Title
Supreme Court
Sumifru Corp. vs. Spouses Cereno
Case
G.R. No. 218236
Decision Date
Feb 7, 2018
Sumifru sought injunction against landowners for breaching banana growership agreements; SC denied, citing disputed rights, compensable damages, and expired contracts.

Case Summary (G.R. No. 218236)

Factual Background and Contractual Relationship

Sumifru (Philippines) Corporation, a domestic corporation engaged in banana production and export, is the surviving entity of a merger that included Davao Fruits Corporation (DFC). Sumifru entered into multiple growership agreements with respondents, the spouses Cereao, pertaining to their titled lands totaling 56,901 square meters in Tamayong, Calinan District, Davao City. The agreements included a Production and Purchase Agreement (PPA) and several Growers Exclusive Production and Sales Agreements (GEPASAs), specifying terms for exclusive production and sale of bananas to Sumifru, volume and quality specifications, and contract durations spanning from 1999 up to 2015.

Petitioner's Complaint and Relief Sought

Sumifru filed a complaint before the Regional Trial Court (RTC) alleging that beginning in February 2007, the spouses Cereao violated their exclusive contractual obligations by harvesting bananas without Sumifru's consent, packaging them in non-Sumifru-approved boxes, and selling to third parties. Sumifru sought the issuance of a writ of preliminary prohibitory and mandatory injunction to prevent such acts and to compel the respondents to comply with their obligations under the PPA and GEPASAs.

Respondents' Position and RTC's Initial Rulings

The spouses Cereao responded by asserting that the contracts had been terminated extrajudicially by them, citing gross violations and breaches by Sumifru. The RTC denied Sumifru's application for the injunction on grounds that there was no urgency or irreparable injury warranting the issuance of such relief and that the application was tantamount to asking for a premature decision on the merits. This denial was reaffirmed after Sumifru's motion for reconsideration was also denied.

Court of Appeals' Decision

The Court of Appeals (CA) affirmed the RTC’s denial of the writ of preliminary injunction. It held that:

  1. Sumifru did not demonstrate a clear and unmistakable right since the respondents disputed the validity and enforceability of the agreements, particularly the claim of extrajudicial termination.
  2. The alleged injury was compensable by damages as it was capable of mathematical computation, negating claims of irreparable injury.
  3. Granting the injunction would effectively decide the merits prematurely, an improper exercise of judicial discretion.

Issues Raised by Sumifru

Sumifru contested the CA ruling on four main points:

  1. The respondents’ claim of extrajudicial termination lacks legal basis and should not have cast doubt on Sumifru’s right to the injunction.
  2. The injunction sought was only to preserve the status quo and not dispose of the case.
  3. Continued contractual violations by respondents would cause grave and irreparable damage.
  4. Such damages cannot be adequately compensated monetarily.

Legal Analysis and Supreme Court’s Ruling

The Supreme Court denied the petition, affirming the existing rulings based on the following principles:

  • Requisites for Preliminary Injunction: Under Rule 58, Sec. 3 of the Rules of Court, a preliminary injunction may be issued only upon establishment of:
    (a) A clear and unmistakable right to relief that consists of restraining or compelling certain acts;
    (b) Probable injustice or injury from the acts pending litigation;
    (c) Acts threatening rights of the applicant that may render judgment ineffectual.

  • Clear Legal Right: The right to be protected must be in esse, meaning an actual, existing legal right. Injunction cannot protect contingent, abstract, or disputed rights. Since the respondents challenged the validity of the contracts asserting termination, Sumifru's legal right was not clear and free from substantial dispute.

  • Irreparable Injury: Injury must be incapable of pecuniary estimation. Sumifru’s alleged losses, including cash advances and farm inputs to the respondents totaling over Php 720,000, are quantifiable and thus compensable by damages. Alleged future reputational or litigation risks were speculative and unsupported by evidence.

  • Preservation of Status Quo: The purpose of a p

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