G.R. No. 173586 ; March 14, 2012
MCA-MBF COUNTDOWN CARDS PHILIPPINES INC., ET AL., Petitioners, vs. MBF CARD INTERNATIONAL LIMITED AND MBF DISCOUNT CARD LIMITED, Respondents.

FACTS

Respondents MBf Card and MBf Discount Card, foreign corporations, negotiated with petitioner MCA Holdings, through Amable Aguiluz V, to form a joint venture company (JVC) to operate a discount card business in the Philippines using the “Countdown” trademark. Pending final agreements, Aguiluz V incorporated petitioner MCA-MBF as the intended JVC. At his request, respondents remitted US$74,074.04 to MCA-MBF’s bank account as payment for their 40% equity share, to be applied only upon execution and approval of the formal Joint Venture and Licensing Agreements. While negotiations were ongoing, petitioners, through MCA-MBF, began promoting and selling Countdown Discount Cards to the public using the trademark. Despite respondents’ written demands to cease all activities until contracts were finalized, and petitioners’ promise to comply, petitioners proceeded to advertise the cards. This prompted respondents to terminate negotiations and demand a refund of their remittance and cessation of trademark use, leading to the filing of a complaint for recovery of money and damages.

ISSUE

Whether the petitioners, in their individual capacities, can be held personally liable to refund the US$74,074.04 remitted by the respondents for the proposed joint venture.

RULING

Yes. The Supreme Court affirmed the personal liability of the individual petitioners. The legal logic rests on the absence of a perfected consensual contract. For a joint venture agreement to be binding, it must be perfected by consent under Article 1315 of the Civil Code. Here, the parties were merely in the negotiation stage, with no final and executed agreements. The remittance was made with a clear condition—it was to be applied as payment for shares only upon the execution and approval of the formal contracts. Since those contracts were never finalized, the obligation to return the money arose from the failure of the condition and the law on solutio indebiti. The payment was received by MCA-MBF without a lawful cause. The Court rejected the argument that liability rested solely with the corporation, MCA-MBF, requiring piercing of the corporate veil. The individual petitioners, particularly Aguiluz V, who actively negotiated and requested the fund transfer, were held liable in their personal capacities as the parties who received the money under a conditional arrangement that never materialized. They effectively held the funds in trust for the specific, unfulfilled purpose, justifying direct personal liability for its restitution.