G.R. No. L-18487. November 28, 1964
GENERAL ENTERPRISES, INC., plaintiff-appellee, vs. LIANGA BAY LOGGING COMPANY, INC., defendant-appellant.

FACTS

The parties had an agreement whereby Lianga Bay Logging (defendant) would supply logs to General Enterprises (plaintiff), who would sell them abroad for a commission. After seven months, defendant unilaterally stopped supplying logs, prompting plaintiff to sue for breach of contract and damages, including lost future profits (lucrum cessans). The Supreme Court initially awarded damages, and defendant filed motions for reconsideration and new trial.

ISSUE

1) Whether the award of lucrum cessans (lost profits) was proper and correctly computed; 2) Whether defendant was justified in suspending its obligations; 3) Whether exemplary damages and attorney’s fees were proper; and 4) Whether a new trial should be granted based on newly discovered evidence.

RULING

The Supreme Court modified its earlier decision. 1) The award of lucrum cessans was proper as defendant’s breach prevented plaintiff from earning future commissions. However, the amount was recalculated to deduct a 2% sub-agent commission from the total lost commission, resulting in a reduced award. 2) Defendant’s arguments justifying suspension (e.g., that its supply obligation was conditional or that it had a right to renegotiate prices) were rejected, as they had been fully addressed in the main decision; defendant’s unilateral stoppage constituted a clear breach. 3) The awards for exemplary damages and attorney’s fees were affirmed as proper. 4) The motion for a new trial was denied, as the proffered new evidence (a contract with another company and sales records) was not newly discovered and did not conclusively prove plaintiff could not have sold the logs. The Court held defendant liable for all damages reasonably attributable to its breach.