FIRST DIVISION

[G.R. No. 203993. April 20, 2015.]

PRISCILO B. PAZ , * petitioner, v s . NEW INTERNATIONAL
ENVIRONMENTAL UNIVERSALITY, INC., respondent.
DECISION
PERLAS-BERNABE, J :
p

Assailed in this petition for review on certiorari 1 are the Decision 2 dated
January 31, 2012 and the Resolution 3 dated October 2, 2012 of the Court of
Appeals (CA) in CA-G.R. CV No. 00903-MIN, which armed the Decision 4 dated
May 19, 2006 of the Regional Trial Court of Davao City, Branch 33 (RTC) in Civil
Case No. 29,292-2002, declaring petitioner Captain Priscilo B. Paz (petitioner)
liable for breach of contract.
The Facts
On March 1, 2000, petitioner, as the ocer-in-charge of the Aircraft Hangar
at the Davao International Airport, Davao City, entered into a Memorandum of
Agreement 5 (MOA) with Captain Allan J. Clarke (Capt. Clarke), President of
International Environmental University, whereby for a period of four (4) years,
unless pre-terminated by both parties with six (6) months advance notice, the
former shall allow the latter to use the aircraft hangar space at the said Airport
"exclusively for company aircraft/helicopter." 6 Said hangar space was previously
leased to Liberty Aviation Corporation, which assigned the same to petitioner. 7
On August 19, 2000, petitioner complained in a letter 8 addressed to "MR.
ALLAN J. CLARKE, International Environmental Universality, Inc. . . ." that the
hangar space was being used "for trucks and equipment, vehicles maintenance
and fabrication," instead of for "company helicopter/aircraft" only, and thereby
threatened to cancel the MOA if the "welding, grinding, and fabrication jobs"
were not stopped immediately. 9
On January 16, 2001, petitioner sent another letter 10 to "MR. ALLAN J.
CLARKE, International Environmental Universality, Inc. . . .," reiterating that the
hangar space "must be for aircraft use only," and that he will terminate the MOA
due to the safety of the aircrafts parked nearby. He further offered a vacant space
along the airport road that was available and suitable for Capt. Clarke's
operations. 11
On July 19, 2002, petitioner sent a third letter, 12 this time, addressed to
"MR. ALLAN JOSEPH CLARKE, CEO, New International Environmental University,
Inc. . . .," demanding that the latter vacate the premises due to the damage
caused by an Isuzu van driven by its employee to the left wing of an aircraft
parked inside the hangar space, which Capt. Clarke had supposedly promised to

buy, but did not. 13

On July 23, 2002, petitioner sent a final letter 14 addressed to "MR. ALLAN J.
CLARKE, Chairman, CEO, New International Environmental University, Inc. . . .,"
strongly demanding the latter to immediately vacate the hangar space. He
further informed Capt. Clarke that the company will "apply for immediate
electrical disconnection with the Davao Light and Power Company (DLPC)[,] so as
to compel [the latter] to desist from continuing with [the] works" thereon. 15
On September 4, 2002, respondent New International Environmental
Universality, Inc. 16 (respondent) filed a complaint 17 against petitioner for breach
of contract before the RTC, docketed as Civil Case No. 29,292-2002, 18 claiming
that: (a) petitioner had disconnected its electric and telephone lines; (b) upon
petitioner's instruction, security guards prevented its employees from entering
the leased premises by blocking the hangar space with barbed wire; and (c)
petitioner violated the terms of the MOA when he took over the hangar space
without giving respondent the requisite six (6)-month advance notice of
termination. 19
In his defense, petitioner alleged, among others, that: (a) respondent had
no cause of action against him as the MOA was executed between him and Capt.
Clarke in the latter's personal capacity; ( b) there was no need to wait for the
expiration of the MOA because Capt. Clarke performed highly risky works in the
leased premises that endangered other aircrafts within the vicinity; and (c) the
six (6)-month advance notice of termination was already given in the letters he
sent to Capt. Clarke. 20
On March 25, 2003, the RTC issued a Writ of Preliminary Injunction 21
ordering petitioner to: (a) immediately remove all his aircrafts parked within the
leased premises; (b) allow entry of respondent by removing the steel gate
installed thereat; and (c) desist and refrain from committing further acts of
dispossession and/or interference in respondent's occupation of the hangar space.
For failure of petitioner to comply with the foregoing writ, respondent led
on October 24, 2003 a petition for indirect contempt 22 before the RTC, docketed
as Civil Case No. 30,030-2003, which was tried jointly with Civil Case No.
29,292-2002. 23
The RTC Ruling
After due trial, the RTC rendered a Decision 24 dated May 19, 2006 nding
petitioner: (a) guilty of indirect contempt for contumaciously disregarding its
Order 25 dated March 6, 2003, by not allowing respondent to possess and occupy
the leased premises pending nal decision in the main case; and (b) liable for
breach of contract for illegally terminating the MOA even before the expiration
of the term thereof. 26 He was, thus, ordered to pay a ne of P5,000.00, and to
pay respondent nominal damages of P100,000.00 and attorney's fees of
P50,000.00 with legal interest, and costs of suit. 27
On the challenge to respondent's juridical personality, the RTC quoted the
Order 28 dated April 11, 2005 of the SEC explaining that respondent was issued a
Certicate of Incorporation on September 3, 2001 as New International

Environmental Universality, Inc. but that, subsequently, when it amended its

Articles of Incorporation on November 14, 2001 and July 11, 2002, the SEC
Extension Oce in Davao City erroneously used the name New International
Environmental University, Inc. 29 The latter name was used by respondent when
it led its amended complaint on September 11, 2002 and the petition for
indirect contempt against petitioner on October 24, 2003 believing that it was
allowed to do so, as it was only on April 11, 2005 when the SEC directed it to
revert to its correct name. 30
The RTC further declared that the MOA, which was "made and executed by
and between CAPT. [PRISCILO] B. PAZ, Ocer-In-Charge of Aircraft Hangar at
Davao International Airport, Davao City, Philippines, hereinafter called as FIRST
PARTY [a]nd CAPT. ALLAN J. CLARKE[,] President of INTERNATIONAL
ENVIRONMENTAL UNIVERSITY with oce address at LIBERTY AVIATION
HANGAR, Davao International Airport, Davao City, Philippines, hereinafter called
as SECOND PARTY," 31 was executed by the parties not only in their personal
capacities but also in representation of their respective corporations or entities. 32
On the issue of the violation of the terms of the MOA, the RTC found
respondent to have been eectively evicted from the leased premises
between July and August of 2002, or long before the expiration of the term
thereof in 2004, when petitioner: (a) placed a gate/fence that prevented ingress
to and egress from the leased premises; (b) parked a plane inside and outside the
leased premises; (c) disconnected the electrical and telephone connections of
respondent; and (d) locked respondent's employees out. 33 Despite the service of
the injunctive writ upon petitioner, respondent was not allowed to possess and
occupy the leased premises, as in fact, the trial court even had to order on March
8, 2004 the inventory of the items locked inside the bodega of said premises that
was kept o-limits to respondent. Hence, petitioner was declared guilty of
indirect contempt. 34
Aggrieved, petitioner elevated his case on appeal before the CA, arguing
that the trial court should have dismissed outright the cases against him for
failure of respondent to satisfy the essential requisites of being a party to an
action, i.e., legal personality, legal capacity to sue or be sued, and real interest in
the subject matter of the action. 35
The CA Ruling
Finding that the errors ascribed by petitioner to the trial court only touched
the civil action for breach of contract, the appellate court resolved the appeal
against him in a Decision 36 dated January 31, 2012, and affirmed the RTC's
finding of petitioner's liability for breach of contract. 37
The CA ruled that, while there was no corporate entity at the time of the
execution of the MOA on March 1, 2000 when Capt. Clarke signed as "President
of International Environmental University," petitioner is nonetheless estopped
from denying that he had contracted with respondent as a corporation, having
recognized the latter as the "Second Party" in the MOA that "will use the hangar
space exclusively for company aircraft/helicopter." 38 Petitioner was likewise
found to have issued checks to respondent from May 3, 2000 to October 13,

2000, which belied his claim of contracting with Capt. Clarke in the latter's
personal capacity. 39
Petitioner moved for the reconsideration 40 of the foregoing Decision,
raising as an additional issue the death 41 of Capt. Clarke which allegedly
warranted the dismissal of the case. 42 However, the motion was denied in a
Resolution 43 dated October 2, 2012 where the CA held that Capt. Clarke was
merely an agent of respondent, who is the real party in the case. Thus, Capt.
Clarke's death extinguished only the agency between him and respondent, not
the appeal against petitioner. 44
Undaunted, petitioner is now before the Court via the instant petition, 45
claiming that: (a) the CA erred in not settling his appeal for both the breach of
contract and indirect contempt cases in a single proceeding and, consequently,
the review of said cases before the Court should be consolidated, 46 and (b) the
CA should have dismissed the cases against him for (1) lack of jurisdiction of the
trial court in view of the failure to implead Capt. Clarke as an indispensable
party; 47 (2) lack of legal capacity and personality on the part of respondent; 48
and (3) lack of factual and legal bases for the assailed RTC Decision. 49
The Court's Ruling
The petition lacks merit.

First, on the matter of the consolidation 50 of the instant case with G.R. No.
202826 entitled "Priscilo B. Paz v. New International Environmental University ,"
the petition for review of the portion of the RTC Decision nding petitioner guilty
of indirect contempt, 51 the Court had earlier denied said motion in a Resolution
52 dated July 24, 2013 on the ground that G.R. No. 202826 had already been
denied 53 with nality. 54 Thus, any further elucidation on the issue would be a
mere superfluity.
Second, whether or not Capt. Clarke should have been impleaded as an
indispensable party was correctly resolved by the CA which held that the former
was merely an agent of respondent. 55 While Capt. Clarke's name and signature
appeared on the MOA, his participation was, nonetheless, limited to being a
representative of respondent. As a mere representative, Capt. Clarke acquired no
rights whatsoever, nor did he incur any liabilities, arising from the contract
between petitioner and respondent. Therefore, he was not an indispensable party
to the case at bar. 56
It should be emphasized, as it has been time and again, that this Court is
not a trier of facts, and is thus not duty-bound to analyze again and weigh the
evidence introduced in and considered by the tribunals. 57 When supported by
substantial evidence, the ndings of fact by the CA are conclusive and binding on
the parties and are not reviewable by this Court, unless the case falls under any
of the exceptions, 58 none of which was established herein.
The CA had correctly pointed out that, from the very language itself of the
MOA entered into by petitioner whereby he obligated himself to allow the use of
the hangar space "for company aircraft/helicopter," petitioner cannot deny that
he contracted with respondent. 59 Petitioner further acknowledged this fact in his

nal letter dated July 23, 2002, where he reiterated and strongly demanded the
former to immediately vacate the hangar space his "company is
occupying/utilizing." 60
Section 21 61 of the Corporation Code 62 explicitly provides that one who
assumes an obligation to an ostensible corporation, as such, cannot resist
performance thereof on the ground that there was in fact no corporation. Clearly,
petitioner is bound by his obligation under the MOA not only on estoppel but by
express provision of law. As aptly raised by respondent in its Comment 63 to the
instant petition, it is futile to insist that petitioner issued the receipts for rental
payments in respondent's name and not with Capt. Clarke's, whom petitioner
allegedly contracted in the latter's personal capacity, only because it was upon
the instruction of an employee. 64 Indeed, it is disputably presumed that a person
takes ordinary care of his concerns, 65 and that all private transactions have been
fair and regular. 66 Hence, it is assumed that petitioner, who is a pilot, knew
what he was doing with respect to his business with respondent.
Petitioner's pleadings, however, abound with clear indications of a business
relationship gone sour. In his third letter dated July 19, 2002, petitioner
lamented the fact that Capt. Clarke's alleged promise to buy an aircraft had not
materialized. 67 He likewise insinuated that Capt. Clarke's real motive in staying
in the leased premises was the acquisition of petitioner's right to possess and use
the hangar space. 68 Be that as it may, it is settled that courts have no power to
relieve parties from obligations they voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments. 69
The lower courts, therefore, did not err in finding petitioner liable for breach
of contract for eectively evicting respondent from the leased premises even
before the expiration of the term of the lease. The Court reiterates with approval
the ratiocination of the RTC that, if it were true that respondent was violating
the terms and conditions of the lease, "[petitioner] should have gone to court to
make the [former] refrain from its 'illegal' activities or seek rescission of the
[MOA], rather than taking the law into his own hands." 70
WHEREFORE, the petition is DENIED. The Decision dated January 31,
2012 and the Resolution dated October 2, 2012 of the Court of Appeals in CAG.R. CV No. 00903-MIN are hereby AFFIRMED.
SO ORDERED.

Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ., concur.

Footnotes
* "Prisicilo B. Paz" or "Priscillo M. Paz" in some parts of the record.
1.

Erroneously titled as "petition for certiorari." Rollo (G.R. No. 203993), pp. 32-112.
Petitioner also filed an amended petition for certiorari (should be petition for
review on certiorari; id. at 217-300), which was noted by the Court in a
Resolution dated July 24, 2013 (see id. at 536-537).

2.

Id. at 121-137. Penned by Associate Justice Romulo V. Borja with Associate

Justices Pamela Ann Abella Maxino and Zenaida Galapate-Laguilles concurring.

3.
4

Id. at 118-120. Penned by Associate Justice Romulo V. Borja with Associate

Justices Pedro B. Corales and Ma. Luisa C. Quijano-Padilla concurring.
Id. at 175-185. Penned by Judge Wenceslao E. Ibabao.

5.

Id. at 328.

6.

Id.

7.

See id. at 123.

8.

Id. at 143.

9.

See id.

10.

Id. at 144.

11.

See id.

12.

Id. at 145.

13.

See id.

14.

Id. at 146.

15.

See id.

16.

In the MOA, respondent was identified simply as "International Environmental

University." Pursuant to the Order of the Securities and Exchange Commission
(SEC) dated April 11, 2005 (see id. at 411), respondent was ordered to enjoin
from using the afore-mentioned name and to revert to its correct name of
"New International Universality, Inc." as shown in the issued Certificate of
Incorporation on September 3, 2001; see id. at 177-178.

17.

Not attached to the records of the case.

18.

Rollo (G.R. No. 203993), pp. 125 and 175-176. Respondent also filed an
Amended Complaint impleading E.V.D. Security Agency as additional defendant.

19.

See id. at 125-126.

20.

See id. at 126-127.

21.

Id. at 160-161. Issued by Judge Renato A. Fuentes.

22.

Not attached to the records of the case.

23.

See rollo (G.R. No. 203993), pp. 129 and 175-176.

24.

Id. at 175-185.

25.

Id. at 155-159.

26.

Id. at 184.

27.

Id. at 184-185.

28.

Id. at 411.

29.

Id. See also id. at 177-178.

30.

See id. at 179.

31.

Id. at 328.

32.

See id. at 179-180.

33.

See id. at 181-182.

34.

See id. at 182-183.

35.

See id. at 130.

36.

Id. at 121-137.

37.

Id. at 136.

38.

See id. at 135.

39.

Id. at 135-136.

40.

Not attached to the records of case.

41.

See Certificate of Death of Capt. Clarke; rollo (G.R. No. 203993), p. 173,
including dorsal portion.

42.

Id. at 119.

43.

Id. at 118-120.

44.

Id. at 119.

45.

Id. at 217-300.

46.

Id. at 69-72. See also id. at 256-260.

47.

Id. at 72-78. See also id. at 260-266.

48.

Id. at 79-80. See also id. at 267-268.

49.

Id. at 78 and 266.

50.

See Motion to Consolidate Cases dated June 27, 2013; id. at 514-519.

51
52.

Id. at 514.
Id. at 536.

53.

In a Resolution dated October 22, 2012. See id. at 422.

54.

On May 8, 2013, an Entry of Judgment had already been issued in G.R. 202826.
See rollo (G.R. No. 202826), pp. 437-438.

55.

See rollo (G.R. No. 203993), p. 119.

56.

Cf. Chua v. Total Office Products and Services, Inc., 508 Phil. 490, 499-500
(2005).

57.

See Sps. Saraza v. Francisco, G.R. No. 198718, November 27, 2013.

58.

See Sps. Binua v. Ong, G.R. No. 207176, June 18, 2014.

59.

Rollo (G.R. No. 203993), p. 135.

60.

Id. at 146.

61.

SEC. 21. Corporation by estoppel. All persons who assume to act as a

corporation knowing it to be without authority to do so shall be liable as general
partners for all debts, liabilities and damages incurred or arising as a result
thereof Provided, however, That when any such ostensible corporation is sued
on any transaction entered by it as a corporation or on any tort committed by it
as such, it shall not be allowed to use as a defense its lack of corporate
personality.
One who assumes an obligation to an ostensible corporation as such, cannot
resist performance thereof on the ground that there was in fact no
corporation.

62.

Batas Pambansa Blg. 68 (May 1, 1980).

63.

Dated April 18, 2013. Rollo (G.R. No. 203993), pp. 372-408.

64.

See id. at 388-389.

65.

See Rule 131, Section 3 (d) of the Rules of Court.

66.

See Rule 131, Section 3 (p) of the Rules of Court.

67.

Rollo (G.R. No. 203993), p. 145.

68.

Id. at 128.

69.

Fernandez v. Sps. Tarun, 440 Phil. 334, 347 (2002).

70.

Rollo (G.R. No. 203993), p. 182.