Case Digest (G.R. No. 127843)
Facts:
In Avon Cosmetics, Incorporated, represented by its President and General Manager Jose Marie Franco (hereafter “Avon” or “petitioners”), versus Leticia H. Luna (hereafter “respondent” or “Luna”), the Supreme Court reviewed a petition for certiorari under Rule 45 filed on December 20, 2006 (G.R. No. 153674). The Petition assails the Decision of the Court of Appeals dated May 20, 2002 in CA-G.R. CV No. 52550, which affirmed the Regional Trial Court of Makati City, Branch 138’s January 26, 1996 judgment in Civil Case No. 88-2595. Luna began her association with Beautifont, Inc. in 1972, first as a franchise dealer and then as a Supervisor, and in 1978 continued in the same capacity after Avon acquired Beautifont. Beyond supervising, she acted as a make-up artist for Avon’s theatrical promotions for a per diem. On November 5, 1985, Avon and Luna executed a Supervisor’s Agreement providing, among others, an exclusivity clause (paragraph 5) obliging Luna “to sell or offer to sell, disCase Digest (G.R. No. 127843)
Facts:
- Employment and Contractual Background
- Leticia H. Luna (“Luna”) began in 1972 as franchise dealer of Beautifont, Inc., became Supervisor in 1973. In 1978 Avon Cosmetics, Inc. (“Avon”) succeeded Beautifont; Luna continued as Supervisor and make-up artist for Avon’s Theatrical Promotion Group, receiving per diems.
- On November 5, 1985, Avon and Luna executed a “Supervisor’s Agreement,” which provided, inter alia:
- Luna would purchase Avon products at wholesale exclusively for resale and secure required permits.
- Luna was an independent retailer/dealer with no authority to bind Avon.
- Clause 5: Luna “shall sell or offer to sell, display or promote only and exclusively products sold by” Avon.
- Clause 6: “Either party may terminate this agreement at will, with or without cause, at any time upon notice.”
- Alleged Breach and Termination
- Late 1988: Luna became Group Franchise Director of SandrA Philippines, Inc., selling vitamins and supplements to Avon employees and friends. On September 23, 1988, she secured a legal opinion declaring clauses 5 and 6 void as unreasonable restraint of trade; she distributed this opinion to fellow supervisors.
- October 11, 1988: Avon, through its President Jose Mari Franco, notified Luna of termination for violating clause 5 by selling/promoting non-Avon products and inducing other dealers to do likewise.
- Procedural History
- December 1, 1988: Luna filed a complaint for damages (Civil Case No. 88-2595, RTC Makati Branch 138).
- January 26, 1996: RTC rendered judgment for Luna, awarding ₱100,000 moral damages, ₱20,000 attorney’s fees, and costs. Avon appealed.
- May 20, 2002: Court of Appeals in CA-G.R. CV No. 52550 affirmed the RTC decision in toto.
- 2006: Avon filed a petition for review on certiorari under Rule 45 before the Supreme Court (G.R. No. 153674).
Issues:
- Whether paragraph 5 (the exclusivity clause) of the Supervisor’s Agreement is void as against public policy (unreasonable restraint of trade).
- Whether paragraph 6 (the termination clause) granting Avon the right to cancel the Agreement at will is void as against public policy.
- Whether the award of moral damages and attorney’s fees in favor of Luna was proper.
- Whether Avon is entitled to attorney’s fees and litigation expenses.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)