FIRST DIVISION
G.R. No. 190667, November 07, 2016
COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner, v. SPOUSES JOSE R. BERNARDO AND LILIBETH R. BERNARDO, DOING BUSINESS UNDER THE NAME AND STYLE "JOLLY BEVERAGE ENTERPRISES," Respondents.
D E C I S I O N
SERENO, C.J.:
This is a Petition for Review1 filed by Coca-Cola Bottlers Philippines, Inc. (petitioner), from the Court of Appeals (CA) Decision2 and Resolution3 in CA-GR. CV No. 91096. The CA affirmed in toto the Decision4 of Regional Trial Court (RTC) Branch 88 in Quezon City in Civil Case No. Q-00-42320.
This case originated from the claim for damages filed by respondent spouses Jose and Lilibeth Bernardo (respondents) against petitioner for violation of Articles 19, 20, 21, and 28 of the Civil Code. The RTC found petitioner liable to pay respondents temperate damages in the amount of P500,000 for loss of goodwill, to be offset against the latter's outstanding balance for deliveries in the amount of P449,154. The trial court ordered petitioner to pay P50,000 as moral damages, P20,000 as exemplary damages, and P100,000 as attorney's fees.
Petitioner asserts that the Complaint had no basis, and that the trial court had no jurisdiction to award temperate damages in an amount equivalent to the outstanding obligation of respondents. It prays not only for the reversal of the assailed judgments, but also for an award of moral and exemplary damages, as well as attorney's fees and litigation expenses. It also asks that respondents be ordered to pay P449,154 plus legal interest from the date of demand until full payment.5
We deny the Petition.chanroblesvirtuallawlibrary
[Petitioner] infiltrated certain areas in Quezon City at the expense of and later, in derogation of its wholesalers, particularly [respondents]. As admitted by Allan Mercado, the Integrated Selling and Marketing Manager of appellant, it was previously dependent on wholesalers to circulate its products around the country. x x x.
x x x x
[T]owards the end of the partnership, appellant employed a different marketing scheme purportedly to obviate the poor dealership management from wholesalers in major areas. But as may be shown by the incidents leading to the filing of this case, this method was designed strategically to overrun [respondents'] business and take over the customers of its wholesalers.
x x x x
One such method was "different pricing schemes" wherein the prices given to supermarkets and grocery stores were considerably lower than those imposed on wholesalers. No prior advice thereof was given to [respondents] or any of the wholesalers. In fact, they only knew of it when their customers began complaining about the variation in prices of softdrinks sold in supermarkets and those that were sold by them. When in fact [respondent] Bernardo personally inspected the products in grocery stores, he discovered that a box of Coke-in-can is sold at P40.00, lower than those offered by them as wholesalers.
About the same time, [petitioner] also implemented the "Area Market Cooperatives" (AMC) and the "Coke-Alok" promo. Under the AMC, customers of wholesalers can purchase [petitioner's] products from prominent stores in heavily crowded areas for P76.00 per case, as opposed to [respondent's] offering of P112.00. In "Coke-Alok," [petitioner] directly sold Coke products to wholesale customers with incentives as free bottle of Coke for every case of softdrinks purchased. Being of limited resources, [respondents had no] means to equal the lucrative incentives given by [petitioner] to their customers.
x x x x
Apart from direct selling and other promotions, [petitioner] also employed high-handed means that further shrunk [respondents'] market coverage. In one instance, [petitioner's sales representative] advised [respondents] and other wholesalers to keep away from major thoroughfares. Apparently, [petitioner] was going to supply their products to these stores themselves. x x x.
x x x x
x x x Furthermore, one of [petitioner's] representatives, Nelson Pabulayan, admitted that he sold products at the canteen in V. Luna Hospital [which was then being serviced by respondents].
As if that was not enough, petitioner engaged other stores, such as Freezel's Bakeshop that was located adjacent to [respondent's] warehouse, to sell Coke products at a price substantially lower than [that offered by respondents].
This [cut-throat competition] is precisely what appellant did in order to take over the market: directly sell its products to or deal them off to competing stores at a price substantially lower than those imposed on its wholesalers. As a result, the wholesalers suffered losses, and in [respondents'] case, laid ofT a number of employees and alienated the patronage of its major customers including small-scale stores.It must be emphasized that petitioner is not only a beverage giant, but also the manufacturer of the products; hence, it sets the price. In addition, it took advantage of the infonnation provided by respondents to facilitate its takeover of the latter's usual business area. Distributors like respondents, who had assisted petitioner in its marketing efforts, suddenly found themselves with fewer customers. Other distributors were left with no choice but to fold.51
Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.In Albenson Enterprises Corp. v. CA,53 this Court held that under any of the above provisions of law, an act that causes injury to another may be made the basis for an award of damages. As explained by this Court in GF Equity, Inc. v. Valenzona:54chanroblesvirtuallawlibrary
Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same.
Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.
The exercise of a right ends when the right disappears; and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justice which gives it life is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another or offends morals or good customs. Over and above the specific precepts of positive law are the supreme norms of justice which the law develops and which are expressed in three principles: honeste vivere, alterum non laedere and jus suum quique tribuere; and he who violates them violates the law. For this reason, it is not permissible to abuse our rights to prejudice others.Meanwhile, the use of unjust, oppressive, or high-handed business methods resulting in unfair competition also gives a right of action to the injured party. Article 28 of the Civil Code provides:chanRoblesvirtualLawlibrary
Art. 28. Unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby sutlers damage.Petitioner cites Tolentino, who in turn cited Colin and Capitant. According to the latter, the act of "a merchant [who] puts up a store near the store of another and in this way attracts some of the latter's patrons" is not an abuse of a right.55 The scenario in the present case is vastly different: the merchant was also the producer who, with the use of a list provided by its distributor, knocked on the doors of the latter's customers and offered the products at a substantially lower price. Unsatisfied, the merchant even sold its products at a preferential rate to another store within the vicinity. Jurisprudence holds that when a person starts an opposing place of business, not for the sake of profit, but regardless of Joss and for the sole purpose of driving a competitor out of business, in order to take advantage of the effects of a malevolent purpose, that person is guilty of a wanton wrong.56
WHEREFORE, premises considered, it is most respectfully prayed that the Honorable Court render a judgment directing defendants to:Petitioner's argument is flimsy and unsupported even by the cases it has cited.57 The CA correctly ruled that the award of temperate damages was justified, even if it was not specifically prayed for, because 1) respondents did pray for the grant of "other reliefs," and 2) the award was clearly warranted under the circumstances. Indeed, the law permits judges to award a different kind of damages as an alternative to actual damages:chanRoblesvirtualLawlibraryOther reliefs which are just and equitable under the premises are also prayed for.
- Pay plaintiffs the amount of P1,000,000.00 representing loss of goodwill nurtured over the past 13 years as actual damages.
- Pay plaintiffs the amount of P200,000 representing moral damages.
- Pay plaintiffs the amount of P100,000 representing exemplary damages.
- Pay plaintiffs the amount of P100,000 representing attorney's fees.
Civil Code, Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty. (Emphasis supplied)Compensatory damages may be awarded in the concept of temperate damages for injury to business reputation or business standing, loss of goodwill, and loss of customers who shifted their patronage to competitors.58
Endnotes:
1Rollo, pp. 10-35.
2 Penned by Presiding Justice Conrado M. Vasquez and concurred in by Associate Justices Arturo G. Tayag and Ramon M. Bato, Jr., dated 23 July 2009; id. at 42-59.
3 Dated 19 November 2009; id. at 60-61.
4 Penned by Presiding Judge Rosanna Fe Romero-Maglaya, dated 28 September 2007; id. at 109-121.
5 Id. at 34.
6 Id. at 43.
7 Id.
8 Id.
9 Id.
10 Id. at 93-95.
11 Id. at 93-94.
12 Agreement; id. at 97-99.
13Rollo, p. 110.
14 This observation was consistent with respondents' claim that they had faithfully complied with all their obligations.
15Rollo, p. 44, 110.
16 Id.
17 Id. at 110.
18 Id.
19 Id. at 111.
20 Id. at 53.
21 Id.
22 Id. at 55.
23 Id. at 115.
24 Id. at 45.
25 Id. at 62-64.
26 Id.
27 ld. at 82-92.
28See Answer, id. at 66-76.
29 Id. at 71.
30 Id. at 74.
31 Id. 109-121.
32 Id. at 120.
33 Id.
34 Id. at 121.
35 Id.
36 Id.
37 Order dated 8 February 2008; id. at 141-143.
38Rollo, pp. 52-55.
39 Id. at 25.
40 Id. at 26.
41 Id. at 27.
42 Id. at 28.
43 Id. at 30.
44 Id. at 25.
45 Id. at 12-13.
46Castillo v. CA, 329 Phil. 150 ( 1996).
47Rollo, pp. 21, 26-27.
48People v. Cabalhin y Daclitan, G.R. No. 100204, 28 March 1994, 231 SCRA 486 citing People v. Rodriguez y Teves, 254 Phil. 763 (1989); People v. Solares y Manaloto, 255 Phil. 196 (1989).
49Rollo, pp. 56, 118.
50 Id. at 54.
51 Glicerio Oliveros, Jr. and Zenaida Flores testified that they had closed their stores because of business losses; see id. at 116.
52Carpio v. Valmonte, 481 Phil. 352 (2004).
53 G.R. No. 88694, 11 January 1993, 217 SCRA 16.
54 501 Phil. 153, 164-165 (2005) citing De Guzman v. NLRC, G.R. No. 90856, 23 July 1992, 211 SCRA 723 further citing Tolentino, Civil Code of the Philippines, Vol. 1, 61 (1990).
55Rollo, p. 30.
56Willaware Products Corp. v. Jesichris Manufacturing Corp., G.R. No. 195549, 3 September 2014, 734 SCRA 238 citing Tolentino, supra note 54, p. 117.
57Casent Realty v. Premiere Development Bank (516 Phil. 219 [2006]) does not aid its cause. In that case, the trial court denied Casent Realty's Very Urgent Motion for Clarification regarding the functions of an independent auditor, but allowed the petitioner to file a manifestation that it was uninterested in having independent auditors assist the parties in arriving at an amicable settlement of the case, so that pre-trial would proceed. While this Court found that the order of the trial court was inconsistent with the allegations made in the motion, it held that there was no grave abuse of discretion.
The other case cited by petitioner, Spouses Gonzaga v. CA (483 Phil. 424 [2004]), is inapplicable. In that case, the petition was denied because of the failure of Spouses Gonzaga to file a cross-claim against a third party for the refund of a certain amount. The additional relief they asked from the court - the enforcement of the deed of conditional sale, the deed of final and absolute sale, and the memorandum of agreement executed by them and the third partywould be distinct from the relief they prayed for in their third-party complaint, which is for the payment of whatever would be adjudged against them for their occupation of the land. In this case, the trial court merely awarded an alternative kind of damages.
58RCPI v. CA, 190 Phil. 1058 (1981).
59 590 Phil. 342 (2008).
60 507 Phil. 472 (2005).
61Rollo, p. 58.
62 Petitioner never questioned this part of the RTC Decision pertaining to the offsetting (See id. at 121):cralawlawlibrary
The Court is not unmindful of the undisputed fact that plaintiffs have an outstanding obligation with CCBPI in the amount of P449,154.00. However, record shows that said outstanding obligation was incurred by the plaintiffs at the time the afore-said marketing strategies were already employed by CCBPI and the wholesalers' grievances including that of the plaintiffs were already aired by them. Hence, it is not amiss to deduce that these obligations arose as a result of CCBPI's machinations leading to plaintiff's business reversals. The Court thus tinds, as justice and fair play require, that plaintiff's outstanding obligation be offset by the temperate damages CCBPI caused to plaintiffs and is held liable for as a consequence of its unfair marketing strategies.
63 In order to effect total compensation under Article 1281 of the Civil Code, the two debts must be of the same amount.
64Rollo, pp. 22-23.
65 Article 2219. Moral damages may be recovered in the following and analogous cases:cralawlawlibrary
x x x x
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
66Rollo, p. 23.
67 498 Phil. 105 (2005).
68 Rule 10.2, Canon 10 of the Code of Professional Responsibility states:cralawlawlibrary
Rule 10.02 - A lawyer shall not knowingly misquote or misrepresent the contents of a paper, the language or the argument of opposing counsel, or the text of a decision or authority, or knowingly cite as law a provision already rendered inoperative by repeal or amendment, or assert as a fact that which has not been proved.
69 Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:cralawlawlibrary
(1) When exemplary damages are awarded;ChanRoblesVirtualawlibrary
x x x x
See also PhilTranco Service Enterprises, Inc. v. CA, 340 Phil. 98 ( 1997); Air France v. Carrascoso, 124 Phil. 722 (1966).
70Rollo, p. 33.