Mactan Rock Industries, Inc. v. Germo, G.R. No. 228799

SECOND DIVISION
[G.R. No. 228799. January 10, 2018.]
MACTAN ROCK INDUSTRIES, INC. and ANTONIO TOMPAR, petitioners, vs.

BENFREI S. GERMO, respondent.
DECISION
PERLAS-BERNABE, J : p
Assailed in this petition for review on certiorari1 are the Decision 2 dated August 8,
2016 and the Resolution 3 dated October 14, 2016 of the Court of Appeals (CA) in CA-G.R.
CV No. 104431, which affirmed the Decision 4 dated January 14, 2015 of the Regional Trial
Court of Muntinlupa City, Branch 276 (RTC) in Civil Case No. 11-029, finding petitioners
Mactan Rock Industries, Inc. (MRII) and Antonio Tompar (Tompar) solidarily liable to pay
respondent Benfrei S. Germo (Germo) the amount of P4,499,412.84 plus interest,
damages, and attorney's fees.
The Facts
This case stemmed from a Complaint 5 for sum of money and damages filed by
Germo against MRII — a domestic corporation engaged in supplying water, selling
industrial maintenance chemicals, and water treatment and chemical cleaning services 6 —
and its President/Chief Executive Officer (CEO), Tompar. The complaint alleged that on
September 21, 2004, MRII, through Tompar, entered into a Technical Consultancy
Agreement (TCA) 7 with Germo, whereby the parties agreed, inter alia, that: (a) Germo
shall stand as MRII's marketing consultant who shall take charge of negotiating, perfecting
sales, orders, contracts, or services of MRII, but there shall be no employer-employee
relationship between them; and (b) Germo shall be paid on a purely commission basis,
including a monthly allowance of P5,000.00. 8 On May 2, 2006 and during the effectivity of
the TCA, Germo successfully negotiated and closed with International Container Terminal
Services, Inc. (ICTSI) a supply contract of 700 cubic meters of purified water per day.
Accordingly, MRII commenced supplying water to ICTSI on February 22, 2007, and in turn,
the latter religiously paid MRII the corresponding monthly fees. 9 Despite the foregoing,
MRII allegedly never paid Germo his rightful commissions amounting to P2,225,969.56 as
of December 2009, inclusive of interest. 10 Initially, Germo filed a complaint before the
National Labor Relations Commission (NLRC), but the same was dismissed for lack of
jurisdiction due to the absence of employer-employee relationship between him and MRII.
He then filed a civil case before the Regional Trial Court of Muntinlupa, Branch 256, but the
same was dismissed without prejudice to its re-filing due to his counsel's failure to mark all
his documentary evidence at the pre-trial conference. 11 Hence, Germo filed the instant
complaint praying that MRII and Tompar be made to pay him the amounts of
P2,225,969.56 as unpaid commissions with legal interest from the time they were due until
fully paid, P1,000,000.00 as moral damages, P1,000,000.00 as exemplary damages, and
the costs of suit. 12
In their Answer, 13 MRII and Tompar averred, among others, that: (a) there was no
employer-employee relationship between MRII and Germo as the latter was hired as a
mere consultant; (b) Germo failed to prove that the ICTSI account materialized through his
efforts as he did not submit the required periodic reports of his negotiations with
prospective clients; and (c) ICTSI became MRII's client through the efforts of a certain Ed
Fornes. 14 Further, MRII and Tompar claimed that Germo should be made to pay them
litigation expenses and attorney's fees as they were compelled to litigate and engage the
services of counsel to protect their interest. 15
Due to MRII, Tompar, and their counsel's multiple absences at the various schedules
for pre-trial conference, the RTC considered them as "in default," thereby allowing Germo
to present his evidence ex-parte. 16
The RTC Ruling
In a Decision 17 dated January 14, 2015, the RTC ruled in Germo's favor, and
accordingly, ordered MRII and Tompar to solidarily pay him the amounts of: (a)
P4,499,412.84 representing Germo's unpaid commissions from February 2007 until March
2012 with legal interest from judicial demand until fully satisfied; (b) P100,000.00 as moral
damages; (c) P100,000.00 as exemplary damages; and (d) P50,000.00 as attorney's
fees. 18
The RTC found that MRII and Germo validly entered into a TCA whereby the latter
shall act as the former's marketing consultant, to be paid on a commission basis. 19 It also
found that MRII's contract with ICTSI was made possible through Germo's negotiation and
marketing skills, and as such, the latter should be paid the commissions due to him. In this
regard, Germo presented various sales invoices spanning the period of February 2007 to
March 2012, wherein he should have been paid commissions in the amount of
P4,499,412.84. 20Further, based on the evidence presented and in order to deter those
who intend to negate the fulfillment of an obligation to the prejudice of another, the RTC
found it appropriate to award Germo moral damages, exemplary damages, and attorney's
fees in the foregoing amounts. 21 Finally, the RTC imposed a lien equivalent to the
appropriate legal fees on the monetary awards in Germo's favor, noting that the latter
litigated the instant suit as an indigent. 22
Aggrieved, MRII and Tompar appealed 23 to the CA, this time claiming, among
others, that: (a) the jurisdiction over the case lies before the NLRC as the same is a
monetary dispute arising from an employer-employee relationship; and (b) Germo had no
legal personality to pursue the instant case since he only signed the TCA as a
representative of another entity. 24
The CA Ruling
In a Decision 25 dated August 8, 2016, the CA affirmed the RTC ruling. 26 It held that
Germo had sufficiently proven through the required quantum of evidence that: (a) he and
MRII, through Tompar, entered into a TCA and thus, the provisions thereof are binding
between them; (b) MRII's contract with ICTSI was realized through Germo's efforts; and (c)
MRII failed to pay Germo the commissions due to him pursuant to the TCA and the ICTSI
contract. 27
Anent MRII and Tompar's additional arguments, the CA held that the same
constitutes a new case theory, which cannot be introduced for the first time on appeal. The
CA further pointed out that such new theory is directly contradictory to the judicial
admissions they made in their Answer, 28which are already binding on them. 29
Undaunted, MRII and Tompar moved for reconsideration, 30 but the same was
denied in a Resolution 31 dated October 14, 2016; hence, this petition. 32
The Issue Before the Court
The issue for the Court's resolution is whether or not the CA correctly upheld MRII
and Tompar's solidary liability to Germo.
The Court's Ruling
The petition is partly meritorious.

In the instant petition, MRII and Tompar insist, among others that: (a) the regular
courts have no jurisdiction over the case as the present dispute involves an employment
dispute cognizable by the NLRC; and (b) Germo had no legal personality to pursue the
case as he signed the TCA not in his personal capacity, but as a representative of another
entity. 33
Such insistence is untenable.
As aptly pointed out by the CA, the foregoing constitutes a new theory raised for the
first time on appeal, considering that in their Answer 34 before the RTC, MRII and Tompar
admitted, inter alia, the: (a) lack of employer-employee relationship between MRII and
Germo as the latter was hired as a mere consultant; and (b) genuineness, authenticity, and
due execution of the TCA, among other documents proving Germo's claims. 35 "As a rule, a
party who deliberately adopts a certain theory upon which the case is tried and decided by
the lower court, will not be permitted to change theory on appeal. Points of law, theories,
issues and arguments not brought to the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing court, as these cannot be raised for the
first time at such late stage. It would be unfair to the adverse party who would have no
opportunity to present further evidence material to the new theory, which it could have done
had it been aware of it at the time of the hearing before the trial court." 36 While this rule
admits of an exception, 37 such is not applicable in this case.
More importantly, MRII and Tompar's statements in their Answer constitute judicial
admissions, 38 which are legally binding on them. 39Case law instructs that even if such
judicial admissions place a party at a disadvantageous position, he may not be allowed to
rescind them unilaterally and that he must assume the consequences of such
disadvantage, 40 as in this case.
As to the merits of the case, the courts a quocorrectly found that: (a) Germo entered
into a valid and binding TCA with MRII where he was engaged as a marketing consultant;
(b) aside from the P5,000.00 monthly allowance, Germo was going to be paid on a purely
commission basis; (c) during the effectivity of the TCA and in the performance of his duties
as marketing consultant of MRII, Germo successfully brokered MRII's contract of services
with ICTSI, obviously resulting in revenues in MRII's favor; (d) despite the foregoing and
demands from Germo, MRII refused to pay Germo's rightful commission fees; and (e)
MRII's refusal to pay Germo resulted — or at the very least, contributed to — Germo's
financial hardships. In light of the foregoing, the courts a quo correctly found MRII liable to
Germo for the various monetary obligations as stated in their respective rulings. Time and
again, it has been consistently held that the factual findings of the trial court, especially
when affirmed by the CA, deserve great weight and respect and will not be disturbed on
appeal unless it appears that there are facts of weight and substance that were overlooked
or misinterpreted and that would materially affect the disposition of the case; 41 none of
which are present insofar as this matter is concerned.
Be that as it may, the Court finds that the courts a quo erred in concluding that
Tompar, in his capacity as then-President/CEO of MRII, should be held solidarily liable with
MRII for the latter's obligations to Germo. It is a basic rule that a corporation is a juridical
entity which is vested with legal and personality separate and distinct from those acting for
and in behalf of, and from the people comprising it. As a general rule, directors, officers, or
employees of a corporation cannot be held personally liable for the obligations incurred by
the corporation, unless it can be shown that such director/officer/employee is guilty of
negligence or bad faith, and that the same was clearly and convincingly proven. Thus,
before a director or officer of a corporation can be held personally liable for corporate
obligations, the following requisites must concur: (1) the complainant must allege in the
complaint that the director or officer assented to patently unlawful acts of the corporation,
or that the officer was guilty of gross negligence or bad faith; and (2) the complainant must
clearly and convincingly prove such unlawful acts, negligence or bad faith. 42 In this case,
Tompar's assent to patently unlawful acts of the MRII or that his acts were tainted by gross
negligence or bad faith was not alleged in Germo's complaint, much less proven in the
course of trial. Therefore, the deletion of Tompar's solidary liability with MRII is in order.
Further, the Court deems it proper to adjust the interests imposed on the monetary
awards in Germo's favor. To recapitulate, he was awarded the amounts of P4,499,412.84
representing his unpaid commissions from February 2007 to March 2012, P100,000.00 as
moral damages, P100,000.00 as exemplary damages, and P50,000.00 as attorney's fees.
Pursuant to prevailing jurisprudence, his unpaid commissions shall earn legal interest at
the rate of twelve percent (12%) per annum from judicial demand, i.e., the filing of the
complaint on February 28, 2011 until June 30, 2013, and thereafter, at the rate of six
percent (6%) per annum from July 1, 2013 until the finality of this Decision. Thereafter, all
monetary awards due to him shall then earn legal interest at the rate of six percent (6%)
per annum from the finality of this ruling until fully paid. 43
Finally, since Germo litigated the instant suit as an indigent party as defined in
Section 21, Rule 344 of the Rules of Court, it is only proper that the appropriate filing fees
be considered as a lien on the monetary awards due to him, pursuant to the second
paragraph of Section 19, Rule 141 45 of the same Rules.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated August 8,
2016 and the Resolution dated October 14, 2016 of the Court of Appeals in CA-G.R. CV
No. 104431 are herebyAFFIRMED with MODIFICATION, DELETINGpetitioner Antonio
Tompar's solidary liability with petitioner Mactan Rock Industries, Inc. (MRII). Accordingly,
MRII is solely liable to respondent Benfrei S. Germo (Germo) for the following amounts: (a)
P4,499,412.84 representing his unpaid commissions from February 2007 to March 2012
with legal interest at the rate of twelve percent (12%) per annum from judicial demand, i.e.,
the filing of the complaint on February 28, 2011 until June 30, 2013, and thereafter, at the
rate of six percent (6%) per annum from July 1, 2013 until the finality of this Decision; (b)
P100,000.00 as moral damages; (c) P100,000.00 as exemplary damages; and (d)
P50,000.00 as attorney's fees. The total monetary awards shall then earn legal interest at
the rate of six percent (6%) per annum from the finality of this ruling until fully paid.
Finally, let the appropriate filing fees be considered as a lien on the monetary awards
due to Germo, who litigated the instant case as an indigent party, in accordance with
Section 19, Rule 141 of theRules of Court.
SO ORDERED.

Mactan Rock Industries, Inc. v. Germo, G.R. No. 228799

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SECOND DIVISION

[G.R. No. 228799. January 10, 2018.]

MACTAN ROCK INDUSTRIES, INC. and ANTONIO TOMPAR, petitioners, vs.

The RTC Ruling

The Issue Before the Court

The Court's Ruling

The petition is partly meritorious.

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