Court orders San Miguel to pay P68M for hoarding

By Ina Reformina, ABS-CBN News

Posted at Oct 05 2011 02:10 AM | Updated as of Oct 05 2011 09:16 PM

MANILA, Philippines – The Court of Appeals (CA) has ordered San Miguel Corporation (SMC) to pay rival Asia Brewery, Inc. (ABI) over P68 million in damages in connection with the hoarding of over 1.6 million bottles of ABI beer products and plastic crates in 3 SMC plants and warehouses in 1997, thereby reversing a decision handed down by its 11th Division and affirming, with modifications, a trial court ruling.

In a 12-page decision penned by Associate Justice Danton Bueser dated September 22, 2011, the appellate court granted a motion for reconsideration (MR) filed by ABI and set aside its ruling dated September 15, 2010 which favored SMC's counter-claim that ordered ABI to pay SMC over P160 million in damages.

The appellate court, through a division of 5 magistrates, reinstated the decision, with modifications, of the Marikina Regional Trial Court (RTC) Branch 263, ordering SMC to compensate ABI for the costs of profit the latter lost and exemplary damages.

The trial court ordered a raid of SMC's warehouses in San Fernando, Pampanga; Cabuyao, Laguna; and Misamis Oriental in 1997 that yielded over 1.6 million bottles of ABI's Beer na Beer, Carslberg, Manila Beer, Colt 45, Lone Star and Budweiser products in various sizes, some of which were still unopened. The sheriff also seized 128,679 ABI red plastic shells.

On November 28, 2008, the Marikina RTC found SMC guilty of unfair trade practices and ordered the company to pay ABI over P130 million in damages.

The appellate court's ruling in 2010 handed down by its 11th Division, however, relied on a swapping agreement between the 2 companies from 1990 to 1992 where both agreed to recover ABI's Beer na Beer and SMC's Pale Pilsen that were mistakenly retrieved by both parties.

ABI claimed it terminated the agreement accusing SMC of deliberately retrieving ABI bottles and shells from dealers and retailers in unusually large volumes to withdraw them from normal court of trade. But the appellate court ruled then in favor of SMC's defense that ABI beer products seized by the court sheriff were leftovers when ABI unilaterally terminated the swapping agreement and subsequently refused to take back its bottles and shells.

However, in granting ABI's MR, the appellate court held that "SMC truly committed unfair trade acts or practices with reference to the shells and bottles found in its possession, but not covered by the swapping agreement."

"The appearance of such products was distinct and the numbers involved were so significant that SMC's defense of unintentional product mixed-up was too unlikely to be believable.

"[W]e find reasonable and justified the award of temperate damages (P60 million of the total amount awarded) which are a bit more than half of the original amount awarded by the lower court," the appellate court held.