G.R. No. 125947 ; June 8, 2000
ROMAGO ELECTRIC CO., INC., petitioner, vs. COURT OF APPEALS, TOYOTA SHAW, INC. and SEVERINO C. LIM, respondents.

FACTS

Petitioner Romago Electric Co., Inc. and Motown Vehicles, Inc. were sister companies. Romago occupied a building owned by Motown, which was built on a lot leased from Tanglaw Realty, Inc. When Motown ceased operations, Romago took over the building and assumed the obligation to pay lease rentals directly to Tanglaw. Subsequently, the stockholders of Motown, through Francisco Gonzales, sold all shares and assets of Motown to respondent Toyota Shaw, Inc. (TSI) under a Stock Purchase Agreement. This agreement stipulated that TSI assumed none of Motown’s liabilities except specified loans. A clause in the prior offer to sell noted that the premises were occupied by Romago and that adequate time had to be agreed upon for a peaceful transfer, but portions could be occupied immediately by the buyer for training purposes. From February to May 1989, Romago and TSI jointly occupied the premises. Romago paid the rentals and utilities for February and March, while TSI paid for April and May. Romago later demanded from TSI a share of the rentals and utilities it had paid, leading to a collection suit.

ISSUE

Whether Toyota Shaw, Inc. is liable to reimburse Romago Electric Co., Inc. for a proportionate share of the rentals and utilities paid for their period of joint occupancy.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision, absolving TSI from liability. The Court found no express or implied contract between Romago and TSI regarding the sharing of occupancy expenses. The Stock Purchase Agreement was exclusively between Motown’s vendors and TSI, and Romago was not a party to it. The clause in the prior offer concerning Romago’s occupancy was merely an informative statement of fact and did not create an obligation for TSI to share expenses with Romago. The subsequent conduct of the parties—where each paid for the months they primarily used the premises—was deemed to be out of mutual consideration and equity, not pursuant to any verbal agreement. Furthermore, Romago’s new argument on appeal, that reimbursement was due under Article 1236 of the Civil Code (payment by a third person), was raised too late. Points of law, theories, and arguments not brought up in the proceedings below cannot be raised for the first time on appeal, as doing so violates basic rules of fair play and due process. Thus, with no contractual basis established and a belated legal theory, TSI incurred no obligation to reimburse Romago.