Pioneer v. CA
Pioneer v. CA
Jacob S. Lim was engaged in the airline business as owner-operator of Southern Air Lines (SAL). On May
17, 1965, Japan Domestic Airlines (JDA) and Lim entered into and executed a sales contract for the sale
and purchase of two (2) DC-3A Type aircrafts and one (1) set of necessary spare parts. Pioneer
Insurance and Surety Corporation (Pioneer, petitioner in G.R. No. 84197) as surety executed and issued
its Surety Bond No. 6639 n favor of JDA, in behalf of its principal, Lim, for the balance price of the
aircrafts and spare parts.
Border Machinery and Heavy Equipment Company, Inc. (Bormaheco), Francisco and Modesto Cervantes
and Constancio Maglana contributed some funds used in the purchase of the above aircrafts and spare
parts. The funds were supposed to be their contributions to a new corporation proposed by Lim to expand
his airline business. They executed two (2) separate indemnity agreements in favor of Pioneer, one
signed by Maglana and the other jointly signed by Lim for SAL, Bormaheco and the Cervanteses.
Lim doing business under the name and style of SAL executed in favor of Pioneer as deed of chattel
mortgage as security for the latter's suretyship in favor of the former. It was stipulated therein that Lim
transfer and convey to the surety the two aircrafts.
Lim defaulted on his subsequent installment payments prompting JDA to request payments from the
surety. Pioneer paid a total sum of P298,626.12.
Pioneer filed an action for judicial foreclosure with an application for a writ of preliminary attachment
against Lim and respondents, the Cervanteses, Bormaheco and Maglana.
Maglana, Bormaheco and the Cervanteses filed cross-claims against Lim alleging that they were not
privies to the contracts signed by Lim and, by way of counterclaim, sought for damages for being exposed
to litigation and for recovery of the sums of money they advanced to Lim for the purchase of the aircrafts
in question.
Issue:
Whether Bormaheco, Spouses Cervantes, and Constancio Maglana are entitled to reimbursement of the
supposed losses of the proposed corporation?
Ruling:
No.
There is no de facto partnership was created among the parties which would entitle the petitioner to a
reimbursement of the supposed losses of the proposed corporation. The record shows that the petitioner
was acting on his own and not in behalf of his other would-be incorporators in transacting the sale of the
airplanes and spare parts.
In the instant case, it is to be noted that the petitioner was declared non-suited for his failure to appear
during the pretrial despite notification. In his answer, the petitioner denied having received any amount
from respondents Bormaheco, the Cervanteses and Maglana. The trial court and the appellate court,
however, found through Exhibit 58, that the petitioner received the amount of P151,000.00 representing
the participation of Bormaheco and Atty. Constancio B. Maglana in the ownership of the subject airplanes
and spare parts. The record shows that defendant Maglana gave P75,000.00 to petitioner Jacob Lim thru
the Cervanteses.
It is therefore clear that the petitioner never had the intention to form a corporation with the respondents
despite his representations to them. This gives credence to the cross-claims of the respondents to the
effect that they were induced and lured by the petitioner to make contributions to a proposed corporation
which was never formed because the petitioner reneged on their agreement.