Facts:

The case involves Dart Philippines, Inc. (petitioner) and spouses Francisco and Erlinda Calogcog (respondents). The dispute arose from a Distributorship Agreement executed on March 3, 1986, which was set to expire on March 31, 1987, but included an automatic renewal clause for two additional one-year terms. A subsequent agreement was executed on April 1, 1991, with a similar renewal provision. On April 30, 1992, Dart Philippines informed the respondents that it would not renew the agreement due to several violations by the respondents. In response, the respondents made a handwritten promise to comply with the agreement's terms, prompting Dart to extend the distributorship until September 30, 1992.

In July 1992, Dart conducted an audit of the respondents' accounts, which led to a second audit in September 1992. The respondents objected to the second audit and refused to allow the auditing firm access to their records. Consequently, Dart only accepted purchase orders...

Facts:

1. Parties and Agreement:

   • Petitioner, Dart Philippines, Inc., is engaged in manufacturing and importing Tupperware products and marketing them through a direct selling distribution system.
   • Respondents, Spouses Francisco and Erlinda Calogcog, entered into a Distributorship Agreement with petitioner on March 3, 1986, which was subject to automatic renewal for two one-year terms.
   • Another Distributorship Agreement was executed on April 1, 1991, expiring on March 31, 1992, with provisions for yearly renewal upon mutual agreement.

2. Non-Renewal and Audit:

   • On April 30, 1992, petitioner informed respondents that it would not renew the agreement due to respondents' violations, including false sales reports and unauthorized alterations of promotion mechanics.
   • Respondents made a handwritten promise to comply with the agreement, prompting petitioner to extend the agreement until September 30, 1992.
   • Petitioner conducted an audit of respondents' account in July 1992 and informed respondents of a second audit in September 1992. Respondents objected to the second audit, leading petitioner to process their purchase orders on a pre-paid basis.

3. Legal Proceedings:

   • On September 29, 1992, respondents filed a Complaint for damages with the Regional Trial Court (RTC) of Pasig City, alleging that petitioner abused its rights by conducting the audit and shifting to a pre-paid basis, causing them damages of around P1.3 million.
   • The RTC issued a writ of preliminary injunction, but the Court of Appeals (CA) later ruled that the Distributorship Agreement had expired, rendering the injunction improper.
   • Respondents filed a Supplemental Complaint, alleging additional damages, including P4.495 million for goodwill, P1 million for products on hand, and P3 million for the cost of a building.

4. RTC and CA Decisions:

   • The RTC ruled in favor of respondents, awarding damages, including goodwill money, compensation for the building, moral and exemplary damages, and attorney’s fees.
   • The CA affirmed the RTC decision but reduced the awards for moral and exemplary damages and deleted the compensation for the building.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Abuse of Rights:

   • Under Article 19 of the Civil Code, abuse of rights requires: (1) a legal right or duty, (2) exercised in bad faith, and (3) with the sole intent to injure another.
   • Petitioner’s actions were justified and in accordance with the Distributorship Agreement. There was no evidence of bad faith or malice.

2. Damages:

   • Damages cannot be awarded for acts that do not constitute a legal wrong (damnum absque injuria).
   • The reimbursement of P23,500.17 for internal auditors’ salaries was upheld because petitioner engaged the auditors and did not contest the award.

3. Attorney’s Fees:

   • Attorney’s fees are not awarded merely because a party wins a case. There must be evidence of bad faith or vexatious litigation, which was absent here.

Concurring and Dissenting Opinion (Carpio Morales, J.)

• Justice Carpio Morales concurred with the reimbursement of professional fees but dissented on the imposition of 12% interest. She argued that the obligation was not a forbearance of money and proposed a 6% interest rate from judicial demand to finality, and 12% thereafter.