SHARP (PHILS.) CORPORATION, PLAINTIFF- APPELLEE, VS. CECILIO M. MAALA, DOING BUSINESS UNDER THE NAME AND STYLE “UNIVERSAL APPLIANCE”, DEFENDANT-APPELLANT.
BARRIOS, J.:
Maala purchased on credit from Sharp various home appliances which amounted to P1,200.926.00. The first set of deliveries was between the period of November 30, 1993 to May 31, 1994 and the total value of the goods delivered by Sharp to Maala was P841,826.00. The second batch of purchases was from October 30, 1994 to December 31, 1994 worth P359,100.00. It was a condition agreed upon by the parties that said credits will be paid within 30 days from the date of invoice and/or actual delivery. Maala then issued twenty-eight (28) post dated Dagupan City Rural Bank (or DCRB) checks amounting to P841,826.00 in favor of Sharp to cover payments of the appliances delivered during the first transaction period. For the second transaction period, Maala issued sixteen (16) post dated China Bank checks amounting to P359,100.00.
The China Bank checks were cleared and credited to the account of Sharp. The devil was with the DCRB checks which were all deposited by Sharp with its depositary Far East Bank and Trust Company (or FEBTC). These were cleared by the Central Bank but were not credited to the account of Sharp for the reason given that DCRB was in an “unhealthy financial condition” (Decision, par. 2, p. 267, record).
Since the value of the checks were not credited to its account, Sharp made demands on Maala for the payment of these checks. Maala in turn demanded for DCRB to remit the value of the checks to FEBTC (p. 106, record). DCRB thru its manager communicated to FEBTC stating that the amount of the checks will be raised very soon in their effort of selling unissued shares of stock (p. 108, record). From then on a series of correspondence were made by and among Sharp, Maala, FEBTC and DCRB (Exhs. “E” to “J”, pp. 111 to 117, record), but at the end of the day these DCRB checks were never credited to Sharp’s account, except for two.
And so Sharp filed the instant suit on August 10, 1999, and on April 12, 2005 the court a quo rendered judgment in its favor disposing that:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff SHARP (PHILS.) CORPORATION and as against herein defendant CECILIO M. MAALA, doing business under the trade name and style ‘UNIVERSAL APPLIANCE”, ordering the latter the following:
1) TO PAY plaintiff the amount of P841,826.00 less the amount of two (2) checks which has already been cleared and credited to the account of herein plaintiff on August 14, 1994 based on the letter of FEBTC to herein plaintiff dated September 23,1994 (Exh. “F”) plus an interest rate of 12% per annum based upon the amount as aforementioned after computing the specific deductions therefrom;
2) TO PAY plaintiff the amount of P2,000.00 as attorney’s fees corresponding to counsel’s appearance during the trial; and
3) TO PAY the costs of suit. (p. 270, record)
Insisting that he was free from the obligation to pay Sharp the value of the checks already cleared by the Central Bank, Maala came to Us on appeal assigning that the following errors were committed by the court a quo:
- THE LOWER COURT ERRED IN HOLDING THAT APPELLANT’S CHECKS DRAWN AGAINST HIS CURRENT ACCOUNT DEPOSIT WITH THE DRAWEE BANK, DAGUPAN CITY RURAL BANK WERE DISHONORED.
- THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLANT HAD FULLY PAID HIS PURCHASES ON CREDIT — ALL HIS CHECKS ISSUED TO APPELLEE HAD CLEARED AND WERE HONORED IN DUE COURSE OF CENTRAL BANK CLEARING, THE AMOUNTS OF THE CHECKS DEBITED FROM HIS CURRENT ACCOUNT DEPOSIT, AND THE CANCELLED CHECKS RECEIVED BY HIM. (p. 41, rollo)
Maala avers that the court a quo’s ruling is contrary to the evidence on record that he has fully paid his purchases with Sharp. The checks he issued as payments were not dishonored. FEBTC has officially stamped the checks and forwarded these to the Central Bank for clearing, and they were cleared. DCRB has debited their value in his account and he already received the cancelled checks. Maala asserts that the Central Bank clearing has the legal effect of discharging the obligations in the checks and the fact that the cancelled checks and the original invoices are all in his possession gives rise to the presumption that the obligation has been paid. According to Maala, the complaint does not even state that the checks were dishonored, and there is no allegation that the checks were returned to him. Maala adds too that no notice of dishonor was ever presented to him. As there was no allegation that the checks has been dishonored, perforce Sharp has no cause of action against him.
There is no merit in the appeal.
It was clearly established that out of the twenty-eight (28) DCRB checks that were issued, only the amounts of two (2) checks were credited to the account of Sharp. Despite the claim of Maala that DCRB debited the amounts of the checks from his account and that he is now in possession of the check invoices, what is evident is that Sharp never received the value of the twenty-six (26) checks. There is no doubt too that the checks underwent clearing with the Central Bank, but even this does not prove that Sharp received the value of the checks in the face of admissions to the contrary. The clearing by the Central Bank and the possession of Maala of the check invoices do not create an indisputable presumption that the checks have already been paid and discharged.
All the while, Maala had knowledge that the amounts of the checks have not been credited to the account of Sharp. In fact it was even Maala who made communications with DCRB advising it to remit payment to FEBTC. This is evident in his letter dated August 11, 1994, which in part states that:
x x xWe are very much alarmed by the information we received from one of our biggest suppliers, SHARP PHILIPPINES CORPORATION that our payments to them for the months of April and May, 1994 covered by twenty eight (28) DAGUPAN CITY RURAL BANK checks has up to this date, not been credited to their account with their depository bank, FAR EAST BANK AND TRUST COMPANY. Enclosed is a copy of the letter from their depository bank reporting this anomalous situation.
When we received the corresponding cancelled checks from you sometime ago, we thought that everything is alright. We were dismayed when we were told about this unexpected development.May we therefore plead with you to please remit immediately this above stated amount, which are properly covered with corresponding deposits with your bank, to FAR EAST BANK AND TRUST COMPANY, to prevent further harm on our business operations and profitability. (Exhibit “A”, p. 106, record)
And in the letter dated August 22, 1994, Maala again advised DCRB that:
x x x
This will follow up our letter of August 11th,1994 on the matter of the twenty eight (28) checks x x x proceeds of which you have not fully remitted to the FAR EAST BANK AND TRUST CO., payee’s depository bank, although this amount is fully funded by us.
Your continued failure to make good to the payee all of these checks up to this date has caused the payee to freeze our credit lines and this could expose you to damages bigger than and apart from the interest charges accruing.
Also, when you returned all of the said checks to us already properly marked as is properly processed, you conveyed the impression that everything has been accomplished in the normal course of business and the checks has been settled or paid in full. Certainly this is deception bordering on estafa considering that you never remitted the corresponding amounts to the payee’s depository bank.
x x x
If after ten (10) days from receipt of this letter you fail to remit in full or in its entirety the sum of x x x (P841,826.00) to FAR EAST BANK AND TRUST CO. in settlement of the TWENTY EIGHT (28) DCRB checks x x x issued by us in favor of Sharp (Phils.) Corporation a list of which is attached hereto, or you have not concluded proper accommodation or arrangements acceptable to all the affected parties, we may have to resort to appropriate legal remedies, including filing of a proper lawsuit in court, to protect our interest. (Exh. “D”, pp. 109-110, record)
It is clear from the above evidence that Maala knew well that his purchases from Sharp have not been paid and that his obligation to pay these still subsists because of the non-remittance by DCRB. He cannot claim that he is freed from the liability to pay for the goods delivered to him. Article 1233 of the New Civil Code appropriately provides that:
A debt shall not be understood to have been paid unless the thing or service which the obligation consists has been completely delivered as the case may be.
Noteworthy too are the declarations of the court a quo that:
It is thus correct for the plaintiff to contend that the contract of deposit between the defendant and DCRB has nothing to do with the contract of sale entered into between herein parties as the aforesaid bank is not even privy to the latter contract. In that manner the bankruptcy or insolvency on the part of DCRB has no implication upon the contact (sic) between the plaintiff and the defendant as the latter’s obligation stays and did not cease to exist. Relevantly the ratiocination of the defendant that the collecting bank of the plaintiff is the one responsible for its failure to collect cannot hold much of water since in the first place, the negligence on the part of FEBTC shall not be attributed to the plaintiff. In the same token, the collecting bank is not also privy to the present subject contract. It is not even an agent of the plaintiff. As such herein defendant cannot put the blame upon FEBTC for it is a clear fact that it is the DCRB who was at fault. x x x Defendant’s failure to make good his promise to pay his obligations can be attributed to his negligence and deference in pursuing his claim against his depositary bank, of course, through some positive acts such as the filing of a corresponding lawsuit to enforce his claims thereon (Decision, p. 269, record).
Privity of contracts take effect only between parties, their successors-in-interest, heirs and assigns (Jardine Davies vs. JRB Realty, G. R. No. 151438, July 15, 2005). Indeed there is privity of contract only between Sharp and Maala, and the performance of their reciprocal obligations cannot be made dependent on the fulfillment by a third person of an obligation to either Sharp or Maala in another contract to which the other is a stranger to. Maala’s claim that the checks were never dishonored is unmeritorious. Considering the peculiar circumstances involved in this case, a notice of dishonor was not necessary and even irrelevant because it remains uncontroverted that the amount of the twenty-six (26) checks were never credited to the account of Sharp.
Woven in the fabric of our jurisprudence is that findings of the trial court are accorded not only the highest respect, but also finality, unless some weighty circumstance have been ignored or misunderstood but which could alter the result and could affect the judgment to be rendered (People vs. Genita, G. R. No. 126171, March 11, 2004). There is nothing in this case for the exception to apply.
WHEREFORE, the appeal is DENIED and the decision appealed from is AFFIRMED.
SO ORDERED.
Guarina, III and Tagle, JJ., concur.