SEA COMMERCIAL COMPANY, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS, JAMANDRE INDUSTRIES, INC. and TIRSO JAMANDRE, respondents.
G.R. No. 122823. November 25, 1999.*
GONZAGA-REYES, J.:
FACTS:
SEACOM is a corporation engaged in the business of selling and distributing agricultural machinery, products and equipment. SEACOM and JII entered into a dealership agreement as its exclusive dealer in the City and Province of Iloilo and Capiz and to make the dealership agreement on a non-exclusive basis.
During the agreement, JII allegedly incurred a balance of P18,843.85 for unpaid deliveries, and SEACOM brought action to recover said amount plus interest and attorney’s fees.
In the counterclaim, JII alleged that as a dealer in Capiz, JII contracted to sell 24units of Mitsubishi power tillers to FSDC, which fact JII allegedly made known to SEACOM, but the latter taking advantage of said information and in bad faith, went directly to FSDC and dealt with it and sold 21 units of said tractors with much lower prices, thereby depriving JII of unrealized profit of P85,415.61. However, SEACOM, not satisfied with the presence of its dealer JII in the market, joined the competition even as the against the latter
ISSUE:
Whether SEACOM acted in bad faith when it competed with its own dealer as regards the sale of farm machineries to FSDC.
RULING:
Yes. Even if the dealership agreement was amended to make it on a non-exclusive basis, SEACOM may not exercise its right unjustly or in a manner that is not in keeping with honesty or good faith; otherwise it opens itself to liability under the abuse of right rule embodied in Article 19 of the Civil Code above-quoted. This provision, together with the succeeding article on human relation, was intended to embody certain basic principles “that are to be observed for the rightful relationship between human beings and for the stability of the social order.” What is sought to be written into the law is the pervading principle of equity and justice above strict legalism.
SC accordingly resolves to affirm the award for unrealized profits. The Court of Appeals noted that the trial court failed to specify to which the two appellees the award for moral and exemplary damages is granted. However, in view of the fact that moral damages are not as a general rule granted to a corporation, and that Tirso Jamandre was the one who testified on his feeling very aggrieved and on his mental anguish and sleepless nights thinking of how SEACOM “dealt with us behind (our) backs”, the award should go to defendant Jamandre, President of JII.
