Case Digest (G.R. No. 234849)
Facts:
San Miguel Foods, Inc. v. Spouses Ramon and Ma. Nelia Fabie, and Fresh Link, Inc., G.R. No. 234849, April 03, 2024, Supreme Court First Division, Hernando, J., writing for the Court. Petitioner San Miguel Foods, Inc. (SMFI) sought review of the Court of Appeals’ May 18, 2017 Decision (and its October 18, 2017 Resolution denying reconsideration) which affirmed with modifications the July 21, 2014 Decision of the Regional Trial Court (RTC), Branch 59, Makati City, in Civil Case No. 99-1147. The CA decision was penned by Associate Justice Carmelita Salandanan Manahan (concurring: Magdangal M. De Leon and Elihu A. Ybanez). The RTC decision was penned by Presiding Judge Winlove M. Dumayas.The case arose from a Complaint for Breach of Contract and Damages (with prayer for TRO/PI) filed by respondent corporation Fresh Link, Inc., owned by respondents Spouses Ramon and Ma. Nelia Fabie, against SMFI and two of its officers. Fresh Link alleged that beginning in 1992 it was appointed complementary exclusive distributor of SMFI products for specified Makati territories under successive renewals of a Complementary Distributorship Agreement and an associated Credit Line Agreement secured by a standby letter of credit. Fresh Link alleged that SMFI unilaterally pre-terminated the Agreement by ceasing credit deliveries on June 4, 1999, causing actual and other damages.
SMFI countered that Fresh Link had outstanding indebtedness (allegedly PHP 1,899,645.97), that the standby letter of credit expired on May 31, 1999, and that it therefore required cash payments rather than credit deliveries; SMFI relied largely on documentary purchase records and testimony of company officers. Fresh Link relied mainly on the testimony of Nelia Fabie and complaint letters to SMFI.
At the RTC, after trial, the court found for plaintiffs and awarded actual and exemplary damages (Decision dated July 21, 2014). SMFI’s motion for reconsideration was denied (November 17, 2014). On appeal, the Court of Appeals affirmed with modifications (May 18, 2017): it held SMFI pre-terminated the Agreement, invalidated the termination provision for violating mutuality of contracts, and found liability under Article 1170 of the Civil Code; the CA replaced the award of actual damages with temperate damages of PHP 1,000,000.00 plus other amounts. SMFI’s motion for reconsideration in the CA was denied (Oct. 18, 2017).
SMFI filed a Petition for Review on Certiorari under Rule 45 to this Court, raising (a) that the CA failed to pass upon SMFI’s counterclaims; (b) tha...(Pro-only)
Issues:
- Did the Court of Appeals and the RTC fail to pass upon or otherwise err in adjudicating SMFI’s counterclaims for unpaid accounts?
- Did the Court of Appeals err in invalidating the Agreement’s termination clause (Article VI/VII) as violative of the rule on mutuality of contracts?
- Did the lower courts err in failing to properly consider SMFI’s defenses concerning the letter of credit and whether SMFI validly required cash payment (i.e., whether there was a unilateral pre-termination)?
- Were the awards of temperate, moral, exemplary damages, and attorney’s fees t...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)