Coca-cola Bottles Phil. Inc. v. Spouses Bernardo

   Coca-cola Bottles Phil. Inc. v. Spouses Bernardo, 

G.R. No. 190667, 

November 7, 2016

DOCTRINE: 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 sutlers damage.

FACTS: Petitioner Coca-Cola Bottlers is a domestic corporation engaged in the largescale

manufacture, sale, and distribution of beverages around the country. On the other

hand, respondents, doing business under the name "Jolly Beverage Enterprises," are

wholesalers of softdrinks in Quezon City.

The business relationship between the parties commenced when petitioner designated

respondents as its distributor. For their part, respondents undertook to sell petitioner's

products exclusively, meet the sales quota, and assist petitioner in its marketing efforts.

The agreement was extended for another two years. This time, petitioner gave

respondents complimentary cases of its products instead of cash assistance, and

increased the latter's sales quota.

For 13 years, the parties enjoyed a good and harmonious business partnership.

Before the contract expired, petitioner required respondents to submit a list of their

customers. 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. It

further engaged a store adjacent to respondents' warehouse to sell the former's products

at a substantially lower price.

Respondents claimed that because of these schemes, they lost not only their major

customers but also small stores, such as the canteen in the hospital where respondent

Jose Bernardo worked. They admitted that they were unable to pay deliveries worth

P449,154.

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. Petitioner denied the allegations. It maintained that it had

obtained a list of clients through surveys, and that promotional activities or developmental

strategies were implemented only after the expiration of the Agreements. It opined that

the filing of the complaint was a mere ploy resorted to by respondents to evade the

payment of the deliveries. The RTC held petitioner liable for damages for abuse of rights

in violation of Articles 19, 20, and 21 of the Civil Code and for unfair competition under

Article 28. Its officers were, however, absolved of liability, as there was no showing that

they had acted in their individual and personal capacities. CA affirmed the decision in

toto.

ISSUE:

Whether or not petitioner violated Articles 19, 20, 21, or 28 of the Civil Code

HELD:

Yes. The Court affirms the decision of CA. Both the RTC and the CA found that petitioner

had employed oppressive and high-handed schemes to unjustly limit the market coverage

and diminish the investment returns of respondents.

This cut-throat competition is precisely what appellant did in order to take over the market:

directly sell its products to or deal them off to competing stores at a price substantially

lower than those imposed on its wholesalers. As a result, the wholesalers suffered losses,

and in respondents' case, laid of a number of employees and alienated the patronage of

its major customers including small-scale stores.

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.

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. In this case, both the

RTC and the CA found that respondents had similarly suffered pecuniary loss by reason

of petitioner's high-handed machinations to eliminate competition in the market.