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NFF INDUSTRIAL CORPORATION v. G & L ASSOCIATED BROKERAGE & GERARDO TRINIDAD

FACTS:

Petitioner NFF Industrial Corporation is a manufacturer of bulk bags and respondent G & L Associated Brokerage, Inc. is one of its customers. Respondent Gerardo Trinidad is the general manager of the respondent company. Respondent company ordered 1,000 pieces of bulk bags from petitioner, followed by an additional 1,000 pieces, all at a price of P380 per piece. The deliveries were made to Hi-Cement Corporation and were acknowledged by representatives of respondent company. Petitioner alleged that all deliveries were covered by sales invoices and were duly served upon and received by respondent company's representative. However, respondents claimed that the ordered bulk bags were not received in conformity with the terms of the Purchase Order. As no payment was made by respondent company, petitioner sent demand letters but received no response. A complaint for sum of money was filed by petitioner, and the Regional Trial Court (RTC) rendered a decision in favor of petitioner. The RTC's decision was reversed by the Court of Appeals (CA), prompting petitioner to file a Motion for Reconsideration, which was denied. Petitioner now seeks a reversal of the CA's decision based on several grounds.

The petitioner argues that there was a valid delivery on their part, which would require the respondent to pay for the value of the bulk bags. The issue is whether or not there was a valid delivery in accordance with the law. The resolution of this issue requires a scrutiny of the concept of "delivery" in the context of the Law on Sales. The petitioner contends that it has delivered the bulk bags to the respondent and the respondent had made use of the bags in its business activities. On the other hand, the respondents argue that the evidence failed to establish that the alleged deliveries were received by their authorized representative, therefore there was no delivery. The petitioner presents evidence, including the testimony of their Sales Manager, that there were various occasions of delivery and these were duly acknowledged by respondent Trinidad.

The petitioner delivered four hundred pieces (400 pcs) of bulk bags instead of the agreed five hundred pieces (500 pcs) to the respondent. After the delivery, the petitioner communicated with Mr. Trinidad, the representative of the respondent, who acknowledged the delivery and thanked the petitioner. Mr. Trinidad then followed up on the remaining balance of the delivery. The petitioner informed Mr. Trinidad that two thousand pieces (2,000 pcs) were already in production and that one thousand pieces (1,000 pcs) were scheduled for delivery in a few days. The petitioner's deliveryman informed the petitioner that they had already delivered one thousand pieces (1,000 pcs) of bulk bags to the Cement Manufacturing Plant. The petitioner called Mr. Trinidad to inform him of the delivery, and Mr. Trinidad acknowledged it. Subsequently, the deliveryman also informed the petitioner that there was a delivery of six hundred pieces (600 pcs). The petitioner called Mr. Trinidad again to inform him of the delivery, and Mr. Trinidad confirmed it. The petitioner later personally talked to Mr. Trinidad when submitting invoices for the delivered products. These invoices were to be submitted to the customer for recognition, collection, and payment purposes.

ISSUES:

  1. Whether or not petitioner has fulfilled its obligation to deliver the bulk bags to respondent company.

  2. Whether or not respondent company's allegations of non-delivery and misdelivery are valid.

  3. Whether the respondents' acceptance of delivery of the bulk bags can be inferred from their receipt of billing statements and delivery receipts.

  4. Whether the respondents' use of the bulk bags is an act inconsistent with the ownership of the petitioner.

  5. Whether there was valid delivery of the bulk bags.

  6. Whether respondents should be held liable for the outstanding obligation.

  7. What interest rate should be imposed for the period of October 27, 1999 to June 30, 2013?

  8. What interest rate should be imposed for the period of July 1, 2013, up to the day prior to the date of promulgation of this Decision?

  9. What interest rate should be imposed from the date of promulgation of this Decision up to full payment?

RULING:

  1. The court ruled in favor of the petitioner.

  2. Yes, the respondents' acceptance of delivery can be inferred from their receipt of billing statements and delivery receipts. Despite receiving these documents, the respondents failed to raise any complaint regarding the matter. Furthermore, they did not contest the subsequent demand letters they received. Therefore, they may be held liable to pay for the price of the bulk bags.

  3. Yes, the respondents' use of the bulk bags is considered an act inconsistent with the ownership of the petitioner. The respondents used the bulk bags by loading cement inside them and using them to transport cement. This act of dominion over the bulk bags is inconsistent with the ownership of the petitioner.

  4. Yes, there was valid delivery of the bulk bags. The evidence adduced by the petitioner preponderantly establish that the bulk bags were actually used by the respondents. Respondents failed to immediately call the attention of the petitioner if there were issues with the delivery. Only when respondents were required by the trial court to submit an answer to the complaint did they contest the claims of the petitioner. Therefore, the respondents cannot be allowed to unjustly enrich themselves at the expense of the petitioner.

  5. Respondent Trinidad cannot be held jointly and severally liable for the outstanding obligation of the respondent company as there was no showing of any circumstances warranting the piercing of the corporate veil. The separate and distinct personalities of the corporations were not used to justify a wrong, protect fraud, or perpetrate deception.

  6. The Court affirmed with modification the decision of the Regional Trial Court. The following interest rates shall be imposed:

  7. a) For the period of October 27, 1999 to June 30, 2013, a twelve percent (12%) per annum interest rate shall be imposed, compounded annually.

  8. b) For the period of July 1, 2013 up to the day prior to the date of promulgation of this Decision, a six percent (6%) per annum interest rate shall be imposed, compounded annually.

  9. c) From the date of promulgation of this Decision up to full payment, a straight six percent (6%) interest per annum shall be imposed on the sum of money plus the interest computed under paragraphs (a) and (b) above.

PRINCIPLES:

  • Actual delivery of goods to the designated delivery site constitutes fulfillment of the obligation to deliver.

  • Failure to demand delivery of goods may weaken claims of non-delivery.

  • Allegations of misdelivery can be disproven by evidence showing that the goods were delivered to the agreed delivery site.

  • Inconsistent information regarding the recipient of the delivery may undermine claims of misdelivery.

  • Payroll records can be used as evidence to dispute claims of misdelivery.

  • The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller. (Article 1585 of the Civil Code)

  • The vendee's acceptance of goods and the use made of them can be considered as implied conformity to the terms of the invoices, and the buyer is bound thereby. (Sy v. Mina)

  • The buyer's failure to raise any objection to the invoices or to evidence delivery of the materials ordered as per their agreement is deemed as an implied acceptance by the buyer of the said conditions. (Sy v. Mina)

  • Preponderance of evidence refers to the weight, credit, and value of the aggregate evidence on either side, and it is proof that is more convincing to the court as worthy of belief than that which is offered in opposition.

  • The separate juridical personality of a corporation can be disregarded when wrongdoing is established clearly and convincingly. It cannot be presumed.

  • In the absence of stipulation by the parties, the judgment obligor shall be liable to pay six percent (6%) interest per annum to be computed from default, i.e., judicial or extrajudicial demand, and the rate of legal interest shall be six percent (6%) per annum from the finality of the judgment until its satisfaction, taking the form of a judicial debt.

  • Legal interest rates may be imposed depending on the period concerned.

  • Interest rates may be compounded annually.

  • The interest rate applicable from the date of promulgation of a decision up to full payment shall be a straight six percent (6%) per annum.