SPOUSES MARINO AND LINA JOEL SAPUGAY, PETITIONERS, VS. HON. COURT OF APPEALS, RUFINO MOJARES AND NESTOR RECTO, RESPONDENTS.

This is a petition for review on certiorari seeking
to annul the decision of respondent Court of Appeals in CA-G.R. CV No. 14999,
dated November 29, 1990, which
reversed the decision of the Regional Trial Court of Valenzuela dated January
8, 1987; and its resolution dated June 18, 1991, which denied the motion for reconsideration.

The antecedent facts, as narrated
by respondent Court of Appeals in its decision are, as follows:

Petitioners spouses Marino Sapugay and Lina Joel Sapugay, owners
of Romar Trading, have been engaged in the sale of liquefied petroleum gas
since 1972, distributing Filigas and Marflame gas.

In the early part of April, 1982, petitioners were approached by
Dante Tiquio, whom Nemar Marketing Corporation had authorized to find buyers
for its property and goodwill of Mobilflame Gas refilling and dealership
business in Sto. Tomas, Batangas. Tiquio offered to petitioners the goodwill of Nemar’s business for
P200,000.00 and the lot and improvements wherein the business is conducted for
P500,000.00 with assumption of mortgage thereof to Filinvest Finance
Corporation. Petitioners got interested
in Tiquio’s offer and so, all of
them went to inspect the property. Finding it suited to their liking and as the ownership papers of Nemar
were in order, petitioners asked Tiquio to arrange a meeting between them and
the president of Nemar.

On April 14, 1982, petitioners, Tiquio and Rufino Mojares,
president of Nemar, met at the Intercontinental Hotel and talked about the
proposed sale. They met again on April
23, 1982, at the same hotel and finally reached an agreement on the sale of
Nemar’s property and business goodwill, such that the price of the goodwill of the business is P200,000.00, while the
price of the lot and improvements thereon is P500,000.00. Petitioners shall assume the mortgage of the
property to Filinvest and pay the latter P15,000.00 monthly interest on the
mortgage loan.

Nemar’s general manager, Nestor Recto, then accompanied and
introduced petitioners to Ricardo Cardenas, manager of the LPG business of
Mobil Oil, Phil., Inc. who, after having been satisfied with their
qualifications to undertake the dealership, consented for them to take over Nemar’s
former dealership in the area. Petitioners and Recto agreed to meet at Nemar’s branch office in Surigao
St., Quezon City, before the end of May, 1982, for the signing of the deed of
sale and other documents to be prepared by
Nemar.

On June 16, 1982, at Nemar’s office, petitioners signed the Deed
of Conveyance with Assumption of Obligation (Exh. “D” or
“1”) and Supplementary Agreement (Exh. “E” or
“2”) prepared by Nemar, both dated June 18, 1982. Petitioners then delivered to Recto four
postdated checks for P50,000.00 each, totalling P200,000.00, covering
payment of the goodwill and right to operate Nemar’s LPG refilling and dealership
business (Exhs. “F,” “F-1,” “F-2;” also Exh.
“7”). Petitioners replaced
the first two checks with manager’s checks and the third, they replaced with
cash. It was only the fourth check that
petitioners did not make good, due to subsequent developments.

Pursuant to the transaction between petitioners and Nemar, the
latter resigned as Mobil Gas dealer in Sto. Tomas, Batangas; turned over to
petitioners, with the conformity of Mobil Oil, Phil., all the gas tanks and
other refilling equipments loaned by it and found on the property; and
furnished petitioners with a list of all the subdealers in the area formerly
serviced by it.

On June 21, 1982, Mobil Oil, Phil. signed a letter-agreement
constituting petitioners as its authorized dealer in Sto. Tomas, Batangas and
lending to them all its
equipments on the property (Exhs. “8-E-1” and
“8-F-1”). In compliance with
this agreement, petitioners hired
security guards to safeguard the property; insured Mobil Oil, Phil.’s equipment
thereon; employed personnel for the operation of the business; obtained the
necessary mayor’s and BIR permits for the conduct of the business; printed the
documents necessary for the business such as sales invoices and other forms;
transferred the registration of the electrical installation on the property
from Nemar to their names; advertised the business upon instruction of Mobil
Oil, Phil.; and inaugurated the opening of the business during the town fiesta
which was attended not only by the local officials but also by Mobil Oil, Phil.’s
officials.

After having sold out the remaining supply of LPG turned over to
petitioners by Nemar, they sought to buy gas for refilling but Mobil Oil, Phil.
refused to supply them any unless they first submit a bond in the amount of P200,000.00 which was later increased to P500,000.00 and then to
P700,000.00. Petitioners went from one
surety company to another to get the required bond. Unfortunately, they could not obtain it because every company they approached demanded that they
first submit a copy of their dealership
agreement with Mobil Oil, Phil. but which the latter refused to issue to them
unless they first file the bond. Because of petitioners’ failure to file the bond, Mobil Oil, Phil. later
rejected them as its dealer in Sto. Tomas, Batangas and awarded the dealership
to Island Gas Corporation.

On October 17, 1983, Mobil Oil, Phil. filed Civil Case No. 3103
before the Regional Trial Court of Makati against petitioner Lina Joel Sapugay
for replevin to recover the refilling equipments that it had loaned to her
(Exh. “6”) which case was, however, decided in her favor. As regards petitioner Lina Joel Sapugay’s
counterclaim, she was awarded actual, compensatory and moral damages,
litigation expenses and attorney’s fees, in
the total amount of almost
a million pesos, exclusive of interests and costs (Exh. “I” or
“8”).

Earlier, the fourth check for P50,000.00 and three checks for P7,500.00 each which were delivered by petitioners to Nemar under
the provisions of their Supplementary Agreement (Exh. “E” or
“2”) were dishonored, so that on April 7, 1983, Nemar filed a
criminal complaint against petitioner Lina Joel Sapugay before the Fiscal’s
Office of Lipa City for violation of B.P. 22 (Exh. “3”).

Petitioners, on the other hand, filed on August 8, 1983 Civil
Case No. 1909-V-83 before the
Regional Trial Court of Valenzuela against Nemar, Rufino Mojares and Nestor
Recto for reformation of instruments and sum of money. In their complaint, petitioners sought to
reform the Deed of Conveyance with Assumption
of Obligation (Exh. “D” or “1”) and Supplementary Agreement
(Exh. “E” or “2”) and the return of the amount of
P150,000.00 which they had paid Nemar for the goodwill of the Mobilflame LPG
dealership and refilling business, but which they failed to operate allegedly
due to the fraudulent acts of private respondents, as well as payment of
damages, attorney’s fees, and litigation expenses.

In private respondents’ answer they claimed that they had nothing
to do with Mobil Oil Phil.’s refusal to award to petitioners the dealership of
their LPG refilling business in Sto. Tomas, Batangas and that the consideration
of P700,000.00 mentioned in the documents in question was the price of the lot
and the improvements thereon and did not include the goodwill of the LPG refilling
business since the award for the operation of said business was solely at the
management of Mobil Oil, Phil.’s discretion. They counterclaimed for damages allegedly suffered as a result of
petitioners’ failure to assume their obligation to Filinvest Finance Corporation; for reconveyance of the property
which was the subject-matter of their agreement with petitioners; for
liquidated damages and attorney’s fees provided for in said agreements; and for
exemplary damages and other reliefs.

On January 8, 1987, the trial court rendered a judgment in favor
of petitioners, the dispositive portion of which, reads (p. 234, Records):

“FOREGOING CONSIDERED, judgment is hereby rendered in favor of
the plaintiffs and against the defendants:

a) declaring the documents entitled ‘Deed of
Conveyance with Assumption of Obligation’ and the ‘Supplementary Agreement’ in
question reformed in the sense
that the FIVE HUNDRED THOUSAND PESOS (P500,000.00) was for the payment of the
parcel of land and the improvements thereon; and that the TWO HUNDRED THOUSAND
PESOS (P200,000.00) of which ONE
HUNDRED FIFTY THOUSAND PESOS (/150,000.00) has so far been paid by plaintiffs, was for the payment of goodwill of the LPG refilling
business being conducted on the premises and is returnable to plaintiffs by defendants if the former fail to get the award of the LPG refilling and
dealership business;

“b) condemning
defendants, jointly and severally, to return to plaintiffs the amount of ONE
HUNDRED FIFTY THOUSAND PESOS (P150,000.00) which they paid for the goodwill of
the Mobil Oil LPG Refilling business, through no fault of their own, failed to
get the dealership, with legal interest from receipt thereof until fully paid;

“c) condemning
defendants, jointly and severally to pay plaintiffs the sum of FIVE THOUSAND
PESOS (P5,000.00) in the concept of reasonable attorney’s fees and the costs of
suit.

“Defendants (sic) counterclaim is hereby dismissed.

“SO ORDERED.” (p. 234, Rollo)

Private respondents then filed an appeal before respondent Court
of Appeals. On November 29, 1990,
respondent court reversed the decision of the trial court, the dispositive
portion of which, reads (p. 32, Rollo):

“WHEREFORE, the judgment appealed from herein is REVERSED and
another one rendered DISMISSING appellees’ complaint; and on appellants’
counterclaim, appellee are ordered to pay appellants P50,000 as their remaining
unpaid balance on the price of the goodwill of the business sold to them by
appellants, and also to pay appellants P10,000 attorney’s fees for having filed
this clearly unfounded suit against the latter, forcing them to incur expenses
to protect their interests.

“Costs against appellees in both instances.

“SO ORDERED.”

On June 18, 1991, the motion for
reconsideration was denied for lack of merit (pp. 33-34, Rollo). Hence, the present petition.

Petitioners raise herein the following issues (p. 10, Rollo):

“1) WHETHER PUBLIC
RESPONDENT COMMITTED SERIOUS ERROR OF LAW AMOUNTING TO GRAVE ABUSE OF DISCRETION
AND/OR IN EXCESS OF JURISDICTION IN NOT TAKING INTO CONSIDERATION THE
OVERWHELMING EVIDENCE ON RECORD SHOWING THAT THE GOODWILL PAYMENT IS RETURNABLE
BY PRIVATE RESPONDENTS TO PETITIONERS IF AND WHEN THE LATTER WERE NOT FINALLY
AWARDED BY MOBIL THE RIGHT TO CONTINUE TO OPERATE THE LPG REFILLING AND
DEALERSHIP BUSINESS;

“2) WHETHER PUBLIC
RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AND/OR IN EXCESS OF JURISDICTION
IN NOT FINDING THAT PRIVATE RESPONDENTS, HAD A HAND IN DENIAL BY MOBIL TO
PETITIONERS THE AWARD TO CONTINUE TO OPERATE THE MOBIL LPG REFILLERSHIP AND
DEALERSHIP ON THE STATION SUBJECT THEREIN;

“3) WHETHER PUBLIC
RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT THE REAL
INTENTION OF THE PARTIES WAS TO MAKE THE PAYMENT FOR THE GOODWILL AND THE RIGHT
TO CONTINUE TO OPERATE THE MOBIL LPG (REFILLING) AND DEALERSHIP BUSINESS
RETURNABLE THE MOMENT PETITIONERS FAILS TO DO SO.” (p. 10, Rollo)

We shall limit Our disquisition on the first issue because the
rest of petitioners’ discussion with respect to the other issues are nothing
but a circumlocution thereof.

Amplifying thereon, petitioners asseverate that on the basis of
the foregoing facts, the finality of the sale of the goodwill which was
dependent on the refillership and dealership business which was, in turn,
dependent on the finality of the award as to who shall ultimately continue to
operate the same, it would not, therefore, seem strange that the P200,000.00 consideration for the sale
thereof was returnable to them if they
do not get the final award to continue to operate
the business, as agreed upon by the
parties. The goodwill,
being on the business itself, goes to whoever is finally awarded to continue to
operate the business. Since petitioners
did not finally get the business, they are entitled to the return of the money
they paid for the goodwill thereof.

Petitioners’ argument, judged by initial impression, appears tenable. After considering the uncontroverted facts
of this case, however, We find it insipid. We are not persuaded that respondent court’s decision and resolution
should be set aside. Its ratiocinations
thereon are eloquent and need not be elaborated upon. Therefore, We affirm and quote them as Our own (pp. 28-31, Rollo):

“But is there (a) need to reform the same documents as
(Exhibit ‘D’ or ‘1’ and Exhibit ‘E’ or ‘2’) as claimed by appellees and
as held by the trial court, so as to make them state that out of the price of
P700,000(.00) agreed upon by the
parties, P200,000.00 was intended to be the price of the goodwill of appellant
Nemar’s aforementioned Mobilflame dealership, and that if appellee would not
get said dealership, appellant would return to them said P200,000.00 which they
(appellees) were required to pay in postdated checks replaceable with cash and
out of which they had already paid P150,000.00?

“We think not. For
apart from the fact that appell(ee) wife, a very intelligent businesswoman who
is the one running and managing their LPG business for years, would not have
signed said documents if they did not express the parties’ true intent and
agreement, we find believable appellants’ insistence that no such stipulation
was included in the aforesaid documents because when they were signed by them
and appellees, they had already delivered to appellees the goodwill of the
Mobilflame dealership and refilling business in question; that is, they had
already introduced appellees to the manager of the Mobil Oil, Phil. LPG business in the Philippines and the latter had already
agreed for appellees to take over Nemar’s Mobilflame dealership in
Sto. Tomas, Batangas, and Nemar had accordingly already resigned as Mobilflame
dealer in that area. Appellants,
therefore, had already done everything that it could have done to transfer to
appellees its goodwill over the dealership in question before the signing of
the aforesaid documents. Why, then,
would Nemar still agree to return to
appellees whatever had been paid by the latter for the goodwill over said
dealership in the area in question in case appellees would fail to get said
dealership?

“Furthermore, we
believe that it is already moot and academic to discuss herein the
question whether the documents in question should be reformed so as to include
a stipulation therein that appellants would return to appellees whatever they
had paid for the goodwill of the dealership in question, for not only had
appellants already delivered said goodwill to appellees when they signed the
aforesaid documents such that they had every right to retain what appellees had
paid therefor, but more so because on June 21, 1982, or just a few days from
the signing by the parties of the documents aforementioned, Mobil Oil, Phil.
already signed with appellees a
letter-agreement constituting the latter as its authorized dealer in the area
formerly serviced by appellant Nemar, and thereafter, appellees already
started operating as Mobilflame dealer
in that area. Unfortunately, trouble
later arose between appellees and Mobil when appellees had already sold the stock of Mobilflame left by Nemar and were
asking Mobil to replenish their supply of Mobilflame,
which request the latter refused because it wanted appellees to first submit a
bond in the amount of P200,000.(00)
which amount it later increased
to P700,000(.00) and which bond appellees were, however, unable to submit
because every surety company that they approached was in turn requiring them to
first submit a copy of their dealership contract with Mobil Oil, but the latter
did not want to give them said dealership contract until they
submit the required bond. And it was
this failure of appellees to submit said bond that Mobil Oil gave as the reason
for rejecting appellees as its dealer in the area aforementioned and to award
said dealership to someone else. As
correctly pointed out by appellants, then, they had no control over nor
participation in all these subsequent developments and happenings,
and that if there was any party whom
appellees should sue for the damages that they allegedly suffered when they did
not get the Mobilflame dealership formerly handled by appellant Nemar, it
should be Mobil Oil, Phil. and not appellants.

“As a matter of fact, when Mobil Oil, Phil. filed C. C. No.
3103 for replevin against appellees with the RTC of Makati, MM to recover the
refilling equipments that it had loaned to the latter which had been installed
in the premises in question during the time of Nemar’s dealership, appellees
counterclaimed for the damages that they hd allegedly suffered when the did not
get the aforementioned dealership, including the P150,000(.00) that they had already paid Nemar for the goodwill
of said dealership, while the court refused to grant said P150,000(.00) to appellees on the
ground that Mobil was not privy to their transaction with Nemar, said court,
however, granted to appellees damages and attorney’s fees to the tune of almost
a million pesos, exclusive of interests and costs (Exhs. ‘8-J’ to ‘8-K’, pp.
141-142, Rec.). Obviously, then, appellees knew all along that their cause of action to recover damages for their failure
to get the Mobilflame dealership in question was against Mobil Oil and not
against appellants; and it is not appellants’ fault that the court in C.C. No.
3103 refused to allow appellees to recover from Mobil Oil the P150,000(.00)
that they had already paid to appellant Nemar for the goodwill of the dealership
in question, but as already, stated, Mobil Oil was adjudged to pay them almost one million pesos in damages for their failure to get said
dealership, in view of the court’s finding that Mobil Oil was in bad faith in refusing to award them said dealership.

“All in all, therefore, we believe that appellants are not
liable to return to appellees the P150,000(.00) that the latter had already paid appellants for the goodwill of the
Mobilflame dealership in question. On
the contrary, since appellants had fully delivered said goodwill to appellees
and it was not their fault that Mobil Oil, Phil. did not finally award said
dealership to appellees, then it is appellees who should complete the payment of
appellants’ goodwill in said dealership, the
price of which is, as appellees claimed and the lower court found, P200,000(.00) out of which amount
appellees had paid appellants
only P150,000(.00).”

ACCORDINGLY, the petition is hereby DENIED. The respondent Court of Appeals’ decision
dated November 29, 1990 and its resolution dated June 18, 1991 are AFFIRMED.

SO ORDERED.

Padilla, (Acting Chairman), Griño-Aquino, and Bellosillo, JJ., concur.

Cruz, J., (Chairman),on leave.