Case Digest (G.R. No. 153059)
Facts:
Pepsico, Inc., Doing Business Under the Name and Style Pepsico Restaurants International v. Emerald Pizza, Inc., G.R. No. 153059, August 14, 2007, the Supreme Court Third Division, Nachura, J., writing for the Court.Petitioner PepsiCo, Inc. is a foreign corporation licensed to do business in the Philippines; its operating unit PepsiCo Restaurants International oversees restaurant operations outside the U.S. Respondent Emerald Pizza, Inc. is a domestic franchisee. On March 12, 1981 Emerald entered into a 20-year Franchise Agreement with Pizza Hut, Inc. (a Delaware corporation). Emerald also executed a Marketing Services Agreement with PepsiCo implemented in March 1982, and the franchise was amended on November 5, 1982 for registration purposes.
In 1988 Emerald sued (alleging breach by the franchisor), and the parties executed a compromise agreement on January 13, 1989 signed by representatives of PepsiCo, Pizza Hut and Emerald; the compromise contemplated relocations, additional unit grants, a reduction of the protective radius and an undertaking that a new franchise agreement would be executed. Implementing that settlement, Emerald and Pizza Hut executed an Amendatory Agreement on March 3, 1989.
On April 23, 1996 Emerald filed Civil Case No. 65645 before the Regional Trial Court (RTC) of Pasig City, Branch 165, against PepsiCo for specific performance, injunction and damages, alleging among others the franchisor’s refusal to renew the franchise; Emerald sought a TRO/preliminary injunction and the RTC initially ordered 72-hour status quo. PepsiCo opposed, asserting it was not a signatory to the March 12, 1981 franchise and therefore not a real party-in-interest.
After summary hearing the RTC issued an April 26, 1996 Order lifting the TRO and dismissing the complaint on the ground the action was prematurely filed because arbitration under the franchise had not been pursued; the RTC did not base dismissal on PepsiCo’s contention that it was not the real party-in-interest. The RTC denied Emerald’s motion for reconsideration and Emerald appealed to the Court of Appeals (CA).
In CA-G.R. CV No. 53758 the CA, by Decision dated December 12, 2001, agreed that the action was prematurely filed for failure to comply with the arbitration clause but held dismissal was erroneous; the CA found PepsiCo to be a real party-in-interest despite not being an original signatory. The CA directed the RTC to give the parties 60 days to settle by arbitration and, failing that, to proceed to pretrial and trial. Motions for reconsideration at the CA were denied on April 16, 2002.
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Issues:
- Is PepsiCo, Inc. a real party-in-interest in the action filed by Emerald Pizza, Inc.?
- If PepsiCo is a real party-in-interest, is Pizza Hut, Inc. an indispensable party that m...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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