91. GUTIERREZ HERMANOS, Plaintiff-Appellant, v. ORIA HERMANOS & CO., DefendantAppellant.

PRINCIPAL AND AGENT; RESPONSIBILITY OF AGENT FOR ACTS OF PRINCIPAL. When

an agent in executing the orders and commissions of his principal carries out the instructions he
has received from his principal, and does not appear to have exceeded his authority or to have
acted with negligence, deceit, or fraud, he cannot be held responsible for the failure of his
principal to accomplish the object of the agency.
Gutierrez Hermanos and Oria Hermanos entered into a contract wherein GH bound itself to
acquire for and forward to OH certain goods such as rice, cash, petroleum, etc. Because of this,
GH and OH decided to open a mutual current account under Oria Hermanos on the books of
Gutierrez Hermanos with 8% interest. Gutierrez Hermanos informed Oria Hermanos. that said
current account would be closed within 30 days, after which, Oria Hermanos would have to settle
the balance due to Gutierrez Hermanos, if any. However, despite repeated demands from
Gutierrez Hermanos to Oria Hermanos, the latter never paid which led to the filing of this suit.
Up until the closing of the account, GH had sent OH various quantities of salt, petroleum,
tobacco, groceries, and beverages and had collected a commission on the sale. The semiannual
accounts rendered by GH were never questioned. However, OH claims that GH had set higher
prices than the price actually paid, thereby defrauding OH. OH prayed that GH render an account
as well as the vouchers used to determine the purchase price of the said goods. OH also claimed
that GH had kept the discount in addition to collecting commission on the sale of goods.
Issue: whether or not OH is liable to GH for its unsettled account?
Held:
Yes, but only upon proper accounting of the expenses for the shipment of rice and petroleum
which were claimed to be overpriced.
When an agent in executing the orders and commissions of his principal carries out the
instructions he has received from his principal, and does not appear to have exceeded his
authority or to have acted with negligence, deceit, or fraud, he cannot be held responsible for the
failure of his principal to accomplish the object of the agency.
Since it was not proven that the price of the goods were overstated, thereby defrauding OH, OH
cannot escape the liability of paying GH for performing the task given to him by OH as his
principal.
92. Domingo vs. Domingo, 42 SCRA 131, No. L-30573, October 29, 1971
Facts: Vicente M. Domingo granted Gregorio Domingo, a real estate broker, the exclusive agency
to sell his lot with 5% commission if sold within the 30-day period by Vicente or anyone or if sold
by Vicente within three months from the termination of the agency. A property was sold to one
Oscar De Leon.
Pursuant to his promise to Gregorio, Oscar gave him as a gift or propina the sum of One
Thousand Pesos (P1,000.00) for succeeding in persuading Vicente to sell his lot at P1.20 per
square meter or a total in round figure of One Hundred Nine Thousand Pesos (P109,000.00).
This gift of One Thousand Pesos (P1,000.00) was not disclosed by Gregorio to Vicente. Neither
did Oscar pay Vicente the additional amount of One Thousand Pesos (P1,000.00) by way of
earnest money.
Issue: (1) whether the failure on the part of Gregorio to disclose to Vicente the payment to him by
Oscar de Leon of the amount of One Thousand Pesos (P1,000.00) as gift or "propina" for having
persuaded Vicente to reduce the purchase price from P2.00 to P1.20 per square meter, so
constitutes fraud as to cause a forfeiture of his commission on the sale price;

Held:
Art. 1720. Every agent is bound to give an account of his transaction and to pay to the principal
whatever he may have received by virtue of the agency, even though what he has received is not
due to the principal.
The law imposes upon the agent the absolute obligation to make a full disclosure or complete
account to his principal of all his transactions and other material facts relevant to the agency, so
much so that the law as amended does not countenance any stipulation exempting the agent
from such an obligation and considers such an exemption as void.
Hence, an agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit
from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of
his loyalty to the principal and forfeits his right to collect the commission.
93. THE UNITED STATES,
plaintiff-appellee,
vs.
DOMINGO REYES, defendant-appellant.
FACTS:
R. B. Blackman, a surveyor in Pangasinan had an oral agreement with Domingo Reyes. The
latter would collect in behalf of Blackman amounts due from 12 individuals in connection with the
survey of their lands totaling to Php 860.00. He only succeeded in collecting Php 540 and
delivered Php 368 to Blackman, retaining the balance of Php 172.00. Both parties had different
claims. Blackman siad that the agreement was 10% commission for Reyes. But Reyes insisted it
was 20%. If the Court would accept Blackmans claims, Reyes would be entitled to Php 54.00
therefore Php 172.00 misappropriated or Php 118.00 if commission was deducted. On the other
hand, if the Court accepts Reyes claims which was 20% then 20% of the amount supposed to be
collected was Php 172.00. Reyes was found guilty of estafa.
ISSUES:
Whether or not there was a contract of agency between the parties? and the terms and conditions
are complied with?
HELD:
YES. There was a contract of agency. But with the terms and conditions are NOT COMPLIED
WITH. On the onset there was a contract of agency through an oral agreement. Reyes was
bound to pay the principal all he received from the collecting dues as stated by Blackman. In view
of the discrepancy in the evidence the court was not disposed to set up judgment as superior to
that of the trial court. Also conceding that Reyes was to receive 20%, this unless some contrary
and express stipulation was included would not entitle him in advance to 20% of the amount
actually collected. The right to receive a commission of either 10% or 20% did not make to hold
out any sum he chose. Since for all practical purposes the agency was terminated the agent was
under the obligation to turn over to the principal the amount collected, minus his commission or
that amount.
94. Villa v.s. Garcia Bosque 49 Phil. 126 (1926)
FACTS:
Rosa Villa y Monna, widow of Enrique Bota instituted in the Court of First Instance of Manila filed
a suit for the recovery of Php 20,509.71 with interest from the defendants Guillermo Garcia
Bosque, Jose Polivar Ruiz, R.G. France and F.H. Goulette. It was alleged that the plaintiff was
entitled from the sale of a printing establishment and bookstore located at 89 Escolta, Manila.
Acting through her attorney-in-fact, Manuel Pirretas y Monros. The trial judge ruled that the

defendants should pay the sum of Php 19,230.01 as capital with an interest of 7% plus Php
1,279.90 as interest accrued. On appeal, it was found that Villa, owner of La For de Catalua (the
said establishment) resided in Barcelona, Spain since September 17, 1909 and its through Atty.
Pirretas that the act of selling was executed to the defendants Garcia Bosque and Ruiz with the
following stipulations:
Php 15,000.00 to be paid on November 1,
Php 10,000.00 when the purchasers to take possession;
Php 15,000.00 at two years; and
Php 15,000.00 after 3 years
A total of Php 55,000.00 was the stipulated sum and if the sale was by installments, there would
be an interest of 7% per annum. In the same document France and Goulette obligated
themselves as solidary sureties. In 1920, Atty. Pirretas executed a document in January 22, 1920
purporting a substitution of agency to Figueras Hermanos a mercantile entity transferring his
legal representation and power conferred by Villa. When the second installment comes, the
purchasers negotiated with Alfredo Rocha, of Figueras Hermanos, a payment of Php 5,800.00
and 5 promissory notes payable when agreed upon. However these notes were not paid promptly
at maturity. Further, Garcia Bosque converted the business establishment into a limited
partnership and then to a corporation Bota Printing Company. Figueras entered into an
agreement reciting that Gracia Bosque was indebted to Villa in the amount of Php 32,000.00
ISSUE:
Whether or not the act of Figueras as substitute agent of Atty. Pirretas was correct?
HELD:
NO. The act of substitution conferred no authority. The Court ruled that there is nothing here that
can be construed to authorize Figueras to discharge any of the debtors without payment or to
novate the contract by which their obligation is created.
95. DEvelopment bank of the philippines vs CA
*Cyril Rufino C. Pelayo (Ajs group member)

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS and the ESTATE OF THE LATE JUAN B. DANS,
represented by CANDIDA G. DANS, and the DBP MORTGAGE REDEMPTION
INSURANCE POOL, respondents.
G.R. No. L-109937 March 21, 1994
QUIASON, J.
Facts: In May 1987, Juan B. Dans, together with his wife Candida, his son and daughterin-law, applied for a loan of P500,000.00 with the Development Bank of the Philippines
(DBP), Basilan Branch. As the principal mortgagor, Dans, then 76 years of age, was
advised by DBP to obtain a mortgage redemption insurance (MRI) with the DBP
Mortgage Redemption Insurance Pool (DBP MRI Pool).
A loan, in the reduced amount of P300,000.00, was approved by DBP on August 4, 1987
and released on August 11, 1987. From the proceeds of the loan, DBP deducted the
amount of P1,476.00 as payment for the MRI premium. On August 15, 1987, Dans
accomplished and submitted the MRI Application for Insurance and the Health
Statement for DBP MRI Pool.

On August 20, 1987, the MRI premium of Dans, less the DBP service fee of 10 percent,
was credited by DBP to the savings account of the DBP MRI Pool. Accordingly, the DBP
MRI Pool was advised of the credit.
On September 3, 1987, Dans died of cardiac arrest. The DBP, upon notice, relayed this
information to the DBP MRI Pool. On September 23, 1987, the DBP MRI Pool notified
DBP that Dans was not eligible for MRI coverage, being over the acceptance age limit of
60 years at the time of application.
On October 21, 1987, DBP apprised Candida Dans of the disapproval of her late
husbands MRI application. The DBP offered to refund the premium of P1,476.00 which
the deceased had paid, but Candida Dans refused to accept the same, demanding payment
of the face value of the MRI or an amount equivalent to the loan. She, likewise, refused
to accept an ex gratia settlement of P30,000.00, which the DBP later offered.
On February 10, 1989, respondent Estate, through Candida Dans as administratrix, filed a
complaint with the Regional Trial Court, Branch I, Basilan, against DBP and the
insurance pool for Collection of Sum of Money with Damages. Respondent Estate
alleged that Dans became insured by the DBP MRI Pool when DBP, with full knowledge
of Dans age at the time of application, required him to apply for MRI, and later collected
the insurance premium thereon. Respondent Estate therefore prayed: (1) that the sum of
P139,500.00, which it paid under protest for the loan, be reimbursed; (2) that the
mortgage debt of the deceased be declared fully paid; and (3) that damages be awarded.
On March 10, 1990, the trial court rendered a decision in favor of respondent Estate and
against DBP. The DBP MRI Pool, however, was absolved from liability, after the trial
court found no privity of contract between it and the deceased. The trial court declared
DBP in estoppel for having led Dans into applying for MRI and actually collecting the
premium and the service fee, despite knowledge of his age ineligibility.
Issue: 1) Whether or not there is a contract made between DBP MRI Pool and the late
Juan Dans;
2) Whether or not DBP should be held liable.
Held: 1) No. When Dans applied for MRI, he filled up and personally signed a Health
Statement for DBP MRI Pool (Exh. 5-Bank) with the following declaration:
I hereby declare and agree that all the statements and answers contained herein are true,
complete and correct to the best of my knowledge and belief and form part of my
application for insurance. It is understood and agreed that no insurance coverage shall be
effected unless and until this application is approved and the full premium is paid during
my continued good health (Records, p. 40).
Under the aforementioned provisions, the MRI coverage shall take effect: (1) when the
application shall be approved by the insurance pool; and (2) when the full premium is
paid during the continued good health of the applicant. These two conditions, being
joined conjunctively, must concur.
Undisputably, the power to approve MRI applications is lodged with the DBP MRI Pool.

The pool, however, did not approve the application of Dans. There is also no showing
that it accepted the sum of P1,476.00, which DBP credited to its account with full
knowledge that it was payment for Dans premium. There was, as a result, no perfected
contract of insurance; hence, the DBP MRI Pool cannot be held liable on a contract that
does not exist.
2) Yes. As an insurance agent, DBP made Dans go through the motion of applying for
said insurance, thereby leading him and his family to believe that they had already
fulfilled all the requirements for the MRI and that the issuance of their policy was
forthcoming. Apparently, DBP had full knowledge that Dans application was never
going to be approved. The maximum age for MRI acceptance is 60 years as clearly and
specifically provided in Article 1 of the Group Mortgage Redemption Insurance Policy
signed in 1984 by all the insurance companies concerned (Exh. 1-Pool).
Under Article 1987 of the Civil Code of the Philippines, the agent who acts as such is
not personally liable to the party with whom he contracts, unless he expressly binds
himself or exceeds the limits of his authority without giving such party sufficient notice
of his powers.
The DBPs liability, however, cannot be for the entire value of the insurance policy. To
assume that were it not for DBPs concealment of the limits of its authority, Dans would
have secured an MRI from another insurance company, and therefore would have been
fully insured by the time he died, is highly speculative. Considering his advanced age,
there is no absolute certainty that Dans could obtain an insurance coverage from another
company. It must also be noted that Dans died almost immediately, i.e., on the nineteenth
day after applying for the MRI, and on the twenty-third day from the date of release of
his loan.
One is entitled to an adequate compensation only for such pecuniary loss suffered by him
as he has duly proved (Civil Code of the Philippines, Art. 2199).
WHEREFORE, the decision of the Court of Appeals in CA G.R.-CV
No. 26434 is MODIFIED and petitioner DBP is ORDERED: (1) to REIMBURSE
respondent Estate of Juan B. Dans the amount of P1,476.00 with legal interest from the
date of the filing of the complaint until fully paid; and (2) to PAY said Estate the amount
of Fifty Thousand Pesos (P50,000.00) as moral damages and the amount of Ten Thousand
Pesos (P10,000.00) as attorneys fees. With costs against petitioner.

96. Philippine Products Company vs. Primateria Societe Anonyme Pour Le

Commerce Exterieur
Primateria Societe Anonyme Pour Le Commerce Exterieur (Primateria Zurich, a sociedad
anonima formed in Zurich), through Alexander Baylin, entered into an agreement with Philippine
Products Company (PPC) whereby it was agreed that from 1951 to 1953, PPC shall ship copra
products abroad.
Apparently, Primateria Zurich was not licensed by the Securities and Exchange Commission to do
business in the Philippines. Primateria Zurich also failed to pay its obligations amounting to

P31,009.71. PPC sued Primateria Zurich and it impleaded Baylin, Primateria Philippines, and one
Jose Crame, the latter three being impleaded as agents of Primateria Zurich.
The lower court ruled in favor PPC but it absolved Baylin, Crame, and Primateria Philippines.
PPC appealed as it insists that Baylin et al should be liable as agents because under Section 68
and 69 of theCorporation Law, the agents of foreign corporations not licensed to transact in the
Philippines shall be personally liable for contracts made in their (foreign corporations) behalf.
ISSUE: Whether or not PPC is correct.
HELD: No. PPC was not able to prove that Primateria Zurich, a sociedad anonima, is a foreign
corporation. And as a sociedad anonima, Primateria Zurich is not a corporation under
our Corporation Law. As such, Sections 68 and 69 cannot be invoked in order to make the
alleged agents of Primateria Zurich be liable. PPC will have to enforce the judgment against
Primateria Zurich alone.
97. NAPOCOR v. NATIONAL MERCHANDISING Corp.
FACTS:
Plaintiff-appellant National Power Corporation (NPC) and defendant- appellant National
Merchandising Corporation (NAMERCO), the Philippine representative of New York-based
International Commodities Corporation, executed a contract of sale of sulfur with a stipulation for
liquidated damages in case of breach.
Defendant-appellant Domestic Insurance Company executed a performance bond in favor of
NPC to guarantee the seller's obligation. In entering into the contract, Namerco, however, did not
disclose to NPC that Namerco's principal, in a cabled instruction, stated that the sale was subject
to availability of a steamer, and contrary to its principal's instruction, Namerco agreed that nonavailability of a steamer was not a justification for non-payment of liquidated damages.
The New York supplier was not able to deliver the sulfur due to its inability to secure shipping
space. Consequently, the Government Corporate Counsel rescinded the contract of sale due to
the supplier's non-performance of its obligations, and demanded payment of liquidated damages
from both Namerco and the surety. Thereafter, NPC sued for recovery of the stipulated liquidated
damages. After trial, the Court of First Instance rendered judgment ordering defendantsappellants to pay solidarity to the NPC reduced liquidated damages with interest.
ISSUE:
Whether NaMerCo exceeded their authority
HELD:
Yes, NaMerCo exceeded their authority.
The Supreme Court held that before the contract of sale was signed Namerco was already aware
that its principal was having difficulties in booking shipping space.
It is being enforced against the agent because article 1897 implies that the agent who acts in
excess of his authority is personally liable to the party with whom he contracted.
Moreover, the rule is complemented by article 1898 of the Civil Code which provides that "if the
agent contracts in the name of the principal, exceeding the scope of his authority, and the
principal does not ratify the contract, it shall be void if the party with whom the agent contracted is
aware of the limits of the powers granted by the principal".
Namerco never disclosed to the Napocor the cabled or written instructions of its principal. For that
reason and because Namerco exceeded the limits of its authority, it virtually acted in its own
name and not as agent and it is, therefore, bound by the contract of sale which, however, is not
enforceable against its principal.

98. ALBERT VS UNIVERSITY PUBLISHING CO., INC. (Jan. 30, 1965)

Mariano Albert entered into a contract with University Publishing Co., Inc. through Jose M.
Aruego, its President, whereby University would pay plaintiff for the exclusive right to publish his
revised Commentaries on the Revised Penal Code. The contract stipulated that failure to pay
one installment would render the rest of the payments due. When University failed to pay the
second installment, Albert sued for collection and won. However, upon execution, it was found
that University was not registered with the SEC. Albert petitioned for a writ of execution against
Jose M. Aruego as the real defendant. University opposed, on the ground that Aruego was not a
party to the case.
The Supreme Court found that Aruego represented a non-existent entity and induced not
only Albert but the court to believe in such representation. Aruego, acting as representative of
such non-existent principal, was the real party to the contract sued upon, and thus assumed such
privileges and obligations and became personally liable for the contract entered into or for other
acts performed as such agent.
The Supreme Court likewise held that the doctrine of corporation by estoppel cannot be
set up against Albert since it was Aruego who had induced him to act upon his (Aruego's) willful
representation that University had been duly organized and was existing under the law.
99. Eugenio vs Court of Appeals

Private respondent Pepsi-Cola Bottling Company of the Philippines, Inc. is engaged in

the business of manufacturing, making bottling and selling soft drinks and beverages to
the general public. Petitioner Nora S. Eugenio was a dealer of the soft drink products
of private respondent corporation. Although she had only one store located at 27
Diamond Street, Emerald Village, Marikina, Metro Manila, Eugenio had a regular charge
account in both the Quezon City plant (under the name "Abigail Minimart" *) as well
as in the Muntinlupa plant (under the name "Nora Store") of respondent corporation.
Her husband and co-petitioner, Alfredo Y. Eugenio, used to be a route manager of
private respondent in its Quezon City plant.
On March 17, 1982, private respondent filed a complaint for a sum of money against
petitioners Nora S. Eugenio and Alfredo Y. Eugenio, docketed as Civil Case No. Q34718 of the then Court of First Instance of Quezon City, Branch 9 (now Regional Trial
Court, Quezon City, Branch 97). In its complaint, respondent corporation alleged that on
several occasions in 1979 and 1980, petitioners purchased and received on credit various
products from its Quezon City plant. As of December 31, 1980, petitioners allegedly had
an outstanding balance of P20,437.40 therein. Likewise, on various occasions in 1980,
petitioners also purchased and received on credit various products from respondent's
Muntinlupa plant and, as of December 31, 1989, petitioners supposedly had an
outstanding balance of P38,357.20 there. In addition, it was claimed that petitioners had
an unpaid obligation for the loaned "empties" from the same plant in the amount of
P35,856.40 as of July 11, 1980. Altogether, petitioners had an outstanding account of
P94,651.00 which, so the complaint alleged, they failed to pay despite oral and written
demands. 1

In their defense, petitioners presented four trade provisional receipts (TPRs) allegedly
issued to and received by them from private respondent's Route Manager Jovencio
Estrada of its Malate Warehouse (Division 57), showing payments in the total sum of
P80,500.00 made by Abigail's Store. Petitioners contended that had the amounts in the
TPRs been credited in their favor, they would not be indebted to Pepsi-Cola. The details
of said receipts are as follows:
TPR No. Date of Issue Amount
500320 600 Fulls returned 5/6/80 P23,520.00
500326 600 Fulls returned 5/10/80 23,520.00
500344 600 Fulls returned 5/14/80 23,520.00
500346 Cash 5/15/80 10,000.00 2

Total P80,560.00
Further, petitioners maintain that the signature purporting to be that of petitioner Nora S.
Eugenio in Sales Invoice No. 85366 dated May 15, 1980 in the amount of
P5,631.00, 3 which was included in the computation of their alleged debt, is a
falsification. In sum, petitioners argue that if the aforementioned amounts were
credited in their favor, it would be respondent corporation which would be indebted
to them in the sum of P3,546.02 representing overpayment.
After trial on the merits, the court a quo rendered a decision on February 17, 1986,
ordering petitioners, as defendants therein to jointly and severally pay private respondent
the amount of P74,849.00, plus 12% interestper annum until the principal amount shall
have been fully paid, as well as P20,000.00 as attorney's fees. 4 On appeal in CA-G.R. CV
No. 10623, the Court of Appeals declared said decision a nullity for failure to comply
with the requirement in Section 14, Article VIII of the 1987 Constitution that decisions of
courts should clearly and distinctly state the facts and the law on which they are based.
The Court of Appeals accordingly remanded the records of the case to the trial court,
directing it to render another decision in accordance with the requirements of the
Constitution. 5
In compliance with the directive of the Court of Appeals, the lower court rendered a
second decision on September 29, 1989. In this new decision, petitioners were this time
ordered to pay, jointly and severally, the reduced amount of P64,188.60, plus legal
interest of 6% per annum from the filing of the action until full payment of the amount
adjudged. 6 On appeal therefrom, the Court of Appeals affirmed the judgment of the trial
court in a decision promulgated on September 27, 1991. 7 A motion for the
reconsideration of said judgment of respondent court was subsequently denied in a
resolution dated January 23, 1992. 8

We agree with petitioners and respondent court that the crux of the dispute in the case at
bar is whether or not the amounts in the aforementioned trade provisional receipts
should be credited in favor of herein petitioner spouses.
In a so-called encyclopedic sense, however, our course of action in this case and the
denouement of the controversy therein takes into account the jurisprudential rule that in
the present recourse we would normally have restricted ourselves to questions of law and
eschewed questions of fact were it not for our perception that the lower courts manifestly
overlooked certain relevant factual considerations resulting in a misapprehension thereof.
Consequentially, that position shall necessarily affect our analysis of the rules on the
burden of proof and the burden of evidence, and ultimately, whether the proponent of the
corresponding claim has preponderated or rested on an equipoise or fallen short of
preponderance.
First, the backdrop. It appears that on August 1, 1981, private respondent through the
head of its Legal Department, Atty. Antonio N. Rosario, sent an inter-office
correspondence to petitioner Alfredo Eugenio inviting him for an interview/interrogation
on August 3, 1981 regarding alleged "non-payment of debts to the company, inefficiency,
and loss of trust and confidence." 9 The interview was reset to August 4, 1981 to enable
said petitioner to bring along with him their union president, Luis Isip. On said date, a
statement of overdue accounts were prepared showing that petitioners owed respondent
corporation the following amounts:
Muntinlupa Plant
Nora's Store
Trade Account P38,357.20 (as of 12/3/80) 10
Loaned Empties P35,856.40 (as of 7/11/81) 11
Quezon City Plant
Abigail Minimart
Regular Account P20,437.40 (as of 1980) 12

Total P94,651.00
A reconciliation of petitioners' account was then conducted. The liability of petitioners as
to the loaned empties (Muntinlupa plant, Nora Store) was reduced to P21,686.00 after a
reevaluation of the value of the loaned empties. 13 Likewise, the amount of P5,631.00
under Invoice No. 85366, which was a spurious document, was deducted from their
liability in their trade account with the Muntinlupa plant. 14 Thereafter, Eugenio and Isip
signed the reconciliation sheets reflecting these items:
Muntinlupa Plant
Nora Store
Trade Account P32,726.20 15
Loaned Empties P21,686.00 16

Quezon City Plant

Abigail Minimart
Trade Account P20,437.20 17

Total P74,849.40
After the meeting, private respondent alleged that petitioner Alfredo Y. Eugenio requested
that he be allowed to retire and the existing accounts be deducted from his retirement pay,
but that he later withdrew his retirement plan. Said petitioner disputed that allegation and,
in fact, he subsequently filed a complaint for illegal dismissal. The finding of labor
arbiter, later affirmed by the Supreme Court, showed that this petitioner was indeed
illegally dismissed, and that he never filed an application for retirement. In fact, this
Court made a finding that the retirement papers allegedly filed in the name of this
petitioner were forged. 18 This makes two falsified documents to be foisted against
petitioners.
With their aforesaid accounts still unpaid, petitioner Alfredo Y. Eugenio submitted to
Atty. Rosario the aforementioned four TPRs. Thereafter, Atty. Rosario ordered Daniel
Azurin, assistant personnel manager, to conduct an investigation to verify this claim of
petitioners. According to Azurin, during the investigation on December 4, 1981, Estrada
allegedly denied that he issued and signed the aforesaid TPRs. 19 He also presented a
supposed affidavit which Estrada allegedly executed during that investigation to affirm
his verbal statements therein. Surprisingly, however, said supposed affidavit is
inexplicably dated February 5, 1982. 20 At this point, it should be noted that Estrada never
testified thereafter in court and what he is supposed to have done or said was merely
related by Azurin.
Now, on this point, respondent court disagreed with herein petitioners that the testimony
on the alleged denial of Jovencio Estrada regarding his signatures on the disputed TPRs,
as well as his affidavit dated February 5, 198221 wherein he affirmed his denial, are
hearsay evidence because Estrada was not presented as a witness to testify and be crossexamined thereon. Except for the terse statement of respondent court that since petitioner
Alfredo Eugenio was supposedly present on December 4, 1981, "(t)he testimony of
Jovencio Estrada at the aforementioned investigation categorically denying that he issued
and signed the disputed TPRs is, therefore, not hearsay," 22 there was no further
explanation on this unusual doctrinal departure.
The rule is clear and explicit. Under the hearsay evidence rule, a witness can testify only
to those facts which he knows of his personal knowledge; that is, which are derived from
his own perception, except as otherwise provided in the Rules. 23 In the present case,
Estrada failed to appear as a witness at the trial. It was only Azurin who testified that
during the investigation he conducted, Estrada supposedly denied having signed the
TPRs. It is elementary that under the measure on hearsay evidence, Azurin's testimony
cannot constitute legal proof as to the truth of Estrada's denial. For that matter, it is not
admissible in evidence, petitioners' counsel having seasonably objected at the trial to such

testimony of Azurin as hearsay. And, even if not objected to and thereby admissible, such
hearsay evidence has no probative value whatsoever. 24
It is true that the testimony or deposition of a witness deceased or unable to testify, given
in a former case or proceeding, judicial or administrative, involving the same parties and
subject matter, may be given in evidence against the adverse party who had the
opportunity to cross-examine him. 25 Private respondent cannot, however, seek sanctuary
in this exception to the hearsay evidence rule.
Firstly, the supposed investigation conducted by Azurin was neither a judicial trial nor an
administrative hearing under statutory regulations and safeguards. It was merely an interoffice interview conducted by a personnel officer through an ad hoc arrangement.
Secondly, a perusal of the alleged stenographic notes, assumingarguendo that these notes
are admissible in evidence, would show that the "investigation" was more of a freeflowing question and answer type of discussion wherein Estrada was asked some
questions, after which Eugenio was likewise asked other questions. Indeed, there was no
opportunity for Eugenio to object, much less to cross-examine Estrada. Even in a formal
prior
trial
itself,
if
the
opportunity
for
cross-examination did not exist therein or if the accused was not afforded opportunity to
fully cross-examine the witness when the testimony was offered, evidence relating to the
testimony given therein is thereafter inadmissible in another proceeding, absent any
conduct on the part of the accused amounting to a waiver of his right to cross-examine. 26
Thirdly, the stenographer was not even presented to authenticate the stenographic notes
submitted to the trial court. A copy of the stenographic report of the entire testimony at
the former trial must be supported by the oath of the stenographer that it is a correct
transcript of his notes of the testimony of the witness as a sine qua non for its competency
and admissibility in evidence. 27 The supposed stenographic notes on which respondent
corporation relies is unauthenticated and necessarily inadmissible for the purpose
intended.
Lastly, although herein private respondent insinuated that Estrada was not presented as a
witness because he had disappeared, no evidence whatsoever was offered to show or even
intimate that this was due to any machination or instigation of petitioners. There is no
showing that his absence was procured, or that he was eloigned, through acts imputable
to petitioners. In the case at bar, except for the self-serving statement that Estrada had
disappeared, no plausible explanation was given by respondent corporation. Estrada was
an employee of private respondent, hence it can be assumed that it could easily trace or
ascertain his whereabouts. It had the resources to do so, in contradistinction to petitioners
who even had to seek the help of the Public Attorney's Office to defend them here.
Private respondent could not have been unaware of the importance of Estrada's testimony
and the consequent legal necessity for presenting him in the trial court, through coercive
process if necessary.
Obviously, neither is the affidavit of Estrada admissible; it is likewise barred as evidence
by the hearsay evidence rule. 28 This is aside from the fact that, by their nature, affidavits

are generally not prepared by the affiants themselves but by another who uses his own
language in writing the affiant's statements, which may thus be either omitted or
misunderstood by the one writing them. 29 The dubiety of that affidavit, as earlier
explained, is further underscored by the fact that it was executed more than two months
after the investigation, presumably for curative purposes as it were.
Now, the authenticity of a handwriting may be proven, among other means, by its
comparison made by the witness or the court with writings admitted or treated as genuine
by the party against whom the evidence is offered or proved to be genuine to the
satisfaction of the judge. 30 The alleged affidavit of Estrada states". . . that the comparison
that was made as to the authenticity of the signature appearing in the TPRs and that of my
signature showed that there was an apparent dissimilarity between the two signatures,
xerox copy of my 201 File is attached hereto as Annex 'F' of this affidavit. 31 However, a
search of the Folder of Exhibits in this case does not reveal that private respondent ever
submitted any document, not even the aforementioned 201 File, containing a specimen of
the signature of Estrada which the Court can use as a basis for comparison. Neither was
any document containing a specimen of Estrada's signature presented by private
respondent in the formal offer of its exhibits. 32
Respondent court made the further observation that "Estrada was even asked by Atty.
Azurin at said investigation to sign three times to provide specimens of his genuine
signature." 33 There is, however, no showing that he did, but assuming that Estrada signed
the stenographic notes, the Court would still be unable to make the necessary comparison
because two signatures appear on the right margin of each and every page of the
stenographic notes, without any indication whatsoever as to which of the signatures is
Estrada's. The whole document was marked for identification but the signatures were not.
In fact, although formally offered, it was merely introduced by the private respondent "in
order to show that Jovencio Estrada had been investigated and categorically denied
having collected from Abigail Minimart and denying having signed the receipts claimed
by Alfredo Eugenio to be his payment," 34 and not for the purpose of presenting any
alleged signature of Estrada on the document as a basis for comparison.
This is a situation that irresistibly arouses judicial curiosity, if not suspicion. Respondent
corporation was fully aware that its case rested, as it were, on the issue of whether the
TPRs were authentic and which issue, in turn, turned on the genuineness of Estrada's
signatures thereon. Yet, aside from cursorily dismissing the non-presentation of Estrada in
court by the glib assertion that he could not be found, and necessarily aware that his
alleged denial of his signatures on said TPRs and his affidavit rendered the same
vulnerable to the challenge that they are hearsay and inadmissible, respondent
corporation did nothing more. In fact, Estrada's disappearance has not been explained up
to the present.
The next inquiry then would be as to what exactly is the nature of the TPRs insofar as
they are used in the day-to-day business transactions of the company. These trade
provisional receipts are bound and given in booklets to the company sales representatives,
under proper acknowledgment by them and with a record of the distribution thereof. After

every transaction, when a collection is made the customer is given by the sales
representative a copy of the trade provisional receipt, that is, the triplicate copy or
customer's copy, properly filled up to reflect the completed transaction. All unused TPRs,
as well as the collections made, are turned over by the sales representative to the
appropriate company officer. 35
According to respondent court, "the questioned TPR's are merely 'provisional' and were,
as printed at the bottom of said receipts, to be officially confirmed by plaintiff within
fifteen (15) days by delivering the original copy thereof stamped paid and signed by its
cashier to the customer. . . . Defendants-appellants (herein petitioners) failed to present
the original copies of the TPRs in question, showing that they were never confirmed by
the plaintiff, nor did they demand from plaintiff the confirmed original copies thereof." 36
We do not agree with the strained implication intended to be adverse to petitioners. The
TPRs presented in evidence by petitioners are disputably presumed as evidentiary of
payments made on account of petitioners. There are presumptions juris tantum in law that
private transactions have been fair and regular and that the ordinary course of business
has been followed. 37 The role of presumptions in the law on evidence is to relieve the
party enjoying the same of the evidential burden to prove the proposition that he contends
for, and to shift the burden of evidence to the adverse party. Private respondent having
failed to rebut the aforestated presumptions in favor of valid payment by petitioners,
these would necessarily continue to stand in their favor in this case.
Besides, even assuming arguendo that herein private respondent's cashier never
received the amounts reflected in the TPRs, still private respondent failed to prove
that Estrada, who is its duly authorized agent with respect to petitioners, did not
receive those amounts from the latter. As correctly explained by petitioners, "in so far
as the private respondent's customers are concerned, for as long as they pay their
obligations to the sales representative of the private respondent using the latter's official
receipt, said payment extinguishes their obligations." 38 Otherwise, it would unreasonably
cast the burden of supervision over its employees from respondent corporation to its
customers.
The substantive law is that payment shall be made to the person in whose favor the
obligation has been constituted, or his successor-in-interest or any person authorized to
receive it. 39 As far as third persons are concerned, an act is deemed to have been
performed within the scope of the agent's authority, if such is within the terms of the
power of attorney, as written, even if the agent has in fact exceeded the limits of his
authority according to an understanding between the principal and his agent. 40 In
fact, Atty. Rosario, private respondent's own witness, admitted that "it is the responsibility
of the collector to turn over the collection." 41
Still pursuing its ruling in favor of respondent corporation, the Court of Appeals makes
the following observation:

. . . Having allegedly returned 600 Fulls to the plaintiff's representative on May 6, 10, and
14, 1980, appellant-wife's Abigail Store must have received more than 1,800 cases of soft
drinks from plaintiff before those dates. Yet the Statement of Overdue Account pertaining
to Abigail Minimart (Exhs. "D", "D-1" to "D-3") which appellant-husband and his
representative Luis Isip signed on August 3, 1981 does now show more than 1,800 cases
of soft drinks were delivered to Abigail Minimart by plaintiff's Quezon City Plant (which
supposedly issued the disputed TPRs) in May, 1980 or the month before."42
We regret the inaccuracy in said theory of respondent court which was impelled by its
sole and limited reliance on a mere statement of overdue amounts. Unlike a statement of
account which truly reflects the day-to-day movement of an account, a statement of an
overdue amount is only a summary of the account, simply reflecting the balance due
thereon. A statement of account, being more specific and detailed in nature, allows one to
readily see and verify if indeed deliveries were made during a specific period of time,
unlike a bare statement of overdue payments. Respondent court cannot make its
aforequoted categorical deduction unless supporting documents accompanying the
statement of overdue amounts were submitted to enable easy and accurate verification of
the facts.
A perusal of the statement of overdue accounts shows that, except for a reference number
given for each entry, no further details were volunteered nor offered. It is entirely possible
that the statement of overdue account merely reflects the outstanding debt of a particular
client, and not the specific particulars, such as deliveries made, particularly since the
entries therein were surprisingly entered irrespective of their chronological order.
Obviously, therefore, one can not use the statement of overdue amounts as conclusive
proof of deliveries done within a particular time frame.
Except for its speculation that petitioner Alfredo Y. Eugenio could have had easy access
to blank forms of the TPRs because he was a former route manager no evidence
whatsoever was presented by private respondent in support of that theory. We are
accordingly intrigued by such an unkind assertion of respondent corporation since Azurin
himself admitted that their accounting department could not even inform them regarding
the persons to whom the TPRs were issued. 43 In addition, it is significant that respondent
corporation did not take proper action if indeed some receipts were actually lost, such as
the publication of the fact of loss of the receipts, with the corresponding investigation into
the matter.
We, therefore, reject as attenuated the comment of the trial court that the TPRs, which
Eugenio submitted after the reconciliation meeting, "smacks too much of an
afterthought." 44 The reconciliation meeting was held on August 4, 1981. Three months
later, on November, 1981, petitioner Alfredo Y. Eugenio submitted the four TPRs. He
explained, and this was not disputed, that at the time the reconciliation meeting was held,
his daughter Nanette, who was helping his wife manage the store, had eloped and she had
possession of the TPRs. 45 It was only in November, 1981 when petitioners were able to
talk to Nanette that they were able to find and retrieve said TPRs. He added that during
the reconciliation meeting, Atty. Rosario assured him that any receipt he may submit later

will be credited in his favor, hence he signed the reconciliation documents. Accordingly,
when he presented the TPRs to private respondent, Atty. Rosario directed Mr. Azurin to
verify the TPRs. Thus, the amount stated in the reconciliation sheet was not final, as it
was still subject to such receipts as may thereafter be presented by petitioners.
On the other hand, petitioners claimed that the signature of petitioner Nora S. Eugenio in
Sales Invoice No. 85366, in the amount of P5,631.00 is spurious and should accordingly
be deducted from the disputed amount of P74,849.40. A scrutiny of the reconciliation
sheet shows that said amount had already been deducted upon the instruction of one Mr.
Coloma, Plant Controller of Pepsi-Cola , Muntinlupa Plant. 46 That amount is not disputed
by respondent corporation and should no longer be deducted from the total liability of
petitioner in the sum of P74,849.40. Since petitioners had made a payment of P80,560.00,
there was consequently an overpayment of P5,710.60.
All told, we are constrained to hold that respondent corporation has dismally failed to
comply with the pertinent rules for the admission of the evidence by which it sought to
prove its contentions. Furthermore, there are questions left unanswered and begging for
cogent explanations why said respondent did not or could not comply with the
evidentiary rules. Its default inevitably depletes the weight of its evidence which cannot
just be taken in vacuo, with the result that for lack of the requisite quantum of evidence, it
has not discharged the burden of preponderant proof necessary to prevail in this case.
WHEREFORE, the judgment of respondent Court of Appeals in C.A. G.R. CV No.
26901, affirming that of the trial court in Civil Case No. Q-34718, is ANNULLED and
SET ASIDE. Private respondent Pepsi-Cola Bottling Company of the Philippines, Inc. is
hereby ORDERED to pay petitioners Nora and Alfredo Eugenio the amount of P5,710.60
representing overpayment made to the former.