G.R. No. 164703 & G.R. No. 164747; May 4, 2010
Allan C. Go, doing business under the name and style “ACG Express Liner,” vs. Mortimer F. Cordero; and Mortimer F. Cordero vs. Allan C. Go, doing business under the name and style “ACG Express Liner,” Felipe M. Landicho and Vincent D. Tecson.

FACTS

Mortimer Cordero was appointed the exclusive distributor of Aluminium Fast Ferries Australia (AFFA) catamarans in the Philippines. He successfully negotiated the sale of one SEACAT 25 vessel to Allan Go’s ACG Express Liner, entitling him to a commission. Cordero later discovered that Go, through his lawyers Felipe Landicho and Vincent Tecson, was dealing directly with AFFA’s Tony Robinson to purchase a second vessel, thereby bypassing his exclusive distributorship. Cordero demanded that they respect his rights, but AFFA claimed his appointment was for a single transaction only. Attempts at amicable settlement, where Landicho and Tecson allegedly promised to secure a payment from Go in exchange for a 20% cut, failed. Cordero then filed a complaint with the Bureau of Customs to detain the second vessel and subsequently filed a civil case for damages against Go, Robinson, Landicho, and Tecson.
The Regional Trial Court dismissed the complaint, finding no exclusive distributorship agreement was perfected and that Cordero failed to prove bad faith. The Court of Appeals reversed the dismissal, holding Go, Landicho, and Tecson solidarily liable for actual and moral damages, but absolving Robinson for lack of jurisdiction. Both Cordero (on the award amount) and Go (on the liability) elevated the case to the Supreme Court via separate petitions.

ISSUE

Whether respondents Allan Go, Felipe Landicho, and Vincent Tecson are liable for damages to petitioner Mortimer Cordero for violating his exclusive distributorship rights.

RULING

Yes, the respondents are solidarily liable for damages. The Supreme Court affirmed the CA’s finding of liability but modified the awarded amounts. The legal logic rests on the principle of abuse of rights under Article 19 of the Civil Code. While no formal, perfected exclusive distributorship contract may have existed between Cordero and AFFA, Cordero had a prior existing business relationship with AFFA and had already facilitated the first sale to Go. Go, Landicho, and Tecson, with full knowledge of Cordero’s role and expected commission, deliberately excluded him from the second transaction to avoid paying his rightful compensation. This act of dealing directly with the principal, in bad faith and with intent to circumvent Cordero’s intermediary efforts, constitutes abuse of rights and contravenes the standards of human conduct required by Article 19. Their concerted actions to secretly negotiate the second sale, followed by deceptive settlement talks meant only to delay Cordero while the vessel was delivered, established the willful intent to cause him injury. Consequently, they are jointly and severally liable for the actual damages equivalent to the lost commission from the second vessel, with legal interest. The award for moral damages was deleted for lack of sufficient basis to show the besmirched reputation or similar injury required for such an award.