G.R. No. 200408 - S.V. MORE PHARMA CORPORATION AND ALBERTO A. SANTILLANA, VS. DRUGMAKERS LABORATORIES, INC. AND ELIEZER DEL MUNDO. [G.R. NO. 200416] S.V. MORE PHARMA CORPORATION AND ALBERTO A. SANTILLANA, VS. DRUGMAKERS LABORATORIES, INC. AND ELIEZER DEL MUNDO.D E C I S I O N - Supreme Court E-Libra

Ruling

accordingly ordered petitioners, Hizon Laboratories and Rafael, to jointly and severally pay Drugmakers the following amounts: (a) P6,000,000.00 as actual damages representing loss of income and/or loss of business opportunity; ( b ) P500,000.00 as moral damages; ( c ) P100,000.00 as exemplary damages; ( d ) P250,000.00 as attorneys fees; and ( e ) costs of suit. [30] It found that both the Agreement and the Deed of Sale/Assignment explicitly provided that Drugmakers had the right to exclusively manufacture the subject 28 pharmaceutical products; thus, the act of S.V. More in contracting with Hizon Laboratories to manufacture some of the said products constituted a clear violation of their contractual obligations for which they are liable for damages. [31] Moreover, it disregarded petitioners claim that Atty. Carag surreptitiously inserted certain gratuitous provisions into the subject contracts for being unsubstantiated in the light of Albertos admission that he prepared the draft of the Agreement and had read the Agreement and Deed of Sale/Assignment before signing the same. [32] Being aware of the fact that petitioners are legally obliged to maintain Drugmakers as the sole and exclusive manufacturer of the subject pharmaceutical products, the RTC declared Hizon Laboratories and Rafael guilty of bad faith in agreeing to manufacture at least six (6) of them, hence, liable for damages together with petitioners. [33] On October 8, 2002, petitioners moved for reconsideration, [34] while on October 10, 2002, Hizon Laboratories and Rafael filed their Notice of Appeal. [35] In an Order [36] dated August 11, 2003, the RTC denied petitioners motion for reconsideration, prompting them to file an appeal. Meanwhile, in the same Order, the RTC gave due course to the Notice of Appeal filed by Hizon Laboratories and Rafael. The CA Ruling In a Decision [37] dated August 5, 2011, the CA affirmed the RTC Ruling with modifications in that: ( a ) it deleted the award for moral and exemplary damages; and ( b ) it absolved Rafael and Hizon Laboratories from any liability. It found that petitioners indeed breached their contractual obligation when they entered into another manufacturing agreement with Hizon Laboratories, and its owner, Rafael, instead of availing of the option under the Agreement to invalidate the same when Drugmakers failed to provide them with a copy of the manufacturing agreement for the renewal of the license to operate. [38] Hence, respondents are entitled to be paid actual damages representing unrealized profits, [39] attorneys fees, and costs of suit. [40] The CA, however, decreed that since Drugmakers is a juridical entity, it is not therefore entitled to moral and exemplary damages. [41] Further, the CA absolved Hizon Laboratories and Rafael from any liability as they were not parties to the Agreement and Deed of Sale/Assignment nor can they be faulted for manufacturing the pharmaceutical products because their actions were only the dir