Case Digest (G.R. No. 206806)
Facts:
Arco Pulp and Paper Co., Inc. and Candida A. Santos v. Dan T. Lim, G.R. No. 206806, June 25, 2014, Supreme Court Third Division, Leonen, J., writing for the Court.Petitioners Arco Pulp and Paper Co., Inc. (the corporation) and its President/CEO Candida A. Santos were sued by respondent Dan T. Lim (doing business as Quality Paper & Plastic Products Enterprises) for collection of P7,220,968.31 arising from deliveries of scrap papers and cartons made between February and March 2007. The parties had allegedly agreed that petitioners would either pay the cash value of the raw materials or deliver finished products of equivalent value.
According to Lim, on April 18, 2007 petitioners issued a post‑dated check in the amount of P1,487,766.68 as partial payment, which, when deposited that day, was dishonored for being drawn against a closed account. On the same date Arco Pulp and Paper and one Eric Sy (for Megapack Container Corporation) executed a memorandum of agreement providing that Arco would deliver 600 tons of finished Test Liner to Megapack and that the local OCC (raw material) would be supplied by Lim’s business.
After Lim’s May 5, 2007 demand for payment went unsatisfied, he filed a complaint for collection with prayer for attachment in the Regional Trial Court (RTC), Branch 171, Valenzuela City, on May 28, 2007. Petitioners filed an answer but failed to appear at pre‑trial; Lim was allowed to present evidence ex parte. On September 19, 2008 the RTC dismissed Lim’s complaint, finding that the memorandum of agreement effected a novation that extinguished Arco Pulp and Paper’s obligation.
Lim appealed to the Court of Appeals (CA), which on January 11, 2013 reversed the RTC, ordered petitioners to pay the P7,220,968.31 with 12% interest from demand, and awarded P50,000 each for moral and exemplary damages and P50,000 attorneys’ fees. Petitioners’ motion for reconsideration was ...(Subscriber-Only)
Issues:
- Was the obligation between the parties extinguished by novation?
- Can Candida A. Santos be held solidarily liable with Arco Pulp and Paper Co., Inc. for the corporate obligation?
- Are moral damages, exemplary damages, and attorneys’ fees recov...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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