G.R. No. 170674 - Foundation Specialists, Inc. vs. Betonval Ready Concrete, Inc.

Foundation Specialists, Inc. (FSI) contracted with Betonval Ready Concrete, Inc. (Betonval) for the delivery of ready mixed concrete under three "Contract Proposals and Agreements" dated July 23, 1991, September 18, 1991 and March 26, 1992.
Contract stipulations: FSI to supply cement; payment to Betonval within seven days of invoice; 30% per annum interest on overdue payments; credit limit of P600,000.

Betonval delivered pursuant to the contracts but FSI failed to pay outstanding balances beginning January 1992.
Betonval extended the seven-day credit period to 45 days by letter dated March 6, 1992; extension reflected in invoices dated March 31 to September 3, 1992.
On September 1, 1992 Betonval demanded payment of P2,349,460, inclusive of previously unpaid amounts and new billings.

FSI disputed amount pending verification and proposed a payment schedule fixing late payment liability at 24% per annum in a September 3, 1992 letter.
FSI paid pursuant to its proposed schedule and reduced the debt to P1,114,203.34 as of July 1993, the amount inclusive of 24% annual interest computed from invoice due dates.
FSI retained records reflecting 2,801.2 bags of unused cement; Betonval's last invoice reflected 1,307.45 bags.

Betonval filed a complaint for sum of money and damages in the Regional Trial Court, Makati City, Branch 125, Civil Case No. 93-2430.
Betonval sought a writ of preliminary attachment alleging fraud in contracting and disposition of assets to defraud creditors.
The RTC issued a writ of preliminary attachment and approved a P500,000 bond by Stronghold Insurance Co., Inc. (Stronghold).
FSI filed a P500,000 counterbond, discharging the writ except for three items remaining in custodia legis (excavator, crawler crane, Isuzu pick-up).
An additional counterbond of P350,000 lifted garnishment of FSI's receivables from the Department of Public Works and Highways.

On January 29, 1999 the RTC rendered judgment ordering FSI to pay Betonval P1,114,203.34, plus legal interest at 12% per annum from date of judicial demand, attorney’s fees of P50,000, and costs.
The RTC found the attachment improper and ordered plaintiff and surety jointly and severally liable for actual damages of P200,000 on defendant's counterclaim.
In an order dated May 19, 1999 the RTC denied certain motions for reconsideration but modified the judgment by increasing the award of actual and compensatory damages to P1,500,000 and holding Stronghold jointly and severally liable for P500,000 as covered by the attachment bond.

All parties appealed to the Court of Appeals; FSI’s appeal was dismissed for nonpayment of appellate docket fees, while Betonval’s and Stronghold’s appeals proceeded.
In a decision dated January 20, 2005 the Court of Appeals modified the RTC...(Subscriber-Only)

Whether Betonval’s complaint was premature because of FSI’s alleged need to reconcile accounts and claim for unused cement.
Whether FSI waived or was estopped from raising reconciliation or unused cement claims by failing to dispute invoices in a timely manner or by failing to perfect its appeal to the Court of Appeals.

Whether the 45-day credit extension or subsequent dealings effected an novation extinguishing the obligation to pay contractual interest.
Whether Betonval waived the stipulated 30% per annum interest and whether the imposition of 24% per annum by the Court of Appeals was warranted.
Whether only legal interest at 6% per annum from judicial demand should apply instead of agreed rates.

Whether the issuance of the writ of preliminary attachment was proper under Rule 57, Rule 57, Section 1(d) and (e), Rules o...(Subscriber-Only)

Ruling:

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Ratio:

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Doctrine:

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