereby rendered permanently enjoining the
[petitioners] from promoting, marketing and selling Countdown Discount Cards,
and from using MBf and Countdown names, logos and trademarks; ordering
[petitioners] to jointly and severally refund to [respondent] MBf Card the sum
of US$74,074.04 or its equivalent in Philippine currency, with legal interest
thereon from date of demand until full payment; and ordering [petitioners] to
jointly and severally pay [respondents] the amount of TWO HUNDRED THOUSAND (P200,000.00)
PESOS as attorneys fees and expenses of litigation.
As
regards CLTPSJs claim, [respondents] are ordered to pay the amount of FIFTY
THOUSAND (P50,000.00) PESOS, as attorneys fees.[7]
On August 15, 2003, petitioners
filed a Notice of Appeal. On September
28, 2005, petitioners received an Order from the Court of Appeals requiring
them to file their Appellants Brief within 45 days from receipt of said
notice.
Petitioners failed to file the
Brief within the period allotted by the Court of Appeals. Thus, on March 20, 2006, the Court of Appeals
issued the first assailed Resolution dismissing petitioners appeal on the
ground of abandonment of the same:
For
failure of defendants-appellants to file the required brief within the
prescribed period as per report of the Judicial Records Division dated March 1,
2006, their appeal is considered ABANDONED and consequently, ordered DISMISSED
pursuant to Section 1(e), Rule 50 of the 1997 Rules of Civil Procedure.[8]
Petitioners filed a Motion for
Reconsideration with Motion to Admit Appellants Brief, wherein they claimed
that the lawyer who was handling the case suddenly resigned from the law firm
in October 2005, shortly after they received the notice to file the Brief. The other counsels allegedly had been
handling voluminous cases and attending to numerous court appearances and out
of town hearings.
On July 6, 2006, the Court of
Appeals issued the second assailed Resolution denying petitioners Motion for
Reconsideration. According to the Court
of Appeals, the reason given by the counsels is not substantial or meritorious
to merit the relaxation of the rules.
The Court of Appeals also noted that there was no action on the part of
the petitioners from the time they received the notice to file their Brief on
September 28, 2005 until the Resolution of the appellate court on March 20,
2006.[9]
Hence, the present Petition for
Review, wherein petitioners rely on the following grounds:
A.
The Court of Appeals grievously
committed a reversible error in dismissing the case based on procedural
technicalities without considering at all whether or not petitioners appeal
deserved full consideration on the merits.
B.
In the interest of substantial
justice, petitioners appeal should be reinstated considering that the errors
of the trial court in rendering its appealed decision are evident on the face
of the said decision and more so after an examination of the evidence on
record.
1. The Trial Court erred in
perfunctorily disregarding corporate fiction and adjudging individual petitioners
personally liable in its Decision.
2. The Trial Court erred when it
disregarded basic principles of contract law when it ruled that there was no
joint venture agreement yet between respondent MBf Card and petitioner MCA
because they have not yet executed the documents formalizing said contract.
3. The Trial Court erred in finding
that petitioners have not proven Tan Sris authority to represent and bind the
respondents to the joint venture agreement.
4. The Trial Courts award of
attorneys fees is devoid of legal basis.[10]
Petitioners pray before this Court
that their appeal before the Court of Appeals, CA-G.R. CV No. 84370, be
reinstated.[11]
We resolve to deny the present
petition.
Confronted with the necessity to
justify their failure to file their Appellants Brief before the Court of
Appeals, all that the petitioners could offer was that the lawyer who was
handling the case resigned from the law firm shortly after they received the
notice to file the Brief, while other counsels have been handling voluminous
cases, numerous court appearances, and out of town hearings. Petitioners did not allege that the other
lawyers of the firm were not informed of the appellate courts notice to file
the Brief. Petitioners did not even ask
the court for an extension. Instead,
petitioners claim that the rules concerning the filing of the Appellants Brief
are mere insignificant and harmless technicalities[12] and
argue that because of the alleged merits of their case, they do not have to
prove that their failure to file the said brief was excusable:
In light of the merits of
petitioners appeal as will be further discussed below, and in accordance with
the jurisprudence discouraging dismissal of appeals grounded on pure
technicalities, whether or not the
inadvertence resulting in the late filing of the appellants brief is excusable
is already beside the point. The
focus should have been on whether or not the appeal deserved full consideration
on the merits, and this can only be determined if a preliminary consideration of
the merits is made.[13]
(Emphasis added.)
This contention, which in effect
advances that the appellate court does not even deserve a valid explanation for
the appellants failure to its Brief, cannot be countenanced. Liberality is given to litigants who are
worthy of the same, and not to ones who flout the rules, give explanations to
the effect that the counsels are busy with other things, and expect the court
to disregard the procedural lapses on the mere self-serving claim that their
case is meritorious.
In Rural Bankers Association of the Philippines v. Tanghal-Salvaa,[14]
this Court held:
Obedience
to the requirements of procedural rules is needed if the parties are to expect
fair results therefrom, and utter disregard of the rules cannot justly be rationalized
by harking on the policy of liberal construction. Procedural rules are tools designed to
facilitate the adjudication of cases. Courts and litigants alike are thus
enjoined to abide strictly by the rules. And while the Court, in some instances, allows
a relaxation in the application of the rules, this was never intended to forge
a bastion for erring litigants to violate the rules with impunity. The liberality in the interpretation and
application of the rules applies only in proper cases and under justifiable
causes and circumstances. While it is
true that litigation is not a game of technicalities, it is equally true that
every case must be prosecuted in accordance with the prescribed procedure to
insure an orderly and speedy administration of justice.[15]
Furthermore, petitioners characterization
of the rules concerning the filing of the Appellants Brief as insignificant
and harmless technicalities is downright improper as it is contrary to
established jurisprudence. In Casim v. Flordeliza,[16] this
Court particularly held that:
It would
be incorrect to perceive the procedural requirements of the rules on appeal as
being merely harmless and trivial technicalities that can just be discarded.
As this Court so explained in Del Rosario
vs. Court of Appeals
Petitioners'
plea for liberality in applying these rules in preparing Appellants' Brief does
not deserve any sympathy. Long ingrained in our jurisprudence is the rule that
the right to appeal is a statutory right and a party who seeks to avail of the
right must faithfully comply with the rules. In People vs. Marong, we held that deviations from the rules cannot be
tolerated. The rationale for this strict attitude is not difficult to
appreciate. These rules are designed to facilitate the orderly disposition of
appealed cases. In an age where courts are bedeviled by clogged dockets, these
rules need to be followed by appellants with greater fidelity. Their observance
cannot be left to the whims and caprices of appellants.[17]
Petitioners claim that the trial
court Decision was erroneous on its face and that even a cursory reading of the
same would show prima facie merit in
the appeal is in itself a grave exaggeration.
In alleging the prima facie
merit of its appeal, petitioners rely on two main grounds: (1) the RTC
allegedly disregarded the basic principles of contract law when it ruled that
the joint venture agreement had not yet been perfected; and (2) the RTC
allegedly disregarded corporate fiction in adjudging individual petitioners
personally liable to respondents.
The basic principles of contract
law referred to by petitioners are those enshrined in Article 1315[18]
of the Civil Code, which provides that contracts are perfected by mere consent,
and in Article 1356,[19]
which states that contracts shall be obligatory in whatever form they may have
been entered into, provided all the essential requisites for their validity is
present.
It is clear from a reading of the
RTC Decision that the above principles were not disregarded. On the contrary, the RTC went beyond the fact
that the Joint Venture and Licensing Agreement has yet to be signed, and
carefully weighed the evidence in order to determine whether or not there was a
perfected oral joint venture agreement:
1.
The trial court had to look into whether
Tan Sri had the authority to bind respondents in the alleged oral
agreement. In this regard, the trial
court found no evidence proving the same. The RTC instead considered the admission of
Aguiluz V that he neither knew nor inquired whether Tan Sri was an officer or
director of the plaintiff corporations.[20]
2.
Despite the absence of a written
contract, the RTC discussed whether or not the remittance of US$74,074.04 and
conveyance of trade secrets and advice should be considered partial execution of
the Joint Venture Agreement.[21] However, the trial court apparently found the
testimony of the respondents witness to be credible and believed that the
respondents were assured that the money will only be applied to its proposed
40% shareholding upon the execution and approval of the Joint Venture Licensing
Agreements.[22] Furthermore, it appeared to the RTC that the
advice and suggestions from respondents for the sale, promotion and marketing
of the discount cards are merely preparatory acts and does not necessarily
indicate the existence of a perfected contract.[23]
3.
It was shown that the RTC sought to
determine the existence of a Joint Venture and Licensing Agreement despite the
absence of a written contract evidencing the same when it considered therefor
the letter of witness Luis Pangulayan in behalf of petitioner Aguiluz V. The RTC quoted Pangulayans April 14, 1994 letter
wherein it was admitted that (a) the signing of the Joint Venture Agreement is
required to finalize the formation of the JVC since the provisions of the
contract shall be incorporated in the JVCs By-Laws; and (2) even the formation
of the JVC does not necessarily complete the process since a Licensing
Agreement still needs to be executed between the JVC and respondents.[24]
In addition to the above, while we
agree with petitioners that the absence of a written Joint Venture and Licensing Agreement does not necessarily
negate the perfection of a contract, we nevertheless find that this very lack
of a written contract constitutes convincing circumstantial proof that said
parties were indeed in the process of negotiating the contracts terms. When there is as of yet no meeting of the
minds as to the subject matter or the cause or consideration of the contract
being negotiated, the same cannot be considered to have been perfected.
In ruling in favor of respondents,
the RTC made a factual finding that the Joint Venture and Licensing Agreement
being negotiated between petitioners and respondents was never perfected. Respondents are neither incorporators nor
stockholders of MCA-MBF, the company that was supposedly intended to be
converted into the Joint Venture Company.
It must be stressed that MCA-MBF has not yet been converted into the
Joint Venture Company as no shares of stock have been delivered to
respondents. As alleged by respondents
and found by the RTC, the respondents were assured that the money remitted by them
will only be applied to its proposed 40% shareholding in the JVC upon the
execution and approval of the Joint Venture and Licensing Agreements. Therefore, while the US$74,074.04 was
remitted to the account of MCA-MBF as requested by Aguiluz V, said money was,
insofar as respondents are concerned, with the persons they are negotiating with
for the creation of the JVC. Consequently,
respondents cannot be said to be suing the natural persons among the
petitioners as officers of the yet-to-be-created JVC. They were instead held liable for the
US$74,074.04 in their individual capacities as the persons negotiating with respondents
for the creation of the JVC and, thus, there was no need to pierce the
corporate fiction of MCA-MBF.
IN VIEW OF THE FOREGOING, the instant Petition
for Review on Certiorari is hereby DISMISSED.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
|
LUCAS P. BERSAMIN Associate Justice
|
MARTIN S. VILLARAMA, JR. Associate Justice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESTELA M. PERLAS-BERNABE Associate Justice |
|
* Per Special Order No. 1207 dated February 23, 2012.
[1] Rollo, p. 53; penned by Associate
Justice Juan Q. Enriquez, Jr. with Associate Justices Godardo A. Jacinto and
Vicente Q. Roxas, concurring.
[2] Id. at 56.
[3] Id.
at 85-86.
[4] Id.
at 86.
[5] Id.
at 86-87.
[6] Id.
at 87-89.
[7] Id.
at 259-260.
[8] Id.
at 53.
[9] Id.
at 57.
[10] Id.
at 23.
[11] Id.
at 40.
[12] Id.
at 29; Petition, p. 20.
[13] Id.
at 26; id. at 17.
[14] G.R.
No. 175020, October 4, 2007, 534 SCRA 721.
[15] Id. at 741-742.
[16] 425
Phil. 210 (2002).
[17] Id.
at 220-221.
[18] Art. 1315. Contracts are perfected by mere
consent, and from that moment the parties are bound not only to the fulfillment
of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law.
[19] Art. 1356. Contracts shall be obligatory, in
whatever form they may have been entered into, provided all the essential
requisites for their validity are present. However, when the law requires that
a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and
indispensable. In such cases, the right of the parties stated in the following
article cannot be exercised.
[20] Rollo, p. 256.
[21] Id.
[22] Id.,
citing TSN, April 23, 1994, pp. 47-49.
[23] Id.
at 257.
[24] Id.