G.R. No. 147970 - PCL Industries Manufacturing Corp. vs. Court of Appeals

The case arose from a complaint for Sum of Money with Preliminary Attachment filed by private respondent (ASA Color & Chemical Industries, Inc.) against petitioner (PCL Industries Manufacturing Corporation) on October 10, 1995.
The complaint related to alleged non-payment for printing ink materials delivered from January 18, 1994 to April 14, 1994, totaling ₱504,906.00, with payment terms set at 30 days per invoice.
Petitioner was served with a summons and a writ of preliminary attachment on October 20, 1995, which it later sought to dissolve through a motion filed on October 23, 1995.
The trial court denied petitioner’s motion to dissolve and subsequently denied its motion for reconsideration on January 2, 1996.

The printing ink materials delivered in 1993 and 1994 were defective.
It had returned some defective ink materials in August, October, and November 1993 as evidenced by several transmittal slips.

Petitioner further asserted that the defective ink caused its customers to reject finished plastic products due to an “unwanted smell,” resulting in alleged damages amounting to ₱1,592,794.50.
Communication between the parties included:

A June 30, 1995 letter from petitioner complaining about the ink quality.
A July 16, 1995 response from private respondent offering an option to return “sealed and unused” products or to pay the full amount.
A September 26, 1995 reply from petitioner requesting the pick-up of the defective ink and a meeting, which never materialized.

After trial on the merits, the Regional Trial Court (RTC) of Quezon City rendered a decision on January 8, 1999:

It ordered petitioner to pay ₱504,906.00 with 20% per annum interest from April 1994 until fully paid.
Petitioner was also ordered to pay 25% of the said amount as attorney’s fees and the costs of the suit.
Petitioner’s counterclaim regarding defective goods and resultant damages was dismissed due to insufficiency of evidence.

Sufficient evidence existed showing petitioner’s intention to defraud by agreeing to pay within 30 days but subsequently refusing to pay once in possession of the merchandise.
The issue of the propriety of the writ of preliminary attachment was not essential since petitioner had ceased contesting it on appeal.
Evidence presented regarding the alleged defectiveness of the ink was insufficient to demonstrate that respondent’s ink caused the unwanted smell in the finished plastic products.

The CA’s analysis included scrutiny of documentary evidence, such as transmittal receipts and work process forms, which revealed:

The returned ink receipts were from 1993 deliveries, not pertaining to the deliveries in 1994 subject to non-payment.
The work process forms indicated multiple suppliers, which prevented clear attribution of the defective ink solely to respondent ASA.

Petitioner later filed a petition for certiorari under Rule 65 (treated as Rule 45 review) alleging:

Grave abuse of discretion by the CA in upholding the lower court decisions and in issuing the writ of preliminary attachment (even though it was the trial court originally that issued it).
That the CA’s judgment was based on misapprehension of facts unsupported by the evidence, particularly regarding claims of fraud and defective delivery.

The petition argued that petitioner's evidence, particularly the work process documents, should have been given weight to establish that respondent supplied the defective ink.

Whether the issuance of the writ of preliminary attachment was proper given the allegations of fraud and non-compliance with the terms of sale.
Whether the evidence presented by petitioner sufficiently demonstrated that respondent’s ink was defective and had caused subsequent damages.

Whether petitioner’s failure to pay within the stipulated period, notwithstanding subsequent demands and communications, constitutes proof of a preconceived fraudulent intent not to pay.
Whether the allegations in petitioner’s affidavit supported a finding of fraud at the time of contracting the obligation.

Whether the documentary evidence (transmittal receipts, work process forms, and internal memos) was adequate to prove that it was respondent’s defective ink that led to the alleged damages.
Whether the conflicting testimonies regarding the suppliers of ink materials negated petitioner’s claims.

Whether the CA committed grave abuse of discretion by affirming the factual findings of the trial court, given the exceptions to the general rule of finality of those findings.