G.R. No. 218236 - Sumifru Corp. vs. Spouses Cereno

Case Summary (G.R. No. 218236)

Petitioner and Respondent Roles

Sumifru: purchaser and exporter of Cavendish bananas, claimant of exclusive contractual rights and plaintiff below seeking injunctive relief and specific performance. Spouses CereAo: growers who performed under growership agreements and, in their Answer, asserted termination of the agreements because of alleged gross violations by Sumifru.

Key Dates

Material contractual dates: PPA dated 29 November 1999 (covering 9,176 sq. m., term 22 July 1999 to 21 July 2009); three GEPASAs dated 10 January 2002, 7 January 2002, and 9 December 2002 with terms extending to 2015 covering 13,925; 13,800; and 20,000 sq. m., respectively. Complaint for Injunction and Specific Performance filed 4 August 2010. RTC Orders denying preliminary injunction dated 5 October 2010 and denying reconsideration 11 November 2010. Court of Appeals Decision denying certiorari dated 20 May 2014 and denial of motion for reconsideration dated 5 May 2015. Supreme Court resolution denying the petition rendered 7 February 2018.

Applicable Law

Constitutional and procedural framework: 1987 Philippine Constitution (applicable given decision date post-1990) and the Rules of Court. The Rules of Court provisions directly at issue are Rule 58 (Section 1 definition of preliminary injunction and Section 3 grounds for issuance). Relevant jurisprudence cited in the decision includes Liberty Broadcasting Network, Thunder Security and Investigation Agency, Australian Professional Realty, and related authorities interpreting injunctive relief and contractual expiry.

Facts (Agreements and Alleged Breaches)

Sumifru (formerly Davao Fruits Corporation) entered into a Production and Purchase Agreement (PPA) and three Growers Exclusive Production and Sales Agreements (GEPASAs) with the spouses CereAo covering distinct parcels totaling 56,901 sq. m. Under these agreements the CereAos were to sell exclusively to Sumifru produce meeting specified volume and quality. Sumifru alleged that beginning February 2007 the CereAos harvested without Sumifru's consent, used non-Sumifru boxes, and sold bananas to other buyers, despite demands to comply. Sumifru also alleged it had released cash advances and farm inputs totaling Php 720,189.81. The CereAos, in their Answer, asserted extrajudicial termination of the agreements due to Sumifru's alleged gross violations.

Relief Sought and Procedural Posture

Sumifru sought a writ of preliminary prohibitory and mandatory injunction, a Temporary Restraining Order, and specific performance to restrain the CereAos from harvesting, packing in non-provided boxes, and selling to third parties, and to compel faithful performance of contractual obligations. After hearings and submission of position papers, the RTC denied injunctive relief for lack of merit; its denial of reconsideration was affirmed by the Court of Appeals; the Supreme Court reviewed the CA rulings under Rule 45.

RTC Ruling

The Regional Trial Court denied the application for preliminary injunction, finding lack of urgency to warrant injunctive relief and reasoning that granting the injunction would effectively decide the merits of the main case (thus disposing of it prematurely). The RTC treated the requested injunction as essentially seeking a favorable resolution of the substantive breach claims rather than merely preserving the status quo.

Court of Appeals Decision

The Court of Appeals affirmed the RTC, holding Sumifru had not satisfied the legal requisites for a preliminary injunction. The CA emphasized that Sumifru's contractual rights were disputed by the CereAos, that any injury alleged by Sumifru was pecuniary and capable of monetary computation (hence compensable by damages), and that issuance of an injunction would effectively dispose of the main case. The CA declined to interfere absent a showing of grave abuse of discretion by the RTC.

Issues Presented to the Supreme Court

Sumifru raised four main contentions: (1) that the CA erred by finding Sumifru’s right in serious doubt given respondents’ claim of extrajudicial termination without legal basis; (2) that granting the preliminary injunction would not dispose of the main case because it merely preserves the status quo ante; (3) that continuing violations by respondents would cause grave and irreparable damage to Sumifru; and (4) that such grave and irreparable damage could not be adequately compensated by damages.

Legal Standard for Preliminary Injunction

Under Rule 58, Section 1, a preliminary injunction is an interlocutory order restraining or commanding acts before final judgment. Section 3 sets three grounds for issuance. The settled four requisites for either prohibitory or mandatory preliminary injunction are: (1) the applicant must have a clear and unmistakable right (a right in esse); (2) a material and substantial invasion of that right; (3) urgent need for the writ to prevent irreparable injury; and (4) absence of any other ordinary, speedy, and adequate remedy. The remedy is extraordinary, intended to protect actual and existing substantial rights and not contingent, abstract, or future rights. While the right need not be conclusively established, it must be shown at least tentatively and not be vitiated by substantial challenge.

Application of the Standard to the Case

The Supreme Court agreed with the CA and RTC that Sumifru failed to establish a

Case Syllabus (G.R. No. 218236)

The Case

Nature: Petition for review under Rule 45 of the Rules of Court assailing the Decision dated 20 May 2014 and the Resolution dated 5 May 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 04008-MIN.
Relief sought by petitioner Sumifru (Philippines) Corporation (Sumifru): Review and reversal of the CA’s denial of certiorari seeking injunctive relief initially denied by the Regional Trial Court (RTC) of Davao City, Branch 15.
Author of the Supreme Court resolution: CARPIO, J., with Peralta, Perlas-Bernabe, Caguioa, and Reyes, Jr., JJ., concurring.
Lower-court orders and dates challenged: RTC Orders dated 5 October 2010 and 11 November 2010; CA Decision dated 20 May 2014 and CA Resolution dated 5 May 2015.
Procedural posture: Sumifru filed Complaint for Injunction and Specific Performance with Application for Writ of Preliminary Injunction and Temporary Restraining Order in RTC (4 August 2010); RTC denied preliminary injunction (5 October 2010) and denied reconsideration (11 November 2010); Sumifru filed petition for certiorari with the CA; CA denied petition (20 May 2014) and denied motion for reconsideration (5 May 2015); Sumifru filed this petition for review under Rule 45.

Facts

Petitioner Sumifru: domestic corporation engaged in production and export of Cavendish bananas; principal office at Km. 20, Tibungco, Davao City.
Corporate history: Sumifru is the surviving corporation in a merger made effective in June 2008 among several corporations, including Davao Fruits Corporation (DFC), and succeeded to DFC’s rights and obligations.
Respondents: spouses Danilo Cereao and Cerina Cereao (spouses Cereao), owners of titled lands in Tamayong, Calinan District, Davao City, totaling 56,901 square meters (sq. m.).
Alleged contractual relationship: DFC (now Sumifru) entered into several growership agreements with spouses Cereao covering their titled lands; under the PPA and GEPASAs, spouses Cereao, as growers, undertook to sell and deliver exclusively to Sumifru the bananas produced from the contracted areas, conforming to volume and quality specifications defined by the agreements.
Sumifru’s allegation of breach: sometime in February 2007, spouses Cereao allegedly harvested bananas without Sumifru’s consent, packed them in boxes not provided by Sumifru, and sold them to buyers other than Sumifru; Sumifru made demands which respondents refused.

Growership Agreements — Contracts, Terms, and Areas Covered

Four contracts and their contractual terms and land areas as set out in the records:
- Production and Purchase Agreement (PPA) dated 29 November 1999 — contract term 22 July 1999 to 21 July 2009 — land area covered: 9,176 sq. m.
- Growers Exclusive Production and Sales Agreement (GEPASA) dated 10 January 2002 — contract term 15 August 2000 to 14 August 2015 — land area covered: 13,925 sq. m.
- GEPASA dated 7 January 2002 — contract term 15 November 2000 to 14 November 2015 — land area covered: 13,800 sq. m.
- GEPASA dated 9 December 2002 — contract term 23 December 2000 to 22 December 2015 — land area covered: 20,000 sq. m.
Express contractual obligation: exclusive sale and delivery to Sumifru and compliance with specified volume and quality standards; packaging boxes supplied by Sumifru as per the agreements.

Complaint and Prayer for Injunction (RTC)

Filing: Complaint for Injunction and Specific Performance with Application for Writ of Preliminary Injunction and Temporary Restraining Order filed by Sumifru on 4 August 2010 before the RTC.
Injunctive prayers sought: a Writ of Preliminary Prohibitory/Mandatory Injunction and a Temporary Restraining Order to restrain spouses Cereao from:
- (a) harvesting the bananas grown on the contracted growership areas without Sumifru’s consent;
- (b) packing the bananas in boxes other than those provided by Sumifru;
- (c) selling the produce to persons or entities other than Sumifru; and
- (d) committing any other act in violation of their PPA and GEPASAs.
Further relief sought: compel spouses Cereao to faithfully comply with their obligations under the PPA and GEPASAs.
Respondents’ answer: spouses Cereao filed Answer on 29 September 2010 claiming they had terminated the agreements extra-judicially due to Sumifru’s gross violations and serious breach thereof.

Procedural History (detailed)

RTC hearing for preliminary injunction on 24 August 2010; parties agreed and were ordered to file position papers; both parties filed position papers.
RTC Order dated 5 October 2010: denied Sumifru’s application for writ of preliminary prohibitory and mandatory injunction for lack of merit.
RTC Order dated 11 November 2010: denied Sumifru’s motion for reconsideration.
Sumifru filed petition for certiorari with the Court of Appeals under Rule 65.
CA Decision dated 20 May 2014: denied Sumifru’s petition; CA concluded RTC did not abuse discretion in not issuing preliminary injunction.
CA Resolution dated 5 May 2015: denied motion for reconsideration; Sumifru elevated the case to the Supreme Court via petition for review under Rule 45.

Issues Presented by Petitioner

I. Whether the CA and RTC erred in holding that petitioner’s right to a writ of preliminary injunction was put in serious doubt by respondents’ claim of extra-judicial termination of the growership contracts despite lack of legal basis.
II. Whether the courts gravely erred in holding that granting the writ of preliminary injunction would have the effect of disposing of the main case, given that the object is to preserve the status quo ante.
III. Whether the continuing violation by respondents of their exclusive contract with petitioner will cause grave and irreparable damage to petitioner.
IV. Whether the grave and irreparable damage caused by respondents cannot be compensated under any standard compensation.

Ruling of the RTC (as found in the records)

Denial of application for preliminary injunction (Order dated 5 October 2010) for lack of merit.
RTC’s reason: no urgency to issue injunctive relief to prevent injury or irreparable damage while main case is being heard.
RTC’s finding: Sumifru was, in effect, seeking a favorable ruling on the merits of the main case via injunctive relief — which would dispose of the merits and leave only damages for later determination.
RTC denied Sumifru’s motion