Case Digest (G.R. No. L-18487)
Facts:
General Enterprises, Inc. v. Lianga Bay Logging Company, Inc., G.R. No. L-18487. August 31, 1964, Supreme Court En Banc, Bautista Angelo, J., writing for the Court.On May 25, 1959, Lianga Bay Logging Company, Inc. (producer) and General Enterprises, Inc. (distributor) executed a two‑year distribution agreement (Annex A) whereby Lianga agreed to make available portions of its log production for export to Korea and Europe and General Enterprises agreed to market and export them for a 13% commission. Key provisions included a renegotiation clause for “current market price” (para. 2), minimum monthly deliveries (para. 5: at least 1,000,000 bd. ft. initially and 2,000,000 bd. ft. beginning September 1959), financing and equipment assistance by the distributor (para. 7), and a force‑majeure/suspension clause listing causes permitting suspension of obligations (para. 8).
The parties implemented the contract: the distributor delivered a TD‑24 tractor and shipments were made in June–October 1959. On October 27, 1959, Lianga notified General Enterprises that after the November shipment it would cease supplying logs for export unless prices became comparable to returns from lumber/veneer and gave a string of reasons (inability to procure equipment, government restrictions on barter, converting logs to lumber/veneer, machinery breakdowns, the Margin Law, etc.). Lianga thereafter stopped supplying logs. General Enterprises demanded performance; Lianga persisted in suspension. General Enterprises sued in the Court of First Instance of Rizal for breach of contract, seeking actual and exemplary damages and attorney’s fees.
After trial, on December 8, 1960 the Court of First Instance rendered judgment for plaintiff and against defendant, awarding P400,000.00 as actual damages, P100,000.00 as exemplary damages, and P40,000.00 as attorney’s fees. Lianga appealed to the Supreme Court. The Supreme Court issued its decision on August 31, 1964 (opinion by Bautista Angelo, J.), modifying the exemplary damages to P50,000.00 and affirming the judgment in other respects. Lianga filed a motion for reconsideration and a motion for new trial based on alleged newly discovered evidence; th...(Subscriber-Only)
Issues:
- Is Annex A (the distribution agreement) valid and supported by cause/consideration?
- May the effectivity of the agreement be terminated or suspended for the causes stipulated in paragraph 8?
- Does the producer have a right to demand renegotiation of prices under paragraph 2, and may it suspend performance pending such renegotiation?
- May the producer convert its log production into lumber/veneers for barter despite paragraph 5 and the clause preserving barter arrangements?
- Is the producer’s obligation to make available 2,000,000 board feet monthly beginning September 1959 absolute or conditional/potestative?
- Are the trial court’s awards of actual (lucrum cessans), exemplary damages, and attorney’s fees justified, and should any adjustments be made (including deductions for sub‑agent commissions)?
- Did the trial court err in admitting Exhibits K and L (foreign letters) without proper authentication?
- Did the trial court err in not dismissing the complaint, in rescinding th...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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