G.R. No. L-50911




Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-50911 March 12, 1986 MIGUEL PEREZ RUBIO, petitioner, vs. COURT OF APPEALS, ROBERT O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS, MANUFACTURERS BANK & TRUST COMPANY, INC., HACIENDA BENITO, INC., VICTORIA VALLEY DEVELOPMENT CORPORATION and ROBERT O. PHILLIPS, respondents. GUTIERREZ, JR., J.: This is a petition to review the decision of the Court of Appeals, now the Intermediate Appellate Court, in CA-G.R. No. 60896-R, which affirmed the trial court's decision ordering Robert O. Phillips & Sons, Inc., and the plaintiff-spouses to pay Miguel Perez Rubio the sum of P4,250,000.00 but ordered Perez Rubio to pay Robert O. Phillips & Sons, Inc. and the other plaintiffs damages in the amount of P4,404,510.76. The appellate court, however, modified the lower court's order to pay P4,250,000.00 by removing the eight (8%) percent per annum interests on that amount, dispensing with the ten (10%) percent attomey's fees and limiting the liability to Robert O. Phillips and Sons, Inc., only. Also affirmed was the order directing Perez Rubio, as third party plaintiff, to pay Hacienda Benito, Inc. the sum of P7,051,496.23 as actual damages and P150,000.00 attorney's fees and to pay Manufacturer's Bank and Trust Co. P895,085.16 actual damages, plus ten (10%) percent of that amount as attorney's fees. The decision of the trial court in Civil Case No. 8632 has actually been the subject matter of two earlier petitions for certiorari filed by the petitioner against the same respondents. These are G.R. No. L-24581 entitled Miguel Perez Rubio v. The Honorable Samuel Reyes Roberto O. Phillips and Magdalena Ysmael Phillips, Manufacturer's Bank and Trust Company, Victoria Valley Development Corporation and Hacienda Benito, Inc. and G.R. No. L-30404 entitled Miguel Perez Rubio v. Honorable Judge Herminio Mariano in his capacity as Presiding Judge of Branch X of the Court of First Instance of Rizal Robert O. Phillips and Sons, Inc. Robert O. Phillips, Magdalena Ysmael Phillips, Victoria Valley Development Corporation Manufacturers Bank and Trust Company and Hacienda Benito, Inc. This petition arose from the same facts and events which triggered off the filing of the earlier petitions. These facts and events are cited in our Resolution dated January 31, 1966 issued in G.R. No, L-24581, as follows: Upon the facts alleged in the complaint filed in Civil Case No, 8632 of the Court of First Instance of Rizal by Robert O. Phillips and Sons, Inc., et al. v. Miguel Perez Rubio, said plaintiffs prayed for judgment as follows: 1. That a Temporary restraining order and/or exparte writ of preliminary injunction be issued against the defendant to prevent and restrain them from further unlawfull and willful interference with the transaction between the plaintiff corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes "A", "A-1" and "A- 2"), after the approval of the injunction bond; 2. That, after the hearing, judgment be rendered in favor of the plaintiffs against the defendant: a) Restraining him from willfully and unlawfully interfering with the transaction of the plaintiffs with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc.; b) Declaring that the defendant has no right to rescind the Agreements as referred to in Annexes "A", "A.1" and "A.2"; c) Declaring that the defendant has no vendors' lien over the shares of stock of Hacienda Benito, Inc., sold by them to the plaintiff corporation; d) Restraining the defendant from enforcing any collection action against the plaintiff until the obligation, if any, mature; e) Making the writ of preliminary injunction permanent; f) Sentencing the defendant to pay the plaintiffs; (1) P 2,500,000.00, more or less, as actual damages; (2) Moral damages which this Honorable Court may deem just and reasonable; (3) Exemplary damages, which this Honorable Court may deem just and reasonable; (4) P50,000.00, as attorney's fees; and (5) Costs of suit; and 3. That the plaintiffs be granted such further and other reliefs to which they may be entitled in law and in equity' Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April 1, 1965 a writ of preliminary injunction to be mentioned again later. Subsequently, the respondent judge also denied Perez Rubio's motion to dissolve the preliminary injunction. It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. On August 13, 1963 the Perez Rubios, with the conformity of the Ramirezes, sold said shares to Robert O. Phillips and Sons, Inc. for P5,500,000.00 payable in installments and other conditions agreed upon as follows: xxx xxx xxx 3. That for and in consideration of the mutual agreements and promises, MIGUEL and MARIA LUISA hereby sell to PHILLIPS all the shares of stock of Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin, Jr. for the total price of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5,500,000.00), Philippine Currency, payable as follows: a FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement, b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P l,200,000.00) within sixty (60) days from this date. c ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on April 30, 1964 less than the amount of P 96,830.56 due the Hacienda Benito, Inc. from MARIA LUISA and the amount of P127,096.09 from MIGUEL; hereby authorized PHILLIPS to deduct said amounts and to pay the same to Hacienda Benito, Inc. d ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965. e ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965. f FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30, 1967. 4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) due sixty days from this date and to execute the letter of credit and/or bond or both to secure the payment of the remaining installments, as agreed upon, then the Seller shall have the right, at their own discretion, either to rescind this agreement or to enforce the same, provided that any number of days used by the Sellers to consider the acceptability of the bank or bonding company proposed by PHILLIPS shall be added to the period of sixty (60) days herein mentioned; 5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent (8%) per annum on all amounts in arrears until paid in full either by the guaranteeing bank, bonding company or PHILLIPS; 6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all the conditions above mentioned, shall be jointly and severally guaranteed by means of Irrevocable Standby letter of Credit from a bank in favor of MIGUEL and MARIA LUISA, in the proportion they may agree, which shall be communicated to the bank and to PHILLIPS before final contract is entered into with the bank, or by a bond from a bonding company duly approved by MIGUEL and MARIA LUISA; 7. That the stock certificates corresponding to the shares sold, including those in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be transferred to PHILLIPS until the installments due within sixty (60) days from this date is paid in full.' On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips himself and his wife, entered into an agreement with the Perez Rubios deferring payment of the April 31, 1964 under the following conditions; (a) The deferred installment would bear an interest of eight (8%) percent per annum from April 30, 1964 although partial payment, on the principal and on the interest due may be paid during the period granted, in such amounts and at such times as funds are available to Robert O. Phillips & Sons, Inc.; (b) Should Robert O. Phillips & Sons, lnc. fail to pay the particular installment now due on August 31, 1964 or any of the subsequent installments on the exact date due, the whole obligation would become immediately demandable without notice; (c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc., Robert O. Phillips himself and his wife, Magdalena Ysmael Phillips, jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc. under the original contract of sale dated April 13, 1963.' In the meantime, Robert O. Phillips, in his behalf and in that of his wife and Robert O. Phillips and Sons, Inc., entered into negotiations for the sale of their shares of stock in Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the Perez Rubios, through their attorney-in-fact, Joaquin Ramirez, reminded the Phillips spouses and the Phillips corporation in writing of their obligations under the contract of sale of April 13, 1963 and reminded them in particular that the shares subject matter thereof were still subject to the payment of the unpaid balance of the sale price. They gave a similar notice to Alfonso Yuchengco, but expressed no objection to the sale provided the obligations in their favor were satisfied. On March 26, 1965, the Phillips (individuals and corporation), through their attorney, Juan T. David, sent a letter to the Perez Rubios telling them, in substance, that the only obstacle to the consummation of the Phillips-Yuchengco sale of the shares of stock of Hacienda Benito, Inc. was their letter of November 24, 1964 and warned that unless the same was withdrawn by March 29, they would seek redress elsewhere. On March 27, 1965, the Perez Rubios, for their part, wrote the Phillips that due to the latter's inability to comply with the former's conditions, the negotiations going on between them were cancelled, and should the full amount due to them remained unpaid by noon of March 31, 1965, they would file action in court in the afternoon thereof. However, on March 30, 1965, stealing a march on the Perez Rubios, the Phillips individuals and corporations filed Civil Case No. 8632 mentioned heretofore where they obtained, ex-parte, a preliminary injunction to this effect: IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance that, until further orders, you, all your attorneys, representatives, agents, and any other person assisting you, REFRAIN from interfering with the transaction between the plaintiff-corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes 'A', 'A-l', and 'A.2') mentioned in the complaint.' On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced writ of preliminary injunction, which the respondent judge denied on May 6, 1964. But even before the motion aforesaid could be acted upon, they also filed their answer to the combatting plaint with a counterclaim of P4,500,000.00 representing the unpaid balance of the sale price of their shares. Because of this the Perez Rubios were charged with contempt. " (16 SCRA 168, 172). xxx xxx xxx Because of the above incidents and orders, Perez Rubio filed a petition for certiorari against Robert O. Phillips in G.R. No. L- 24581 alleging that in taking cognizance of Civil Case No. 8632 and in issuing the writ of preliminary injunction ex parte, the respondent court committed a grave abuse of discretion The petitioner prayed that the respondent court be restrained from in any way proceeding with the case, and that, respondent Phillips be enjoined from proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso Yuchengco or to any other person, or from performing any act which would diminish the value of said shares of stock or deplete the assets of the company. Upon the filing of the original Perez Rubio petition, we issued on July 26, 1965 a writ of preliminary injunction restraining all the respondents named in the original petition (l) from taking further proceedings in Civil Case No. 8632; (2) from proceeding with the sale of shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso T. Yuchengco or to any other person, and (3) from performing any act which would either diminish the value of said shares of stock or deplete the assets of the Hacienda subject matter of Civil Case No. 8632. On June 10, 1965, the Manufacturers Bank and Trust Company filed a complaint against Phillips and Sons and Hacienda Benito, Inc. as well as the other corporations controlled by Robert O. Phillips for the foreclosure of a real estate mortgage constituted on the properties of the Hacienda. The case was filed in another branch of the Court of First Instance of Rizal and was docketed as Civil Case No. 8766. On the premise that the foreclosure by the bank of the mortgage constituted on the properties of Hacienda Benito, Inc., was intended simply to remove properties and the assets of the Hacienda pertaining to the Phillips spouses beyond Perez Rubios' reach and thus make it impossible for him to collect the sum of P4,250,000.00, Perez Rubio filed a motion for the admission of a supplemental petition, to include Manufacturer's Bank and Victoria Valley Development Corporation as additional respondents. Victoria Valley was a newly formed corporation which Perez Rubio alleged had been hurriedly organized and to which Manufacturer's Bank would transfer all the foreclosed properties thus making it difficult for him to enforce his vendor's lien. Before the first amended supplemental petition could be acted upon, Perez Rubio filed a second amended supplemental petition to implead Hacienda Benito, Inc. as additional party respondent with a specific plea that pending the issuance of a writ of preliminary injunction, Hacienda Benito be restrained from disposing of its properties or assets in any way save in the ordinary course of its business of selling lots of the subdivision. Both supplemental amended petitions were admitted. After all the respondents had filed their answers to the amended petition and after the petitioner filed an answer to the counterclaim interposed by respondents Phillips and Sons, Inc. and the Hacienda, this Court promulgated a decision dated May 27, 1968 wherein, among others, we ruled: (1) In connection with the writ of preliminary injunction issued by the respondent judge in Civil Case 8632 on April 1, 1965 mentioned heretofore, the same is hereby declared null and void and is, consequently, set aside with the result that the writ of preliminary injunction issued by Us in this case enjoining its enforcement is hereby made final. The order of the respondent judge of May 6, 1965 denying petitioner's motion to set aside the aforesaid writ of preliminary injunction of April 1 of the same year is hereby reversed; (2) The writ of certiorari prayed for by petitioner is hereby denied insofar as it seeks to annul the judicial proceedings had in Civil Case 8766 of the Court of First Instance of Rizal, instituted by the Bank against Hacienda and other parties for the foreclosure of the mortgage constituted in its favor upon the properties of Hacienda; without prejudice, however, to the right of petitioner to seek such relief and any other relief that he might be lawfully entitled to against the herein respondents, singly or collectively, in the aforesaid Civil Case 8766 of the Court of First Instance of Rizal or in a separate action. In this connection, it is our judgment that the writ of preliminary injunction issued in this case shall remain subsisting and binding for a period of thirty days from the date of finality of this decision, upon the expiration of which period the same shall be deemed automatically lifted or dissolved, irrespective of whether petitioner had or had not taken steps required for the enforcement and protection of his rights as already indicated; (23 SCRA 773, 789 & 790) In the belief that the forum for the "separate action" referred to in our decision meant Civil Case No. 8632, petitioner Perez Rubio filed in the said case on July 9, 1968 an "Urgent Motion to Admit Amended and Supplemental Answer and Third-Party complaint," the third-party complaint being directed against Manufacturer's Bank, Victoria Valley and hacienda Benito. The motion was denied by the lower court. Hence, the petitioner filed another petition for certiorari to review and set aside the lower court's order dated September 13, 1968 with the additional prayer that pending determination of the issues raised in the petition, the respondent court be restrained from proceeding with the hearing of the case below and the other respondents from transferring or proceeding with the agreement to transfer any of the assets of Hacienda Benito, Inc. to any third person except in the ordinary course of selling subdivision lots. The case was docketed as G.R. No. 30904. On April 16, 1969, we issued a prayed for temporary restraining order. The petition was later granted. In our decision dated January 31, 1973, we ruled: WHEREFORE, the orders complained of are set aside and respondent Judge or whosoever is assigned to try the case below is instructed to admit the amended and supplemental answer and third-party complaint filed by Miguel Perez Rubio. Thereafter, these cases shall proceed accordingly. The restraining order hereinbefore issued by this Court is hereby lifted insofar as it restrains respondent Judge from proceeding with the hearing of Civil Case No. 8632 of the Court of First Instance of Rizal Branch X (Pasig, Rizal), and maintained insofar as it restrains (the other respondents) 'from proceeding with the transfer of the shares and/or of the assets of Hacienda Benito, Inc. to each other or to any other person, except in the ordinary course of selling subdivision lots without prejudice to the judgment that may be rendered by the court a quo in the case. Costs against the respondents. (49 SCRA 319, 337). The third-party complaint sought to secure the return by Manufacturer's Bank and/or Victoria Valley of the properties it and/or they bought as a consequence of the judicial foreclosure of mortgage case, Civil Case No. 8766, with a further plea that in the event the Phillips spouses are ordered to pay Miguel Perez Rubio the judgment on his counterclaim said properties and funds foreclosed by the defendant Bank be held to answer for such judgment or any part thereof unpaid by the Phillips spouses together with damages. The third-party defendants, respondents herein, filed their separate answers. In addition to their answer, Manufacturer's Bank and Hacienda Benito filed separate counterclaims for actual damages for malicious prosecution plus attorney's fees. After trial on the merits, the lower court rendered a decision the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered: (1) Sentencing the plaintiffs to pay jointly and severally the amount of P4,250,000 to defendant Miguel Perez-Rubio, with interest of 8% per annum from April 30, 1964 and attorney's fees equivalent to 10% of the said amount. The plaintiffs however, may offset the foregoing amount by the damages which Perez-Rubio should pay to them for having unlawfully interferred in the transaction with Alfonso Yuchengco which is merely assess at P4,404,510.76. (2) Sentencing the defendant Perez-Rubio to pay to HBI the sum of P 7,051,496.23; attorney's fees of P150,000.00, and to MBTC the sum of P 895,085.16 as actual damages and the sum of 10% thereof as attorney's fees. (3) Dismissing all other causes of action of the parties in this case without pronouncement as to costs. Plaintiffs Phillips and Sons and the Phillips spouses as well as defendant and third-party plaintiff Perez Rubio appealed the decision to the Court of Appeals. As earlier stated, the appealed decision was amended by the appellate court in so far as it related ' to the liability of the plaintiffs on their P4,250,000.00 debt. The appellate court ruled that only plaintiff Phillips and Sons was liable to pay the amount of P4,250,000.00 to defendant Perez Rubio without interest and without attorney's fees. The rest of the trial court's decision was affirmed in full. A motion for reconsideration filed by Perez Rubio was denied by the appellate court. Hence the instant petition was filed. Petitioner Perez Rubio raises the following assignments of errors: I THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR PETITIONER UNLAWFULLY AND INOFFICIOUSLY INTERFERRED IN THE TRANSACTION BETWEEN RESPONDENTS ROBERT O. PHILLIPS & SONS, INC., ROBERT O. PHILLIPS & SONS AND HIS WIFE MAGDALENA WHEN THE SUPREME COURT ITSELF DESCRIBED THE ACTS TAKEN BY YOUR PETITIONER AS A VALID ENFORCEMENT OF ONE'S RIGHT AS A CREDITOR. II THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS ROBERT 0. PHILLIPS, HIS WIFE, AND ROBERT O. PHILLIPS & SONS, INC., ON THE ALLEGED GROUND OF UNLAWFUL INTERFERENCE WITHOUT BASIS IN FACT AS TO WHAT THE DAMAGE CONSISTED OF NOR OF THE MEASURE FOR SAID DAMAGES. III THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR PETITIONER WAS LIABLE FOR DAMAGES TO THE MANUFACTURERS BANK AND TRUST COMPANY, INC. BY REASON OF THE TWO INJUNCTIONS ISSUED BY THIS HONORABLE COURT IN L-24581 (MIGUEL PEREZ RUBIO, ET AL.) AND L-30404 (MIGUEL PEREZ RUBIO VERSUS THE HON. HERMINIO MARIANO, ET AL.), DESPITE THE FACT THAT THERE WAS ACTUALLY ONE RESTRAINING ORDER ISSUED BY THIS HONORABLE COURT INSOFAR AS RESPONDENT MBTC IS CONCERNED AND DESPITE THE FACT THAT NO VALID PROOF OF DAMAGES WAS PRESENTED. IV THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT YOUR PETITIONER PEREZ RUBIO WAS LIABLE TO HACIENDA BENITO, INC., WITHOUT MAKING SO MUCH AS A COMMENT OF FINDING THEREOF, BUT BY THE MERE EXPEDIENT OF AFFIRMING THE DECISION OF THE TRIAL COURT. V THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT IN FINDING YOUR PETITIONER LIABLE TO RESPONDENT HACIENDA BENITO, INC. FOR THE ALLEGED DAMAGES IT SUFFERED BY REASON OF THE INJUNCTION ALLEGEDLY ISSUED BY THE SUPREME COURT AGAINST HACIENDA BENITO, DESPITE THE FACT THAT THE SUPREME COURT AFFIRMED THE PROPRIETY OF THE INJUNCTION ISSUED BY IT. VI THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE AWARD OF DAMAGES IN FAVOR OF RESPONDENT HACIENDA BENITO, INC. DESPITE THE FACT THAT THERE WAS NO BASIS IN THE EVIDENCE FOR THE AWARD. VII THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISCHARGING THE RESPONDENT SPOUSES PHILLIPS FROM THEIR JOINT AND SEVERAL GUARANTEE OF YOUR PETITIONERS' CREDIT AND IN DISALLOWING INTEREST TO RUN THEREON WITHOUT ANY BASIS OR REASON DESPITE THE FACT THEY WERE EXPRESSLY PROVIDED IN THE AGREEMENTS ENTERED INTO BETWEEN YOUR PETITIONER, THE RESPONDENTS ROBERT O. PHILLIPS HIS WIFE MAGDALENA AND ROBERT . PHILLIPS & SONS, INC. VIII THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISALLOWING ATTORNEY'S FEES AND MORAL AS WELL AS EXEMPLARY DAMAGES IN FAVOR OF YOUR PETITIONER PEREZ RUBIO DESPITE THE FACT THAT THIS HONORABLE COURT HAD CLEARLY SHOWN THAT YOUR PETITIONER HAD BEEN IMPROPERLY SUED AND DESPITE THE FACT THAT THIS HONORABLE COURT HAD ALREADY RULED THAT THE IMPLEADING OF OTHER PARTIES WAS PROPER AND NECESSARY FOR THE PROTECTION OF HIS RIGHTS. IX THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISCHARGING RESPONDENTS MANUFACTURERS BANK AND TRUST CO., INC., (MBTC) AND VICTORIA VALLEY DEVELOPMENT CORPORATION FROM ANY LIABILITY TO YOUR PETITIONER DESPITE THEIR VERY ACTIVE PARTICIPATION IN ATTEMPTING TO AND IN ACTUALLY COMMENCING TO REMOVE ALL OF THE ASSETS OF HACIENDA BENITO, INC., AND TRANSFERRING THEM TO RESPONDENT VVDC. The first two assigned errors are in relation to the original complaint in Civil Case No. 8632 filed by Phillips and Sons, Inc., and the Phillips spouses against petitioner Perez Rubio for alleged unlawful interference in the transaction between the respondents on one hand and Alfonso Yuchengco on the other hand. As earlier stated, because of the issuance of a preliminary injunction ex parte which restrained petitioner Perez Rubio from interfering with the Yuchengco transaction and the denial of a motion to dissolve the injunction in Civil Case No. 8632, petitioner Perez Rubio was constrained to file a petition for certiorari with this Court in G.R. No. 24581 alleging that the lower court committed a grave abuse of discretion in issuing the preliminary injunction. Resolving the matter on the propriety of the preliminary injunction, we ruled: It is obvious that what the plaintiffs in Civil Case No. 8632 considered as interference, on the part of the therein defendant (petitioner herein) with the negotiations or transaction at that time being carried on between said plaintiffs, on one hand, and Alfonso T. Yuchengco, on the other, regarding the sale of the shares of stock of Hacienda was said defendant's intention to enforce his right to collect from Robert O. Phillips and Sons, Inc. and its guarantors, the Phillips spouses, the unpaid balance- P4,250,000.00-due to him from the latter of the purchase price of their shares in Hacienda mentioned at the beginning hereof. As a matter of fact, when said defendant filed his answer in Civil Case No. 8632 interposing therein a counterclaim for the collection of said unpaid balance, the plaintiffs therein charged him with having violated the terms of the writ of preliminary injunction issued by the respondent judge. Proceedings in connection with this charge, however, were held in abeyance by reason of the writ of preliminary injunction ion We issued in the present case. After a careful consideration of the material facts and the law applicable to them, We are of the opinion and so hold, that the writ of preliminary injunction issued ex parte by the respondent judge was unjust and improvident. Without hearing the party concerned, and without any legal justification, it restrained a creditor (Perez Rubio) from enforcing his undenied right to collect from his debtor and the latter's guarantors the sum of P4,250,000.00 representing the unpaid balance of the purchase price of his shares in Hacienda. It is a fact that the debtor Corporation (Robert O. Phillips and Sons, Inc.) and its guarantors, the Phillips spouses, do not deny the indebtedness, and yet, notwithstanding its extraordinary amount, they attempted to sell all the shares of stock of Hacienda without making any reasonable provision for the payment thereof. For them to prevent their creditor from enforcing his right to collect, and for the Court to enjoin said creditor from enforcing that right in any lawful manner is, in any language, rank injustice. (23 SCRA 773, 780). The petitioner assumes that the foregoing pronouncement categorically ruled that he did not unlawfully and inofficiously interfere in the transaction between respondents Phillips and Sons and the Phillips spouses on one hand and Alfonso Yuchengco on the other hand and that his acts were a valid enforcement of his rights as a creditor. This assumption is incorrect. It is very clear from the decision that we ruled on the impropriety of the manner in which the preliminary injunction was issued. We stated that without hearing the party concerned and without any legal justification, the trial court restrained creditor Perez Rubio from enforcing his undenied right. We could not have possibly ruled as suggested because the case before us was a petition for certiorari alleging that the trial court committed a grave abuse of discretion in issuing the preliminary injunction ex parte. The issue to be resolved was a pure question of law based on the circumstances surrounding the issuance of the questioned preliminary injunction ex parte. Whether or not the petitioner unlawfully and inofficiously interfered with the aforementioned transaction was a question of fact and any grave abuse of discretion could not, at that time, be resolved by this Court. A trial on the merits was necessary, Our decision in the second petition for certiorari, filed by the petitioner in connection with Civil Case No. 8632 lifted the temporary restraining order in so far as it restrained the trial court from proceeding with the hearing and ordered the cases including the third party complaint to proceed accordingly. Trial on the merits accordingly proceeded after which the trial court concluded that the petitioner unlawfully and inofficiously interfered with the subject transaction as a result of which Phillips and Sons and the Phillips spouses suffered damages. This conclusion was upheld by the Court of Appeals. The appellate court justified its ruling as follows: It is a fact, which defendant Perez Rubio does not and can not deny. that he had informed Alfonso Yuchengco of his vendor's lien over the unpaid shares of stock in the Hacienda Benito, Inc., and that he still had the right to rescind the sale of his stocks to ROPSI (t.s.n., August 7, 1974, pp. 31-35; Exhibit D-1-A-Plaintiffs, I Folder of Exhibits, p. 2). As stated before, Alfonso Yuchengco cooled off, as it were, and withdrew from the transaction (t.s.n., October 30, 1974, pp. 94-95) to which he had previously given his conformity (Exhibits 18-, 21 -Rubio-II Folder of Exhibits, pp. 37, 43) because of Perez Rubio's refusal to withdraw his letter to Yuchengco containing his threat to rescind the sale of his stocks to ROPSI. If this Court has said it before it is repeated here for emphasis that Alfonso Yuchengco had no intention to holding an empty bag, and for defendant Perez Rubio to block the plaintiffs from consummating a transaction the terms of which have already been approved in principle providing for the payment of Perez Rubio's credit is unlawful and inofficious interference. It should be noted that defendant Perez Rubio had already delivered completely the shares of stock of hacienda Benito, Inc. which he had sold to plaintiff ROPSI and that these shares were transferred in the books of the Hacienda in the name of ROPSI (t.s.n., August 5, 1974, pp. 129-130, 131-132, 133-134; August 7, 1974, p. 62; May 14, 1975, p. 32). The plaintiffs therefore had all the right to dispose of the shares of stock. Defendant Perez Rubio also admitted that there was no agreement or document prohibiting plaintiff ROPSI from selling the said shares of stock to any person (t.s.n., August 3, 1974, pp. 12-13) nor any agreement or document requiring his prior permission before ROPSI could sell or otherwise dispose of the said shares of stock (lbid., p. 14). There was also no vendor's lien annotated in the books of Hacienda Benito, Inc. over the said shares of stock (t.s.n., August 7, 1974, pp. 14-16, 63, 66-67), What is more, the plaintiffs have made reasonable provisions for the payment of the unpaid balance due the defendant in their transaction with Alfonso Yuchengco (Exhibit 18-Rubio, paragraph 19, II Folder of Exhibits, pp. 36-37, Exhibit 20-Rubio, paragraphs 8 and 12, lbid., pp. 41-42, Exhibit 22-Rubio, paragraph 5, lbid., p. 46; t.s.n., May 14, 1975, pp. 46, 119-120). Clearly, there appears no valid reason why defendant Perez Rubio had to block the plaintiffs' transaction with Alfonso Yuchengco, except 'to destroy' and 'ruin' the plaintiffs (t.s.n., May 14, 1975, pp. 129- 130), which defendant Perez Rubio himself vowed he would do (t.s.n., May 14, 1975, p. 136). A thorough examination of the record reveals that the factual findings of the appellate court are incomplete and do not reflect the actual events that transpired concerning the sale of shares of stock of Hacienda Benito to Alfonso Yuchengco. The important point left out by the appellate court refers to the controversial November 24, 1964 letter of the petitioner to Phillips and Sons and to the Phillips spouses wherein the petition stated that he has a vendor's lien over the shares of stock of Hacienda Benito and that he still has the option to rescind the contract as regards his sale of stock of the Hacienda. A copy of the letter was sent to Alfonso Yuchengeo, the prospective buyer of the shares of stock of Hacienda Benito, but even after receipt of the letter, the negotiations on the sale of the shares of stock of Hacienda Benito to Alfonso Yuchengco continued. This is shown by the following events: 1. In a letter dated December 17, 1964, Hacienda Benito through Robert O. Phillips as president, Phillips and Sons, through Robert Phillips as president and Robert Phillips in his own behalf offered to Alfonso Yuchengco an option to buy 100% of the shares of stock of Hacienda Benito. It is to be noted that the first option contained in the letter of November 17, 1964 offered to Alfonso Yuchengco was the sale of 80% of the shares of stock of Hacienda Benito. In reply Alfonso Yuchengco in his letter to the Phillips spouses and Phillips and Sons dated January 6, 1965 accepted the option but with modifications as to the terms of the sale, Included in the terms of the sale were provisions for the payment of the seller's debts. 2. In a letter dated February 12, 1965 from the law firm of Ramirez and Ortigas, counsel of the petitioner to Phillips and Sons and the Phillips spouses in relation to the ongoing negotiations for the settlement of the P3,800,000.00, it was stated that the petitioner was not willing to extend the manner of payment of the credit further than April 30, 1967. Contained in the same letter of the law firm was an offer of a compromise as to the manner of payment. 3. In reply to the aforementioned letter, Phillips and Sons and the Phillips spouses wrote a letter dated February 16, 1965 stating their final proposal as to the manner of payment. ln accordance with the final proposal, the last payment of the debt would be on April 30, 1968. On the basis of the terms and conditions of the final proposal, Phillips and Sons and the Phillips spouses requested a "waiver for the consummation of the proposed sale to Mr. Alfonso Yuchengco" (Exhibit 22-Perez Rubio, Exhibits 11, p. 46). 4. In a letter dated February, 22, 1965, the law firm of Ramirez and Ortigas informed Phillips and Sons that their client, the petitioner, rejected the plan to modify in any way the original agreements for payment and that the letter was a formal notice that the complaint for the enforcement of the original contracts would be filed on March 8, 1965 unless the case is settled in a satisfactory manner. (Exhibit 23-Perez Rubio, Exhibit 11, p. 80). As a consequence of the February 22, 1965 letter of the petitioner, Juan T. David, counsel for Phillips and Sons wrote the petitioner himself. In this letter dated March 12, 1965, Atty. David requested that the petitioner withdraw his controversial November 24, 1964 letter. According to David the said letter was the "only obstacle to the conclusion of the transaction between my client, Robert O. Phillips and Sons, Inc. and Mr. Yuchengco involving the shares of stock of Hacienda Benito, Inc." A copy of the letter was attached to a letter sent to Yuchengco also dated March 12, 1965 informing him about the failure to obtain the desired waiver and expressing the view that "waiver is unnecessary." In another letter dated March 26, 1965 addressed to the petitioner, Atty. David gave the petitioner until March 29, 1965 to withdraw unconditionally the controversial letter. The petitioner was informed that Yuchengco had given an ultimatum that if waiver was not obtained by March 31, 1965, the transaction would have to be cancelled. In reply to the March 26, 1965 letter, the petitioner sent a letter addressed to Phillips and Sons and the Phillips spouses informing them that the letter served as notice that all negotiations had been cancelled. Perez Rubio gave them until March 31, 1965 to pay the balance of the payment for his shares of stock plus interests and attorney's fees. The letter served as the last communications between the petitioner and Phillips and Sons and the Phillips spouses before March 31, 1965 when Civil Case No. 8632 was filed. Taking into consideration, all the details of the negotiations in the sale of the shares of stock of Hacienda Benito, Inc. from Phillips and Sons to Mr. Yuchengco, there is no factual or legal basis for the appellate court's conclusion that the petitioner unlawfully and inofficiously interfered with the negotiations. We fail to see any reason why the petitioner should be accused of unlawful interference in maintaining his stand regarding the sale of shares of stock of Hacienda Benito, Inc. that he still had the option to rescind the contract between him and Phillips and Sons and stating the existence of his vendor's hen over said shares of stock. The petitioner never pretended that he still had full control of the shares of stock which he sold to Phillips and Sons. He in fact admitted that the shares of stock were already transferred to the corporation and that he did not have a recorded lien therein. He merely made of record his right to rescind under the original contract of sale. The details pertaining to the earlier transaction governing the sale of the shares of stock between the petitioner and Phillips and Sons were in fact, all known to Yuchengco. And, more important, it is obvious from the records that the petitioner's interest was only in the payment of the P4,250,000.00 balance due him from Phillips and Sons. Thus, in a meeting called by Yuchengco where the negotiations for the sale of the shares of stock of Hacienda Benito were discussed, the petitioner made it clear that he was amenable to his waiving or withdrawing the controversial November 24, 1964 letter provided his interests would be taken care of and protected. (Testimony of Perez Rubio, TSN., August 5, 1970, pp. 44-50). Obviously, the petitioner felt that the payment of his P4,250,000.00 was not secured under the terms of payment proposed by Yuchengco. He had the right to refuse to withdraw the November 24, 1964 letter. We see nothing illegal or inofficious about the letter or the refusal to withdraw it. Whether or not Yuchengco, the prospective buyer, believed that Perez Rubio had a good ground to rescind and whether or not the buyer's interest would be prejudiced were matters of decision-making dependent solely on hint In fact the March 12, 1965 letter of Atty. Juan T. David to the petitioner is quite revealing. Phillips and Sons admitted that under the circumstances, the petitioner's waiver of the controversial November 24, 1964 letter was unnecessary. The letter disclosed the fact that the waiver issue was extensively discussed by the parties including their counsel's maintaining the view that waiver was unnecessary. Thus: March 12, 1965 MR. MIGUEL PEREZ RUBIO c/o Ramirez and Ortigas Law Office 1515 Roxas Boulevard Manila Sir: xxx xxx xxx Taking advantage of the permission given to us by Mr. Yuchengco, to take up the aforementioned legal aspect of the 'waiver', with his counsel, Atty. Alberto M. Meer, we conferred with the latter and expressed our understanding of a 'waiver', and the conclusion that it has no place in the present case, considering the fact that a 'waiver' is only appropriate where the person from whom it is sought has a direct recorded lien on the subject thereof, particularly when the subject is a negotiable instrument; that, at best, a withdrawal of your aforementioned letter should be sufficient to allay the fear of Mr. Yuchengco on the possibility of a suit which might involve him after the sale, if the 'waiver' is not obtained from you. We also called the attention of Mr. Yuchengco that the shares of stock subject of the transaction are clean and un-encumbered, therefore, there is nothing to waive on the part of any person; that the negotiability of the said shares of stock is not impaired by the fact that the owner thereof is indebted to another, especially considering the fact that, instead of securing your credit against my client with the encumbrance of its shares of stock, you preferred the personal guaranty of Mr. and Mrs. Robert O. Phillips, as recorded in the corresponding instruments. Atty. Meer told us that, if we could obtain from you the letter of withdrawal and the phraseology thereof is adequate, the only obstacle to the consummation of the transaction will have been removed and he is disposed to advise his client, Mr. Yuchengco, to go through with the purchase of the shares of stocks of the Hacienda Benito, Inc., therefore, we reiterate our request for the withdrawal of your aforementioned letter. xxx xxx xxx Very truly yours, (SGD.) JUAN T. DAVID Counsel for ROBERTO. PHILLIPS & SONS, INC. A carbon copy of a March 12, 1965 letter from Atty. David to Mr. Alfonso Yuchengco was attached to the letter addressed to Mr. Perez Rubio. In the letter to Mr. Yuchengco, the counsel for Phillips and Sons stressed the View that the waiver or withdrawal of the Perez Rubio letter was unnecessary. The conclusion to be drawn from these facts is that the petitioner is not liable for any form of damages in favor of Phillips and Sons and the Phillips spouses. Consequently, we come to the issue of whether or not the Phillips spouses are solidarily liable for the debt of Phillips and Sons. This is the issue raised in the seventh assignment of error. It should be remembered that on June 23, 1964, Philipps and Sons and the Phillips spouses entered into an agreement wherein, in consideration of the extension granted to Phillips and Sons in the payment of the latter's outstanding debt to the petitioner, the Phillips spouses ". . . jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc. under the signed contract of sale dated April 13, 1963. " Phillips and Sons was not able to pay the petitioner as covenanted in the agreement. The agreement was not assailed in any of the cases involving the petitioner Phillips and Sons and the Phillips spouses. Both parties admit the veracity of the agreement. The agreement serves as the law between the parties. The full enforcement of the agreement's provisions necessarily is in order. We rule that per agreement, the Phillips spouses are jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons with interest therein from April 30, 1964 until fully paid. The third, fourth, fifth and sixth assignments of errors refer to the actual damages awarded to Manufacturers Bank and Hacienda Benito by the appellate court. Both awards were premised on the appellate court's finding that Manufacturers Bank and Hacienda Benito were wrongfully impleaded as parties by the petitioner in his two petitions earlier filed wherein two injunctions were issued by this Court. As a result, the parties allegedly suffered damages. The appellate court premises its findings on the following justifications: (a) Even before the aborted transaction between ROPSI and Alfonso Yuchengco, Hacienda Benito, Inc. was already indebted to the Manufacturers Bank the year before. Appellant ROPSI had also executed real estate mortgages on 78 hectares out of the 135-hectare holding of Hacienda Benito, Inc. in favor of the Manufacturers Bank. Subsequently, the Hacienda executed a Memorandum Agreement on June 5, 1965 with Victoria Valley Development Corporation, with the conformity of the Manufacturers Bank as mortgage creditor, where the financial obligations of the Hacienda and its other affiliate corporations were restructured thus freeing them from their financial obligations to the Manufacturers Bank in exchange for 78 hectares of land which were then mortgaged with the Manufacturers Bank, let alone the payment of a huge amount of interest on the principal. As of May 21, 1965, the Hacienda and its affiliates have not paid the Manufacturers Bank P 7,459,042.98 which was already due and demandable forcing the Manufacturers Bank to file Civil Case No. 8766 against the Hacienda for the foreclosure of the mortgages which resulted in a compromise agreement between the parties, which the court below approved. (Defendant's Record on Appeal, pp. 498-499). (b) As early as October 8, 1965, Miguel Perez Rubio knew that no assets have been transferred under the Memorandum Agreement of June 5, 1965 and that Victoria Valley Development Corporation has considered said Agreement without force and effect making it moot and academic for purposes of rescission (Ibid, p. 501), (c) There is nothing in the promissory notes and the real estate mortgages forming part of the records of Civil Case No. 8766 to show that they have been executed in bad faith or to defeat the credit of Miguel Perez Rubio against ROPSI since they were executed in 1963 over 78 hectares out of the 135- hectare holding of Hacienda Benito, Inc. in the Victoria Valley Subdivision so that prior to the default of ROPSI in the payment of the third installment on August 31, 1964 in favor of Perez Rubio, there were already prior and existing mortgages over the 78 hectares owned by the Hacienda in favor of the Manufacturers Bank (Ibid., pp. 501- 502). (d) The existence of sufficient assets for the payment of the credit of Perez Rubio failed to contradict the evidence showing the existence of unencumbered properties of Hacienda Benito, Inc. which were more than sufficient to meet his credit against ROPSI in the amount of P4,250,000.00 as well as the evidence showing the good financial position of the Hacienda as shown by Exhibit II -Benito, also marked as Exhibit 9-MBTC, III Folder of Exhibits, p. 129 (Ibid., pp. 502- 503). (e) The admission of Perez Rubio that he did not investigate with the corresponding registers of deeds and other entities the status of the unencumbered properties of Hacienda Benito, Inc., ROPSI, Robert O. Phillips and his wife, and the other corporations owned by the Phillips spouses before filing the third-party complaints against the Manufacturers Bank & Trust Company, Hacienda Benito, Inc. and Victoria Valley Development Corporation (t.s.n., August 21, 1974, pp. 133- 138). . . . xxx xxx xxx These findings do not justify the appellate court's conclusion that Manufacturers Bank and Hacienda Benito were wrongfully impleaded and that Perez Rubio owes them millions of pesos in damages as a result. In the welter of cases filed by the contending parties over the same properties and the confusion spawned by the many incidents which gave rise to separate petitions, one basic fact tends to be forgotten. It is this. The Perez Rubio spouses sold Hacienda Benito, Inc. to Phillips and Sons for P5,500,000.00 in 1963 or more than 22 years ago. P50,000.00 was paid immediately; P1,2000,000.00 was due in 60 days; in another 6 months, a third payment of P1,250,000.00 was to be paid. The full amount should have been paid by April 30, 1967. Up to now, P4.25 million of the basic indebtedness has not been paid. The Perez Rubio spouses were not paid as agreed in the contract. When the buyers could not comply with their commitments, the Perez Rubios graciously acceded to a deferment of overdue accounts under a new agreement. Still the payments could not be effected under the extension. All the transactions which led to the litigations by, against, or among Manufacturers Bank, Hacienda Benito, Phillips and Sons, and the Phillips spouses were entered into at the time when payments on the petitioner's shares of stock were overdue, A person who has not been paid a balance of P4,250,000.00 on a sale of P5,500,000.00 will naturally be extremely disturbed to see the buyers and other parties dealing with the properties in a manner which could be reasonably construed as calculated to bring them beyond his reach and making full payment of the debt extremely difficult, if not impossible. It was a normal reaction and to be expected for the original owner to inform third persons trying to buy the still unpaid properties about that fact of non- payment and to emphasize to them his right and options under the original contract of sale. It was also normal to include the third party would-be-buyers who had taken sides with the defaulting original buyer in the litigations brought against Perez Rubio, the man seeking to protect his endangered interests. The inclusion of Manufacturers Bank and Hacienda Benito was part and parcel of the efforts to protect Perez Rubio's interests. It should be noted that petitions wherein they were impleaded had for their subject matter the same unpaid obligation of P4,250,000.00 from Phillips and Sons. The properties to be foreclosed by the Bank represented properties of Perez Rubio for which he had not yet been paid. There is nothing in the records to show that, far from protecting his P4.25 million, Perez Rubio filed the third party complaint to vex and humiliate Manufacturers Bank and Hacienda Benito. As we ruled in the case of R & B Surety and Insurance Company Inc, v. Intermediate Appellate Court (129 SCRA 736): xxx xxx xxx While petitioner might have been negligent in not verifying the authenticity of the signatures in the indemnity agreement, still the same does not amount to bad faith as to justify the award of damages and the conclusion that the act of filing the complaint against respondent Uson amounts to malicious prosecution. In filing the action, the petitioner was only protecting its business interests by trying to recover the amount it had already paid to the Philippine National Bank. In a long line of cases, we have consistently ruled that in the absence of a wrongful act or ommission or of fraud or bad faith, moral damages cannot be awarded and that the adverse result of an action does not per se make the action wrongful and subject the actor to the payment of damages, for the law could not have meant to impose a penalty on the right to litigate. . . . The actual damages awarded to both the Manufacturers Bank and Hacienda Benito apart from having no legal basis were also not duly proven. In fact, the appellate court made no findings of fact on how it arrived at the total amount of P895,085.14 awarded to Manufacturers Bank much less did the court discuss the damages awarded to Hacienda Benito. The damages awarded to Hacienda Benito were only impliedly affirmed by the dispositive portion of the decision wherein it declared that the decision of the lower court was affirmed in toto. This can not be done. As we ruled in Perfecto v. Gonzales (128 SCRA 635): xxx xxx xxx . . . [A]ctual or compensatory damages are those recoverable because of pecuniary loss in business, trade, property, profession, job, or occupation, and the same must be proved; otherwise, if the proof is flimsy and non- substantial, no damages will be given. In the case of Malonzo v. Galang, log Phil. 16, the Court, speaking through Justice J.B.L. Reyes, held that with respect to compensatory damages assuming that they are recoverable under the theory that petitioner had filed a clearly unfounded suit against respondent, the same constitutes a tort against the latter that makes the former liable for all damages which are the natural and probable consequences of the act or omissions complained of. These damages, cannot, however, be presumed and must be duly proved (Article 2199, New Civil Code). Well settled is the rule that even if the complaint filed by one against the other is clearly unfounded this does not necessarily mean, in the absence of specific facts proving damages, that said defendant reany suffered actual damage over and above attorney's fees and costs. The Court cannot rely on its relations as to the fact and amount of damages. It must depend on actual proof of the damages alleged to have been suffered. Considering these conclusions, the final question to be resolved is whether or not the petitioner is entitled to moral and exemplary damages? This is the subject matter of the eighth and ninth assigned errors. We have stated that the petitioner had valid reasons to implead Manufacturers Bank and Hacienda Benito in his cases against Phillips and Sons and the Phillips spouses. An assessment of the evidence in record shows that the filing of the complaint may likewise be characterized as a sincere attempt on the part of Phillips and Sons and the Phillips spouses to find means or to buy time to pay their debt to the petitioner. In the case of Manufacturers Bank, the record shows that its active participation in the transaction involving the properties of Hacienda was legitimate. While no damages are due the Bank, neither is it liable for damages. As far as Victoria Valley is concerned, we find no reason to conclude that it was really organized or actively participated to prejudice the interests of the petitioner. The record shows that Victoria Valley withdrew from the transaction involving the properties of Hacienda Benito even before the filing of the third party complaint. The eighth and ninth assignments of errors under consideration are, therefore, without merit. WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is hereby REVERSED and SET ASIDE. The respondents Robert O. Phillips and Sons and the Phillips spouses are declared to be jointly and severally liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of FOUR MILLION, TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) percent per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963. Costs against the respondents. SO ORDERED. Teehankee, Actg. C.J., Melencio-Herrera, Plana and Patajo, JJ., concur. The Lawphil Project - Arellano Law Foundation