FERMIN Z. CARAM, JR. AND ROSA O. DE CARAM, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS AND ALBERTO V. ARELLANO, RESPONDENTS.

We gave limited due course to this petition on the question of
the solidary liability of the petitioners with their
co-defendants in the lower court^[1]
because of the challenge to the following paragraph in the dispositive portion of the
decision of the respondent
court:*

“1.     Defendants are
hereby ordered to jointly and severally pay the plaintiff the amount of
P50,000.00 for the preparation of the project study and his technical services
that led to the orga­nization of the defendant corporation, plus P10,000.00
attorney’s fees;”^[2]

The petitioners claim that this order has no support in fact and
law because they had no contract whatsoever with the private respondent
regarding the above-mentioned services. 
Their position is that as mere subsequent in­vestors in the corporation
that was later created, they should not be held solidarily
liable with the Filipinas Orient Airways, a separate juridical entity, and with
Barretto and Garcia, their co-defendants in the lower
court,** who were the ones who requested the said services
from the private respondent.^[3]

We are not concerned here with the petitioners’ co­-defendants,
who have not appealed the decision of the re­spondent court and may, for this
reason, be presumed to have accepted the same. 
For purposes of resolving this case before us, it is not necessary to
determine whether it is the promoters of the proposed corporation, or the
corporation, itself after its organization, that shall be responsible for the expenses incurred in
connection with such organization.

The only question we have to decide now is whether or not the
petitioners themselves are also and personally liable
for such expenses and, if so, to what extent.

The reasons for the said order are given by the respondent court
in its decision in this wise:

“As to the 4th assigned error we hold that as to the
remuneration due the plaintiff for the preparation of the pro­ject study and
the pre-organizational services in the amount of P50,000.00, not only the
defendant corporation but the other defendants including defend­ants Caram should be jointly and sever­ally liable for this
amount.  As we above related it was upon
the request of defendants Barretto and Garcia that plaintiff handled the preparation
of the project study which project study was presented to defendant Caram so the latter was convinced to invest in the proposed
airlines.  The project study was revised
for purposes of presentation to financiers and the banks.  It was on the basis of this study that
defendant corporation was actually organized and rendered operational.  Defendants Garcia and Caram,
and Barretto became members of the Board and/or officers of defendant corporation.  Thus, not only the defendant corporation but
all the other defendants who were involved in the prepa­ratory stages of the
incorporation, who caused the preparation and/or benefited from the project
study and the technical services of plaintiff must be liable.”^[4]

It would appear from the above justification
that the petitioners were not really involved in the initial steps that finally
led to the incorporation of the Filipinas Orient Airways.  Elsewhere in the decision, Barretto was described as “the moving spirit.”
The finding of the respondent court is that the project study was under­taken
by the private respondent at the request of Barretto
and Garcia who, upon its completion, presented it to the petitioners to induce
them to invest in the proposed airline. 
The study could have been presented to other prospective investors.  At
any rate, the airline was
eventually organized on the basis of the project study with the petitioners as
major stockholders and, together with Barretto and
Garcia, as principal officers.

The following portion of
the decision in question is also worth considering:

“x x x.  Since defendant Barretto
was the moving spirit in the pre-organization work of defendant corporation
based on his experience and expertise, hence he was logically compensated in the amount of P200,000.00 shares of stock not as
indus­trial partner but more for his technical services that brought to
fruition the defendant corporation.  By
the same token, We find no reason why the plaintiff should not be similarly
compensated not only for having actively participated in the prepa­ration of
the project study for several months and its subsequent revision but also in
his having been involved in the pre-organization of the defendant corporation,
in the preparation of the franchise, in inviting the interest of the financiers
and in the training and screening of personnel. 
We agree that for these special services of the plaintiff the amount of
P50,000.00 as compensation is reasonable.”^[5]

The above finding
bolsters the conclusion that the petitioners were not involved in the initial
stages of the organization of the airline, which were being directed by Barretto as the main promoter.  It was he who was putting all the pieces
together, so to speak.  The petitioners
were merely among the financiers whose interest was to be invited and
who were in fact persuaded, on the
strength of the pro­ject study, to invest in the proposed airline.

Significantly, there was
no showing that the Filipinas Orient Airways was a fictitious corporation and
did not have a separate juridical personality, to justify making the peti­tioners,
as principal stockholders thereof, responsible for its obligations.  As a bona fide corporation, the Filipinas Orient Airways
should alone be liable for its
corporate acts as duly authorized by its officers and directors.

In the light of these
circumstances, we hold that the
petitioners cannot be held personally liable for the compensation claimed by
the private respondent for the services performed by him in the organization of
the corporation.  To repeat, the
petitioners did not contract such services. 
It was only the results of such services that Barretto
and Garcia presented to them and which persuaded them to invest in the proposed
airline.  The most that can be said is
that they benefited from such services, but that surely is no justification to
hold them personally liable therefor.  Otherwise, all the other stockholders of the
corporation, including those who came in later, and regardless of the amount of
their shareholdings, would be equally and personally liable also with the
petitioners for the claims of the private respondent.

The petition is rather hazy and seems to be flawed by an
ambiguous ambivalence.  Our impression is
that it is opposed to the imposition of solidary
responsibility upon the Carams but seems to be
willing, in a vague, unexpressed offer of compromise, to accept joint
liability.  While it is true that it does
here and there disclaim total liability the thrust of the petition seems to be
against the imposition of solidary liability only
rather than against any liability at all, which is what it should have catego­rically
argued.

Categorically, the Court holds that the petitioners are not
liable at all, jointly or jointly and severally, under the first paragraph of
the dispositive portion of the challenged
decision.  So holding, we find it
unnecessary to examine at this time the rules on solidary
obligations, which the parties – needlessly, as it turns out – have belabored
unto death.

WHEREFORE, the petition is granted.  The petitioners are declared not liable under
the challenged decision, which is hereby modified accordingly.  It is so ordered.

Yap, (Chairman), Narvasa,
Melencio-Herrera, Feliciano, and Sarmiento, JJ., concur.

Gancayco, J., no part.  See page 1.

^[1]
Rollo, p. 66.

* Gancayco,
J., ponente, with Relova
and Sison, JJ.

^[2]
Decision, p. 16.

** Judge Pedro C. Navarro, presiding.

^[3]
Rollo, pp. 10, 97.

^[4]
Decision, pp. 14-15.

^[5]
Ibid., p. 11.