G.R. No. 171947-48 - Metropolitan Manila Development Authority vs. Concerned Residents of Manila Bay

St. Therese Merchandising (STM) regularly purchased refined sugar from Victorias Milling Co., Inc. (VMC), which issued Shipping List/Delivery Receipts (SLDRs) as proof of sale.
On October 16, 1989, VMC issued SLDR No. 1214M covering 25,000 bags (50 kg each) of sugar at P638.00 per bag, “per sales order VMC Marketing No. 042 dated October 16, 1989,” and noting “subject for availability of a stock at NAWACO (warehouse).”

On October 25, 1989, STM sold and endorsed SLDR No. 1214M to Consolidated Sugar Corporation (CSC) for P14,750,000.00. CSC paid by one check dated October 25 and three postdated checks (November 13, 1989) and notified VMC of its authority to withdraw the sugar, enclosing a letter of authority from STM.
On October 27, 1989, STM issued 16 checks totaling P31,900,000.00 (covering SLDR Nos. 1213 and 1214); VMC issued Official Receipt No. 33743 acknowledging full payment for 50,000 bags.

CSC surrendered SLDR No. 1214M at VMC’s NAWACO warehouse; VMC released 2,000 bags but refused further withdrawals, claiming STM had already withdrawn sugar corresponding to cleared checks.
CSC’s January 23, 1990 letter demanded withdrawal of the remaining 23,000 bags; VMC reiterated its refusal on January 31, and again on March 9, 1990.

CSC filed a complaint (Civil Case No. 90-1118) against VMC for specific performance to deliver the 23,000 bags and for damages (unrealized profits, exemplary damages, attorney’s fees). VMC countered that it was an unpaid seller, had no privity with CSC, SLDRs were not negotiable titles, and alleged fraud by CSC and STM.
Trial Court Findings (February 13, 1991):

CSC proved payment of P15,950,000.00 for the sugar under SLDR No. 1214M (supported by postdated checks and computer records).
VMC’s denial of full payment was uncorroborated.

Trial Court Judgment: VMC was ordered to deliver 23,000 bags, pay P920,000.00 (unrealized profits), P800,000.00 (exemplary damages), P1,357,000.00 (10% attorney’s fees), plus costs.

Held the transaction under SLDR No. 1214M to be separate and independent.
Ordered VMC to deliver only 12,586 bags; awarded P792,918.00 attorney’s fees and costs.

Found that Exhibit F (computer printout) was not properly admitted to prove undelivered bags.
Relied instead on testimonial and documentary evidence that CSC had withdrawn only 2,000 bags.
Modified relief to delivery of the full 23,000 bags and costs.

Whether CSC was an agent of STM—thus estopped from suing as assignee of SLDR No. 1214M.
Whether VMC could offset (compensate) its mutual obligations to STM against CSC’s claim under SLDR No. 1214M.
Whether the sale under SLDR No. 1214M was conditional (a contract to sell) freeing VMC from delivering the balance.
Whether the “clean hands” doctrine precluded CSC from obtaining judicial relief due to alleged conspiracy/fraud with STM.