MIGUEL PEREZ RUBIO, PETITIONER, VS. COURT OF APPEALS, ROBERTO O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS, MANUFACTURERS BANK & TRUST CO., INC., HACIENDA BENITO, INC., E…

Before us for resolution are the various motions for
reconsideration of the March 12, 1986
decision, the dispositive portion of which reads:

“WHEREFORE, the petition is GRANTED.  The decision of the former Court of Appeals
is hereby REVERSED and SET ASIDE.  The
respondents Phillips and Sons and the Phillips spouses are declared to be
jointly and severally liable to the petitioner for the outstanding debt of
Phillips and Sons in the amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND
PESOS (P4,250,000.00) with interest at the rate of
eight (8%) percent per annum from April 30, 1964 until fully paid as provided
for in the parties’ agree­ment dated August 13, 1963.  Costs against the
respondents.” (p. 869, rollo)

The petitioner asks that the decision be reconsi­dered insofar as
it makes no finding against respondent Phillips for moral and exemplary damages
as well as attorney’s fees and to the extent that the same decision absolves
from joint and solidary liability respondents
Manufacturers Bank and Trust Company (hereinafter called MBTC), Hacienda Benito
(hereinafter called HB, and Victoria Valley Development Corporation
(hereinafter called VVDC).

The petitioner restates his position that the respondents conspired
amongst themselves to put the properties of Hacienda Benito beyond his reach
and thus make it impossible for him to collect the sum of P4,250,000.00 still
unpaid on the purchase price of his shares of stock in Hacienda Benito.

It may be recalled that on June
5, 1965, respon­dent Hacienda Benito, Inc., represented by Robert
O. Phillips, president and Victoria Valley Development Cor­poration which was
in the process of incorporation and represented by Alfonso Yuchengco
with the conformity of Manufacturers Bank and Trust Company represented by Galicano Calapatia executed a
“MEMORANDUM AGREEMENT (Exhibit “31” – Miguel Perez Rubio).

The thrust of the agreement is that respondent VVDC will acquire
under conditions stated therein 134.1668 hectares of land including account
receivables belonging to respondent HBI. 
Moreover, it was specifically provided in the agreement that “x x x HB warrants that the
properties to be acquired by VVDC are not subject to any other obligations,
liens, encumbrances, charges or claims of whatever nature than those mentioned
herein, including real estate taxes up to the first semester of 1965.” (Memorandum Agreement, supra, pp. 3-4).

Included in this 134.1668 hectares are
the 78 hectares mortgaged to MBTC.  These
parcels of land were mortgaged to MBTC to secure obligation and liabilities
incurred by HBI and other affiliate companies owned by the Phillips.  Of the P7,419,130.19
amount due from these companies, only P1,456,276.48 was the liability of HBI.

Under this agreement, MBTC will institute judicial foreclosure of
mortgage after which all the companies would confess judgment and enter into a
compromise agreement in full satisfaction of the claim of MBTC under the
several deeds of mortgage.  It was
further provided that HBI will convey all the 78 hectares in favor of MBTC
after which VVDC will purchase from MBTC the same parcels of land together with
the receivables.  A final proviso was to
the effect that VVDC and HBI will enter into a separate agreement whereby HBI
will expressly assign in favor of VVDC its right to redeem the properties
foreclosed by MBTC.

The consideration of the agreement amounted to P11,621,889.11 which VVDC agreed to assume in order to settle
the obligations of HBI and the other Phillips companies.

The Memorandum Agreement was executed under the following factual
background:  (1) Respondent ROPSI had
still to pay its outstanding P4,250,00.00 debt to the petitioner as the result
of the latter’s sale of his shares of stock of HBI; (2) Negotiations had broken
down between the Phillips spouses, ROPSI and Alfonso Yuchengco
as regards the sale of the shares of stock of Hacienda Benito, Inc.; and (3)
Petitioner had threatened to rescind the contract of sale of his shares of
stock of Hacienda Benito.

Obviously, Hacienda Benito through Robert O. Phillips, and VVDC
through Alfonso Yuchengco were fully aware of the
petitioner’s still being unpaid the P4,250,000.00 balance on his shares of
stocks of Hacienda Benito sold to ROPSI. 
MBTC, too, because of the unrebutted evidence
that its top officers are also the top officers of VVDC is conclusively
presumed to know the petitioner’s predicament. 
These same perso­nalities figured prominently in the negotiations in­volving
the shares of stock of Hacienda Benito including the unpaid P4,250,000.00 collectibles of the petitioner from the ROPSI as
full payment for the sale of his shares of stock in Hacienda Benito.

Hence, the scheme provided for in the Memorandum Agreement
wherein all the properties of Hacienda Benito will be ultimately transferred to
VVDC without any mention at all and completely ignoring the petitioner’s
interest in said Hacienda placed the petitioner’s rightful claim to the payment
of his shares of stock in clear jeopardy.

The fact that the Memorandum Agreement was not fully implemented
is immaterial.  The intent to defraud the
petitioner and the damage which led to the filing of this case was present in
the execution of the Memorandum Agreement.

Therefore, an award for damages in favor of the petitioner is in
order against respondents Hacienda Benito, VVDC and MBTC.

Article 19 of the New Civil Code provides that:

“Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and observe
honesty and good faith.”

while Article 20
thereof provides that:

“Every person who, contrary to law, wilfully
or negligently causes damage to another shall indemnify the latter for the
same.”

Parenthetically, these respondents did not observe honesty and
good faith in dealing with the rightful claim of the petitioner to the still
unpaid P4,250,000.00 collectibles from ROPSI.  The respondents’ acts are tortious
pursuant to Articles 19 and 20 of the New Civil Code.  Hence, these respondents are obliged to pay
for the damage done to the petitioner. 
(See Article 2176, New Civil Code).

In the case at bar, the tortious and
fraudulent scheme of the private respondents made it impossible for the
petitioner to collect the P4,250,000.00 still unpaid purchase price of his
shares of stock in Hacienda Benito.  All
the respondents are, therefore, solidarily liable for
these actual damages suffered by the petitioner.  (See Article 2194 of the New Civil Code).

Consequently, we rule that Hacienda Benito, VVDC and MBTC
together with ROPSI and the Phillips spouses are solidarily
liable to the petitioner for the outstanding debt of ROPSI in the amount of P4,250,000.00 with interest at the rate of eight (8%) per cent
per annum from April 30, 1964 until fully paid as provided for in the parties’
agreement dated August 13, 1963.

Also, an award for moral damages in favor of the petitioner is in
order against respondents Hacienda Benito, VVDC and MBTC.  The planned transfer of all the assets of
Hacienda Benito to VVDC which the respondents sought to accomplish through the
Memorandum Agreement created further anguish and anxiety on the part of the
petitioner who at that time was still trying to collect the P4,250,000.00 full payment of his shares of stock in Hacienda
Benito.

Considering the circumstances under which the respondents
executed the Memorandum Agreement and the social status of the parties herein,
the amount of P100,000.00 as moral damages in favor of
the petitioner is awarded.

However, we find no reasonable ground to set aside our findings in
the March 12, 1986 decision
that respondents Phillips spouses are not liable for moral and exemplary
damages and attorney’s fees.

Juan Miguel Phillips also filed a motion to intervene in the
instant case stating therein that Robert O. Phillips had died, leaving as heirs
respondent Magdalena Ysmael Phillips and four
legitimate children; that he is one of the four (4) children; that as such
legal heir, he has a legal interest in the subject matter of the instant case
and will be favored or prejudiced in his interest depending on the final
outcome of the instant case.  He cites
Rule 12, Section 2, Rules of Court.

The right of the movant-intervenor
proceeds only from the fact of heirship.  Hence his interest to specific portions of
the property of the deceased is, if not conjectural, still contingent and
expectant.  At this point, he cannot
specify any property nor segregate any as his own before the liquidation of the
estate is completed.  This is in
accordance with Article 657 of the Civil Code (Article 777, Civil Code) which
provides that the rights to succession of a person are transmitted from the
moment of death.

Thus, the heir has the right to impugn the validity of the
decedent’s transaction only when he is made answerable or when his specific
right or property would be affected thereby. 
The instant case is a personal action against Robert O. Phillips, filed
while he was still alive.  It is Robert
O. Phillips and his estate which are sought to be made liable, not the movant?intervenor or any of his legal heirs.

WHEREFORE, the petitioners motion for reconsideration is
GRANTED in that respondents Hacienda Benito, Victoria Valley Development
Corporation and Manufacturers Bank and Trust Company (now Filipinas Bank)
together with respondents Robert O. Phillips & Sons and the Phillips
spouses are declared to be jointly and severally liable to the petitioner for
the outstanding debt of Phillips and Sons in the amount of FOUR MILLION TWO
HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight
(8%) per cent per annum from April 30, 1964 until fully paid as provided for in
the parties’ agreement dated August 13, 1963; that respondents Hacienda Benito,
Inc., Victoria Valley Development Corporation and Manufacturers Bank and Trust
Company (now Filipinas Bank) are jointly and severally liable to the petitioner
in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as moral
damages.  Juan Miguel Phillips’ motion
for reconsideration is DENIED for lack of merit.  The motions for reconsideration filed by
Robert O. Phillips and Sons, Magdalena Ysmael Philips
and the heirs of Robert O. Phillips, Hacienda Benito, Inc., and Manufacturers
Bank and Trust Company are DENIED it appearing that no new substantial reasons
have been invoked to warrant reconsideration of the said decision as far as
these parties’ motions are concerned, and this DENIAL is FINAL.

SO ORDERED.

Fernan, (Chairman), Paras, Bidin, and Cortes, JJ., concur.

Padilla, J., took no part.
Principal Counsel of Manufacturers Bank is related to me.