G.R. No. 205638 - Dee Hwa Liong Foundation Medical Center vs. Asiamed Supplies and Equipment Corp.

Case Summary (G.R. No. 205638)

Factual Background

The parties entered into a Contract of Sale whereby Dee Hwa Liong Foundation Medical Center agreed to purchase two medical machines from Asiamed Supplies and Equipment Corporation for PHP 31,000,000, with payment stipulated to be made no later than two working days after delivery and prior to installation. The two machines were delivered in May and July 2003, and delivery and sales invoices were signed by Anthony Dee and DHLFMC’s vice president for administration. DHLFMC paid PHP 3,500,000 on July 25, 2003, PHP 1,000,000 on September 16, 2003, and PHP 800,000 on October 30, 2003, leaving an unpaid balance that Asiamed demanded.

Trial Court Proceedings

Asiamed filed a complaint for sum of money on January 26, 2004, and secured a writ of preliminary attachment, following which one machine was pulled out and other equipment was constructively levied. Dee Hwa Liong Foundation Medical Center and Anthony Dee answered alleging that the sale was conditioned on approval of a loan from Planters Development Bank, which was not obtained. The Regional Trial Court denied petitions to discharge the attachment, conducted trial, and rendered judgment on June 18, 2008 ordering petitioners, jointly and severally, to pay the balance of PHP 25.7 million with twelve percent per annum interest from October 28, 2003, PHP 2.5 million attorney’s fees, and costs; the court denied petitioners’ counterclaim.

Court of Appeals Decision

The Court of Appeals affirmed the trial court in a Decision dated August 30, 2012 and, by Resolution dated January 23, 2013, granted Asiamed’s motion to procure the appointment of an administrator for the estate of deceased petitioner Anthony Dee after counsel for Anthony failed to inform the court of his death and identify his legal representative as required by Rule 3, Section 16, Rules of Court. The Court of Appeals agreed that the Contract of Sale did not make its effectivity contingent on a Planters Bank loan and that petitioners failed to prove rescission.

Issues Presented to the Supreme Court

The Supreme Court framed the issues as: whether the Contract of Sale was rescinded; whether Anthony Dee was properly held solidarily liable with Dee Hwa Liong Foundation Medical Center; whether the interest rate and attorney’s fees stipulated in the delivery invoices bound the parties; and whether the Court of Appeals erred in ordering the procurement of an administrator for the estate of the deceased petitioner Anthony Dee.

Petitioners’ Contentions

Petitioners asserted that the Contract of Sale was rescinded because the transaction was conditioned on Planters Bank loan approval and that Asiamed accepted the rescission. They contended that restoration should have followed rescission, that Anthony Dee could not be held personally liable by reason of DHLFMC’s separate juridical personality and absent proof of bad faith, and that the delivery invoices were contracts of adhesion unilaterally prepared by Asiamed and therefore could not validly impose twelve percent interest and twenty-five percent attorney’s fees. Petitioners also complained of the attachment procedure and maintained that the appointment of an administrator was unnecessary because Anthony’s surviving spouse represented his interests.

Respondent’s Contentions

Asiamed maintained that the Contract of Sale was not conditional on any bank loan, that rescission was not proven, and that petitioners had paid only PHP 5,300,000 of the agreed PHP 31,000,000. Asiamed argued that the delivery invoices, which petitioners signed, expressly provided for twelve percent interest and twenty-five percent attorney’s fees and thus bound the parties. It further contended that Anthony Dee acted in bad faith and that the petition was procedurally defective for lack of valid substitution after Anthony’s death.

Legal Standard on Reviewability

The Supreme Court reiterated that a petition for review under Rule 45, Rules of Court is ordinarily limited to questions of law and that factual findings of the Regional Trial Court, when affirmed by the Court of Appeals, are binding on the Supreme Court. The Court emphasized that exceptions to this rule exist but must be pleaded, substantiated, and proved to permit review of facts.

Analysis — Rescission and Conditionality of the Contract

The Court held that the Contract of Sale’s text did not support petitioners’ claim that the sale’s effectivity depended on Planters Bank loan approval. The Court noted that petitioners relied on cross-examination testimony and an unsigned draft letter to show conditionality, but determined that those items involved assessment of evidence and credence, matters of fact which petitioners failed to raise under a recognized exception to factual finality. Accordingly, the Court found no reversible error in the Court of Appeals’ factual determination that rescission was not established.

Analysis — Personal Liability of Anthony Dee

The Court affirmed the Court of Appeals’ holding that petitioners were estopped from invoking DHLFMC’s separate juridical personality to shield Anthony Dee, because petitioners had specifically denied the allegation in the complaint that DHLFMC represented itself as a corporation. The Court observed that petitioners failed to point to record evidence contradicting their own denial or to prove bad faith by Anthony, and thus did not show error in holding him solidarily liable with DHLFMC.

Analysis — Interest and Attorney’s Fees

The Supreme Court agreed with the lower courts’ factual finding that the delivery invoices, which petitioners signed, formed part of the Contract of Sale and expressly provided for twelve percent interest and a twenty-five percent attorney’s fee in the event of suit. The Court cited Art. 1159 and Art. 1308 of the Civil Code to affirm that contractual obligations bind the parties and that the contract could be evidenced by several writings with nonconflicting terms. Petitioners’ allegation that the invoices were contracts of adhesion or signed without informed consent was a question of fact that they failed to prove; thus, the Court declined to disregard the stipulated charges.

Analysis — Attachment and Equitable Considerations

The Court addressed petitioners’ complaints regarding the manner and duration of the attachment but held that these circumstances did not affect the validity or enforceability of the Contract of Sale and provided no legal basis to reverse the judgment for collection of the balance. The Court therefore declined to reduce the award on equitable grounds related to attachment.

Analysis — Substitution and Appointment of Administrator

The Court upheld the Court of Appeals’ grant of Asiamed’s motion to procure the appointment of an administrator for the estate of deceased petitioner Anthony Dee pursuant to Rule 3, Section 16, Rules of Court, because counsel for Anthony failed to inform the court with

Case Syllabus (G.R. No. 205638)

Parties and Procedural Posture

DEE HWA LIONG FOUNDATION MEDICAL CENTER and ANTHONY DEE were the petitioners and ASIAMED SUPPLIES AND EQUIPMENT CORPORATION was the respondent in the action below.
The petitioners filed a Petition for Review on Certiorari under Rule 45, Rules of Court seeking reversal of the Court of Appeals Decision dated August 30, 2012 and Resolution dated January 23, 2013 in CA-G.R. CV No. 91410.
The case arose from a Contract of Sale for medical equipment and a complaint for sum of money filed in the Regional Trial Court, Civil Case No. 04108948.
The Regional Trial Court rendered judgment awarding respondent sums for unpaid purchase price, interest, attorney's fees, and costs of suit, which the Court of Appeals affirmed.
The Supreme Court denied the petition and affirmed the assailed Decision and Resolution.

Key Factual Allegations

The parties executed a Contract of Sale on August 2, 2002 for a GammaMed Plus Brachytherapy machine and a Gammacell Elan 3000 blood irradiator at the total price of P31,000,000.00.
The Contract of Sale provided that payment was to be made no later than two working days upon delivery and prior to installation and contained a buyer guarantee clause regarding checks and other evidences of obligation.
The machines were delivered on May 20, 2003 and July 17, 2003 and delivery invoices and one sales invoice were signed by ANTHONY DEE and DHLFMC Vice President Alejandro Mateo.
Delivery Invoice Nos. 2680 and 2683 expressly stipulated interest at 12% per annum on overdue accounts and a sum equal to 25% of the amount due, but not less than P50.00, for attorney's fees and collection costs.
Petitioners made partial payments totaling P5,300,000.00 and allegedly failed to pay the balance of P25,700,000.00.
Petitioners claimed the purchase was conditioned on a loan from Planters Development Bank that was not approved and argued for rescission of the sale.
Respondent filed a complaint on January 26, 2004 and secured a writ of preliminary attachment, after which sheriff's officers removed the Brachytherapy equipment and placed other items under constructive levy.

Contractual Terms

The Contract of Sale fixed the purchase price at P31,000,000.00 and required payment within two working days upon delivery and prior to installation.
The Contract contained a buyer guarantee clause warranting the genuineness, validity, and enforceability of any check, note or other evidence of obligation furnished by the buyer.
The signed delivery invoices unambiguously provided for interest at 12% per annum and attorney's fees equal to 25% of the amount due in case of suit, and declared that goods remained the property of seller until fully paid.
The parties conceded the delivery invoices were physically signed by petitioner representatives, forming the basis for respondent's claim.

Procedural History

ASIAMED SUPPLIES AND EQUIPMENT CORPORATION filed suit in the Regional Trial Court on January 26, 2004 and secured a writ of preliminary attachment dated January 30, 2004.
The Regional Trial Court denied petitioners' motions to discharge the attachment and rendered a Decision on June 18, 2008 ordering petitioners to pay the balance of P25.7 million with interest at 12% per annum from October 28, 2003, attorney's fees, and costs.
Petitioners appealed to the Court of Appeals, which affirmed the RTC Decision in a Decision dated August 30, 2012 and granted respondent's Motion for Substitution to procure appointment of an administrator for the estate of the deceased petitioner ANTHONY DEE in a Resolution dated January 23, 2013.
Petitioners filed a Petition for Review under Rule 45, Rules of Court before the Supreme Court on March 25, 2013, which initially denied the petition for lack of reversible error and later gave the petition due course, with full memoranda filed, culminating in the Supreme Court Decision of August 23, 2017.

Issues Presented

Whether the Contract of Sale was rescinded because the loan from Planters Development Bank was not approved.
Whether ANTHONY DEE was properly held jointly and severally liable with DEE HWA LIONG FOUNDATION MEDICAL CENTER for the obligations under the Contract of Sale.
Whether the interest rate and attorney's fees stipulated in the delivery invoices were binding on the parties.
Whether the Court of Appeals erred in allowing respondent to procure the appointment of an administrator for the estate of the deceased petitioner ANTHONY DEE under Rule 3, Section 16 of the Rules of Court.

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