Ben v. Semexco/Zest-O Marketing
REITERATIONFacts
The Antecedents: Petitioners, Mr. Wee Sion Ben and Best Emporium, purchased fruit juices from respondent, SEMEXCO/ZEST-O Marketing Corporation, from January to August 1995. Respondent issued a Charge Invoice for ₱104,277.80 with the condition that "Please make all checks payable to SEMEXCO Marketing Corporation only." Petitioners issued a Metro Bank check for the said amount payable to cash, which was received by respondent's sales representative, Maloney Sorolla. Sorolla encashed the check but did not remit the proceeds to respondent. Procedural History: Upon learning of the "pay to cash" check, respondent's district sales manager inquired from petitioner Wee Sion Ben. Petitioners then issued a replacement check payable to respondent corporation. However, petitioners subsequently directed the drawee bank to stop payment on this replacement check. Respondent made oral and written demands for payment, which were unheeded. Respondent filed a complaint for sum of money. The Regional Trial Court (RTC) dismissed the complaint, finding that the obligation was extinguished by the delivery of the "pay to cash" check to Sorolla. On appeal, the Court of Appeals (CA) modified the RTC's decision, holding petitioners jointly and severally liable for the principal amount plus interest and attorney's fees, finding that the obligation was not extinguished. The Petition: Petitioners seek review of the CA's decision and resolution, questioning whether the issuance of the check payable to cash, delivered and received by Sorolla, constituted valid payment.
Issue(s)
Whether the issuance of a check payable to cash, in violation of a stipulation in the Charge Invoice requiring checks to be payable to the order of the seller, constitutes valid payment. Whether petitioners' obligation to pay for the fruit juices was extinguished.
Ruling
The petition is denied. The assailed Decision and Resolution of the Court of Appeals are affirmed.
Ratio Decidendi
On the issue of whether the issuance of a check payable to cash constitutes valid payment: The Court held that the issuance of the check payable to cash was a clear violation of the term stipulated in the Charge Invoice, which explicitly stated that "Please make all checks payable to SEMEXCO Marketing Corporation only." Both parties are bound by this contractual stipulation. The Court rejected the petitioners' contention that the Charge Invoice, being a contract of adhesion, did not oblige them to comply with its terms. It reiterated the established jurisprudence that contracts of adhesion are as binding as ordinary contracts, and adherence to them signifies consent. Petitioners should have been wary of issuing a "pay to cash" check, especially when it was requested by the sales representative, as this should have alerted them to the potential risk of the check not reaching the respondent corporation. The subsequent issuance of a replacement check and the subsequent stop payment order further indicated an admission by the petitioners that they had indeed violated the condition in the Charge Invoice, thereby negating any claim that their obligation was extinguished. On the issue of whether petitioners' obligation to pay for the fruit juices was extinguished: The Court ruled that the obligation was not extinguished. Article 1595(1) of the Civil Code provides that where, under a contract of sale, ownership has passed to the buyer and the buyer wrongfully neglects or refuses to pay for the goods according to the terms of the contract, the seller may maintain an action against him for the price of the goods. In this case, the petitioners failed to pay according to the terms of the contract by issuing a check payable to cash and subsequently ordering a stop payment on the replacement check. This constituted a wrongful neglect or refusal to pay. Therefore, the respondent, as the seller, was entitled to maintain an action for the price of the goods delivered.
Main Doctrine
Issuing a check payable to 'cash' in violation of a stipulation in a charge invoice requiring checks to be payable to the order of the seller, and subsequently issuing a stop payment order on a replacement check, does not extinguish the buyer's obligation to pay for the goods purchased.