GR L 6860; (April, 1956) (Digest)
G.R. No. L-6860; April 18, 1956
PHILIPPINE AIR LINES, INC., petitioner, vs. LEOPOLDO PRIETO, NATIONAL AIRPORTS CORPORATION and COURT OF APPEALS, respondents.
FACTS
On March 3, 1949, respondent National Airports Corporation (lessor) granted respondent Leopoldo Prieto an exclusive concession to operate a Snack Bar at the International Airport for two years. Prieto agreed to pay a monthly rental, a royalty on gross sales, and utility charges. The lessor sued Prieto for alleged delinquency in these payments. Prieto counterclaimed for damages, alleging the lessor breached the contract by allowing a store engaged in the same business to operate within the airport premises, specifically in a building leased to petitioner Philippine Air Lines, Inc. (PAL). The lessor then filed a third-party complaint against PAL, alleging the store was opened and maintained by PAL without the lessor’s knowledge and in violation of airport rules binding on PAL, and seeking reimbursement for any damages it would have to pay Prieto. PAL defended itself by claiming it had the lessor’s consent to permit the store and that the store was operated by the PAL Cooperative Association, a separate entity from PAL. The Court of First Instance of Manila dismissed the complaint against Prieto, ordered the lessor to pay Prieto damages, and ordered PAL to reimburse the lessor for that amount. The Court of Appeals affirmed this decision.
ISSUE
Whether the National Airports Corporation is entitled to reimbursement from Philippine Air Lines, Inc. for the damages caused to Leopoldo Prieto by the operation of a competing store within the airport.
RULING
Yes, the National Airports Corporation is entitled to reimbursement from Philippine Air Lines, Inc. The Supreme Court affirmed the decisions of the lower courts. The Court found no merit in PAL’s defenses. First, the Court of Appeals’ finding that the lessor did not consent to the operation of the cooperative store was deemed conclusive and supported by the record, including correspondence showing the lessor demanded the store’s closure and charged PAL with failing to secure the necessary permission, to which PAL did not protest. Second, the Court held that PAL was not being held liable for the acts of the separate PAL Cooperative Association, but for its own acts in authorizing and abetting the establishment and operation of the store within its leased premises in violation of airport rules and regulations binding upon it. Therefore, PAL was correctly ordered to reimburse the lessor for the damages paid to Prieto.