Philippine Creosoting Corporation v. Pacwood, Inc.
REITERATIONFacts
The Antecedents: Philippine Creosoting Corporation (Creosoting) ordered treated creosoted wood poles from Pacwood, Inc. (Pacwood). Initially, a purchase order was cancelled due to incomplete delivery. Subsequently, Creosoting ordered 145 pieces of creosoted wood poles, which Pacwood delivered. A dispute arose regarding the outstanding balance, with Creosoting claiming a discrepancy due to a supposed 20% discount, while Pacwood insisted no discount was granted and demanded payment of P406,866.04. Procedural History: Pacwood filed a civil complaint for collection. The trial court initially ruled in favor of Creosoting, dismissing the complaint and awarding attorney's fees and moral damages to Creosoting, and ordering the return of an attached crane or its value. Upon reconsideration, the trial court amended its decision to include the return of the crane or its monetary value and compensation for its loss of use. Pacwood appealed to the Court of Appeals, which reversed the trial court's decision, ordering Creosoting to pay the unpaid obligation plus interest, and Pacwood to pay attorney's fees. The Petition: Both parties appealed to the Supreme Court. Creosoting argued for the existence of a 20% discount and a subsequent full payment of US$10,000.00. Pacwood maintained that no discount was granted and the account remained unpaid.
Issue(s)
Whether Creosoting is liable to pay Pacwood's claim for the unpaid balance on the purchase of 145 pieces of creosoted wood poles, and whether a 20% trade discount was granted by Pacwood to Creosoting. Whether the payment of US$10,000.00 constituted full payment of the account. On the computation of the final award.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals and the Regional Trial Court. It rendered judgment sentencing Philippine Creosoting Corporation to pay Pacwood, Inc. the sum of P171,074.75, with interest at the legal rate of six percent (6%) per annum from November 22, 1984, until fully paid, and P10,000.00 as attorney's fees and costs of suit.
Ratio Decidendi
On the issue of liability for the unpaid balance and the existence of a 20% trade discount: The Court held that the issue was factual and ordinarily binding on the appellate court. However, when the appellate court's ruling conflicts with the trial court's findings, a review is justified. The Court agreed with the Court of Appeals that Pacwood did not grant a 20% trade discount. The invoices and delivery receipts, which were documentary evidence, did not indicate any discount. This documentary proof was deemed superior to Creosoting's testimonial evidence attempting to prove the discount. Therefore, the Court found that Pacwood delivered 145 pieces of creosoted wood poles at the unit price of P2,731.55 each, with no discount. The Court noted that the original claim was P406,866.04, which included interest and penalty charges. On the issue of payment: The Court acknowledged Creosoting's claim that a payment of US$10,000.00 (equivalent to P225,000.00) was made as full payment during a conciliation meeting. However, the Court found that this payment did not fully settle the account based on the established unit price and the number of poles delivered. The Court computed the unpaid balance as the total cost of the poles (145 pieces at P2,731.55 each, totaling P396,074.75) minus the payment of P225,000.00, resulting in a remaining balance of P171,074.75. The Court emphasized that the refusal to pay the remaining balance was unjustified given the evidence presented. On the computation of the final award: The Court modified the Court of Appeals' award. It determined the principal amount due to be P171,074.75. This amount was to earn legal interest at six percent (6%) per annum, counted from the filing of the complaint on November 22, 1984, until fully paid. Additionally, the Court awarded P10,000.00 for attorney's fees and costs of suit, a reduction from the P406,866.04 initially claimed by Pacwood and the P10,000.00 awarded by the Court of Appeals.
Main Doctrine
The Supreme Court held that invoices and delivery receipts, being documentary evidence, prevail over testimonial evidence regarding the existence of a trade discount, absent clear proof to the contrary. The Court also clarified the computation of the unpaid balance, considering payments made and applying legal interest.