Case Digest (G.R. No. 164985) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In First United Constructors Corporation and Blue Star Construction Corporation v. Bayanihan Automotive Corporation, petitioners FUCC and Blue Star, two related construction firms, purchased six dump trucks from respondent Bayanihan Automotive Corporation between May 27 and July 8, 1992. They maintained a credit arrangement and later ordered a Hino Prime Mover on September 19, 1992 and an Isuzu Transit Mixer on September 29, 1992, partially paying by post-dated checks of ₱360,000.00 and ₱375,000.00. Upon presentment, Bayanihan discovered payment was stopped. Petitioners justified the stoppage by alleging respondent’s breach of warranty in failing to repair the second dump truck delivered on May 27, 1992, which they had to repair at their own cost, amounting to ₱247,950.00. Bayanihan filed a collection suit on April 29, 1993 for ₱735,000.00. The Regional Trial Court (RTC) on May 14, 1996 ordered petitioners to pay the unpaid balance with 12% interest and attorney’s fees, and awar Case Digest (G.R. No. 164985) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Petitioners First United Constructors Corporation (FUCC) and Blue Star Construction Corporation (Blue Star) were associate construction firms sharing resources.
- Respondent Bayanihan Automotive Corporation was engaged in importing, reconditioning, and selling used Japan-made trucks.
- Initial Truck Purchases (May–July 1992)
- FUCC ordered and received five Isuzu dump trucks between 27 May and 18 June 1992.
- Blue Star received one Isuzu dump truck on 4 July 1992; FUCC received an Isuzu cargo truck on 8 July 1992.
- The parties established a business relationship, with respondent extending repair services and liberal payment terms.
- Subsequent Purchases and Payment Stoppage (September–December 1992)
- On 19 September 1992, FUCC ordered a Hino Prime Mover, delivered same day; on 29 September 1992, FUCC ordered an Isuzu Transit Mixer.
- FUCC paid part in cash and P735,000 balance by two post-dated checks (P360,000 and P375,000).
- Upon presentment, FUCC had stopped payment, blaming respondent’s refusal to repair a defective dump truck (the second unit delivered on 27 May 1992).
- Pleadings and Counterclaim
- Respondent filed suit for collection on 29 April 1993, claiming P735,000 plus damages.
- Petitioners counterclaimed: (a) refund of price for the defective dump truck (P830,000 minus P735,000); (b) reimbursement of repair expenses (P247,950); (c) exemplary damages (not less than P500,000); (d) attorney’s fees and litigation costs.
- RTC Judgment (14 May 1996)
- Ordered petitioners to pay P360,000 and P375,000 with 12% interest from 11 February 1993, plus 10% attorney’s fees.
- On counterclaim, awarded petitioners P71,350 with 12% interest from decision date and 10% attorney’s fees.
- CA Decision (26 July 2004)
- Affirmed RTC.
- Held recoupment unavailable because the breach-of-warranty claim arose from a different transaction.
- Held compensation unavailable because petitioners’ claims were not liquidated and demandable.
Issues:
- Whether petitioners validly exercised the right of recoupment under Article 1599(1) of the Civil Code for breach of warranty.
- Whether petitioners could avail of legal compensation (set-off) given the liquidated and demandable character of their repair-expense claim.
- Whether respondent should pay legal interest from first extrajudicial demand and actual exemplary damages.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)