Coca-Cola Bottlers Philippines, Inc. v. Sps. Bernardo G.R. 190667 | November 7, 2016 | Topic: Abuse of right; unfair competition |
FACTS:
- Petitioner is a
domestic corporation engaged in the large-scale manufacture, sale, and
distribution of beverages around the country. Respondents are doing business
under the name “Jolly Beverage Enterprises” as wholesalers of soft drinks in
Quezon City.
- The business
relationship between the parties commenced in 1987, when petitioner designated
respondents as its distributor.
- On 22 March 1994,
the parties formally entered into an exclusive dealership contract for three
years. Petitioner would extend developmental assistance and trade discount
incentives. Respondents undertook to sell petitioner’s products exclusively,
meet the sales quota of 7,000 cases per month, and assist petitioner in its
marketing efforts.
- For 13 years, the
parties enjoyed a good and harmonious business partnership. Sometime in late
1998 or early 1999, before the contract expired, petitioner required
respondents to submit a list of their customers on the pretext that it would
formulate a policy defining its territorial dealership in Quezon City. It
assured respondents that their contract would be renewed for a longer period,
provided that they would submit the list. However, despite their compliance,
the promise did not materialize
- Respondents
discovered that in February 1999, petitioner started to reach out to the
persons whose names were on the list. Respondents also received reports that
their delivery trucks were being trailed by petitioner's agents; and that as
soon as the trucks left, the latter would approach the former's customers. Further,
respondents found out that petitioner had employed a different pricing scheme,
such that the price given to distributors was significantly higher than that
given to supermarkets
- Towards the end of
the partnership, petitioner employed a different marketing scheme purportedly
to obviate the poor dealership management from wholesalers in major areas. But
as may be shown by the incidents leading to the filing of this case, this
method was designed strategically to overrun respondent’s business and takeover
the customers of its wholesalers.
- Respondents filed a
Complaint for damages, alleging that the acts of petitioner constituted
dishonesty, bad faith, gross negligence, fraud, and unfair competition in
commercial enterprise.
- RTC
held petitioner Coca-Cola liable. Petitioner then elevated the case to the CA,
which affirmed the RTC Decision in toto.
ISSUES: Whether or not CA
erred in affirming the finding petitioner violated Articles 19, 20, 21, or 28;
hence, the award of damages and attorney’s fees was improper? No
RULING:
- No, the CA did not
err in affirming that petitioner was liable for temperate, moral, and exemplary
damages, as well as attorney’s fees, for abuse of rights and unfair
competition.
- Both the RTC and the
CA found that the petitioner had employed oppressive and high-handed schemes to
unjustly limit the market coverage and diminish the investment returns of
respondents.
- It must be
emphasized that petitioner is not only a beverage giant, but also the
manufacturer of the products; hence, it sets the price. In addition, it took
advantage of the information provided by respondents to facilitate its takeover
of the latter's usual business area. Distributors like respondents, who had
assisted petitioner in its marketing efforts, suddenly found themselves with
fewer customers. Other distributors were left with no choice but to fold
- Articles 19, 20, and
21 of the Civil Code provide the legal bedrock for the award of damages to a
party who suffers damage whenever another person commits an act in violation of
some legal provision; or an act which, though not constituting a transgression
of positive law, nevertheless violates certain rudimentary rights of the party
aggrieved. The use of unjust, oppressive, or high-handed business methods
resulting in unfair competition also gives a right of action to the injured
party.
- Meanwhile, the use
of unjust, oppressive, or high-handed business methods resulting in unfair
competition also gives a right of action to the injured party. Article 28
provides that:
Unfair
competition in agricultural, commercial or industrial enterprises or in labor
through the use of force, intimidation, deceit, machination or any other
unjust, oppressive or highhanded method shall give rise to a right of action by
the person who thereby settlers damage.
- Jurisprudence holds
that when a person starts an opposing place of business, not for the sake of
profit, but regardless of Joss and for the sole purpose of driving a competitor
out of business, in order to take advantage of the effects of a malevolent
purpose, that person is guilty of a wanton wrong.
DISPOSITION: Petition DENIED.
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