G.R. No. 164703 - Go vs. Cordero

Case Summary (G.R. No. 164703)

Factual Background

Between June and August 1997, Tony Robinson, Managing Director of AFFA, appointed Mortimer F. Cordero as exclusive distributor in the Philippines for AFFA catamaran and fast ferry vessels. Cordero negotiated with Allan C. Go and his counsel, Felipe Landicho and Vincent Tecson, resulting in a Memorandum of Agreement dated August 7, 1997 for the purchase of two SEACAT 25 vessels and execution of Shipbuilding Contract No. 7825 for one SEACAT 25 at US$1,465,512.00. AFFA undertook to pay commissions to Cordero amounting to US$328,742.00 per vessel, equivalent to 22.43% of the purchase price. Cordero traveled to AFFA’s Brisbane shipyard, expended funds on travel and communications, and received staggered commission payments from AFFA for the first vessel.

Events Giving Rise to Litigation

In mid‑1998, Cordero learned that Go was directly corresponding with Robinson and others in Brisbane concerning additional engines and arrangements suggestive of a second vessel purchase, while communications to Cordero ceased. Cordero alleged that Go, Landicho, Tecson and Robinson conspired to bypass him, caused AFFA to terminate his exclusive distributorship, and deprived him of accrued and prospective commissions. On June 24, 1998, Cordero sent a handwritten demand letter to Go asserting violation of his distributorship and reserving legal remedies. AFFA’s counsel in Australia denied a continuing distributorship, characterizing any appointment as limited to one transaction. Efforts at an amicable settlement were fruitless according to Cordero; he subsequently filed a Bureau of Customs complaint and, on August 21, 1998, instituted Civil Case No. 98-35332 against Robinson, Go, Landicho and Tecson seeking unpaid commissions, consequential and moral and exemplary damages, attorney’s fees and litigation expenses.

Trial Court Proceedings and Evidence

The trial court denied various motions to dismiss and proceeded to pretrial. Defendants repeatedly sought continuances and twice failed to appear. The RTC found that appellants misled the court and, upon their unjustified failure to appear at a pretrial conference, allowed plaintiff to present evidence ex parte. Cordero testified and introduced documentary exhibits, photographs, bank transmittals and correspondence to prove: (1) his appointment and performance as AFFA’s exclusive distributor in the Philippines; (2) disbursements incurred in furtherance of the distributorship; and (3) partial commission payments from AFFA with a remaining unpaid balance. The RTC rendered judgment on May 31, 2000, holding defendants jointly and solidarily liable and awarding, among other relief, P16,291,352.43 as actual damages, P1,000,000.00 as moral damages, P1,000,000.00 as exemplary damages, and P1,000,000.00 as attorney’s fees.

Post‑Judgment and Appellate Proceedings

Defendants filed a motion for new trial, which the RTC denied. The trial court granted execution pending appeal, prompting interlocutory proceedings before the Court of Appeals in certiorari which resulted in temporary relief and eventual setting aside of the execution orders. The notice of appeal to the CA had earlier been initially denied for failure to pay docket fees but was later transmitted. The Court of Appeals, in CA-G.R. CV No. 69113, affirmed the trial court in allowing ex parte evidence and in recognizing that Cordero — not Pamana Marketing Corporation — was AFFA’s exclusive distributor. The CA limited recovery to unpaid commission for the first vessel, fixed the unpaid balance at US$31,522.09 or P1,355,449.90 (using US$1=P43.00), awarded interest at 6% per annum from filing of the complaint, disallowed P800,000.00 claimed expenses, and reduced moral, exemplary and attorney’s fees to P500,000.00, P300,000.00 and P50,000.00, respectively. By Resolution dated July 22, 2004, the CA modified the interest computation to run at 6% per annum from June 24, 1998 until finality, and 12% per annum once the decision became final and executory. The appeals here are consolidated petitions for review under Rule 45 by Go and by Cordero contesting differing aspects of the CA judgment.

Issues Presented to this Court

The disputes condensed into two principal issues: (1) whether Cordero possessed the legal personality as real party‑in‑interest to maintain the action rather than Pamana Marketing Corporation; and (2) whether respondents, in particular Go, Landicho and Tecson, are liable for damages to Cordero arising from interference with his exclusive distributorship and unpaid commissions, and the proper measure of damages, interest and fees.

Real Party‑in‑Interest: Court’s Conclusion

The Court agreed with the CA that Cordero was the real party‑in‑interest. Documentary certifications from Robinson and the manner in which AFFA and respondents dealt exclusively with Cordero established that he alone exercised and performed the distributorship rights. Commissions were remitted directly to Cordero’s account and respondents were aware of his role, as shown by their furnishing him copies of bank transmittals and by their receipt of portioned commissions from him. The Court noted that Go, Landicho and Tecson did not raise lack of personality at trial and only asserted it on appeal. As to Robinson’s special appearance challenging personal jurisdiction, the Court found that his prior filing for additional time to file responsive pleadings constituted a voluntary submission to the RTC’s jurisdiction and estopped him from later asserting lack of personal jurisdiction.

Liability for Tortious Interference and Breach of Good Faith

The Court applied the doctrine of tortious interference under Article 1314, New Civil Code, and related standards of Article 19 (duty to act with justice and good faith), Articles 20 and 21 and related jurisprudence. The Court held that the elements of tortious interference — a valid contract, knowledge of the contract by the interferer, and unjustified interference — were satisfied. AFFA’s distributorship arrangement with Cordero was valid and known to respondents. Respondents bypassed Cordero, ceased communicating with him, handled payments and arrangements directly with AFFA, and thereby caused AFFA not to pay the remaining commission and to terminate the distributorship. The Court found respondents’ conduct to be in bad faith and without legal justification; malice and bad faith were established by factual circumstances and affirmed findings of the lower courts. The Court distinguished authorities permitting competitive conduct where motivated by legitimate business interest, concluding that respondents’ acts transcended permissible competition and amounted to wrongful interference.

Solidary Liability and Measure of Recovery

The Court affirmed that respondents who participated in the tortious interference were jointly and severally liable pursuant to Article 2194 and established doctrine that joint tortfeasors are solidarily liable for the whole damage. The Court held that respondents could be held liable for the unpaid balance of commission from the first SEACAT 25, fixed at US$31,522.09 (or its peso equivalent), with legal interest at 6% per annum from June 24, 1998 until fully paid. The Court declined to sustain Cordero’s claim for commission on a second vessel due to insufficient proof of an actual second sale mediated through AFFA and respondents.

Damages, Attorney’s Fees a

Case Syllabus (G.R. No. 164703)

Parties and Procedural Posture

Allan C. Go, doing business as ACG Express Liner, was a petitioner in one consolidated Rule 45 action and a defendant in the underlying civil suit.
Mortimer F. Cordero was the plaintiff in Civil Case No. 98-35332 and was the other petitioner seeking review in a separate Rule 45 action.
Tony Robinson was the Australian managing director of Aluminium Fast Ferries Australia (AFFA) and a co-defendant in the trial court.
Felipe M. Landicho and Vincent D. Tecson were lawyers for Allan C. Go and were co-defendants in the trial court.
The Regional Trial Court, Quezon City, Branch 85 rendered judgment in favor of Cordero on May 31, 2000.
The Court of Appeals affirmed with modifications by Decision dated March 16, 2004 and Resolution dated July 22, 2004.
The consolidated petitions for review under Rule 45 were filed in this Court by Go and Cordero, and this Court denied the petitions with modification.

Key Factual Allegations

Cordero alleged that between June and August 1997 he was appointed exclusive distributor in the Philippines by AFFA through Robinson for SEACAT 25 and other fast ferry vessels.
The parties executed a Memorandum of Agreement dated August 7, 1997 and Shipbuilding Contract No. 7825 for one SEACAT 25 at US$1,465,512.00.
The agreed commission to Cordero was 22.43% per vessel or US$328,742.00 per vessel, with partial payments later made.
Cordero undertook trips to AFFA’s Brisbane shipyard, paid travel and related expenses, and monitored construction for Go.
Cordero discovered that Go and his lawyers were dealing directly with Robinson and allegedly canvassing for a second vessel or engine without informing Cordero.
Cordero sent a handwritten demand dated June 24, 1998 asserting violation of his exclusive distributorship and later filed a complaint with the Bureau of Customs and Civil Case No. 98-35332 on August 21, 1998.
AFFA’s lawyers in Australia wrote that Cordero’s appointment was for one transaction only and that the offer of distributorship was revoked.

Issues Presented

Whether Cordero was the real party-in-interest entitled to sue for breach of the distributorship.
Whether Go, Robinson, Landicho and Tecson could be held liable for tortious interference, breach of the exclusive distributorship, and for unpaid commissions and consequential damages.
Whether due process was violated by allowing ex parte presentation of Cordero’s evidence.
Whether the quantum and legal basis of awarded damages, interest, exemplary damages and attorney’s fees were proper.

Trial and Appellate Findings

The RTC found that Cordero was the exclusive distributor of AFFA in the Philippines and allowed Cordero to present evidence ex parte after defendants failed to appear at pre-trial.
The RTC awarded Cordero P16,291,352.43 as actual damages, P1,000,000.00 as moral damages, P1,000,000.00 as exemplary damages, P1,000,000.00 as attorney’s fees, and costs, with legal interest.
The CA affirmed that Cordero was the exclusive distributor and that he was entitled to commission but reduced the award to the unpaid commission balance of US$31,522.09 (P1,355,449.90), disallowed P800,000.00 for expenses, and reduced moral, exemplary and attorney’s fees to P500,000.00, P300,000.00 and P50,000.00, respectively.
The CA applied Article 1207 in relation to Articles 19, 20, 21 and 22 of the New Civil Code for solidary liability.
The Court of Appeals’ Resolution modified interest to run from June 24, 1998 at 6% and to increase to 12% once the decision became final and executory.
This Court affirmed the CA’s Decision with modification reducing moral damages to P300,000.00 and exemplary damages to P200,000.00 and affirmed attorney’s fees at P50,000.00.

Statutory Framework

Section 2, Rule 3, Rules of Court governed the requirement of the real party-in-interest.
Article 1314, New Civil Code prescribe