THIRD DIVISION
[G.R. No. 236549. April 4, 2018.]
JOSE S.B. ALVAREZ, DOING BUSINESS UNDER THE NAME OF TERBO CATERING SERVICES, petitioner,vs. CHATEAU ROYALE SPORTS & COUNTRY CLUB, INC., respondent.
[G.R. No. 236560. April 4, 2018.]
CHATEAU ROYALE SPORTS & COUNTRY CLUB, INC., petitioner,vs. JOSE S.B. ALVAREZ, DOING BUSINESS UNDER THE NAME "TERBO CATERING SERVICES", respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedApril 4, 2018, which reads as follows: HTcADC
"G.R. No. 236549 (Jose S.B. Alvarez, doing business under the name of Terbo Catering Services vs. Chateau Royale Sports & Country Club, Inc.); and G.R. No. 236560 (Chateau Royale Sports & Country Club, Inc. vs. Jose S.B. Alvarez, doing business under the name "Terbo Catering Services"). — Let G.R. No. 236560 be CONSOLIDATED with G.R. No. 236549, considering that both involve the same parties and assail the same CA decision in CA-G.R. CV No. 106571.
Before the Court are two consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Court, both assailing the Decision 1 dated July 31, 2017 and the Resolution 2 dated January 11, 2018 of the Court of Appeals (CA) in CA-G.R. CV No. 106571. The assailed decision affirmed with modification the Decision 3 dated August 31, 2015 of the Regional Trial Court (RTC) of Manila, Branch 17 in Civil Case No. 06-114829, which granted actual, moral, and exemplary damages, and attorney's fees in favor of petitioner Jose S.B. Alvarez, doing business under the name of Terbo Catering Services ("Alvarez").
The Facts
The factual antecedents of the case were presented by the CA in the assailed Decision as follows:
In August 2004, Chateau Royale Sports & Country Club, Inc. engaged the catering services of Jose Alvarez and granted him the exclusive right to operate all the restaurants, coffee shops, dining areas and other food and beverage outlets within the resort complex for a period of five years. Under the agreement, Chateau Royale was authorized to collect payments from customers and to deduct the monthly rentals from the gross sales.
After six months or in March 2005, Chateau Royale permitted Wan Chai to manage the floating restaurant. Immediately, Alvarez protested the entry of a new concessionaire and gave Chateau Royale alternative offers to settle the dispute. However, Chateau Royale ignored the proposals. Dissatisfied, Alvarez sent a final demand letter on October 24, 2005 for Chateau Royale to terminate its agreement with Wan Chai and to remit his share in the gross sales from May to September 2005 including illegal deductions starting August 2004.
When the demand went unheeded, Alvarez served a formal notice rescinding his contract with Chateau Royale. Thereafter, Alvarez requested an accounting from Ms. Rhodora Moreno, the operations manager of Chateau Royale, who then issued a "schedule of payables." Eventually, Alvarez filed an action for damages against Chateau Royale before the Regional Trial Court docketed as Civil Case No. 0611482. In his complaint, Alvarez alleged breach of contract and claimed actual, moral, and exemplary damages plus lost profits and attorney's fees.
In its Answer, Chateau Royale averred that the exclusive right of Alvarez is anchored on his firm commitment to serve all the food and beverage outlets in the resort complex. Nonetheless, Alvarez first violated the agreement when he unreasonably failed to operate the floating restaurant despite repeated demands. Thus, it was constrained to hire Wan Chai to prevent further losses. Moreover, its authorized agents did not receive the alleged demand letters and notice of rescission. Lastly, the claim for damages has no factual basis because the purported record of accounts is a falsified document.
In his reply, Alvarez contended that Chateau Royale disallowed him to operate the floating restaurant because of its dilapidated condition and defective facilities. When the renovation started, Alvarez expected that Chateau Royale will advise him once the necessary repairs are completed, yet, he was surprised to discover that Wan Chai is already conducting business in the establishment. Finally, the statement of account was issued by the operations manager of Chateau Royale who likewise received the demand letters and notice of rescission. 4
In the complaint, Alvarez prayed for the payment of actual damages in the amount of Php5,639,643.84, lost profits in the amount of Php1,840,000.00, moral damages in the amount of Php200,000.00, exemplary damages in the amount of Php200,000.00, and attorney's fees and litigation expenses in the amount of Php200,000.00. 5
On the other hand, Chateau Royale prayed for the dismissal of the complaint and for Alvarez to pay unpaid utilities amounting to Php708,596.00, unrealized profit at the floating restaurant for his refusal to operate it from September 2004 to April 2005 at the rate of Php1,000,000.00 per month, and attorney's fees of Php500,000.00 and appearance fees of Php4,000.00 per court appearance. 6
After trial on the merits, the case was considered submitted for resolution.
Ruling of the Regional Trial Court
In a Decision dated August 31, 2015, the trial court found merit in the complaint and ruled in favor of Alvarez, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff Jose S.B. Alvarez doing business under the name "Terbo Buffet Concepts" or "Terbo Catering Services" against the defendant Chateau Royale Sports and Country Club, Inc., ordering said defendant to:
(a) pay plaintiff actual or compensatory damages in the amount of FIVE MILLION TWO HUNDRED FORTY-SIX THOUSAND TWO HUNDRED SIXTY-NINE PESOS and FORTY-EIGHT CENTAVOS (P5,246,269.48) with interest at 12% per annum from judicial demand until fully paid;
(b) pay plaintiff moral damages in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);
(c) pay plaintiff exemplary damages in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);
(d) pay attorney's fees and costs of suit in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);
SO ORDERED. 7
According to the trial court, since there is no contest as to the existence and validity of the Agreement between Alvarez and Chateau Royale, the only issue to be resolved was whether the latter committed a breach when it allowed another concessionaire, Wan Chai, to operate the floating restaurant, thereby making it liable for the damages being claimed by Alvarez. 8 On this note, the trial court ruled that Chateau Royale committed substantial breach worthy to be a ground for the rescission of the Agreement. 9
The trial court found no merit in Chateau Royale's claims that it did not receive any of the demand letters and that Alvarez was the first one who committed a breach by failing to operate the floating restaurant. On the issue of the demand letters, the trial court ruled that Chateau Royale's executives should have been the ones to testify thereon and should not have relegated the same to its employee assigned to receive mail matters. 10
As for Alvarez's alleged failure to operate the floating restaurant, the trial court emphasized that Chateau Royale did not present any proof to that effect and that it was contrary to logic that no demand, whether written or verbal, was made on Alvarez to comply with his obligation to operate the same under the Agreement. 11
Chateau Royale moved for the reconsideration of the trial court's August 31, 2015 Decision, but this was denied in a Resolution dated November 27, 2015. Thus, Chateau Royale elevated the case to the CA via a Notice of Appeal. 12
The CA ordered the parties to file their respective briefs and thereafter resolved the case based on the pleadings filed. 13
Ruling of the Court of Appeals
In the assailed Decision dated July 31, 2017, the CA denied Chateau Royale's appeal and affirmed the trial court's August 31, 2015 Decision, with modification, to wit:
FOR THESE REASONS, the appeal is DENIED. The August 31, 2015 Decision of the Regional Trial Court in Civil Case No. 0611482 is AFFIRMED with MODIFICATIONS that Chateau Royale Sports & Country Club, Inc. is held liable to pay Jose Alvarez actual damages of P5,246,269.48 with interest of 6% per annum at the time of demand until finality of judgment and its full satisfaction, moral damages in the amount of P50,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of P50,000.00. 14 HEITAD
The CA agreed with the findings of the trial court that Chateau Royale committed a substantial transgression of its reciprocity with Alvarez when it allowed Wan Chai, a competitor of Alvarez, to enter and operate a restaurant within the resort complex. This defeated the very purpose of the exclusivity agreement between the parties and deprived the rights of Alvarez and diminished his supposed profits as exclusive operator. 15 The CA ruled that Chateau Royale failed to substantiate its claim that the Schedule of Payments submitted by Alvarez was falsified or forged. Accordingly, it affirmed the trial court's award of actual damages in the amount of Php5,246,269.48. 16
However, the CA modified the interest rate due on Chateau Royale's obligation to Alvarez in accordance with Nacar v. Gallery Frames, from 12% per annum to 6% per annum from the time of demand or from October 24, 2005 when Alvarez sent his demand letter to Chateau Royale. 17 Aside from the interest rate, the CA also modified the award of damages and lowered them to Php50,000.00 each to conform to recent jurisprudence. 18
On the award of unrealized profits in favor of Alvarez, the CA denied the same on the ground that the judgment of the trial court is final and executory as to Alvarez since he failed to perfect an appeal within the prescribed period and as such, he can only maintain the judgment of the trial court and cannot ask that the same be reversed or modified. 19
Chateau Royale filed a motion for reconsideration and Alvarez filed a motion for partial reconsideration of the CA Decision. These were simultaneously denied by the CA in the assailed Resolution dated January 11, 2018.
The Petitions
G.R. No. 236549
In its petition, Alvarez argues that the CA erred in disregarding its claim for damages in the form of unrealized profits. It asserts that the CA was in a position to consider the same since the trial court overlooked the same, even though Alvarez did not question the same via an appeal, since it was raised as an issue before the trial court and it is a matter of record which has bearing on the issues submitted by Chateau Royale in its appeal. 20
Alvarez also asserts that the CA erred in reducing the award of moral and exemplary damages and attorney's fees, since both the trial court and the CA found that Chateau Royale was in evident bad faith and committed wilful breach of its contractual obligations. 21
G.R. No. 236560
In its petition, Chateau Royale denies having violated the provisions of its Agreement with Alvarez and instead claims that it was the latter who refused to operate the floating restaurant despite its entreaties to comply with his commitment to operate all food and beverage outlets within the resort complex. According to Chateau Royale, Alvarez's refusal to operate the floating restaurant has actually brought it losses amounting to Php1,000,000.00 per month. 22
Chateau Royale also denies receiving any of the demand letters sent by Alvarez and argues that the complaint should have been dismissed for being premature for lack of extrajudicial demand. 23
Moreover, Chateau Royale denies the authenticity and genuineness of the Schedule of Payables presented by Alvarez which was relied upon by the trial court and the CA for the award of actual damages. It argues that the said Schedule of Payables was a fruit of a criminal act of falsification of private document and counters that Alvarez also has other unsettled accountabilities to Chateau Royale pursuant to their agreement. 24
Finally, it opposes the award of moral and exemplary damages and attorney's fees in favor of Alvarez, claiming that the basis for the same was not proven. 25
The Issue
The core issue in these consolidated cases is whether the CA committed reversible error in affirming the trial court's Decision which awarded actual damages in favor of Alvarez in the amount of Php5,246,269.48, and reducing the award of moral and exemplary damages and attorney's fees to Php50,000.00 each.
The Court's Ruling
Both petitions have no merit.
We find no reason to disturb the factual findings and legal conclusions of the CA which affirmed with modification the trial court's August 31, 2015 Decision.
The issues separately raised by both petitioners before this Court were mere reiterations of their arguments before the lower courts and were already exhaustively discussed by the CA in the assailed rulings. Both petitioners failed to raise any new issues or arguments which merit a review of the appellate court's findings.
More importantly, the issues raised by petitioners are factual in nature which can no longer be the subject of Rule 45 petitions. It is well-settled that the factual findings of the trial court, as affirmed by the CA, are accorded great respect and even finality by the courts if said findings are supported by substantial evidence. 26
In the present case, both the trial court and the CA uniformly found that Chateau Royale committed a substantial breach of its obligations to Alvarez when it allowed a third party to operate its floating restaurant in spite of its exclusive contract with Alvarez and the latter's adamant opposition to the third party competitor. We agree with the CA when it ruled, thus:
Here, there is no question as to the genuineness and due execution of the agreement between Chateau Royale and Alvarez. Also, it is undisputed that Chateau Royale expressly granted to Alvarez the exclusive right to operate all the food and beverage establishments within the resort complex of five years, to wit: ATICcS
xxx xxx xxx
Nevertheless, Chateau Royale violated this undertaking to the prejudice of Alvarez when it allowed Wan Chai to operate in the premises before the expiration of the five-year period. To be sure, Alvarez was deprived of his rights as exclusive operator. The benefits and protection as sole catering service were impaired and the supposed profits were diminished with the entry of a competitor. As the trial court aptly observed, the introduction of another concessionaire defeats the very purpose why Alvarez entered into an agreement with Chateau Royale. There is a substantial transgression of the reciprocity between the parties that would warrant rescission of the contract. 27
We also agree with the findings of both courts that Chateau Royale failed to substantiate its claim that Alvarez was the first to commit a breach in the absence of any proof of such. The testimonies of Chateau Royale's witnesses were merely self-serving and uncorroborated. Moreover, Chateau Royale never refuted by substantial evidence the claim that Alvarez was prevented from entering and operating the floating restaurant. Chateau Royale is, therefore, deemed to have admitted the same.
Even assuming that the trial court failed to address the issue of unrealized profits which was raised by Alvarez in G.R. No. 236549, We find that there is no merit thereto. The CA ruled:
Lastly, this Court cannot award damages consisting of unrealized profits in favor of Alvarez. The judgment of the trial court is final and executory as to Alvarez because of his failure to perfect an appeal within the prescribed period. In civil cases, an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than those granted in the decision of the court below. Corollarily, Alvarez can only maintain the judgment of the trial court. He can make counter assignments of error but only for the purpose of sustaining the appealed decision. He is not allowed to ask that the ruling be reversed or modified. 28
As correctly pointed out by the CA, Alvarez is bound by the ruling of the trial court for his failure to question the same on appeal. Thus, he cannot now belatedly question the same before this Court.
We also find that the CA did not commit any reversible error in modifying the interest rate to be applied on the actual damages awarded to Alvarez since the applicable interest rate is 6% per annum in accordance with Nacar v. Gallery Frames, 29 where We held:
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein. (citations omitted; emphasis in the original)
Finally, We rule that the CA committed no reversible error in reducing the award of moral and exemplary damages and attorney's fees. The Courts are at liberty to impose the award of moral and exemplary damages and attorney's fees in accordance with the circumstances of each case and on current jurisprudence. Similarly, the appellate courts are free to modify, increase, or as in this case, reduce the same, as they are not beholden to award any specific limit or amount. Accordingly, We find that the CA committed no error in reducing the amount of damages awarded in favor of Alvarez pursuant to recent jurisprudence.
IN VIEW OF THE FOREGOING, the consolidated petitions are DENIED for lack of merit. The Decision dated July 31, 2017 and the Resolution dated January 11, 2018 of the Court of Appeals in CA-G.R. CV No. 106571 are hereby AFFIRMED. TIADCc
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo (G.R. No. 236549), pp. 52-59. Penned by Associate Justice Mario V. Lopez and concurred in by Associate Justices Remedios A. Salazar-Fernando and Zenaida T. Galapate-Laguilles.
2.Id. at 88.
3.Id. at 60-69. Rendered by Presiding Judge Felicitas O. Laron-Cacanindin.
4.Id. at 52-54.
5.Id. at 84-85.
6.Id. at 158-159.
7.Id. at 69.
8.Id. at 64.
9.Id. at 68.
10.Id. at 66.
11.Id. at 67.
12.Id. at 1174-1175.
13.Id. at 1176-1266.
14.Id. at 58-59.
15.Id. at 55-56.
16.Id. at 56-57.
17.Id. at 57-58.
18.Id. at 58.
19.Id. at 58.
20.Id. at 32-38.
21.Id. at 39-43.
22.Rollo (G.R. No. 236560), pp. 16-20.
23.Id. at 22-23.
24.Id. at 24-25.
25.Id. at 28-31.
26.People of the Philippines v. Jerusalem Esteban y Ballesteros, G.R. No. 200920, June 9, 2014.
27.Rollo (G.R. No. 236549), pp. 55-56.
28.Id. at 58.
29. G.R. No. 189871, August 13, 2013.