People's Aircargo & Warehousing Co., Inc. v. Philippine Airlines, Inc.

FIRST DIVISION

[G.R. No. 226168. January 30, 2019.]

PEOPLE'S AIRCARGO & WAREHOUSING CO., INC., petitioner, vs.PHILIPPINE AIRLINES, INC. AND PRUDENTIAL GUARANTEE AND ASSURANCE, INC., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated January 30, 2019which reads as follows:

"G.R. No. 226168 — (People's Aircargo & Warehousing Co., Inc. v. Philippine Airlines, Inc. and Prudential Guarantee and Assurance, Inc.)

This is an appeal on certiorari seeking to reverse the September 30, 2015 Decision 1 and the July 20, 2016 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CV No. 99066. The CA affirmed with modification the July 28, 2010 Decision 3 of the Regional Trial Court of Makati City, Branch 132 (RTC) in Civil Case No. 00-837, an action for a sum of money with damages.

The Antecedents

On September 17, 1996, respondent Philippine Airlines, Inc. (PAL) and petitioner People's Air Cargo and Warehousing Co., Inc. (PAIR) entered into a Warehousing Agreement (agreement). Under the terms of the agreement, PAIR undertook to provide PAL with warehousing facilities and cargo handling services from October 16, 1996 to October 15, 2001, unless sooner terminated. 4 Pursuant to the terms of the agreement, PAIR provided a Performance Guarantee Bond (surety bond) in the amount of P5,000,000.00 issued by respondent Prudential Guarantee and Assurance, Inc. (Prudential) to ensure the faithful performance of its obligations.

Under the agreement, PAIR had the obligation to remit to PAL its share from the storage and non-storage revenue on the 30th day of the month or the 15th day of the succeeding month, depending on when the cargo would be transferred or stored. The agreement further mandated that the consequent failure of PAIR to remit said revenue share within the required period puts it in default, despite the lack of notice, and made it liable for penalty charges equivalent to five percent (5%) of the delayed remittances per month, computed on a daily basis until remitted. 5

PAL alleged that PAIR breached its obligation by either partially remitting payments or remitting said payments way past their due dates. Negotiations were then undertaken to resolve this issue. Thus, sometime in April 1997, PAL agreed to equally share both storage and non-storage revenues with PAIR. Consequently, in July 1997, PAL and PAIR amended the agreement to reflect the equal sharing of revenues (50-50 sharing scheme), which retroacted to October 16, 1996, with the condition that PAIR accepts PAL's computation of the former's total liability for the period of October 16, 1996 to March 31, 1997. 6 Upon audit, PAL found out that PAIR was still liable for P4,322,969.14. Unfortunately, PAIR failed to pay the said amount. CAIHTE

Meantime, Prudential renewed the surety bond thereby extending its effectivity for another year or until October 15, 1998. 7

Eventually, PAL terminated the agreement because of PAIR's continued inability to remit PAL's share for the period of October 16, 1996 to January 31, 1998 and its failure to provide quality service to PAL. Thus, on November 21, 1997, PAL informed PAIR that it was terminating the agreement effective sixty (60) days from notice. 8 PAIR received the letter on November 28, 1997.

PAL then sent letters to PAIR demanding payment of its unremitted share under the agreement, but the latter failed to heed the demand. Consequently, PAL called upon the surety bond by making a demand to Prudential. However, the latter also refused to pay. 9 Accordingly, PAL filed a complaint for sum of money with damages before the RTC on July 11, 2000.

In its answer with compulsory counterclaim and cross-claim, 10 PAIR did not dispute the existence and due execution of the agreement. It even confirmed the amendment of the revenue sharing scheme. 11 PAIR, however, asserted that it had not been delinquent in its remittances and it was PAL which had been delinquent in paying its rent, which already amounted to P3,554,151.83. PAIR claimed that the filing of the instant complaint besmirched its reputation, entitling it to recover damages and attorney's fees.

At the trial, PAL presented the following witnesses: Michael Mason Tan Co (Michael), Senior Auditor of PAL; Amelia Abad (Amelia), Supervisor of Releasing, Airport Services Department of PAL; and Atty. Salvador Pena (Atty. Pena).

Michael testified that when he was assigned at the Cargo Department, he had reviewed PAIR's account and was able to prepare a comprehensive summary of PAIR's accountability using the invoices submitted to him. He found out that PAIR had a total outstanding balance of P13,142,952.32 with interest of P34,320,978.27, or a total of P47,463,930.59. Michael mentioned that the agreement was pre-terminated on November 21, 1997 but was made effective only on January 28, 1998.

Amelia corroborated Michael's testimony that PAIR's unpaid liability with PAL already reached P47,463,930.59. She also testified that the computation of the 50-50 revenue sharing scheme, which was brought about by the amendment of the agreement, should retroact to 1996.

To support its claim for attorney's fees and costs of litigation, Atty. Pena testified on the legal fees it incurred in pursuing the case. He identified the billing statements which his firm sent to PAL for collection. 12

PAIR, on the other hand, presented the following witnesses: Merlyn Gallardo (Merlyn), Accounting Manager of PAIR; and Patricia Carreon (Patricia), PAIR's Vice-President for Business Development.

Merlyn testified that the business relationship of PAIR with PAL is not without issues. She recalled that PAL and PAIR had an issue regarding the payment of rentals, maintenance fees, building charges and utilities, which was resolved when both agreed to offset said charges from the actual remittances per month. 13 She also claimed that PAL still owed PAIR rental charges.

Patricia testified that, in June 1997, she was the administrator of PAIR's building. At that time, PAL occupied the 588-square meter area of the building's third floor but did not pay the rents, utilities and building charges. PAL eventually moved out. Thus, PAIR had to offset the unpaid charges with PAL's incoming revenues from them. When PAL left the building, its import manager sent a letter dated February 2, 1998 requesting for the termination of the rental charges. Patricia, however, admitted that she did not receive any signed lease contract over the area occupied by PAL. 14 DETACa

In its answer with compulsory counterclaim and cross-claim, 15 Prudential argued that it could not be held liable under the surety bond because the amendment made by PAIR and PAL on the agreement constituted novation without its consent. Furthermore, PAL failed to comply with a condition precedent in filing its complaint, being filed beyond the 60-day limitation provided in the agreement. 16

The RTC Ruling

In its decision dated July 28, 2010, the RTC ruled that PAL was able to sufficiently establish its claim, which PAIR failed to refute. The RTC dismissed PAIR's counterclaim for lack of merit. It held that the evidence required to prove its claim was different from PAL's demands for the recovery of the remittance. As to Prudential, the RTC ruled that it was liable to the extent of its undertaking in the amount of P5,000,000.00 because it was deemed to have accepted the new terms of the agreement when it allowed PAIR to renew the surety bond. The RTC awarded attorney's fees in the amount of P300,000.00 in favor of PAL.

Aggrieved, both PAIR and Prudential appealed before the CA.

The CA Ruling

In its decision dated September 30, 2015, the CA modified the decision of the RTC and declared that Prudential was not liable under the surety bond because PAL failed to make the claim within the 60-day period stipulated in the surety bond and in the agreement between PAL and PAIR. However, the CA dismissed PAIR's appeal for lack of merit. The CA found proof that PAIR failed to remit the payments due and that it provided no countervailing evidence. The CA did not accept PAIR's submission that it should not be liable for PAL's claims because the latter failed to pay the rents and utility charges. The CA ruled that PAIR's claims were not considered compulsory counterclaims, hence, should be denied.

PAIR's motion for reconsideration was denied by the CA in its resolution dated July 20, 2016.

Hence, this petition.

THE ISSUE

WHETHER OR NOT THE CA ERRED IN AFFIRMING THE RULING OF THE RTC THAT PAIR IS LIABLE TO PAL FOR THE PAYMENTS IT FAILED TO REMIT TO THE LATTER.

PAIR argues that it was religiously paying PAL's share in the warehousing of PAL's shipments until the agreement was terminated; that its counterclaim is compulsory and not permissive as ruled by the CA; and that the CA erred in giving due course to Prudential's appeal.

In its Comment, 17 Prudential stated that the CA brushed aside technicalities and resolved the appeal in its favor despite being filed three (3) days late so as to accord party litigants the amplest opportunity for the proper and just determination of their causes.

In its Comment, 18 PAL argued that PAIR raised issues already resolved by the CA and alleged that the RTC and the CA were correct in dismissing PAIR's counterclaim for lack of merit. As such, the instant petition must be denied.

In its Reply, 19 PAIR reiterated its arguments in the instant petition that its counterclaim should be treated as compulsory and that Prudential's appeal should not be treated with liberality.

THE COURT'S RULING

At the outset, it must be pointed out that the arguments raised by PAIR are a mere rehash of what was already resolved and passed upon by the appellate court and the trial court.

Moreover, a determination of the issue of whether or not PAIR was religiously paying PAL's share in the agreement is a factual matter which is beyond the ambit of a petition for review on certiorari. As a rule, a petition for review under Rule 45 of the Rules of Court covers only questions of law. Questions of fact are not reviewable and cannot be passed upon by this Court in the exercise of its power to review. The distinction between questions of law and questions of fact is established. A question of law exists when the doubt or difference centers on what the law is on a certain state of facts. A question of fact, on the other hand, exists if the doubt centers on the truth or falsity of the alleged facts. This being so, the findings of fact of the CA are final and conclusive and this Court will not review them on appeal. 20

This rule, however, is not without exceptions, such as when (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the findings of absence of facts are contradicted by the presence of evidence on record; (8) the findings of the CA are contrary to those of the trial court; (9) the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties. 21 aDSIHc

In the case at bar, the Court finds that petitioner failed to substantiate its claim that the case falls under any of the exceptions. It has been held that the findings of the RTC, especially when affirmed by the CA, are conclusive on this Court when supported by the evidence on record. 22 The Court will not assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal, particularly where the findings of both the trial court and the appellate court on the matter coincide, 23 as in the instant case.

In any event, the petition must still be denied for lack of merit.

The Court agrees with the findings of the RTC and the CA that PAL was able to prove its claim when it submitted the invoices and summary of collectibles, which were duly confirmed and testified on by its witnesses. PAIR, on the other hand, failed to present any evidence to contradict the same. PAIR could have presented any oral or documentary evidence, such as receipts, to prove that payment has been made. In Monfort v. Aguinaldo, 24 the receipts of payment, although not exclusive, were deemed to be the best evidence, to wit:

That the best evidence for proving payment is by the evidence of receipts showing the same is also admitted. What respondents claim is that there is no rule which provides that payment can only be proved by receipts. While receipts are deemed to be the best evidence, they are not exclusive. Other evidence may be presented in lieu thereof if they are not available, as in case of loss, destruction or disappearance. The fact of payment may be established not only by documentary evidence, but also by parol evidence (48 C.J. 727; Greenleaf, Law of Evidence, Vol. II, p. 486; Jones on Evidence [1913] Vol. II, p. 193), specially in civil cases where preponderance of evidence is the rule. Here respondents presented documentary as well as oral evidence which the Court of Appeals found to be sufficient, and this finding is final. (Emphases supplied)

Instead of presenting contradictory evidence, PAIR interposed a counterclaim that is separate and distinct from the agreement subject of the instant case. In its counterclaim, PAIR raised that PAL is liable for unpaid rentals in the amount of P3,554,151.83.

The Court is not convinced. The CA correctly ruled that counterclaim interposed by PAIR is not compulsory; hence, it must be dismissed. In Bungcayao, Sr. v. Fort Ilocandia Property Holdings and Development Corporation, 25 the Court explained the difference between a compulsory and permissive counterclaim, to wit:

A compulsory counterclaim is any claim for money or any relief, which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of the plaintiffs complaint. It is compulsory in the sense that it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and will be barred in the future if not set up in the answer to the complaint in the same case. Any other counterclaim is permissive.

The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as compulsory if there should exist a logical relationship between the main claim and the counterclaim. The Court further ruled that there exists such a relationship when conducting separate trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the same basic controversy between the parties. 26 (Citations omitted)

To determine whether a counterclaim is compulsory or not, the Court devised the following tests: (a) Are the issues of fact and law raised by the claim and by the counterclaim largely the same? (b) Would res judicata bar a subsequent suit on defendant's claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence support or refute plaintiffs claim as well as the defendants counterclaim? and (d) Is there any logical relation between the claim and the counterclaim? A positive answer to all four questions would indicate that the counterclaim is compulsory. 27 ETHIDa

Tested against the above-mentioned criteria, the Court agrees with the CA that PAIR's counterclaim for the recovery of the amount of unpaid rentals is permissive. First, the issues of fact and law governing the main action, i.e., collection of sum of money for unremitted amount of shares in the revenue, is entirely different from the issues of fact and law governing the counterclaim, i.e., unpaid rentals. Second, the decision in the instant case is not tantamount to res judicata on the claims of PAIR. Third, the submission of different sets of evidence is necessary to adjudicate the main action and the counterclaim filed by PAIR. Lastly, there is no logical relation between the claim and the counterclaim because they pertain to two different causes of action.

Anent PAIR's contention that the CA erred in entertaining Prudential's appeal despite being filed out of time, the Court agrees with the CA that Prudential's appeal is impressed with merit and calls for the relaxation of the rules. The courts frown upon the dismissal of an appeal based on purely technical grounds because it is their policy to let appeals be heard on the merits. 28 As a rule, periods prescribed to do certain acts must be followed. However, under exceptional circumstances, a delay in the filing of an appeal may be excused on grounds of substantial justice. 29

In the instant case, Prudential's appeal to the CA is meritorious because records reveal that PAL's claim was made beyond the 60-day period required in the surety bond and mentioned in the agreement between PAL and PAIR. The CA correctly explained:

Accordingly, PAL cannot distance itself from the terms of the Surety Bond because the same is deemed part and parcel of the Agreement. It had the obligation to make a claim within the terms of the Bond. Surely, PAL cannot lay claim anytime it wants or anyhow it wants to proceed with the claim. Logic dictates that when it seeks to make a claim against the bond, it has to refer to the terms of the surety bond agreement to make the proper claims within the acceptable procedure as stated in the manner by which claims should be taken. The terms of the surety bond is clear, thus:

"The liability of PRUDENTIAL GUARANTEE AND ASSURANCE, INC., under this bond will expire on October 15, 1997. Furthermore, it is hereby agreed and understood that PRUDENTIAL GUARANTEE AND ASSURANCE, INC. shall not be liable for any claim not discovered and presented to the company within sixty (60) days from the expiration of this bond or from the occurrence of the default or failure of the principal, whichever is the earliest, and the obligee hereby waives his right to file any claim against the Surety after the termination of the period of sixty (60) days above mentioned after which time this bond shall definitely terminate and be deemed absolutely cancelled."

Furthermore, PAL cannot claim ignorance over the time-bar period because in the terms of the Agreement particularly under the heading Obligations of PAIR Cargo Clause 3.5 (2) which provides:

"The prescriptive period in filing a claim against the surety shall be extended to sixty (60) days from the expiration of the bond."

Verily, PAL knew that there is a period within which to file a claim under the surety bond. Using the "complementary-contracts-construed-together" doctrine it may be said PAL knew that there is a reglementary period within which to file a valid claim. Thus, Prudential rightfully argued that PAL should have presented its claim sixty (60) days from November 21, 1997 or until January 1998, the effective period of the cessation of contractual relations between PAL and PAIR. Thus, since the claim dated October 5, 1998 was received by Prudential on October 12, 1998, it is clear that the claim was made way beyond the time provided under the surety bond. 30 (Emphasis in the original)

Indeed, PAIR has failed to show compelling grounds for a reversal of the findings and conclusions of the RTC and the CA. Thus, the instant petition must be denied.

WHEREFORE, the petition is DENIED. The Decision dated September 30, 2015 and the Resolution dated July 20, 2016 of the Court of Appeals in CA-G.R. CV No. 99066 are hereby AFFIRMED in toto. cSEDTC

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1.Rollo, pp. 62-78; penned by Associate Justice Edwin D. Sorongon, with Associate Justice Ricardo R. Rosario and Associate Justice Ramon Paul L. Hernando (now a Member of this Court), concurring.

2.Id. at 85-86.

3.Id. at 53-61; penned by Judge Rommel O. Baybay.

4.Id. at 62-63.

5.Id. at 63.

6.Id.

7.Id. at 64.

8.Id.

9.Id.

10.Id. at 66.

11.Id.

12.Id. at 65.

13.Id. at 66.

14.Id. at 67.

15.Id.

16. Id.

17. Id. at 109-113.

18. Id. at 115-130.

19. Id. at 145-150.

20. Westmont Investment Corporation v. Francia, Jr., et al., 678 Phil. 180, 190-191 (2011).

21. Cabigting v. San Miguel Foods, Inc., 620 Phil. 14, 22 (2009).

22. Viron Transportation Co., Inc. v. Delos Santos, et al., 399 Phil. 243, 250 (2000).

23. Id.

24. G.R. No. L-4104, May 2, 1952, as cited in PNB v. CA, et al., 326 Phil. 326, 336-337 (1996).

25. 632 Phil. 391 (2010).

26. Id. at 398.

27. GSIS v. Heirs of Fernando F. Caballero, 646 Phil. 314, 322-323 (2010).

28. Vda. de dela Rosa v. CA, et al., 345 Phil. 678, 687 (1997).

29. Id.

30. Rollo, p. 76.