Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18487 November 28, 1964
GENERAL ENTERPRISES, INC., plaintiff-appellee,
vs.
LIANGA BAY LOGGING COMPANY, INC., defendant-appellant.
R E S O L U T I O N
BAUTISTA ANGELO, J.:
Defendant seeks the reconsideration of our decision rendered on August 31, 1964 on the grounds that the amount of P400,000.00 awarded to plaintiff as lucrum cessans is not justified considering the evidence available; that assuming the agreement entered into between the parties to be valid, defendant is not guilty of breach thereof because its obligation to supply the monthly two million board feet for the remainder of the period of the agreement was not mandatory but conditional, aside from the fact that it had the right to suspend the operation of the agreement under the proviso contained in paragraph 8 thereof; that the request of defendant for the renegotiation of the prices of logs which was refused by plaintiff was a right expressly granted to it in paragraph 2 of said agreement; and that the award of exemplary damages and attorney's fees to plaintiff is unjustified.
Defendant, in addition, filed a motion for a new trial based on a new evidence which allegedly could not have been discovered during the trial consisting of a contract executed between the plaintiff and the Basilan Lumber Company and of a record of the export of logs of the latter company during the years 1960 and 1961 which allegedly tend to show that even if additional quantity of logs were made available by defendant to plaintiff during the remaining period of the contract, the latter would not have been able to sell said logs, plus another record tending to show that plaintiff reported to the government as commission received from the sale of 7,405,861 board feet of defendant's logs in the year 1959 the sum of P66,036.86 which merely represents 8% of the 13% commission agreed upon between plaintiff and defendant to bolster its claim that 5% of said commission should be deducted from the lucrum cessans that may be awarded to plaintiff.
Plaintiff opposed the motion for reconsideration and new trial on the ground that no new point has been raised therein but that it would only unduly delay the disposition of the case. To this opposition defendant filed a reply and a counter-manifestation.
As a basis for the actual damages awarded to plaintiff we stated in our decision that "whether logs were delivered to plaintiff, plaintiff earned the commission. Had defendant continued to deliver the logs plaintiff could have continued earning its commission in much the same way as in previous shipments." Defendant's counsel now finds this premise erroneous because it assumes facts not in accordance with the mode of implementation of the agreement in question. It is claimed that, according to said mode, a sale must always precede the supply or delivery of logs. If no sale is made by plaintiff, defendant does not have to supply or deliver any quantity of logs. The commission is earned only on sales made. If there is no sale there is no commission. So, counsel concludes, it is erroneous to assume that had the operation of the agreement continued plaintiff would have earned its commission on the basis of the 34 million board feet called for during the remaining period of the agreement.
Counsel predicates his argument on something which plaintiff was precisely prevented from doing. It is true that a sale must always precede the supply or delivery of logs and the commission is earned only on sales made. But, how could plaintiff conclude sales when defendant has stubbornly refused to continue with the operation of the contract in spite of the warning given to it by plaintiff? Had the operation not been stopped, plaintiff would have undoubtedly continued the flow of sales in pursuance of the agreement. But defendant prevented this for reasons of its own.
The question of whether the obligation to supply the additional monthly two million board feet during the remaining period of the agreement is mandatory or conditional, or whether defendant had the right to suspend its operation as a consequence of its request for renegotiation of prices, are matters that have already been discussed in our main decision. We do not need to repeat here the discussion we have made thereon. We only need to emphasize that, since defendant is guilty of breaking the agreement for reasons purely of its own, in disregard of its express covenant, it held itself liable for all consequential damages that may result from such breach, whether foreseen or unforeseen, and one of the items that may be considered in determining said damages is the failure to realize whatever profits could have been earned during the remaining life of the agreement.1 It is not, therefore, proper to base such damages purely in transactions that had been accomplished in the past and ignore those that could have been accomplished in the future. As the law says, in case of fraud or bad faith, "the obligor shall be responsible for all damages that may be reasonably attributed to the non-performance of the obligation" (Article 2201, new Civil Code).
But we agree with counsel that the commission paid by plaintiff to Frinat International in the sale of logs of defendant should be deducted from the award made in its favor. But what is the rate of such commission? The record does not appear clear on this matter. On one hand, it shows that the 5% commission earned by Frinat International, as sub-agent, was paid by defendant as an additional commission, as may be gathered from defendant's brief (pp. 6, 70, 85, 88, 141 and 197). On the other hand, plaintiff itself admitted that it does not in all cases receive the whole 13% commission because in cases where plaintiff's officials could not personally contact the buyers or conclude sales with them, plaintiff has to pay a commission of 2% to a sub-agent (appellee's brief pp. 21 and 85). The most that can be said, therefore, is that what plaintiff had paid in its previous sales in the form of commission to Frinat International was 2% and not 5% as claimed. This is the most that can be deducted from the 13% commission corresponding to plaintiff.
As already stated in our main decision, the commission earned by plaintiff based on actual sales effected during the first seven months was P.0107456 per board foot. The total board feet which under the terms of the agreement defendant was obligated to deliver for the next 17 months is 34 million board feet. Multiplying 34 million board feet by P.0107456, the product is P365,350.40. Deducting therefrom the 2 % commission that corresponds to Frinat International, which amounts to P56,207.76, the balance is P309,142.64, which should be the lucrum cessans to which plaintiff is entitled.
Under Article 2210, interest may be allowed upon damages awarded for breach of contract, in the discretion of the court. Considering the circumstances of this case, we do not deem it justified to further charge interest on the damages herein involved. The exemplary damages and attorney's fees awarded in the decision are in our opinion proper and so further discussion thereof is unnecessary.
With regard to the motion for a new trial, the contract with Basilan Lumber Company alleged to be a newly discovered evidence is not really so for it could have been presented during the trial. As a matter of fact, the original of said contract was already presented as Exhibit O and claimed in the brief to have been the basis of the agreement in question.
The claim that plaintiff turned down offers for distribution from other companies does not necessarily prove that even if defendant had continued to make available the 2 million board feet monthly plaintiff could not have been able to sell the same, because at the time of the execution of the agreement plaintiff was also the distributor of other companies; like the Basilan Lumber Company, Martha Enterprises, Selective Philippine Lumber Company, and it complied with its commitments with said entities.
WHEREFORE, we hereby modify our decision rendered on August 31, 1964 in the sense of awarding to plaintiff the sum of P309,142.64 as lucrum cessans affirming said decision in all other respects. The motion for new trial is denied.
Concepcion, Reyes, J.B.L., Barrera, Parades, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
Footnotes
1 Algarra v. Sandejas, 27 Phil. 284; Borromeo v. Manila Electric Railroad and Light Co., 44 Phil. 165; Hicks v. Manila Hotel Co., 28 Phil. 325; Server v. Eisenberg & Company (Phil.) Inc. L-10741, March 29, 1958.
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