G.R. No. L-7969; March 30, 1960
JAI-ALAI CORPORATION OF THE PHILIPPINES, plaintiff-appellant, vs. LUIS CHING KIAT BIEK, ET AL., defendants-appellees.

FACTS

Plaintiff Jai-Alai Corporation invited proposals to lease bars and restaurants in its stadium. Defendants submitted a bid, which plaintiff accepted. The agreement, as modified, required defendants to operate the concessions for five years, investing a minimum amount in rehabilitation and equipment, which would become plaintiff’s property upon contract expiration. Defendants would pay a percentage of gross sales with a guaranteed minimum annual rental. During rehabilitation, defendants discovered costs would far exceed the agreed investment. Plaintiff agreed to assume the excess cost under conditions, including that defendants secure a loan for it, amortized with rentals. Defendants later requested rental reductions, citing losses and plaintiff’s interference in management and failure to provide agreed facilities (elevator, air conditioning, checkroom). On January 15, 1949, defendants closed the Sky Room. On January 24, 1949, plaintiff took over all concessions, later operating or subleasing them. Plaintiff filed an action for damages due to alleged breach of contract by defendants. Defendants counterclaimed for reimbursement of their investments, damages for plaintiff’s violations, and unrealized profits. The trial court found for defendants, ordering plaintiff to pay them a net amount after crediting sums due to plaintiff.

ISSUE

Whether the trial court erred in ruling in favor of the defendants and ordering the plaintiff to reimburse them for their investments after finding the plaintiff responsible for breaching the contract.

RULING

The Supreme Court affirmed the trial court’s decision. The evidence established that plaintiff, through its officers, accepted defendants’ bid and the subsequent modifications. The court found that plaintiff unjustifiably interfered with defendants’ management of the concessions and failed to provide agreed-upon facilities. Plaintiff’s act of taking over the concessions on January 24, 1949, constituted a violation of the contract that relieved defendants of liability, particularly for future rents. The trial court correctly computed the amounts due to defendants for their investments, minus legitimate credits in favor of plaintiff (such as percentages due, advances, utility shares, and an assumed debt). The Supreme Court found no error in the lower court’s judgment and affirmed it, with costs against the plaintiff-appellant.