Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-50911 March 12, 1986

MIGUEL PEREZ RUBIO, petitioner,

vs.
COURT OF APPEALS, ROBERT O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS,
MANUFACTURERS BANK & TRUST COMPANY, INC., HACIENDA BENITO, INC., VICTORIA
VALLEY DEVELOPMENT CORPORATION and ROBERT O. PHILLIPS, respondents.

GUTIERREZ, JR., J.:

This is a petition to review the decision of the Court of Appeals, now the Intermediate Appellate
Court, in CA-G.R. No. 60896-R, which affirmed the trial court's decision ordering Robert O. Phillips &
Sons, Inc., and the plaintiff-spouses to pay Miguel Perez Rubio the sum of P4,250,000.00 but
ordered Perez Rubio to pay Robert O. Phillips & Sons, Inc. and the other plaintiffs damages in the
amount of P4,404,510.76. The appellate court, however, modified the lower court's order to pay
P4,250,000.00 by removing the eight (8%) percent per annum interests on that amount, dispensing
with the ten (10%) percent attomey's fees and limiting the liability to Robert O. Phillips and Sons,
Inc., only. Also affirmed was the order directing Perez Rubio, as third party plaintiff, to pay Hacienda
Benito, Inc. the sum of P7,051,496.23 as actual damages and P150,000.00 attorney's fees and to
pay Manufacturer's Bank and Trust Co. P895,085.16 actual damages, plus ten (10%) percent of that
amount as attorney's fees.

The decision of the trial court in Civil Case No. 8632 has actually been the subject matter of two
earlier petitions for certiorari filed by the petitioner against the same respondents. These are G.R.
No. L-24581 entitled Miguel Perez Rubio v. The Honorable Samuel Reyes Roberto O. Phillips and
Magdalena Ysmael Phillips, Manufacturer's Bank and Trust Company, Victoria Valley Development
Corporation and Hacienda Benito, Inc. and G.R. No. L-30404 entitled Miguel Perez Rubio v.
Honorable Judge Herminio Mariano in his capacity as Presiding Judge of Branch X of the Court of
First Instance of Rizal Robert O. Phillips and Sons, Inc. Robert O. Phillips, Magdalena Ysmael
Phillips, Victoria Valley Development Corporation Manufacturers Bank and Trust Company and
Hacienda Benito, Inc.

This petition arose from the same facts and events which triggered off the filing of the earlier
petitions. These facts and events are cited in our Resolution dated January 31, 1966 issued in G.R.
No, L-24581, as follows:

Upon the facts alleged in the complaint filed in Civil Case No, 8632 of the Court of
First Instance of Rizal by Robert O. Phillips and Sons, Inc., et al. v. Miguel Perez
Rubio, said plaintiffs prayed for judgment as follows:

1. That a Temporary restraining order and/or exparte writ of

preliminary injunction be issued against the defendant to prevent and
 restrain them from further unlawfull and willful interference with the
transaction between the plaintiff corporation with Alfonso T.
Yuchengco on the sale of the shares of stock of Hacienda Benito,
Inc., and from enforcing whatever amount he may claim to be due to
them from the plaintiffs under the Agreements (Annexes "A", "A-1"
and "A- 2"), after the approval of the injunction bond;

2. That, after the hearing, judgment be rendered in favor of the

plaintiffs against the defendant:

a) Restraining him from willfully and unlawfully

interfering with the transaction of the plaintiffs with
Alfonso T. Yuchengco on the sale of the shares of
stock of Hacienda Benito, Inc.;

b) Declaring that the defendant has no right to rescind

the Agreements as referred to in Annexes "A", "A.1"
and "A.2";

c) Declaring that the defendant has no vendors' lien

over the shares of stock of Hacienda Benito, Inc., sold
by them to the plaintiff corporation;

d) Restraining the defendant from enforcing any

collection action against the plaintiff until the
obligation, if any, mature;

e) Making the writ of preliminary injunction

permanent;

f) Sentencing the defendant to pay the plaintiffs;

(1) P 2,500,000.00, more or less, as

actual damages;

(2) Moral damages which this

Honorable Court may deem just and
reasonable;

(3) Exemplary damages, which this

Honorable Court may deem just and
reasonable;

(4) P50,000.00, as attorney's fees;

and

(5) Costs of suit; and

3. That the plaintiffs be granted such further and other reliefs to which they may be
entitled in law and in equity'
Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April
1, 1965 a writ of preliminary injunction to be mentioned again later. Subsequently,
the respondent judge also denied Perez Rubio's motion to dissolve the preliminary
injunction.

It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito,
Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin
Ramirez, Jr. On August 13, 1963 the Perez Rubios, with the conformity of the
Ramirezes, sold said shares to Robert O. Phillips and Sons, Inc. for P5,500,000.00
payable in installments and other conditions agreed upon as follows:

xxx xxx xxx

3. That for and in consideration of the mutual agreements and promises, MIGUEL
and MARIA LUISA hereby sell to PHILLIPS all the shares of stock of Hacienda
Benito, Inc. registered in their names and in the names of Joaquin Ramirez and
Joaquin, Jr. for the total price of FIVE MILLION FIVE HUNDRED THOUSAND
PESOS (P5,500,000.00), Philippine Currency, payable as follows:

a FIFTY THOUSAND PESOS (P50,000.00) upon execution of this

agreement,

b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P

l,200,000.00) within sixty (60) days from this date.

c ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS

(P1,250,000.00) on April 30, 1964 less than the amount of P
96,830.56 due the Hacienda Benito, Inc. from MARIA LUISA and the
amount of P127,096.09 from MIGUEL; hereby authorized PHILLIPS
to deduct said amounts and to pay the same to Hacienda Benito, Inc.

d ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS

(P1,250,000.00) on or before April 30, 1965.

e ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS

(P1,250,000.00) on or before April 30, 1965.

f FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before

April 30, 1967.

4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED
THOUSAND PESOS (P1,200,000.00) due sixty days from this date and to execute
the letter of credit and/or bond or both to secure the payment of the remaining
installments, as agreed upon, then the Seller shall have the right, at their own
discretion, either to rescind this agreement or to enforce the same, provided that any
number of days used by the Sellers to consider the acceptability of the bank or
bonding company proposed by PHILLIPS shall be added to the period of sixty (60)
days herein mentioned;
5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent
(8%) per annum on all amounts in arrears until paid in full either by the guaranteeing
bank, bonding company or PHILLIPS;

6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all
the conditions above mentioned, shall be jointly and severally guaranteed by means
of Irrevocable Standby letter of Credit from a bank in favor of MIGUEL and MARIA
LUISA, in the proportion they may agree, which shall be communicated to the bank
and to PHILLIPS before final contract is entered into with the bank, or by a bond from
a bonding company duly approved by MIGUEL and MARIA LUISA;

7. That the stock certificates corresponding to the shares sold, including those in the
names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be transferred to
PHILLIPS until the installments due within sixty (60) days from this date is paid in
full.'

On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips himself
and his wife, entered into an agreement with the Perez Rubios deferring payment of
the April 31, 1964 under the following conditions;

(a) The deferred installment would bear an interest of eight (8%) percent per annum
from April 30, 1964 although partial payment, on the principal and on the interest due
may be paid during the period granted, in such amounts and at such times as funds
are available to Robert O. Phillips & Sons, Inc.;

(b) Should Robert O. Phillips & Sons, lnc. fail to pay the particular installment now
due on August 31, 1964 or any of the subsequent installments on the exact date due,
the whole obligation would become immediately demandable without notice;

(c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc.,
Robert O. Phillips himself and his wife, Magdalena Ysmael Phillips, jointly and
severally guaranteed all the installments and other obligations of Robert O. Phillips &
Sons, Inc. under the original contract of sale dated April 13, 1963.'

In the meantime, Robert O. Phillips, in his behalf and in that of his wife and Robert O.
Phillips and Sons, Inc., entered into negotiations for the sale of their shares of stock
in Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the
Perez Rubios, through their attorney-in-fact, Joaquin Ramirez, reminded the Phillips
spouses and the Phillips corporation in writing of their obligations under the contract
of sale of April 13, 1963 and reminded them in particular that the shares subject
matter thereof were still subject to the payment of the unpaid balance of the sale
price. They gave a similar notice to Alfonso Yuchengco, but expressed no objection
to the sale provided the obligations in their favor were satisfied.

On March 26, 1965, the Phillips (individuals and corporation), through their attorney,
Juan T. David, sent a letter to the Perez Rubios telling them, in substance, that the
only obstacle to the consummation of the Phillips-Yuchengco sale of the shares of
stock of Hacienda Benito, Inc. was their letter of November 24, 1964 and warned that
unless the same was withdrawn by March 29, they would seek redress elsewhere.
On March 27, 1965, the Perez Rubios, for their part, wrote the Phillips that due to the
latter's inability to comply with the former's conditions, the negotiations going on
between them were cancelled, and should the full amount due to them remained
 unpaid by noon of March 31, 1965, they would file action in court in the afternoon
thereof. However, on March 30, 1965, stealing a march on the Perez Rubios, the
Phillips individuals and corporations filed Civil Case No. 8632 mentioned heretofore
where they obtained, ex-parte, a preliminary injunction to this effect:

IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance

that, until further orders, you, all your attorneys, representatives, agents, and any
other person assisting you, REFRAIN from interfering with the transaction between
the plaintiff-corporation with Alfonso T. Yuchengco on the sale of the shares of stock
of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be
due to them from the plaintiffs under the Agreements (Annexes 'A', 'A-l', and 'A.2')
mentioned in the complaint.'

On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced
writ of preliminary injunction, which the respondent judge denied on May 6, 1964. But
even before the motion aforesaid could be acted upon, they also filed their answer to
the combatting plaint with a counterclaim of P4,500,000.00 representing the unpaid
balance of the sale price of their shares. Because of this the Perez Rubios were
charged with contempt. " (16 SCRA 168, 172).

xxx xxx xxx

Because of the above incidents and orders, Perez Rubio filed a petition for certiorari against Robert
O. Phillips in G.R. No. L- 24581 alleging that in taking cognizance of Civil Case No. 8632 and in
issuing the writ of preliminary injunction ex parte, the respondent court committed a grave abuse of
discretion The petitioner prayed that the respondent court be restrained from in any way proceeding
with the case, and that, respondent Phillips be enjoined from proceeding with the sale of the shares
of stock of Hacienda Benito, Inc. or any of its assets to Alfonso Yuchengco or to any other person, or
from performing any act which would diminish the value of said shares of stock or deplete the assets
of the company.

Upon the filing of the original Perez Rubio petition, we issued on July 26, 1965 a writ of preliminary
injunction restraining all the respondents named in the original petition (l) from taking further
proceedings in Civil Case No. 8632; (2) from proceeding with the sale of shares of stock of Hacienda
Benito, Inc. or any of its assets to Alfonso T. Yuchengco or to any other person, and (3) from
performing any act which would either diminish the value of said shares of stock or deplete the
assets of the Hacienda subject matter of Civil Case No. 8632.

On June 10, 1965, the Manufacturers Bank and Trust Company filed a complaint against Phillips
and Sons and Hacienda Benito, Inc. as well as the other corporations controlled by Robert O.
Phillips for the foreclosure of a real estate mortgage constituted on the properties of the Hacienda.
The case was filed in another branch of the Court of First Instance of Rizal and was docketed as
Civil Case No. 8766. On the premise that the foreclosure by the bank of the mortgage constituted on
the properties of Hacienda Benito, Inc., was intended simply to remove properties and the assets of
the Hacienda pertaining to the Phillips spouses beyond Perez Rubios' reach and thus make it
impossible for him to collect the sum of P4,250,000.00, Perez Rubio filed a motion for the admission
of a supplemental petition, to include Manufacturer's Bank and Victoria Valley Development
Corporation as additional respondents. Victoria Valley was a newly formed corporation which Perez
Rubio alleged had been hurriedly organized and to which Manufacturer's Bank would transfer all the
foreclosed properties thus making it difficult for him to enforce his vendor's lien. Before the first
amended supplemental petition could be acted upon, Perez Rubio filed a second amended
supplemental petition to implead Hacienda Benito, Inc. as additional party respondent with a specific
plea that pending the issuance of a writ of preliminary injunction, Hacienda Benito be restrained from
disposing of its properties or assets in any way save in the ordinary course of its business of selling
lots of the subdivision. Both supplemental amended petitions were admitted.

After all the respondents had filed their answers to the amended petition and after the petitioner filed
an answer to the counterclaim interposed by respondents Phillips and Sons, Inc. and the Hacienda,
this Court promulgated a decision dated May 27, 1968 wherein, among others, we ruled:

(1) In connection with the writ of preliminary injunction issued by the respondent
judge in Civil Case 8632 on April 1, 1965 mentioned heretofore, the same is hereby
declared null and void and is, consequently, set aside with the result that the writ of
preliminary injunction issued by Us in this case enjoining its enforcement is hereby
made final. The order of the respondent judge of May 6, 1965 denying petitioner's
motion to set aside the aforesaid writ of preliminary injunction of April 1 of the same
year is hereby reversed;

(2) The writ of certiorari prayed for by petitioner is hereby denied insofar as it seeks
to annul the judicial proceedings had in Civil Case 8766 of the Court of First Instance
of Rizal, instituted by the Bank against Hacienda and other parties for the foreclosure
of the mortgage constituted in its favor upon the properties of Hacienda; without
prejudice, however, to the right of petitioner to seek such relief and any other relief
that he might be lawfully entitled to against the herein respondents, singly or
collectively, in the aforesaid Civil Case 8766 of the Court of First Instance of Rizal or
in a separate action. In this connection, it is our judgment that the writ of preliminary
injunction issued in this case shall remain subsisting and binding for a period of thirty
days from the date of finality of this decision, upon the expiration of which period the
same shall be deemed automatically lifted or dissolved, irrespective of whether
petitioner had or had not taken steps required for the enforcement and protection of
his rights as already indicated; (23 SCRA 773, 789 & 790)

In the belief that the forum for the "separate action" referred to in our decision meant Civil Case No.
8632, petitioner Perez Rubio filed in the said case on July 9, 1968 an "Urgent Motion to Admit
Amended and Supplemental Answer and Third-Party complaint," the third-party complaint being
directed against Manufacturer's Bank, Victoria Valley and hacienda Benito.

The motion was denied by the lower court. Hence, the petitioner filed another petition for certiorari to
review and set aside the lower court's order dated September 13, 1968 with the additional prayer
that pending determination of the issues raised in the petition, the respondent court be restrained
from proceeding with the hearing of the case below and the other respondents from transferring or
proceeding with the agreement to transfer any of the assets of Hacienda Benito, Inc. to any third
person except in the ordinary course of selling subdivision lots. The case was docketed as G.R. No.
30904. On April 16, 1969, we issued a prayed for temporary restraining order. The petition was later
granted. In our decision dated January 31, 1973, we ruled:

WHEREFORE, the orders complained of are set aside and respondent Judge or
whosoever is assigned to try the case below is instructed to admit the amended and
supplemental answer and third-party complaint filed by Miguel Perez Rubio.
Thereafter, these cases shall proceed accordingly. The restraining order
hereinbefore issued by this Court is hereby lifted insofar as it restrains respondent
Judge from proceeding with the hearing of Civil Case No. 8632 of the Court of First
Instance of Rizal Branch X (Pasig, Rizal), and maintained insofar as it restrains (the
other respondents) 'from proceeding with the transfer of the shares and/or of the
 assets of Hacienda Benito, Inc. to each other or to any other person, except in the
ordinary course of selling subdivision lots without prejudice to the judgment that may
be rendered by the court a quo in the case. Costs against the respondents. (49
SCRA 319, 337).

The third-party complaint sought to secure the return by Manufacturer's Bank and/or Victoria Valley
of the properties it and/or they bought as a consequence of the judicial foreclosure of mortgage
case, Civil Case No. 8766, with a further plea that in the event the Phillips spouses are ordered to
pay Miguel Perez Rubio the judgment on his counterclaim said properties and funds foreclosed by
the defendant Bank be held to answer for such judgment or any part thereof unpaid by the Phillips
spouses together with damages.

The third-party defendants, respondents herein, filed their separate answers. In addition to their
answer, Manufacturer's Bank and Hacienda Benito filed separate counterclaims for actual damages
for malicious prosecution plus attorney's fees.

After trial on the merits, the lower court rendered a decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

(1) Sentencing the plaintiffs to pay jointly and severally the amount of P4,250,000 to
defendant Miguel Perez-Rubio, with interest of 8% per annum from April 30, 1964
and attorney's fees equivalent to 10% of the said amount. The plaintiffs however,
may offset the foregoing amount by the damages which Perez-Rubio should pay to
them for having unlawfully interferred in the transaction with Alfonso Yuchengco
which is merely assess at P4,404,510.76.

(2) Sentencing the defendant Perez-Rubio to pay to HBI the sum of P 7,051,496.23;
attorney's fees of P150,000.00, and to MBTC the sum of P 895,085.16 as actual
damages and the sum of 10% thereof as attorney's fees.

(3) Dismissing all other causes of action of the parties in this case without
pronouncement as to costs.

Plaintiffs Phillips and Sons and the Phillips spouses as well as defendant and third-party plaintiff
Perez Rubio appealed the decision to the Court of Appeals.

As earlier stated, the appealed decision was amended by the appellate court in so far as it related '
to the liability of the plaintiffs on their P4,250,000.00 debt. The appellate court ruled that only plaintiff
Phillips and Sons was liable to pay the amount of P4,250,000.00 to defendant Perez Rubio without
interest and without attorney's fees. The rest of the trial court's decision was affirmed in full.

A motion for reconsideration filed by Perez Rubio was denied by the appellate court. Hence the
instant petition was filed.

Petitioner Perez Rubio raises the following assignments of errors:

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR

PETITIONER UNLAWFULLY AND INOFFICIOUSLY INTERFERRED IN THE
TRANSACTION BETWEEN RESPONDENTS ROBERT O. PHILLIPS & SONS, INC.,
ROBERT O. PHILLIPS & SONS AND HIS WIFE MAGDALENA WHEN THE
SUPREME COURT ITSELF DESCRIBED THE ACTS TAKEN BY YOUR
PETITIONER AS A VALID ENFORCEMENT OF ONE'S RIGHT AS A CREDITOR.

II

THE COURT OF APPEALS GRAVELY ERRED IN AWARDING DAMAGES TO

RESPONDENTS ROBERT 0. PHILLIPS, HIS WIFE, AND ROBERT O. PHILLIPS &
SONS, INC., ON THE ALLEGED GROUND OF UNLAWFUL INTERFERENCE
WITHOUT BASIS IN FACT AS TO WHAT THE DAMAGE CONSISTED OF NOR OF
THE MEASURE FOR SAID DAMAGES.

III

THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT YOUR

PETITIONER WAS LIABLE FOR DAMAGES TO THE MANUFACTURERS BANK
AND TRUST COMPANY, INC. BY REASON OF THE TWO INJUNCTIONS ISSUED
BY THIS HONORABLE COURT IN L-24581 (MIGUEL PEREZ RUBIO, ET AL.) AND
L-30404 (MIGUEL PEREZ RUBIO VERSUS THE HON. HERMINIO MARIANO, ET
AL.), DESPITE THE FACT THAT THERE WAS ACTUALLY ONE RESTRAINING
ORDER ISSUED BY THIS HONORABLE COURT INSOFAR AS RESPONDENT
MBTC IS CONCERNED AND DESPITE THE FACT THAT NO VALID PROOF OF
DAMAGES WAS PRESENTED.

IV

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THAT YOUR

PETITIONER PEREZ RUBIO WAS LIABLE TO HACIENDA BENITO, INC.,
WITHOUT MAKING SO MUCH AS A COMMENT OF FINDING THEREOF, BUT BY
THE MERE EXPEDIENT OF AFFIRMING THE DECISION OF THE TRIAL COURT.

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF

THE TRIAL COURT IN FINDING YOUR PETITIONER LIABLE TO RESPONDENT
HACIENDA BENITO, INC. FOR THE ALLEGED DAMAGES IT SUFFERED BY
REASON OF THE INJUNCTION ALLEGEDLY ISSUED BY THE SUPREME COURT
AGAINST HACIENDA BENITO, DESPITE THE FACT THAT THE SUPREME
COURT AFFIRMED THE PROPRIETY OF THE INJUNCTION ISSUED BY IT.

VI

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE AWARD OF

DAMAGES IN FAVOR OF RESPONDENT HACIENDA BENITO, INC. DESPITE
THE FACT THAT THERE WAS NO BASIS IN THE EVIDENCE FOR THE AWARD.

VII

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISCHARGING

THE RESPONDENT SPOUSES PHILLIPS FROM THEIR JOINT AND SEVERAL
 GUARANTEE OF YOUR PETITIONERS' CREDIT AND IN DISALLOWING
INTEREST TO RUN THEREON WITHOUT ANY BASIS OR REASON DESPITE
THE FACT THEY WERE EXPRESSLY PROVIDED IN THE AGREEMENTS
ENTERED INTO BETWEEN YOUR PETITIONER, THE RESPONDENTS ROBERT
O. PHILLIPS HIS WIFE MAGDALENA AND ROBERT . PHILLIPS & SONS, INC.

VIII

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISALLOWING

ATTORNEY'S FEES AND MORAL AS WELL AS EXEMPLARY DAMAGES IN
FAVOR OF YOUR PETITIONER PEREZ RUBIO DESPITE THE FACT THAT THIS
HONORABLE COURT HAD CLEARLY SHOWN THAT YOUR PETITIONER HAD
BEEN IMPROPERLY SUED AND DESPITE THE FACT THAT THIS HONORABLE
COURT HAD ALREADY RULED THAT THE IMPLEADING OF OTHER PARTIES
WAS PROPER AND NECESSARY FOR THE PROTECTION OF HIS RIGHTS.

IX

THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISCHARGING

RESPONDENTS MANUFACTURERS BANK AND TRUST CO., INC., (MBTC) AND
VICTORIA VALLEY DEVELOPMENT CORPORATION FROM ANY LIABILITY TO
YOUR PETITIONER DESPITE THEIR VERY ACTIVE PARTICIPATION IN
ATTEMPTING TO AND IN ACTUALLY COMMENCING TO REMOVE ALL OF THE
ASSETS OF HACIENDA BENITO, INC., AND TRANSFERRING THEM TO
RESPONDENT VVDC.

The first two assigned errors are in relation to the original complaint in Civil Case No. 8632 filed by
Phillips and Sons, Inc., and the Phillips spouses against petitioner Perez Rubio for alleged unlawful
interference in the transaction between the respondents on one hand and Alfonso Yuchengco on the
other hand.

As earlier stated, because of the issuance of a preliminary injunction ex parte which restrained
petitioner Perez Rubio from interfering with the Yuchengco transaction and the denial of a motion to
dissolve the injunction in Civil Case No. 8632, petitioner Perez Rubio was constrained to file a
petition for certiorari with this Court in G.R. No. 24581 alleging that the lower court committed a
grave abuse of discretion in issuing the preliminary injunction.

Resolving the matter on the propriety of the preliminary injunction, we ruled:

It is obvious that what the plaintiffs in Civil Case No. 8632 considered as
interference, on the part of the therein defendant (petitioner herein) with the
negotiations or transaction at that time being carried on between said plaintiffs, on
one hand, and Alfonso T. Yuchengco, on the other, regarding the sale of the shares
of stock of Hacienda was said defendant's intention to enforce his right to collect from
Robert O. Phillips and Sons, Inc. and its guarantors, the Phillips spouses, the unpaid
balance- P4,250,000.00-due to him from the latter of the purchase price of their
shares in Hacienda mentioned at the beginning hereof. As a matter of fact, when
said defendant filed his answer in Civil Case No. 8632 interposing therein a
counterclaim for the collection of said unpaid balance, the plaintiffs therein charged
him with having violated the terms of the writ of preliminary injunction issued by the
respondent judge. Proceedings in connection with this charge, however, were held in
 abeyance by reason of the writ of preliminary injunction ion We issued in the present
case.

After a careful consideration of the material facts and the law applicable to them, We
are of the opinion and so hold, that the writ of preliminary injunction issued ex parte
by the respondent judge was unjust and improvident. Without hearing the party
concerned, and without any legal justification, it restrained a creditor (Perez Rubio)
from enforcing his undenied right to collect from his debtor and the latter's guarantors
the sum of P4,250,000.00 representing the unpaid balance of the purchase price of
his shares in Hacienda. It is a fact that the debtor Corporation (Robert O. Phillips and
Sons, Inc.) and its guarantors, the Phillips spouses, do not deny the indebtedness,
and yet, notwithstanding its extraordinary amount, they attempted to sell all the
shares of stock of Hacienda without making any reasonable provision for the
payment thereof. For them to prevent their creditor from enforcing his right to collect,
and for the Court to enjoin said creditor from enforcing that right in any lawful manner
is, in any language, rank injustice. (23 SCRA 773, 780).

The petitioner assumes that the foregoing pronouncement categorically ruled that he did not
unlawfully and inofficiously interfere in the transaction between respondents Phillips and Sons and
the Phillips spouses on one hand and Alfonso Yuchengco on the other hand and that his acts were a
valid enforcement of his rights as a creditor.

This assumption is incorrect. It is very clear from the decision that we ruled on the impropriety of the
manner in which the preliminary injunction was issued. We stated that without hearing the party
concerned and without any legal justification, the trial court restrained creditor Perez Rubio from
enforcing his undenied right. We could not have possibly ruled as suggested because the case
before us was a petition for certiorari alleging that the trial court committed a grave abuse of
discretion in issuing the preliminary injunction ex parte. The issue to be resolved was a pure
question of law based on the circumstances surrounding the issuance of the questioned preliminary
injunction ex parte. Whether or not the petitioner unlawfully and inofficiously interfered with the
aforementioned transaction was a question of fact and any grave abuse of discretion could not, at
that time, be resolved by this Court. A trial on the merits was necessary, Our decision in the second
petition for certiorari, filed by the petitioner in connection with Civil Case No. 8632 lifted the
temporary restraining order in so far as it restrained the trial court from proceeding with the hearing
and ordered the cases including the third party complaint to proceed accordingly.

Trial on the merits accordingly proceeded after which the trial court concluded that the petitioner
unlawfully and inofficiously interfered with the subject transaction as a result of which Phillips and
Sons and the Phillips spouses suffered damages. This conclusion was upheld by the Court of
Appeals. The appellate court justified its ruling as follows:

It is a fact, which defendant Perez Rubio does not and can not deny. that he had
informed Alfonso Yuchengco of his vendor's lien over the unpaid shares of stock in
the Hacienda Benito, Inc., and that he still had the right to rescind the sale of his
stocks to ROPSI (t.s.n., August 7, 1974, pp. 31-35; Exhibit D-1-A-Plaintiffs, I Folder
of Exhibits, p. 2). As stated before, Alfonso Yuchengco cooled off, as it were, and
withdrew from the transaction (t.s.n., October 30, 1974, pp. 94-95) to which he had
previously given his conformity (Exhibits 18-, 21 -Rubio-II Folder of Exhibits, pp. 37,
43) because of Perez Rubio's refusal to withdraw his letter to Yuchengco containing
his threat to rescind the sale of his stocks to ROPSI. If this Court has said it before it
is repeated here for emphasis that Alfonso Yuchengco had no intention to holding an
empty bag, and for defendant Perez Rubio to block the plaintiffs from consummating
 a transaction the terms of which have already been approved in principle providing
for the payment of Perez Rubio's credit is unlawful and inofficious interference.

It should be noted that defendant Perez Rubio had already delivered completely the
shares of stock of hacienda Benito, Inc. which he had sold to plaintiff ROPSI and that
these shares were transferred in the books of the Hacienda in the name of ROPSI
(t.s.n., August 5, 1974, pp. 129-130, 131-132, 133-134; August 7, 1974, p. 62; May
14, 1975, p. 32). The plaintiffs therefore had all the right to dispose of the shares of
stock. Defendant Perez Rubio also admitted that there was no agreement or
document prohibiting plaintiff ROPSI from selling the said shares of stock to any
person (t.s.n., August 3, 1974, pp. 12-13) nor any agreement or document requiring
his prior permission before ROPSI could sell or otherwise dispose of the said shares
of stock (lbid., p. 14). There was also no vendor's lien annotated in the books of
Hacienda Benito, Inc. over the said shares of stock (t.s.n., August 7, 1974, pp. 14-16,
63, 66-67), What is more, the plaintiffs have made reasonable provisions for the
payment of the unpaid balance due the defendant in their transaction with Alfonso
Yuchengco (Exhibit 18-Rubio, paragraph 19, II Folder of Exhibits, pp. 36-37, Exhibit
20-Rubio, paragraphs 8 and 12, lbid., pp. 41-42, Exhibit 22-Rubio, paragraph 5, lbid.,
p. 46; t.s.n., May 14, 1975, pp. 46, 119-120). Clearly, there appears no valid reason
why defendant Perez Rubio had to block the plaintiffs' transaction with Alfonso
Yuchengco, except 'to destroy' and 'ruin' the plaintiffs (t.s.n., May 14, 1975, pp. 129-
130), which defendant Perez Rubio himself vowed he would do (t.s.n., May 14, 1975,
p. 136).

A thorough examination of the record reveals that the factual findings of the appellate court are
incomplete and do not reflect the actual events that transpired concerning the sale of shares of stock
of Hacienda Benito to Alfonso Yuchengco. The important point left out by the appellate court refers
to the controversial November 24, 1964 letter of the petitioner to Phillips and Sons and to the Phillips
spouses wherein the petition stated that he has a vendor's lien over the shares of stock of Hacienda
Benito and that he still has the option to rescind the contract as regards his sale of stock of the
Hacienda. A copy of the letter was sent to Alfonso Yuchengeo, the prospective buyer of the shares
of stock of Hacienda Benito, but even after receipt of the letter, the negotiations on the sale of the
shares of stock of Hacienda Benito to Alfonso Yuchengco continued. This is shown by the following
events:

1. In a letter dated December 17, 1964, Hacienda Benito through Robert O. Phillips as president,
Phillips and Sons, through Robert Phillips as president and Robert Phillips in his own behalf offered
to Alfonso Yuchengco an option to buy 100% of the shares of stock of Hacienda Benito. It is to be
noted that the first option contained in the letter of November 17, 1964 offered to Alfonso Yuchengco
was the sale of 80% of the shares of stock of Hacienda Benito. In reply Alfonso Yuchengco in his
letter to the Phillips spouses and Phillips and Sons dated January 6, 1965 accepted the option but
with modifications as to the terms of the sale, Included in the terms of the sale were provisions for
the payment of the seller's debts.

2. In a letter dated February 12, 1965 from the law firm of Ramirez and Ortigas, counsel of the
petitioner to Phillips and Sons and the Phillips spouses in relation to the ongoing negotiations for the
settlement of the P3,800,000.00, it was stated that the petitioner was not willing to extend the
manner of payment of the credit further than April 30, 1967. Contained in the same letter of the law
firm was an offer of a compromise as to the manner of payment.

3. In reply to the aforementioned letter, Phillips and Sons and the Phillips spouses wrote a letter
dated February 16, 1965 stating their final proposal as to the manner of payment. ln accordance with
the final proposal, the last payment of the debt would be on April 30, 1968. On the basis of the terms
and conditions of the final proposal, Phillips and Sons and the Phillips spouses requested a "waiver
for the consummation of the proposed sale to Mr. Alfonso Yuchengco" (Exhibit 22-Perez Rubio,
Exhibits 11, p. 46).

4. In a letter dated February, 22, 1965, the law firm of Ramirez and Ortigas informed Phillips and
Sons that their client, the petitioner, rejected the plan to modify in any way the original agreements
for payment and that the letter was a formal notice that the complaint for the enforcement of the
original contracts would be filed on March 8, 1965 unless the case is settled in a satisfactory
manner. (Exhibit 23-Perez Rubio, Exhibit 11, p. 80).

As a consequence of the February 22, 1965 letter of the petitioner, Juan T. David, counsel for
Phillips and Sons wrote the petitioner himself. In this letter dated March 12, 1965, Atty. David
requested that the petitioner withdraw his controversial November 24, 1964 letter. According to
David the said letter was the "only obstacle to the conclusion of the transaction between my client,
Robert O. Phillips and Sons, Inc. and Mr. Yuchengco involving the shares of stock of Hacienda
Benito, Inc." A copy of the letter was attached to a letter sent to Yuchengco also dated March 12,
1965 informing him about the failure to obtain the desired waiver and expressing the view that
"waiver is unnecessary."

In another letter dated March 26, 1965 addressed to the petitioner, Atty. David gave the petitioner
until March 29, 1965 to withdraw unconditionally the controversial letter. The petitioner was informed
that Yuchengco had given an ultimatum that if waiver was not obtained by March 31, 1965, the
transaction would have to be cancelled.

In reply to the March 26, 1965 letter, the petitioner sent a letter addressed to Phillips and Sons and
the Phillips spouses informing them that the letter served as notice that all negotiations had been
cancelled. Perez Rubio gave them until March 31, 1965 to pay the balance of the payment for his
shares of stock plus interests and attorney's fees.

The letter served as the last communications between the petitioner and Phillips and Sons and the
Phillips spouses before March 31, 1965 when Civil Case No. 8632 was filed.

Taking into consideration, all the details of the negotiations in the sale of the shares of stock of
Hacienda Benito, Inc. from Phillips and Sons to Mr. Yuchengco, there is no factual or legal basis for
the appellate court's conclusion that the petitioner unlawfully and inofficiously interfered with the
negotiations.

We fail to see any reason why the petitioner should be accused of unlawful interference in
maintaining his stand regarding the sale of shares of stock of Hacienda Benito, Inc. that he still had
the option to rescind the contract between him and Phillips and Sons and stating the existence of his
vendor's hen over said shares of stock.

The petitioner never pretended that he still had full control of the shares of stock which he sold to
Phillips and Sons. He in fact admitted that the shares of stock were already transferred to the
corporation and that he did not have a recorded lien therein. He merely made of record his right to
rescind under the original contract of sale. The details pertaining to the earlier transaction governing
the sale of the shares of stock between the petitioner and Phillips and Sons were in fact, all known to
Yuchengco. And, more important, it is obvious from the records that the petitioner's interest was only
in the payment of the P4,250,000.00 balance due him from Phillips and Sons. Thus, in a meeting
called by Yuchengco where the negotiations for the sale of the shares of stock of Hacienda Benito
were discussed, the petitioner made it clear that he was amenable to his waiving or withdrawing the
controversial November 24, 1964 letter provided his interests would be taken care of and protected.
(Testimony of Perez Rubio, TSN., August 5, 1970, pp. 44-50). Obviously, the petitioner felt that the
payment of his P4,250,000.00 was not secured under the terms of payment proposed by
Yuchengco. He had the right to refuse to withdraw the November 24, 1964 letter. We see nothing
illegal or inofficious about the letter or the refusal to withdraw it.

Whether or not Yuchengco, the prospective buyer, believed that Perez Rubio had a good ground to
rescind and whether or not the buyer's interest would be prejudiced were matters of decision-making
dependent solely on hint In fact the March 12, 1965 letter of Atty. Juan T. David to the petitioner is
quite revealing. Phillips and Sons admitted that under the circumstances, the petitioner's waiver of
the controversial November 24, 1964 letter was unnecessary. The letter disclosed the fact that the
waiver issue was extensively discussed by the parties including their counsel's maintaining the view
that waiver was unnecessary. Thus:

M
a
r
c
h
1
2
,
1
9
6
5

MR. MIGUEL PEREZ RUBIO

c/o Ramirez and Ortigas Law Office

1515 Roxas Boulevard

Manila

Sir:

xxx xxx xxx

Taking advantage of the permission given to us by Mr. Yuchengco, to take up the

aforementioned legal aspect of the 'waiver', with his counsel, Atty. Alberto M. Meer,
we conferred with the latter and expressed our understanding of a 'waiver', and the
conclusion that it has no place in the present case, considering the fact that a 'waiver'
is only appropriate where the person from whom it is sought has a direct recorded
lien on the subject thereof, particularly when the subject is a negotiable instrument;
that, at best, a withdrawal of your aforementioned letter should be sufficient to allay
the fear of Mr. Yuchengco on the possibility of a suit which might involve him after
the sale, if the 'waiver' is not obtained from you.

We also called the attention of Mr. Yuchengco that the shares of stock subject of the
transaction are clean and un-encumbered, therefore, there is nothing to waive on the
part of any person; that the negotiability of the said shares of stock is not impaired by
 the fact that the owner thereof is indebted to another, especially considering the fact
that, instead of securing your credit against my client with the encumbrance of its
shares of stock, you preferred the personal guaranty of Mr. and Mrs. Robert O.
Phillips, as recorded in the corresponding instruments.

Atty. Meer told us that, if we could obtain from you the letter of withdrawal and the
phraseology thereof is adequate, the only obstacle to the consummation of the
transaction will have been removed and he is disposed to advise his client, Mr.
Yuchengco, to go through with the purchase of the shares of stocks of the Hacienda
Benito, Inc., therefore, we reiterate our request for the withdrawal of your
aforementioned letter.

xxx xxx xxx

Very truly yours,

(SGD.)

JUAN
T.
DAVID

Couns
el

for ROBERTO.
PHILLIPS

& SONS, INC.

A carbon copy of a March 12, 1965 letter from Atty. David to Mr. Alfonso Yuchengco was attached to
the letter addressed to Mr. Perez Rubio. In the letter to Mr. Yuchengco, the counsel for Phillips and
Sons stressed the View that the waiver or withdrawal of the Perez Rubio letter was unnecessary.

The conclusion to be drawn from these facts is that the petitioner is not liable for any form of
damages in favor of Phillips and Sons and the Phillips spouses. Consequently, we come to the issue
of whether or not the Phillips spouses are solidarily liable for the debt of Phillips and Sons. This is
the issue raised in the seventh assignment of error.

It should be remembered that on June 23, 1964, Philipps and Sons and the Phillips spouses entered
into an agreement wherein, in consideration of the extension granted to Phillips and Sons in the
payment of the latter's outstanding debt to the petitioner, the Phillips spouses ". . . jointly and
severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc.
under the signed contract of sale dated April 13, 1963. " Phillips and Sons was not able to pay the
petitioner as covenanted in the agreement.

The agreement was not assailed in any of the cases involving the petitioner Phillips and Sons and
the Phillips spouses. Both parties admit the veracity of the agreement. The agreement serves as the
law between the parties. The full enforcement of the agreement's provisions necessarily is in order.
We rule that per agreement, the Phillips spouses are jointly and severally liable to the petitioner for
the outstanding debt of Phillips and Sons with interest therein from April 30, 1964 until fully paid.
The third, fourth, fifth and sixth assignments of errors refer to the actual damages awarded to
Manufacturers Bank and Hacienda Benito by the appellate court.

Both awards were premised on the appellate court's finding that Manufacturers Bank and Hacienda
Benito were wrongfully impleaded as parties by the petitioner in his two petitions earlier filed wherein
two injunctions were issued by this Court. As a result, the parties allegedly suffered damages. The
appellate court premises its findings on the following justifications:

(a) Even before the aborted transaction between ROPSI and Alfonso Yuchengco,
Hacienda Benito, Inc. was already indebted to the Manufacturers Bank the year
before. Appellant ROPSI had also executed real estate mortgages on 78 hectares
out of the 135-hectare holding of Hacienda Benito, Inc. in favor of the Manufacturers
Bank. Subsequently, the Hacienda executed a Memorandum Agreement on June 5,
1965 with Victoria Valley Development Corporation, with the conformity of the
Manufacturers Bank as mortgage creditor, where the financial obligations of the
Hacienda and its other affiliate corporations were restructured thus freeing them from
their financial obligations to the Manufacturers Bank in exchange for 78 hectares of
land which were then mortgaged with the Manufacturers Bank, let alone the payment
of a huge amount of interest on the principal. As of May 21, 1965, the Hacienda and
its affiliates have not paid the Manufacturers Bank P 7,459,042.98 which was already
due and demandable forcing the Manufacturers Bank to file Civil Case No. 8766
against the Hacienda for the foreclosure of the mortgages which resulted in a
compromise agreement between the parties, which the court below approved.
(Defendant's Record on Appeal, pp. 498-499).

(b) As early as October 8, 1965, Miguel Perez Rubio knew that no assets have been
transferred under the Memorandum Agreement of June 5, 1965 and that Victoria
Valley Development Corporation has considered said Agreement without force and
effect making it moot and academic for purposes of rescission (Ibid, p. 501),

(c) There is nothing in the promissory notes and the real estate mortgages forming
part of the records of Civil Case No. 8766 to show that they have been executed in
bad faith or to defeat the credit of Miguel Perez Rubio against ROPSI since they
were executed in 1963 over 78 hectares out of the 135- hectare holding of Hacienda
Benito, Inc. in the Victoria Valley Subdivision so that prior to the default of ROPSI in
the payment of the third installment on August 31, 1964 in favor of Perez Rubio,
there were already prior and existing mortgages over the 78 hectares owned by the
Hacienda in favor of the Manufacturers Bank (Ibid., pp. 501- 502).

(d) The existence of sufficient assets for the payment of the credit of Perez Rubio
failed to contradict the evidence showing the existence of unencumbered properties
of Hacienda Benito, Inc. which were more than sufficient to meet his credit against
ROPSI in the amount of P4,250,000.00 as well as the evidence showing the good
financial position of the Hacienda as shown by Exhibit II -Benito, also marked as
Exhibit 9-MBTC, III Folder of Exhibits, p. 129 (Ibid., pp. 502- 503).

(e) The admission of Perez Rubio that he did not investigate with the corresponding
registers of deeds and other entities the status of the unencumbered properties of
Hacienda Benito, Inc., ROPSI, Robert O. Phillips and his wife, and the other
corporations owned by the Phillips spouses before filing the third-party complaints
against the Manufacturers Bank & Trust Company, Hacienda Benito, Inc. and
Victoria Valley Development Corporation (t.s.n., August 21, 1974, pp. 133- 138). . . .
 xxx xxx xxx

These findings do not justify the appellate court's conclusion that Manufacturers Bank and Hacienda
Benito were wrongfully impleaded and that Perez Rubio owes them millions of pesos in damages as
a result.

In the welter of cases filed by the contending parties over the same properties and the confusion
spawned by the many incidents which gave rise to separate petitions, one basic fact tends to be
forgotten. It is this. The Perez Rubio spouses sold Hacienda Benito, Inc. to Phillips and Sons for
P5,500,000.00 in 1963 or more than 22 years ago. P50,000.00 was paid immediately;
P1,2000,000.00 was due in 60 days; in another 6 months, a third payment of P1,250,000.00 was to
be paid. The full amount should have been paid by April 30, 1967. Up to now, P4.25 million of the
basic indebtedness has not been paid.

The Perez Rubio spouses were not paid as agreed in the contract. When the buyers could not
comply with their commitments, the Perez Rubios graciously acceded to a deferment of overdue
accounts under a new agreement. Still the payments could not be effected under the extension.

All the transactions which led to the litigations by, against, or among Manufacturers Bank, Hacienda
Benito, Phillips and Sons, and the Phillips spouses were entered into at the time when payments on
the petitioner's shares of stock were overdue, A person who has not been paid a balance of
P4,250,000.00 on a sale of P5,500,000.00 will naturally be extremely disturbed to see the buyers
and other parties dealing with the properties in a manner which could be reasonably construed as
calculated to bring them beyond his reach and making full payment of the debt extremely difficult, if
not impossible. It was a normal reaction and to be expected for the original owner to inform third
persons trying to buy the still unpaid properties about that fact of non- payment and to emphasize to
them his right and options under the original contract of sale. It was also normal to include the third
party would-be-buyers who had taken sides with the defaulting original buyer in the litigations
brought against Perez Rubio, the man seeking to protect his endangered interests.

The inclusion of Manufacturers Bank and Hacienda Benito was part and parcel of the efforts to
protect Perez Rubio's interests. It should be noted that petitions wherein they were impleaded had
for their subject matter the same unpaid obligation of P4,250,000.00 from Phillips and Sons. The
properties to be foreclosed by the Bank represented properties of Perez Rubio for which he had not
yet been paid.

There is nothing in the records to show that, far from protecting his P4.25 million, Perez Rubio filed
the third party complaint to vex and humiliate Manufacturers Bank and Hacienda Benito. As we ruled
in the case of R & B Surety and Insurance Company Inc, v. Intermediate Appellate Court (129 SCRA
736):

xxx xxx xxx

While petitioner might have been negligent in not verifying the authenticity of the
signatures in the indemnity agreement, still the same does not amount to bad faith as
to justify the award of damages and the conclusion that the act of filing the complaint
against respondent Uson amounts to malicious prosecution. In filing the action, the
petitioner was only protecting its business interests by trying to recover the amount it
had already paid to the Philippine National Bank.

In a long line of cases, we have consistently ruled that in the absence of a wrongful
act or ommission or of fraud or bad faith, moral damages cannot be awarded and
 that the adverse result of an action does not per se make the action wrongful and
subject the actor to the payment of damages, for the law could not have meant to
impose a penalty on the right to litigate. . . .

The actual damages awarded to both the Manufacturers Bank and Hacienda Benito apart from
having no legal basis were also not duly proven. In fact, the appellate court made no findings of fact
on how it arrived at the total amount of P895,085.14 awarded to Manufacturers Bank much less did
the court discuss the damages awarded to Hacienda Benito. The damages awarded to Hacienda
Benito were only impliedly affirmed by the dispositive portion of the decision wherein it declared that
the decision of the lower court was affirmed in toto.

This can not be done. As we ruled in Perfecto v. Gonzales (128 SCRA 635):

xxx xxx xxx

. . . [A]ctual or compensatory damages are those recoverable because of pecuniary

loss in business, trade, property, profession, job, or occupation, and the same must
be proved; otherwise, if the proof is flimsy and non- substantial, no damages will be
given. In the case of Malonzo v. Galang, log Phil. 16, the Court, speaking through
Justice J.B.L. Reyes, held that with respect to compensatory damages assuming that
they are recoverable under the theory that petitioner had filed a clearly unfounded
suit against respondent, the same constitutes a tort against the latter that makes the
former liable for all damages which are the natural and probable consequences of
the act or omissions complained of. These damages, cannot, however, be presumed
and must be duly proved (Article 2199, New Civil Code). Well settled is the rule that
even if the complaint filed by one against the other is clearly unfounded this does not
necessarily mean, in the absence of specific facts proving damages, that said
defendant reany suffered actual damage over and above attorney's fees and costs.
The Court cannot rely on its relations as to the fact and amount of damages. It must
depend on actual proof of the damages alleged to have been suffered.

Considering these conclusions, the final question to be resolved is whether or not the petitioner is
entitled to moral and exemplary damages? This is the subject matter of the eighth and ninth
assigned errors.

We have stated that the petitioner had valid reasons to implead Manufacturers Bank and Hacienda
Benito in his cases against Phillips and Sons and the Phillips spouses. An assessment of the
evidence in record shows that the filing of the complaint may likewise be characterized as a sincere
attempt on the part of Phillips and Sons and the Phillips spouses to find means or to buy time to pay
their debt to the petitioner. In the case of Manufacturers Bank, the record shows that its active
participation in the transaction involving the properties of Hacienda was legitimate. While no
damages are due the Bank, neither is it liable for damages. As far as Victoria Valley is concerned,
we find no reason to conclude that it was really organized or actively participated to prejudice the
interests of the petitioner. The record shows that Victoria Valley withdrew from the transaction
involving the properties of Hacienda Benito even before the filing of the third party complaint. The
eighth and ninth assignments of errors under consideration are, therefore, without merit.

WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is hereby
REVERSED and SET ASIDE. The respondents Robert O. 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.

SO ORDERED.

Teehankee, Actg. C.J., Melencio-Herrera, Plana and Patajo, JJ., concur.