REMEDIAL LAW | Pepsi Co., Inc. v. Emerald Pizza, Inc., G.R. No. 153059, Aug. 14, 2007

Pepsi Co., Inc. v. Emerald Pizza, Inc.,

G.R. No. 153059, Aug. 14, 2007


FACTS: Petitioner PepsiCo, Inc. (PepsiCo) is a foreign corporation organized and existing under the laws of North Carolina, U.S.A. and licensed to do business in the Philippines. Its operating unit, PepsiCo Restaurants International, oversees the company's restaurants outside the United States and Canada. On March 12, 1981, respondent Emerald Pizza, Inc. (Emerald), a domestic corporation, entered into a 20-year Franchise Agreement[5] with one of PepsiCo's restaurant businesses, the Pizza Hut, Inc. (Pizza Hut), a Delaware (U.S.A.) corporation. Emerald also entered into a Marketing Services Agreement with PepsiCo, which was implemented in March 1982 due to an alleged breach by the franchisor of the franchise agreement, Emerald instituted a civil action against PepsiCo. However, the parties amicably settled their differences and executed a compromise agreement to this effect on January 13,1989 in implementing the provisions of the compromise agreement, Emerald and Pizza Hut again executed an Amendatory Agreement. Then again, on account of purported violations by the franchisor of the franchise agreement, among which was its refusal to renew the franchise, Emerald, on April 23, 1996, instituted before the Regional Trial Court (RTC) of Pasig City. A Complaint against PepsiCo for specific performance, injunction and damages with an application for the issuance of a temporary restraining order (TRO) or a writ of preliminary injunction. In opposing Emerald's application for a TRO, PepsiCo, through its resident representative, argued, among others, that it was not a signatory to the franchise agreement subject of the case, thus, the complaint states no cause of action for it was not brought against the real... party-in-interest. Whether PepsiCo is a real party-in-interest in the civil case filed by Emerald.


RULING Yes. Under the Rules of Civil Procedure, every action must be prosecuted or defended in the name of the real party-in-interest, the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. “Interest" within the meaning of the rule means material interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest.


Here, is true that PepsiCo is not a signatory to the March 12, 1981 Franchise Agreement, the parties thereto being only Pizza Hut and Emerald. However, the settlement agreement entered into by the parties herein and Pizza Hut on January 13, 1989 clearly reveals that PepsiCo also... assumed the obligations of Pizza Hut in the said franchise agreement and that it was in effect acting as a franchisor together with Pizza Hut. PepsiCo could not have allowed Emerald to relocate its then existing restaurant, granted it a third unit site, reduced the protective radius of the franchise, guaranteed its sales, represented that the overseeing unit would accede to the settlement, and agreed to execute a... franchise agreement without prejudice to the original term agreed upon in the March 12, 1981 franchise, had it not been acting as one of the franchisors or had it not assumed the duties, rights and obligations of a franchisor. Thus, in this suit involving the franchise, PepsiCo... is a real party-in-interest. The subsequent execution of the amendatory agreement on March 3, 1989 only by and between Emerald and Pizza Hut does not in any way relieve PepsiCo of the obligations it assumed as a franchisor in the settlement agreement. Let it be noted that the said amendatory agreement came... into being merely to formally implement the stipulations in the settlement.







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