G.R. No. 100574 September 28, 1992
SPOUSES MARINO AND LINA JOEL SAPUGAY, petitioners, vs. HON. COURT OF APPEALS, RUFINO MOJARES and NESTOR RECTO, respondents.

FACTS

Petitioners Spouses Marino and Lina Joel Sapugay, owners of Romar Trading, were engaged in the sale of liquefied petroleum gas. In April 1982, they were approached by Dante Tiquio, authorized by Nemar Marketing Corporation (represented by its president Rufino Mojares and general manager Nestor Recto, the private respondents), to sell its Mobilflame Gas refilling and dealership business in Sto. Tomas, Batangas. The parties agreed on a sale: P200,000 for the business goodwill and P500,000 for the lot and improvements, with petitioners assuming the existing mortgage to Filinvest Finance Corporation. Petitioners were introduced to Mobil Oil Philippines, Inc., which consented to their takeover of the dealership. On June 16, 1982, petitioners signed a Deed of Conveyance with Assumption of Obligation and a Supplementary Agreement, both dated June 18, 1982, and delivered four postdated checks totaling P200,000 for the goodwill. They replaced the first three checks with manager’s checks and cash, but the fourth check was not honored.
Pursuant to the agreement, Nemar resigned as Mobil dealer, turned over equipment, and furnished a list of subdealers. Mobil Oil signed a letter-agreement on June 21, 1982, constituting petitioners as authorized dealers and lending equipment. Petitioners undertook operational steps: hiring guards, insuring equipment, obtaining permits, printing documents, transferring electrical registration, advertising, and inaugurating the business. However, Mobil Oil later refused to supply LPG unless petitioners submitted a bond, initially P200,000, then increased to P500,000 and P700,000. Petitioners could not secure the bond because surety companies required a copy of the dealership agreement, which Mobil refused to issue without the bond. Due to this failure, Mobil rejected petitioners as dealers and awarded the dealership to Island Gas Corporation.
Subsequently, Mobil Oil filed a replevin case against petitioner Lina Joel Sapugay to recover loaned equipment, but the court decided in her favor, awarding her damages. Meanwhile, Nemar filed a criminal complaint for violation of B.P. 22 due to dishonored checks. Petitioners filed a civil case against Nemar, Mojares, and Recto for reformation of instruments and sum of money, seeking to reform the deeds and recover the P150,000 paid for goodwill, alleging fraudulent acts by private respondents. The Regional Trial Court ruled in favor of petitioners, ordering reformation of the documents, return of the P150,000, and payment of attorney’s fees. The Court of Appeals reversed this decision, dismissing petitioners’ complaint and ordering them to pay the remaining P50,000 balance for the goodwill and P10,000 in attorney’s fees to private respondents.

ISSUE

Whether the payment for the goodwill of the business is returnable by private respondents to petitioners if petitioners were not finally awarded the right to operate the LPG refilling and dealership business by Mobil Oil.

RULING

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals. The Court held that the sale of the goodwill was final and not contingent upon petitioners securing the dealership from Mobil Oil. The evidence showed that private respondents had fully delivered the goodwill by resigning as Mobil dealer, turning over the business, and facilitating petitioners’ introduction to Mobil, which initially consented to the takeover. The subsequent refusal of Mobil to award the dealership was due to petitioners’ failure to submit the required bond, a matter over which private respondents had no control or participation. The Court found that private respondents were not liable to return the P150,000 paid for the goodwill because they had fulfilled their obligations under the agreement. Instead, petitioners were ordered to pay the remaining P50,000 balance for the goodwill. The Court emphasized that petitioners’ cause of action for damages due to failure to secure the dealership lay against Mobil Oil, not against private respondents, as evidenced by the prior replevin case where petitioners successfully counterclaimed against Mobil for damages.