G.R. No. 190667. November 07, 2016
COCA-COLA BOTTLERS PHILIPPINES, INC., PETITIONER, VS. SPOUSES JOSE R. BERNARDO AND LILIBETH R. BERNARDO, DOING BUSINESS UNDER THE NAME AND STYLE “JOLLY BEVERAGE ENTERPRISES,” RESPONDENTS.

FACTS

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) and respondent spouses Bernardo, doing business as Jolly Beverage Enterprises, had a long-standing exclusive dealership agreement. Before the expiration of their last contract in February 1999, CCBPI requested the respondents’ customer list under the pretext of formulating a territorial policy and with assurances of contract renewal. Respondents complied, but the renewal did not materialize. Instead, respondents discovered that CCBPI used the list to directly solicit their customers, employed predatory pricing schemes like “Coke Alok,” and engaged a store adjacent to their warehouse to sell products at lower prices, causing respondents to lose major clients and incur business losses leading to an unpaid obligation of ₱449,154 for deliveries.
Respondents filed a complaint for damages, alleging acts constituting abuse of rights and unfair competition under Articles 19, 20, 21, and 28 of the Civil Code. The Regional Trial Court (RTC) found CCBPI liable, awarding respondents ₱500,000 as temperate damages for loss of goodwill, to be offset against their outstanding balance. The RTC also awarded moral damages, exemplary damages, and attorney’s fees. The Court of Appeals affirmed the RTC decision in toto.

ISSUE

Whether the Court of Appeals erred in affirming the RTC’s decision holding CCBPI liable for damages for abuse of rights and unfair competition.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The legal logic rests on the application of Articles 19, 20, 21, and 28 of the Civil Code. Article 19 mandates that every person must act with justice, give everyone their due, and observe honesty and good faith. The Court found CCBPI’s actions—soliciting the customer list under false pretenses and then using it to directly compete with and undermine the respondents’ business—constituted bad faith and an abuse of rights. This was not a legitimate competitive practice but a deliberate scheme to appropriate the respondents’ market, violating the principle of abuse of right.
Furthermore, Article 28 prohibits unfair competition, and CCBPI’s predatory tactics, such as the “Coke Alok” promo and undercutting prices through a neighboring store, were designed to eliminate respondents as a competitor. These acts were oppressive and demonstrated a reckless disregard for respondents’ right to a fair chance in business. The award of temperate damages for loss of goodwill was proper as the exact amount of loss, though not precisely quantifiable, was substantiated by the business reversal suffered. The offsetting of this award against the respondents’ unpaid obligation was a fair application of compensation, as the debt arose from the very business losses CCBPI caused. The awards of moral and exemplary damages, as well as attorney’s fees, were also justified due to CCBPI’s fraudulent and oppressive acts.