Paz Vs New International Environmental Universality Inc. 756 SCRA 284

FIRST DIVISION
G.R. No. 203993, April 20, 2015

*
PRISCILO B. PAZ, Petitioner, v. NEW INTERNATIONAL ENVIRONMENTAL
UNIVERSALITY, INC., Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated January 31,
2012 and the Resolution3 dated October 2, 2012 of the Court of Appeals (CA) in CA-
G.R. CV No. 00903-MIN, which affirmed the Decision4 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 officer-in-charge of the Aircraft Hangar at the

Davao International Airport, Davao City, entered into a Memorandum of
Agreement5 (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 letter8 addressed to "MR. ALLAN J.

CLARKE, International Environmental Universality, Inc. x x x" 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 letter10 to "MR. ALLAN J. CLARKE,
International Environmental Universality, Inc. x x x," 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. x x x,"
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 letter14 addressed to "MR. ALLAN J. CLARKE,
Chairman, CEO, New International Environmental University, Inc. x x x," 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 complaint17 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 Injunction21 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 filed on October
24, 2003 a petition for indirect contempt22 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 Decision24 dated May 19, 2006 finding petioner:
(a) guilty of indirect contempt for contumaciously disregarding its Order25 dated
March 6, 2003, by not allowing respondent to possess occupy the leased premises
pending final 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 fine 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

Order28 dated April 11, 2005 of the SEC explaining that respondent was issued a
Certificate 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 Office in
Davao City erroneously used the name New International Environmental
University, Inc.29 The latter name was used by respondent when it filed 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, Officer-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 office 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 effectively 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 off-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
Decision36 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 reconsideration40 of the foregoing Decision, raising as an

additional issue the death41 of Capt. Clarke which allegedly warranted the dismissal of
the case.42 However, the motion was denied in a Resolution43 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 consolidation50 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 finding petitioner guilty of indirect
contempt,51 the Court had earlier denied said motion in a Resolution52 dated July 24,
2013 on the ground that G.R. No. 202826 had already been denied53 with
finality.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
findings 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 final 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 2161 of the Corporation Code62 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
Comment63 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 effectively 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 CA-G.R. CV No. 00903-MIN
are hereby AFFIRMED.
SO ORDERED.

Paz Vs New International Environmental Universality Inc. 756 SCRA 284

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FIRST DIVISION

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

On March 1, 2000, petitioner, as the officer-in-charge of the Aircraft Hangar at the

On August 19, 2000, petitioner complained in a letter8 addressed to "MR. ALLAN J.

On September 4, 2002, respondent New International Environmental Universality,

On March 25, 2003, the RTC issued a Writ of Preliminary Injunction21 ordering

The RTC Ruling

On the challenge to respondent's juridical personality, the RTC quoted the

Petitioner moved for the reconsideration40 of the foregoing Decision, raising as an

Undaunted, petitioner is now before the Court via the instant petition,45 claiming that:

The Court's Ruling

The petition lacks merit.

Section 2161 of the Corporation Code62 explicitly provides that one who

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