Facts:

The case revolves around a dispute between 88 Mart Duty Free, Inc. (petitioner) and Fernando U. Juan, represented by Eduardo A. Gonzales (respondent). The events leading up to the dispute began on June 1, 1995, when Jean Lui, the chief executive officer and general manager of the petitioner, met respondent Fernando U. Juan at Juan's restaurant in Subic. During this meeting, they discussed potential business dealings, particularly concerning a shipment of assorted imported food items owned by Juan. Lui expressed interest in purchasing this entire shipment, eventually agreeing on a price of US$39,165, with the understanding that the relevant shipping documents and invoices would be handed over as part of the transaction. On the same day, respondent delivered the shipping documents to an employee of 88 Mart, David Manalo, enabling the transfer of the shipment to the petitioner under a letter from the Subic Bay Metropolitan Authority (SBMA) Port Authority.

However, despite the

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Facts:

Background and Preliminary Negotiations

• On June 1, 1995, Jean Lui, the chief executive officer and general manager of 88 Mart Duty Free, Inc., met with Fernando U. Juan at Juan’s restaurant in Subic.
• During their conversation, business matters were discussed, particularly focusing on a container van shipment comprising assorted imported food items and other non-perishable goods owned by respondent.

The Transaction and Delivery of Documents

• Jean Lui expressed interest in purchasing the entire shipment for US$39,165, prompting subsequent actions by both parties.
• On the same day, respondent delivered the invoices, complete shipping documents, and the packing list to David Manalo, an employee of petitioner.
• Following this, the shipment was transferred in the name of petitioner as evidenced by a letter from SBMA Port Authority Officer-in-Charge Ferdinand L. Hernandez addressed to Commissioner of Customs Guillermo L. Parayno, and accompanied by a declaration of admission from the SBMA Port Authority.
• The transaction documents showed that petitioner had applied for the shipment’s entry into the SBMA, a process in which petitioner was authorized to import duty- and tax-free.

Formation of the Contract Dispute

• Respondent, through counsel, sent a letter demanding payment of the agreed purchase price after several days even though petitioner had already received the documents.
• Petitioner and Lui contended that no perfected contract of sale existed. They maintained that:
• Lui was interested in only a part of the shipment (specifically Kool Aid and Vanilla Flintstones Cookies) subject to verification of prices and condition of the goods.
• Upon learning that other suppliers offered lower prices, Lui instructed his employee to inform respondent that they were no longer interested in buying the entire consignment.
• Petitioner and Lui argued that the turnover of documents was part of an arrangement to assist respondent in securing an import permit, as petitioner was the only one authorized under SBMA rules to import the shipment on a tax- and duty-free basis, whereas respondent was not.

Litigation in the Lower Courts

• Respondent filed a complaint for the sum of money and damages, also praying for the issuance of a writ of preliminary attachment against petitioner and Lui in the Regional Trial Court (RTC) of Olongapo City, Branch 75.
• During the trial:
• The RTC granted applications and motions filed by respondent, including:
• The issuance of a writ of preliminary attachment on petitioner’s movable properties.

ii. Permission for respondent to sell perishable goods at a public auction, which later fetched P165,000 with the highest bid. ii. The turnover of documents constituted a constructive delivery, thereby transferring ownership to petitioner, who was bound to pay the purchase price. iii. Petitioner and Lui were held jointly and severally liable, although moral and exemplary damages were denied due to the absence of established fraud.

Appellate Court (Court of Appeals) Decision

• The Court of Appeals (CA) affirmed the RTC’s decision with modifications by:
• Reiterating that the transfer of documents was a constructive delivery and effectively transferred ownership.
• Holding petitioner liable for the purchase price, but limiting the liability to the deficiency after considering the resale of some goods at P165,000.
• Exonerating Lui from solidary liability on the basis that there was no evidence he acted in bad faith, with gross negligence, or outside the scope of his authority.

Issues Raised in the Petition for Review

• Petitioner raised two primary issues for review:
• The existence of a perfected contract of sale.
• The propriety of the issuance of the writ of preliminary attachment by the RTC.
• Petitioner argued that the factual findings of the lower courts, particularly regarding the contract formation, were either “overlooked” or misinterpreted.

Supreme Court Resolution

• The Supreme Court (SC) determined that the contract of sale had been properly established by the RTC and CA based on sufficient factual and legal bases, making it a matter not subject to review under Rule 45 except in limited circumstances.
• Conversely, the SC found that the issuance of the writ of preliminary attachment was improper since:
• The lower courts did not find any fraud or any justifiable ground under the law for such an attachment.
• There was no evidence to support the issuance of the writ given that petitioner’s failure was solely due to non-fulfillment of contractual obligations after a change in business judgment.
• Consequently, the SC granted petitioner’s motion to discharge the writ while otherwise affirming the CA decision.

Issue:

Issue on the Existence of a Perfected Contract of Sale

• Whether there was a valid, perfected contract of sale between petitioner and respondent despite petitioner’s contention that no definitive agreement had been reached regarding all items offered.
• Whether the constructive delivery of documents and the subsequent actions by the parties (especially the application for import entry) served to effectively bind petitioner to the contract.

Issue on the Issuance of the Writ of Preliminary Attachment

• Whether the issuance of a writ of preliminary attachment against petitioner’s movable properties by the RTC was proper under the circumstances presented.
• Whether the allegations, particularly the claim of fraud, were sufficient to justify the ex parte issuance of such a writ.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)