G.R. No. 122796 - Petrophil Corp. vs. Court of Appeals

On December 27, 1970, Petrophil Corporation (petitioner) entered into a hauling contract with Dr. Amanda Ternida-Cruz (private respondent).
The contract allowed Dr. Cruz to haul and transport any and all packages and bulk products of Petrophil.

The contract was for an indefinite period and could be terminated by Petrophil with a 30-day prior written notice, as provided in paragraph 11.
It allowed for termination for reasons including breach, negligence, discourtesy, improper or inadequate performance, or abandonment.
A Penalty Clause was annexed, establishing calibrated penal sanctions for infractions by Dr. Cruz or her employees.
The contract mandated the formation of a Hearing Committee that would afford the parties an opportunity to be heard before any sanction imposition.

On May 21, 1987, Petrophil, through its Operations Manager, notified Dr. Cruz of the termination of the contract in accordance with paragraph 11.
Dr. Cruz requested reconsideration, which was denied on June 5, 1987.

On June 23, 1987, Dr. Cruz filed a complaint (Civil Case No. 87-40930) with the Regional Trial Court of Manila, seeking nullity of the termination and declaring the suspension unjustified.
Shortly after, on March 11, 1988, other private respondents—Jessie de Vera, Marcial Mulig, Antonio Cuenca, and Rufino Cuenca, all tank truck drivers employed by Dr. Cruz—filed a complaint (Civil Case No. 88-43946) for damages against Petrophil officials.
The cases were consolidated for joint trial.

Dr. Cruz testified that she had been active in the gasoline business for 26 years, including as a dealer, operator, and hauling contractor.
She claimed that the termination was retaliatory, as it came after her expressing sympathy toward striking Petrophil employees and her reporting anomalies involving PNOC officials.
Driver Jessie de Vera corroborated the allegation that the termination was intended to silence her, adding that Petrophil officials reduced hauling trips to force resignations and ultimately close her business.

The petitioner denied any intent to punish or silence, asserting that the reduction of hauling trips was due to internal assignment policies (compartmentation) rather than retaliatory motives.
Witnesses for Petrophil testified that on April 25, 1987, during a strike at the Pandacan terminal, Dr. Cruz and her husband were present at the picket line and refused to load petroleum products, leading to disruptions in delivery and loss of sales.
Based on this, management terminated the contract as a response to the operational disturbances.

In Civil Case No. 87-40830, the court ordered Petrophil to pay Dr. Cruz unearned hauling charges and attorney’s fees, making the preliminary injunction permanent.
In Civil Case No. 88-43949, the court awarded sums to respondent-drivers as unearned income and attorney’s fees.

The appellate court affirmed, with modifications, the trial court’s decision, with the modification that unearned hauling charges should accrue legal interest from May 29, 1991 until fully paid.
The court upheld the finding that the termination was executed “for cause” and that the procedures in the contractual guidelines had been followed.

Petrophil contended that the appellate court unlawfully set aside a valid contractual stipulation.
It also argued that no requisite evidence existed to impose tortious liability, claiming the termination was an exercise of its contractual right.

Does the contract require interpretation given that it provides two distinct modes of termination (for cause and without cause), or is the language sufficiently clear?
Was Petrophil justified in terminating the contract under paragraph 11 without invoking the “for cause” provisions?

Was the termination of Dr. Cruz’s contract influenced by retaliatory motives (i.e., punishing her for sympathizing with striking employees)?
Does such conduct amount to an abuse of right under Article 19 of the Civil Code, entitling Dr. Cruz and her drivers to damages?

Should the procedures outlined in the Policy Statement, Guidelines, and the Penalty Clause be applied when the alleged offense does not clearly fall within its ambit?
Is raising the issue regarding the application of the penalty clause for the first time on appeal procedurally acceptable?