NFF Industrial Corp vs. G&L Associated

G.R. No. 178169, January 12, 2015

NFF INDUSTRIAL CORPORATION, Petitioner, v. G & L ASSOCIATED BROKERAGE AND/OR GERARDO TRINIDAD, Respondent.

Petitioner NFF Industrial Corporation is engaged in the business of manufacturing bulk bags, while respondent G & L Associated Brokerage, Inc. (respondent company) is among its customers. Respondent Gerardo Trinidad is the general manager of respondent company.

According to petitioner, on July 20, 1999, respondent company ordered 1,000 pieces of bulk bags from petitioner, at P380.00 per piece, or a total purchase price of P380,000.00, payable within 30 days from delivery, covered by Purchase Order No. 97-002 dated July 29, 1999.5 In the said Purchase Order, an instruction was made that the bulk bags were for immediate delivery to “G & L Associated Brokerage, Inc., c/o Hi-Cement Corporation, Norzagaray, Bulacan.” Shortly thereafter, respondent company ordered an additional 1,000 pcs. of bulk bags, thus for a total of 2,000 pcs, at the same price per bag and with the same terms of payment as well as the same instructions for delivery.

Petitioner alleged that the deliveries were duly acknowledged by representatives of respondent company. Petitioner also averred that all the delivery receipts were rubber stamped, dated and signed by the security guard-on-duty, as well as other representatives of respondent company. All deliveries made were likewise covered by sales invoices. Based on the said invoices, the total sales price is P760,000.00. All the sales invoices were duly served upon, and received by respondent company’s representative, one Marian Gabay.

According to respondents, the Purchase Order specifically provides that the bulk bags were to be delivered at Hi-Cement Corporation to Mr. Raul Ambrosio, respondent company’s checker and authorized representative assigned thereat. Subsequently, however, the ordered bulk bags were not delivered to respondent company, the same not having been received by the authorized representative in conformity with the terms of the Purchase Order.

Meanwhile, thirty (30) days elapsed from the time the last alleged delivery was made but no payment was effected by respondent company. This prompted petitioner to send a demand letter dated October 27, 1999 to respondent company. As respondent company failed to respond to the demand letter, petitioner followed up its claim from the former through a series of telephone calls. Again, since no concrete answer was provided by respondent company, petitioner sent another demand letter dated November 23, 1999; and finally, a third demand letter dated October 2, 2001. As the demands remained unheeded, petitioner filed a complaint for sum of money against respondents on December 19, 2001.

Issue: WON there was valid delivery on the part of petitioner in accordance with law, which would give rise to an obligation to pay on the part of respondent for the value of the bulk bags.

Held:

The resolution of the issue at bar necessitates a scrutiny of the concept of “delivery” in the context of the Law on Sales. Under the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. The ownership of thing sold is considered acquired by the vendee once it is delivered to him in the following wise:

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.

Art. 1497. The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.

Thus, ownership does not pass by mere stipulation but only by delivery. Manresa explains, “the delivery of the thing signifies that title has passed from the seller to the buyer." Moreover, according to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place. Here, emphasis is placed on Article 1497 of the Civil Code, which contemplates what is known as real or actual delivery, when the thing sold is placed in the control and possession of the vendee.

In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the concept of “delivery” was elucidated, to wit:

Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee."