Appeals court settles dispute over Red Bull

The Court of Appeals has cleared any confusion surrounding the distributorship of energy drink Red Bull in the Philippines, nullifying an earlier issued injunction blocking the termination of a distribution contract between the manufacturer and an already defunct local firm.

In a 14-page decision, CA Associate Justice Amy Lazaro-Javier cleared the way for Thai firm TC Pharmaceutical Co. Ltd. to choose its own distributor in the country.

TC Pharmaceutical had an exclusive distributorship agreement with Energy Food and Drinks Inc., a local firm that closed shop as far back as Dec. 31, 2009.

Even before Energy Food and Drinks closed shop, TC Pharmaceutical already pulled the plug on the agreement. The exclusive distributorship was terminated on Oct. 31, 2008.

However, despite these events, the Quezon City Regional Trial Court Branch 217 issued a writ of preliminary injunction preventing TC Pharmaceutical from choosing a new Red Bull distributor in the country.

According to the appellate court’s decision, QC RTC Judge Santiago Arenas “committed grave abuse of discretion,” seemingly applying “double standards” by siding with Energy Food and Drinks without considering the grounds that TC Pharmaceutical presented in seeking the termination of the distributorship agreement.

The QC RTC issued its writ of preliminary injunction in favor of Energy Food and Drinks on the grounds of “irreparable damage.” It rejected TC Pharmaceutical’s motion for reconsideration, saying the company failed to prove irreparable damage to its interests.

The CA decision said the QC RTC “misread and misapplied in a strained manner elementary precepts on the issuance or non-issuance of a writ of preliminary injunction which ironically it even cited.”

Lazaro-Javier said that had the QC RTC considered the evidence presented, it would have discovered that Energy Food and Drinks had admitted that it was remiss in its obligations under the distributorship agreement by defaulting on the payment of its obligations despite a positive bottom line.

Energy Food and Drinks likewise failed to meet its sales target and, toward the end of the agreement, reduced its marketing efforts for Red Bull.

With this issue now cleared, TC Pharmaceutical has assigned Maryland Distributors Inc. as the new authorized and exclusive distributor of Red Bull in the country. Its contract will last until December 2015.