Title
Jammang vs. Takahashi Trading Co., Ltd.
Case
G.R. No. 149429
Decision Date
Oct 9, 2006
Jammang, as Alma's GM, breached a supplemental agreement by failing to remit proceeds from sold goods, held personally liable despite corporate separation; SC affirmed RTC and CA rulings.
trader
liable
remit proceeds
A

Case Summary (G.R. No. 149429)

Factual Background

Jammang had been engaged in trading for over fifteen years and had established trade relations between Zamboanga City and nearby Asian countries. In October 1993, Hiroaki Takahashi, president of Takahashi, introduced Jammang to Sinotrans because Sinotrans was scouting for a supplier of Chinese goods for Takahashi’s buyers in Labuan, Malaysia. Sinotrans agreed to supply Chinese goods provided Takahashi would act as Sinotrans’s sales agent, with an arrangement that Jammang would turn over sale proceeds, less mark-up, and return unsold goods, if any, to Sinotrans. Jammang and Takahashi also agreed to share equally whatever profit might be derived from the sale of Sinotrans goods.

Two shipments were made from Qingdao, China to Labuan, Malaysia: bleached or printed cotton, garlic, and lungkow vermicelli (sotanghon). The goods were valued at US$696,337 and were consigned to Takahashi. Contrary to Jammang’s assurances, there were no ready buyers in Labuan. Takahashi stored the goods for two months at a warehouse fee, while Jammang later convinced Sinotrans and Takahashi to allow him to bring the goods to Zamboanga City, Philippines, where he again claimed to have ready buyers. He promised to turn over the proceeds of sale and unsold items to Sinotrans, and he reiterated their equal sharing of profits. The goods were transshipped to Zamboanga City, with Jammang as consignee.

Jammang made only a partial turnover of proceeds amounting to US$230,000. He later failed to remit further amounts. The parties then executed a Supplemental Agreement (Exhibit “G”) on July 27, 1994, which reflected the following material points: the total goods received by Alma amounted to US$696,337; Alma had already remitted US$230,000 as partial payment; Alma undertook to remit US$15,000 by July 29, 1994 through T/T; a remaining collectible amount of US$266,000 had a due date of September 15, 1994; when Alma received payments from buyers, it must immediately remit the same amount to Sinotrans; and the remaining stocks valued at US$185,000 would be sold continuously, with an attempt to dispose of them up to October 31, 1994.

Despite Exhibit “G,” Jammang remitted only US$15,000. Sinotrans later discovered that Jammang had already sold all goods covered by the agreement. After repeated oral and written demands, Jammang allegedly failed to account for and to turn over the remaining balance of US$451,337 to Sinotrans, and he declined to communicate with respondents. He also refused to give Takahashi its share in what was perceived as profits.

Trial Court Proceedings

Sinotrans filed with the RTC of Pasig City a complaint for collection of a sum of money and damages against Jammang, with an application for a writ of preliminary attachment. The RTC granted the writ in an order dated January 26, 1996.

At trial, respondents presented documentary evidence through the testimony of their lone witness, Lui Xiao Bo, a resident of China and the Import Export Manager of Sinotrans. Lui testified that because only US$230,000 had been remitted by Jammang as partial payment, he inspected the remaining inventory that Jammang showed him. Based on his estimate, the value of the remaining goods was US$180,000. Petitioners, however, insisted that they had collectibles amounting to US$246,000 and that US$100,000 worth of stocks remained at BCC Warehouse.

The RTC decision, dated April 22, 1999, declared that Jammang remained bound by Exhibit “G” and ordered him to pay Sinotrans (a) US$266,000 as principal obligation with legal interest until full payment, (b) 10% of the principal obligation as reasonable attorney’s fees, and (c) to account for remaining stocks valued at US$185,000 and to remit sale proceeds if sold. The RTC also dismissed petitioners’ counterclaim.

The Parties’ Contentions on Appeal and Review

Petitioners appealed to the Court of Appeals, arguing mainly that the CA erred in affirming the RTC on multiple substantive grounds. They contended, first, that the CA improperly treated Jammang as solidarily liable with Alma despite the corporate principle that a corporation has a personality separate and distinct from its stockholders and officers. They further claimed that Jammang was not even a stockholder or officer but merely general manager, hence not liable for an obligation contracted by Alma as a corporate entity.

Second, petitioners asserted that the CA misconstrued the law on agency. They argued that the findings treated Jammang as an agent of Sinotrans despite lack of a special power of attorney and despite respondents’ failure to show that Jammang received payments for goods sold on credit. They relied on the principle that an agent is not obliged to pay the price unless he received it, and they emphasized that the RTC itself allegedly found no evidence that Jammang received payments for the goods sold amounting to US$266,000.

Third, petitioners claimed that the CA sanctioned an alleged departure from accepted judicial procedure. They argued that the lone witness for respondents, Lui Xiao Bo, did not testify before the judge who handled the case but before a legal researcher, and that petitioners were not allowed to cross-examine the witness. They maintained that the trial judge thus did not have the opportunity to assess the witness’s credibility.

Fourth, petitioners insisted that respondents should have been held liable to them for actual, moral, and exemplary damages, as well as attorney’s fees and litigation expenses, and they asserted that respondents failed to prove their claims by preponderant evidence.

Respondents, on the other hand, anchored their case on the alleged binding nature of Exhibit “G” and on Jammang’s acknowledged receipt of the goods and his undertakings to remit the stated amounts and to account for remaining stocks. They relied on the trial evidence and supported the RTC’s interpretation of the agreement.

Ruling of the Court of Appeals

The Court of Appeals dismissed the appeal on May 16, 2001, affirming the RTC decision in its entirety, and it later denied reconsideration on August 9, 2001. The CA held that the plain language of Exhibit “G” showed that Jammang committed himself to act as a selling agent of Sinotrans. It cited Jammang’s acknowledgement of actual receipt of goods valued at US$696,337, his first remittance of US$230,000, his undertaking to remit the US$266,000 still due and collectible, and his undertaking to remit US$15,000 on July 29, 1994, as well as his acknowledgement of remaining unsold goods valued at US$185,000 to be disposed by October 31, 1994. The CA also noted that Jammang submitted a Business Development Report confirming receipt of the goods.

The CA rejected Jammang’s attempt to portray his role as merely a facilitator or warehouseman, stating that evidence regarding receipt by BCC Warehouse was only photocopies and that the warehouse owner was not presented to clarify the transaction. The CA also found unsupported by competent evidence Jammang’s claim that the goods had been seized by authorities.

As to Jammang’s contention that Rev. Pablo Palis was the appointed selling agent, the CA relied on an affidavit executed by Rev. Palis indicating that he worked as Jammang’s Executive Assistant in Jammang’s office from 1993 until December 1995, during which the transaction occurred. The CA concluded that Palis’s involvement was in his capacity as Jammang’s employee or agent and not as an agent of respondents. It also pointed out that buyers issued promissory notes in Jammang’s name, not Palis’s.

On Jammang’s argument that he only signed Exhibit “G” as a matter of accommodation, the CA held that his attempts to vary the agreement’s terms raised more questions than provided a credible account. It characterized his stance as an evasion of a legally contracted obligation after benefiting from the sale and then reneging on his remittance commitment. The CA likewise found no reversible error in the trial court’s appreciation of testimonial evidence. It stressed that because the trial court could evaluate credibility through the tests applied—conformity with knowledge and consistency with ordinary experience—the testimony and circumstances supported the RTC’s conclusions.

Finally, the CA held it would not disturb concurrent factual findings by the RTC and the CA where they coincided. It therefore found no reason to overturn the contractual obligations enforced by the RTC, including the remittance of amounts due under Exhibit “G,” the accounting for remaining stocks, and attorney’s fees as provided by Art. 2208 (2) of the Civil Code.

Legal Basis and Reasoning

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