Industrial Textile Manufacturing Company of the Philippines, Inc. v. LPJ Enterprises, Inc.
REITERATIONFacts
The Antecedents: Respondent LPJ Enterprises, Inc. had a contract to supply cement to Atlas Consolidated Mining and Development Corporation (Atlas). Petitioner Industrial Textile Manufacturing Company of the Philippines, Inc. (Itemcop), a sister corporation of Atlas, proposed an experiment to develop plastic cement bags. After initial failures, three hundred "improved bags" showed substantially reduced seepage. Based on these results and a letter from Itemcop proclaiming dramatic results, LPJ Enterprises agreed to use the plastic bags and issued four purchase orders totaling P101,474.00 for 101,800 bags. Itemcop delivered the bags, and LPJ Enterprises made partial payments, leaving a balance of P84,123.80. LPJ Enterprises admitted liability for the first purchase order (53,800 bags) but denied full responsibility for the remaining 47,000 bags, claiming its workers objected due to health hazards from cement dust seepage, forcing a reversion to kraft paper bags. LPJ Enterprises stated it would only pay for the 15,000 bags it actually used. Procedural History: The Regional Trial Court (RTC) rendered judgment sentencing LPJ Enterprises to pay the outstanding balance, interest, attorney's fees, and costs. The Intermediate Appellate Court (IAC) reversed the RTC decision, dismissing petitioner's complaint and absolving respondent from liability. The Petition: Petitioner seeks review of the IAC decision, arguing it disregarded facts and misapplied the law.
Issue(s)
Whether the petition presents a valid ground for re-examination of the appellate court's factual findings. Whether respondent LPJ Enterprises, Inc. is liable for the 47,000 plastic bags not actually used for packing cement. Whether the transaction constituted an absolute sale or a "sale on approval" or "sale or return."
Ruling
The Supreme Court ruled that the petition presents valid grounds for re-examination of the IAC's factual findings. It held that respondent LPJ Enterprises, Inc. is liable for the 47,000 plastic bags not used, as the transaction constituted an absolute sale. The Court set aside the IAC decision and reinstated the RTC decision.
Ratio Decidendi
On the propriety of re-examining factual findings: The Court reiterated the rule that it is not a trier of facts and that appellate court findings are generally conclusive. However, it cited exceptions, including when the inference made is manifestly mistaken, the judgment is based on a misapprehension of facts, or the appellate court overlooked relevant facts that would justify a different conclusion. The Court found that the IAC disregarded the admitted liability for the first purchase order, thus falling under the exception. On respondent's liability for unused bags: The Court found it undisputed that the plastic bags were tested and favorably considered after alterations, forming the basis for respondent's agreement and issuance of purchase orders. The quantity ordered also negated the claim of ongoing experimentation. The Court noted that respondent accepted the final delivery and made payments even after problems were likely insurmountable, and that respondent's president collected commissions for the purchase orders. The Court concluded that respondent's claim of conditions governing the transaction could not be considered as they were not specified in the purchase orders. On the nature of the sale: The Court held that Article 1502 of the Civil Code, concerning "sale or return" or "sale on approval," requires an express written agreement. Parol evidence cannot alter a complete written contract. The Court found that the transaction between petitioner and respondent constituted an absolute sale because there was no such express written stipulation, and respondent accepted the goods. Therefore, respondent is liable for the plastic bags delivered.
Main Doctrine
A transaction constitutes an absolute sale, rendering the buyer liable for the goods delivered, when there is no express written agreement to make the contract a "sale or return" or a "sale on approval," and the buyer accepts the goods without reservation.