Case Digest (G.R. No. 149240)
Facts:
In Advance Paper Corporation and George Haw, in his capacity as President of Advance Paper Corporation, Petitioners, versus Arma Traders Corporation, Manuel Ting, Cheng Gui, Benjamin Ng, Antonio Tan, and Uy Seng Kee Willy, Respondents (G.R. No. 176897, December 11, 2013), the Petitioners–a paper‐products manufacturer–extended credit and three loans totaling ₱15,321,798.25 to Arma Traders between September and December 1994. Arma Traders, a wholesale distributor, issued 82 postdated checks signed by its bank signatories Tan and Uy, which were dishonored for insufficiency of funds or account closure. On December 29, 1994, Petitioners filed a complaint for collection of sum of money with preliminary attachment in the Regional Trial Court (RTC) of Manila (Civil Case No. 94-72526). The RTC, upon full trial, held that the purchase and loan transactions were duly proven, ordered Arma Traders to pay the principal amount with interest and ₱1,500,000.00 attorney’s fees, but dismissed theCase Digest (G.R. No. 149240)
Facts:
- Parties and Corporate Relationships
- Advance Paper Corporation
- Domestic corporation manufacturing and selling paper products.
- George Haw – President; Connie Haw – General Manager.
- Arma Traders Corporation
- Domestic corporation distributing school and office supplies.
- Manuel Ting – Vice-President; Cheng Gui – General Manager; Benjamin Ng – Corporate Secretary.
- Antonio Tan – former President and bank signatory; Uy Seng Kee Willy – Treasurer and bank signatory.
- Transactions and Litigation
- Purchases and Loans
- Sept.–Dec. 1994: Purchases on credit of notebooks and paper products totaling ₱7,533,001.49.
- Nov. 1994: Three unsecured loans totaling ₱7,788,796.76 to settle other obligations.
- Arma Traders issued 82 postdated checks (aggregate ₱15,130,636.87) payable to cash or Advance Paper.
- All checks dishonored for “insufficient funds” or “account closed.”
- Trial Court Proceedings
- Dec. 29, 1994: Complaint for collection of sum of money with preliminary attachment filed by petitioners.
- Petitioners’ evidence: summaries, sales invoices, copies of checks, Haw’s testimony, bank statement.
- Respondents’ defenses: alleged non-delivery of goods, loans were personal obligations, ultra vires acts, badges of fraud and conspiracy.
- RTC Ruling (June 18, 2001)
- Found purchases and loans proven; ordered Arma Traders to pay ₱15,321,798.25 with interest and ₱1,500,000 attorney’s fees.
- Dismissed claims against individual officers for lack of evidence of joint or solidary liability.
- CA Ruling (March 31, 2006)
- Held petitioners failed to prove existence of purchases (hearsay invoices) and loans (no board resolution).
- Relied on badges of fraud and SEC report discrepancies.
- Set aside RTC’s judgment for Advance Paper; upheld dismissal as to officers; awarded moral, exemplary damages and attorney’s fees to respondents.
- Supreme Court Petition
- Petitioners sought review under Rule 45, raising procedural and substantive errors in the CA decision.
Issues:
- Procedural Issues
- Whether the petition should be dismissed for defective verification (use of Community Tax Certificate) under A.M. No. 02-8-13-SC.
- Whether the petition should be dismissed for late filing of the motion for reconsideration in the Court of Appeals.
- Substantive Issues
- Whether Arma Traders is liable for the loans under the doctrine of apparent authority.
- Whether petitioners proved Arma Traders’ liability on the purchases on credit by a preponderance of evidence.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)