Sumifru (Philippines) Corporation v. Spouses Leonora

Summary

Sumifru (Philippines) Corporation sought to compel Spouses Burbe to exclusively sell bananas under a Production and Purchase Agreement. The Supreme Court affirmed lower courts' rulings that the contract's automatic renewal clause was void for violating the principle of mutuality of contracts under Article 1308 of the Civil Code. The clause gave only Sumifru the sole option to renew the agreement for additional terms, making it unconscionable as it left contract compliance to one party's will. Since the original 10-year term expired in March 2009 and the renewal clause was invalid, no actionable breach existed when respondents sold bananas to third parties in March 2010. The Court emphasized that contracts must bind both parties mutually and cannot be left to the sole discretion of one party.