65 - orient air services & hotel representatives vs. ca

8/11/2019 65 - Orient Air Services & Hotel Representatives vs. CA

1/8

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 76931 May 29, 1991

ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, petitioner,vs.COURT OF APPEALS an AMERICAN AIR!LINES INCORPORATE", respondents.

G.R. No. 76933 May 29, 1991

AMERICAN AIRLINES, INCORPORATE", petitioner,vs.COURT OF APPEALS an ORIENT AIR SERVICES & HOTEL REPRESENTATIVES, INCORPORATE", respondents.

Francisco A. Lava, Jr. and Andresito X. Fornier for Orient Air Service and Hotel Representatives, Inc.

Sycip, Salazar, Hernandez & Gataitan for Aerican Airlines, Inc.

PA"ILLA, J.:p

his case is a consolidation of t!o "#$ petitions for revie! on certiorariof a decision1of the Court of %ppeals in C%&'.R. No.

CV&()#*), entitled +%erican %irlines, Inc. vs. Orient %ir Services and -otel Representatives, Inc.+ !hichaffired, !ith odification, the decision 2of the Reional rial Court of Manila, /ranch IV, !hichdisissed the coplaint and ranted therein defendant0s counterclai for aent0s overridin coissionand daaes.

he antecedent facts are as follo!s1

On 23 4anuar5 2*66, %erican %irlines, Inc. "hereinafter referred to as %erican %ir$, an air carrierofferin passener and air caro transportation in the Philippines, and Orient %ir Services and -otelRepresentatives "hereinafter referred to as Orient %ir$, entered into a 'eneral Sales %enc5 %reeent"hereinafter referred to as the %reeent$, !hereb5 the forer authori7ed the latter to act as its e8clusiveeneral sales aent !ithin the Philippines for the sale of air passener transportation. Pertinent provisionsof the areeent are reproduced, to !it1

9INESSE-

In consideration of the utual convenants herein contained, the parties hereto aree asfollo!s1

2. Representation of Aerican !y Orient Air Services

Orient %ir Services !ill act on %erican0s behalf as its e8clusive 'eneral Sales %ent!ithin the Philippines, includin an5 :nited States ilitar5 installation therein !hich arenot serviced b5 an %ir Carrier Representation Office "%CRO$, for the sale of air passenertransportation. he services to be perfored b5 Orient %ir Services shall include1


2/8

"a$ solicitin and prootin passener traffic for the services of %ericanand, if necessar5, eplo5in staff copetent and sufficient to do so;

"b$ providin and aintainin a suitable area in its place of business tobe used e8clusivel5 for the transaction of the business of %erican;

"c$ arranin for distribution of %erican0s tietables, tariffs andprootional aterial to sales aents and the eneral public in theassined territor5;

"d$ servicin and supervisin of sales aents "includin such sub&aentsas a5 be appointed b5 Orient %ir Services !ith the prior !ritten consentof %erican$ in the assined territor5 includin if re


3/8

"i$ ?or transportation solel5 bet!een points !ithin the :nited States andbet!een such points and Canada1 6@ or such other rate"s$ as a5 beprescribed b5 the %ir raffic Conference of %erica.

"ii$ ?or transportation included in a throuh tic>et coverin transportationbet!een points other than those described above1 A@ or such other

rate"s$ as a5 be prescribed b5 the International %ir ransport%ssociation.

"b$ Overridin# coission

In addition to the above coission %erican !ill pa5 Orient %ir Services an overridincoission of B@ of the tariff fares and chares for all sales of transportation over

%erican0s service b5 Orient %ir Service or its sub&aents.

888 888 888

2(. $efa%lt

If Orient %ir Services shall at an5 tie default in observin or perforin an5 of theprovisions of this %reeent or shall becoe ban>rupt or a>e an5 assinent for thebenefit of or enter into an5 areeent or proise !ith its creditors or o into lien in e8ecution, or if it ceases to be in business, this

%reeent a5, at the option of %erican, be terinated forth!ith and %erican a5,!ithout pre=udice to an5 of its rihts under this %reeent, ta>e possession of an5 tic>etfors, e8chane orders, traffic aterial or other propert5 or funds belonin to %erican.

22. IAA and A" R%les

he provisions of this %reeent are sub=ect to an5 applicable rules or resolutions of theInternational %ir ransport %ssociation and the %ir raffic Conference of %erica, and

such rules or resolutions shall control in the event of an5 conflict !ith the provisionshereof.

888 888 888

2B. erination

%erican a5 terinate the %reeent on t!o da5s0 notice in the event Orient %irServices is unable to transfer to the :nited States the funds pa5able b5 Orient %irServices to %erican under this %reeent. Either part5 a5 terinate the %reeent!ithout cause b5 ivin the other B( da5s0 notice b5 letter, telera or cable.

888 888 888 3

On 22 Ma5 2*A2, allein that Orient %ir had reneed on its obliations under the %reeent b5 failin toproptl5 reit the net proceeds of sales for the onths of 4anuar5 to March 2*A2 in the aount of :S#3),)((.)(, %erican %ir b5 itself undertoo> the collection of the proceeds of tic>ets sold oriinall5 b5Orient %ir and terinated forth!ith the %reeent in accordance !ith Pararaph 2B thereof "erination$.?our ")$ da5s later, or on 23 Ma5 2*A2, %erican %ir instituted suit aainst Orient %ir !ith the Court of?irst Instance of Manila, /ranch #), for %ccountin !ith Preliinar5 %ttachent or 'arnishent,Mandator5 In=unction and Restrainin Order #averrin the aforesaid basis for the terination of the

%reeent as !ell as therein defendant0s previous record of failures +to proptl5 settle past outstandin


4/8

refunds of !hich there !ere available funds in the possession of the defendant, . . . to the daae andpre=udice of plaintiff.+ $

In its %ns!er 6!ith counterclai dated * 4ul5 2*A2, defendant Orient %ir denied the aterial alleationsof the coplaint !ith respect to plaintiff0s entitleent to alleed unreitted aounts, contendin that afterapplication thereof to the coissions due it under the %reeent, plaintiff in fact still o!ed Orient %ir a

balance in unpaid overridin coissions. ?urther, the defendant contended that the actions ta>en b5%erican %ir in the course of terinatin the %reeent as !ell as the terination itself !ere untenable,Orient %ir claiin that %erican %ir0s precipitous conduct had occasioned pre=udice to its businessinterests.

?indin that the record and the evidence substantiated the alleations of the defendant, the trial courtruled in its favor, renderin a decision dated 2 4ul5 2*A), the dispositive portion of !hich reads1

9-ERE?ORE, all the foreoin preises considered, =udent is hereb5 rendered infavor of defendant and aainst plaintiff disissin the coplaint and holdin theterination ade b5 the latter as affectin the 'S% areeent illeal and iproper andorder the plaintiff to reinstate defendant as its eneral sales aent for passenertranportation in the Philippines in accordance !ith said 'S% areeent; plaintiff is

ordered to pa5 defendant the balance of the overridin coission on total flo!nrevenue coverin the period fro March 2, 2*66 to Deceber B2, 2*A( in the aount of:SA),A#2.B2 plus the additional aount of :SA,(((.(( b5 !a5 of proper B@overridin coission per onth coencin fro 4anuar5 2, 2*A2 until suchreinstateent or said aounts in its Philippine peso e


5/8

3$ %erican is ordered to pa5 Orient the su of P#3,(((.(( as attorney8s fees.

the rest of the appealed decision is affired.

Costs aainst %erican.%

%erican %ir oved for reconsideration of the aforeentioned decision, assailin the substance thereofand aruin for its reversal. he appellate court0s decision !as also the sub=ect of a Motion for PartialReconsideration b5 Orient %ir !hich pra5ed for the restoration of the trial court0s rulin !ith respect to theonetar5 a!ards. he Court of %ppeals, b5 resolution proulated on 26 Deceber 2*A, denied

%erican %ir0s otion and !ith respect to that of Orient %ir, ruled thus1

Orient0s otion for partial reconsideration is denied insofar as it pra5s for affirance ofthe trial court0s a!ard of e8eplar5 daaes and attorne50s fees, but ranted insofar asthe rate of e8chane is concerned. he decision of 4anuar5 #6, 2*A is odified inpararaphs "2$ and "#$ of the dispositive part so that the pa5ent of the sus entionedtherein shall !e at t0eir /0ilippine peso e'%ivalent in accordance 1it0 t0e official rate ofe2c0an#e le#ally prevailin# on t0e date of act%al payent. 9

/oth parties appealed the aforesaid resolution and decision of the respondent court, Orient %ir aspetitioner in '.R. No. 6*B2 and %erican %ir as petitioner in '.R. No. 6*BB. /5 resolution 1of thisCourt dated #3 March 2*A6 both petitions !ere consolidated, hence, the case at bar.

he principal issue for resolution b5 the Court is the e8tent of Orient %ir0s riht to the B@ overridincoission. It is the stand of %erican %ir that such coission is based onl5 on sales of its servicesactuall5 neotiated or transacted b5 Orient %ir, other!ise referred to as +tic>eted sales.+ %s basis thereof,priar5 reliance is placed upon pararaph 3"b$ of the %reeent !hich, in reiteration, is et stoc>s of %erican %ir, and the forer not havinopted to appoint an5 sub&aents, it is %erican %ir0s contention that Orient %ir can clai entitleent to thedisputed overridin coission based onl5 on tic:eted sales. his is supposed to be the clear eanin ofthe underscored portion of the above provision. hus, to be entitled to the B@ overridin coission, thesale ust be ade b5 Orient %ir and the sale ust be done !ith the use of %erican %ir0s tic>et stoc>s.

On the other hand, Orient %ir contends that the contractual stipulation of a B@ overridin coissioncovers the total revenue of %erican %ir and not erel5 that derived fro tic>eted sales underta>en b5Orient %ir. he latter, in =ustification of its subission, invo>es its desination as the e2cl%sive'eneralSales %ent of %erican %ir, !ith the correspondin obliations arisin fro such aenc5, such as, theprootion and solicitation for the services of its principal. In effect, b5 virtue of such e8clusivit5, +all salesof transportation over %erican %ir0s services are necessaril5 b5 Orient %ir.+ 11


6/8

It is a !ell settled leal principle that in the interpretation of a contract, the entiret5 thereof ust be ta>eninto consideration to ascertain the eanin of its provisions. 12he various stipulations in the contractust be read toether to ive effect to all. 13%fter a careful e8aination of the records, the Court findserit in the contention of Orient %ir that the %reeent, !hen interpreted in accordance !ith the foreoinprinciples, entitles it to the B@ overridin coission based on total revenue, or as referred to b5 theparties, +total flo!n revenue.+

%s the desinated e8clusive 'eneral Sales %ent of %erican %ir, Orient %ir !as responsible for theprootion and ar>etin of %erican %ir0s services for air passener transportation, and the solicitationof sales therefor. In return for such efforts and services, Orient %ir !as to be paid coissions of t!o "#$>inds1 first, a sales aenc5 coission, ranin fro 6&A@ of tariff fares and chares fro sales b5OrientAir 10en ade on Aerican Air tic:et stoc:; and second, an overridin coission of B@ of tarifffares and charesforallsalesof passener transportation over %erican %ir services. It is iediatel5observed that the precondition attached to the first t5pe of coission does not obtain for the secondt5pe of coissions. he latter t5pe of coissions !ould accrue for sales of %erican %ir servicesade not on its tic>et stoc> but on the tic>et stoc> of other air carriers sold b5 such carriers or otherauthori7ed tic>etin facilities or travel aents. o rule other!ise, i.e., to liit the basis of such overridincoissions to sales fro %erican %ir tic>et stoc> !ould erase an5 distinction bet!een the t!o "#$t5pes of coissions and !ould lead to the absurd conclusion that the parties had entered into a contract!ith eaninless provisions. Such an interpretation ust at all ties be avoided !ith ever5 effort e8ertedto haroni7e the entire %reeent.

%n additional point before finall5 disposin of this issue. It is clear fro the records that %erican %ir !asthe part5 responsible for the preparation of the %reeent. Conseen +contra proferente+, i.e., construed aainst the part5 !ho caused theabiuit5 and could have avoided it b5 the e8ercise of a little ore care. hus, %rticle 2B66 of the CivilCode provides that the interpretation of obscure !ords or stipulations in a contract shall not favor thepart5 !ho caused theobscurit5. 1#o put it differentl5, !hen several interpretations of a provision are other!ise e


7/8

On the atter of daaes, the respondent appellate court odified b5 reduction the trial court0s a!ard ofe8eplar5 daaes and attorne50s fees. his Court sees no error in such odification and, thus, affirsthe sae.

It is believed, ho!ever, that respondent appellate court erred in affirin the rest of the decision of thetrial court. 9e refer particularl5 to the lo!er court0s decision orderin %erican %ir to +reinstate defendant

as its eneral sales aent for passener transportation in the Philippines in accordance !ith said 'S%%reeent.+

/5 affirin this rulin of the trial court, respondent appellate court, in effect, copels %erican %ir toe8tend its personalit5 to Orient %ir. Such !ould be violative of the principles and essence of aenc5,defined b5 la! as a contract !hereb5 +a person binds hiself to render soe service or to do soethinin representation or on behalf of another, 9I- -E CONSEN OR %:-ORIF O? -E G%ER . 17"ephasis supplied$ In an aent&principal relationship, the personalit5 of the principal is e8tended throuhthe facilit5 of the aent. In so doin, the aent, b5 leal fiction, becoes the principal, authori7ed toperfor all acts !hich the latter !ould have hi do. Such a relationship can onl5 be effected !ith theconsent of the principal, !hich ust not, in an5 !a5, be copelled b5 la! or b5 an5 court. he %reeentitself bet!een the parties states that +either part5 a5 terinate the %reeent1it0o%t ca%seb5 ivinthe other B( da5s0 notice b5 letter, telera or cable.+ "ephasis supplied$ 9e, therefore, set aside the

portion of the rulin of the respondent appellate court reinstatin Orient %ir as eneral sales aent of%erican %ir.

9-ERE?ORE, !ith the foreoin odification, the Court %??IRMS the decision and resolution of therespondent Court of %ppeals, dated #6 4anuar5 2*A and 26 Deceber 2*A, respectivel5. Costs aainstpetitioner %erican %ir.

SO ORDERED.

5elencio9Herrera, and Re#alado, JJ., conc%r.

/aras, J., too: no part. Son is a partner in one of t0e co%nsel.

Sariento, J., is on leave.

Foo'no'()

2 Penned b5 4ustice Serafin /. Cailon and concurred in b5 4ustices 4ose C. Capos,4r. and Desiderio P. 4urado.

# Penned b5 4ude -erinio C. Mariano.

B Rollo, pp. 22(&22A.

) Rollo, p. 2(#.

3 I!id., p. 2().

I!id., p. 2#2.

6 Rollo, p. 2#.


8/8

A Rollo, pp. 26B&26).

* I!id., p. #2(.

2( Rollo, p. #2#.

22 Rollo, p. #*2.

2# N%ESS Shippin Philippines, Inc. vs. NGRC, '.R. No. 6B))2, ) Septeber 2*A6, 23BSCR% 36.

2B North Neros Suar Co. vs. Copania 'eneral de abacos, No. G&*#66, #* March2*36; %rticle 2B6), Civil Code of the Philippines.

2) Ein Corporation vs. Interediate %ppellate Court, '.R. No. 6))32, #3Ma5 2*AA, 22 SCR% 32A.

23 'overnent of the Philippine Islands vs. Derha /rothers and the International

/an>in Corporation, B Phil. *(.

he Ga!phil Pro=ect & %rellano Ga! ?oundation

65 - orient air services & hotel representatives vs. ca

Documents