Facts:

The case involves Calibre Traders, Inc., represented by Mario Sison Sebastian and Minda Blanco Sebastian, as petitioners against Bayer Philippines, Inc. (Bayerphil), the respondent. The events leading to the case began when Calibre, a distributor of Bayerphil's agricultural chemicals in Pangasinan and Tarlac, entered into a distributorship agreement effective from June 1989 to June 1991. However, Bayerphil ceased deliveries to Calibre on July 31, 1989, due to Calibre's failure to settle its outstanding debts amounting to P1,751,064.56. Despite being aware of the payment deadline, Calibre withheld payment to compel Bayerphil to reconcile their accounts, leading to a series of correspondences between the two parties regarding claims for discounts and rebates.

Calibre's claims, totaling P968,265.82, included various disputes over interest charges, rebates, and sales returns. Bayerphil responded to these claims, asserting that many were unfounded and providing detai...

Facts:

Background of the Dispute
Calibre Traders, Inc. (Calibre) was a distributor of Bayer Philippines, Inc. (Bayerphil) for agricultural chemicals in Pangasinan and Tarlac. Their last distributorship agreement was effective from June 1989 to June 1991. However, Bayerphil stopped delivering stocks to Calibre on July 31, 1989, due to Calibre's unpaid accounts totaling P1,751,064.56.

Claims and Counterclaims
Calibre, aware of its unpaid debts, withheld payment to compel Bayerphil to reconcile its accounts. Calibre claimed entitlement to discounts and rebates amounting to P968,265.82, which it detailed in a letter dated August 16, 1989. Calibre sent follow-up letters but no settlement was reached.

Bayerphil’s Response
Bayerphil denied some of Calibre’s claims and granted others, but required Calibre to settle its outstanding balance. Calibre rejected Bayerphil’s offer and filed a suit for damages, alleging that Bayerphil breached the distributorship agreement by manipulating accounts, withholding discounts, and favoring other distributors.

Issue:

1. Whether Calibre is entitled to damages from Bayerphil.
2. Whether Bayerphil’s counterclaim for unpaid purchases should be granted.

Ruling:

The Supreme Court affirmed the Court of Appeals' decision, ruling that Calibre is not entitled to damages. The Court found no evidence of bad faith or malice on Bayerphil's part in dealing with Calibre. Bayerphil’s actions, such as stopping deliveries due to unpaid accounts and appointing other distributors, were justified under the terms of the distributorship agreement, which was non-exclusive.

Regarding Bayerphil’s counterclaim, the Court ruled that while the counterclaim was permissive (not compulsory), the trial court erred in dismissing it outright for non-payment of docket fees. Instead, Bayerphil should have been given the opportunity to pay the fees within a reasonable time. The Court upheld the CA’s award of P1,272,103.07 to Bayerphil, representing Calibre’s unpaid purchases, plus interest.

Ratio:

1. No Proof of Bad Faith: Calibre failed to prove that Bayerphil acted maliciously or in bad faith. Bayerphil’s actions were reasonable given Calibre’s unpaid accounts and the non-exclusive nature of the distributorship agreement.
2. Permissive Counterclaim: Bayerphil’s counterclaim was permissive, not compulsory, as it did not arise from the same transaction or occurrence as Calibre’s claim for damages. However, the trial court should have allowed Bayerphil to pay the required docket fees within a reasonable time instead of dismissing the counterclaim.
3. Award of Unpaid Amounts: The Court upheld Bayerphil’s claim for unpaid purchases since Calibre did not deny owing the amount and Bayerphil’s computation was unrebutted.

Conclusion:

The Supreme Court affirmed the CA’s decision, denying Calibre’s claims for damages and granting Bayerphil’s counterclaim for unpaid purchases. Bayerphil was ordered to pay the docket fees for its counterclaim within 15 days.