Case Digest (G.R. No. 225433) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
Petitioner Lara’s Gifts & Decors, Inc. is a manufacturer and exporter of handicraft products, while respondent Midtown Industrial Sales, Inc. sells industrial and construction materials and counts petitioner among its customers. Between January and December 2007, petitioner purchased P1,263,104.22 worth of materials on a sixty-day credit term subject to a 24% per annum interest on all overdue accounts as reflected in the sales invoices (Annexes A–A-51). Payment was by postdated Chinabank checks, which bounced, and by replacement postdated Export and Industry Bank checks, which likewise dishonored. Respondent sent a demand letter dated 21 January 2008 (received 22 January 2008) and, upon nonpayment, filed on 5 February 2008 a Complaint for Sum of Money with Prayer for Attachment before the Regional Trial Court, Branch 128, Caloocan City (Civil Case No. C-22007). In its Answer, petitioner admitted the existence of the invoices and checks but denied due execution of the invoices an Case Digest (G.R. No. 225433) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Business Relationship
- Petitioner Lara’s Gifts & Decors, Inc.: manufacturer, seller, exporter of handicraft products; customer of respondent.
- Respondent Midtown Industrial Sales, Inc.: seller of industrial and construction materials; extended credit to petitioner.
- Purchases and Nonpayment
- January–December 2007: petitioner bought ₱1,263,104.22 worth of materials on 60-day credit; invoices stipulated 24% p.a. interest on overdue accounts.
- Payment by postdated checks: original ChinaBank and replacement EIB checks bounced for insufficient funds/closed account.
- Respondent’s demand letter (January 21, 2008) went unheeded.
- Complaint for sum of money with prayer for attachment filed February 5, 2008.
- Petitioner’s Defense
- Admitted purchases and check issuance but alleged deliveries were substandard; checks lacked value.
- Finished goods rejected by US buyers; subsequent factory fire (February 19, 2008) destroyed inventories.
- Trial Court Proceedings (RTC, Caloocan City)
- Decision January 27, 2014: judgment for respondent; petitioner to pay
- ₱1,263,104.22 + 24% p.a. interest from February 5, 2008;
- ₱50,000 attorney’s fees; costs of suit.
- Findings: petitioner failed to prove substandard deliveries; sales invoices and checks established debt.
- Court of Appeals
- Decision April 21, 2016; Resolution June 29, 2016: affirmed trial court.
- Held: petitioner admitted invoices and check issuance; failed to show unconscionability of 24% rate; no evidence of disadvantageous bargaining.
Issues:
- Admissibility of sales invoices: Do Midtown’s invoices have probative value absent formal proof of genuineness?
- Contractual default: Is petitioner in default of its payment obligations?
- Civil Code provisions: Are Articles 1192 (concurrent breach) and 1283 (setoff) applicable?
- Interest clause validity and duration:
- Is the 24% p.a. interest rate void?
- If valid, does interest run only until finality of judgment?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)