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Velayo v.

Shell
Facts:
Shell (R), headquartered in England, supplied the fuel of Commercial Air Lines Inc. (P)
which headquartered in the HSBC building, Makati. Ps financial condition was poor so
Sycip, a board member of P, offered to R a Douglas C-54 plane for partial fulfilment of
their accounts. Ps management then convened its creditors including Fitzgerald in an
informal luncheon in the Trade and Commerce Building at Juan Luna St., Manila
wherein it informed them of its insolvency and had to close. 194 creditors had been the
principal creditors. The creditors present agreed to the formation of the working
committee to supervise the preservation of the properties of the corporation and agreed
further that Fitzgerald of R shall represent the creditors as a whole in this committee.
However, Rs sister American corp. Shell Oil Inc. filed a collection suit against P before
the California court in which the plane located at Ontario International Airport in San
Bernardino, California was attached. The latter court ruled in its favour. The National
Airports Corp. learned of this and filed against P with attachment but P filed for voluntary
insolvency to stay the action. Velayo was appointed as Ps assignee.
Velayo filed for injunction against Ps prosecution with attachment of the plane in the
US. R retorted that Fitzgerald merely attended the luncheon and had no interest in the
US case. The lower court rendered judgment against P.
Issue:
Whether R isnt civilly liable.
Ruling:
No. The court held that R taking advantage of his knowledge that insolvency
proceedings were to be instituted by P if the creditors did not come to an understanding
as to the manner of distribution of the insolvent asset among them, and believing it most
probable that they would not arrive at such understanding as it was really the case
schemed and effected the transfer of its sister corporation in the United States, where
Ps plane C-54 was by that swift and unsuspected operation efficaciously disposed of
said insolvents property depriving the latter and the Assignee that was latter appointed,
of the opportunity to recover said plane. This is against Art. 19 of the Civil Code. No
person should unjustly enrich himself at the expense of another. R is liable for
damages.

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