Chevron Philippines, Inc. vs. Looyuko

A sole proprietor is bound by transactions conducted by employees acting within their apparent authority, and a failure to specifically deny under oath the genuineness and due execution of invoices—which are actionable documents in a collection case—constitutes an implied admission of their validity, precluding the proprietor from later denying liability.

Chevron Philippines, Inc. (formerly Caltex) filed a collection case against Alberto T. Looyuko, doing business as "Noah's Ark Group of Companies," and others, seeking payment for petroleum products and services delivered to Noah's Ark Sugar Refinery, Inc. between April and November 1997. The total claimed obligation was ₱7,381,510.70, exclusive of interest. The respondents denied any contractual relationship, asserting that Noah's Ark Sugar Refinery was a sole proprietorship owned by Looyuko but that the alleged purchases were made without his knowledge or authorization by persons not authorized to bind him.

• Nature of the Action: This is a collection case filed by Chevron to recover the sum of ₱7,381,510.70 for petroleum products and services allegedly sold and delivered to Noah's Ark Sugar Refinery.
• The Alleged Purchases: From April to November 1997, 105 invoices were generated for bunker fuel oil and pumping/sealing services. The products were hauled by third-party carriers from Chevron's depot to the refinery in Mandaluyong City. The invoices contained conditions stating that the "prevailing duly authorized maximum interest rate" would be charged on overdue accounts and 20% of the indebtedness as attorney's fees for failure to pay after demand.
• Demand and Non-Payment: Chevron sent demand letters to respondents Julieta Go and Achilles Pacquing, whom it alleged were officers of the refinery. A final demand letter was sent to Alberto Looyuko on August 10, 1998. No payment was made.
• Respondents' Defense: Alberto Looyuko denied owning or operating Noah's Ark Sugar Refinery or Noah's Ark Group of Companies. He denied authorizing any purchases from Chevron and claimed the refinery had ceased operations in November 1997. Co-respondents Go and Pacquing denied being officers of the refinery and claimed they merely worked in the building where Looyuko held office.
• RTC Findings: The trial court found Looyuko liable, holding that the invoices proved deliveries were made to and accepted by the refinery. It found Go and Pacquing were employees/agents who should have informed Looyuko of the demand, but dropped them as defendants for lack of evidence against them personally. It imposed a 24% interest rate per annum as stipulated and awarded attorney's fees.
• CA Ruling: The appellate court reversed, holding no perfected contract of sale existed due to lack of proof of Looyuko's consent and no proof of delivery to an authorized representative of the refinery. It found Chevron's evidence insufficient.

• Procedural Defect in Appeal: Petitioner argued that the CA erred in not dismissing the respondents' appeal outright because their Appellant's Brief lacked page references to the record, violating Section 1(f), Rule 50 of the Rules of Court.
• Existence of Contractual Relationship: Petitioner maintained that a contractual relationship existed based on the established credit line for Noah's Ark Sugar Refinery, the consummated sale through delivery of products, and the principle of unjust enrichment if respondents were allowed to evade payment.
• Appreciation of Evidence: Petitioner contended that the CA disregarded the trial court's factual findings, which were supported by a preponderance of evidence, including the invoices, demand letters, and witness testimonies.

• No Fatal Procedural Defect: Respondents countered that the failure to cite page references is a formal, non-fatal defect, citing Banco de Oro Unibank, Inc. v. Spouses Locsin.
• Lack of Contractual Relation: Respondents argued that Chevron failed to prove: (a) any contractual relation with them; (b) that Noah's Ark Sugar Refinery actually received the petroleum products; and (c) that Go and Pacquing were authorized corporate officers.
• Unauthorized Transactions: Respondents maintained that they cannot be bound by the actions of unknown persons acting without their authority, and Chevron transacted at its own peril.

• Procedural Issue: Whether the respondents' appeal should have been dismissed for failure to comply with Section 1(f), Rule 50 of the Rules of Court regarding page references in the Appellant's Brief.
• Substantive Issue 1: Whether sufficient evidence exists to prove the contractual relationship between petitioner and respondents and the delivery of the petroleum products.
• Substantive Issue 2: Whether the trial court erred in imposing a 24% per annum interest rate on the overdue account.

• Procedural Issue: The appeal was not fatally defective. The failure to cite page references to the record is a formal defect that is not fatal, consistent with prevailing jurisprudence (Banco de Oro Unibank, Inc. v. Spouses Locsin).
• Substantive Issue 1: Contractual liability was established. The 105 invoices were actionable documents. Alberto Looyuko, as the admitted sole proprietor of Noah's Ark Sugar Refinery, failed to specifically deny under oath the genuineness and due execution of these invoices in his Answer. This failure constituted an implied admission of their validity. Furthermore, his failure to disclaim the authority of the refinery employees who signed for the deliveries created an agency by estoppel, binding him to the transactions.
• Substantive Issue 2: The 24% interest rate was erroneous. The invoices stipulated the "prevailing duly authorized maximum interest rate," not 24%. The applicable rate was 12% per annum from the date of extrajudicial demand (August 21, 1998) to June 30, 2013, and 6% per annum from July 1, 2013 until full payment, pursuant to BSP Circular No. 799 and prevailing jurisprudence. Additionally, 20% of the principal indebtedness is awarded as attorney's fees as stipulated in the invoices.

• Agency by Estoppel / Apparent Authority — When a principal, by his own act or omission, intentionally or negligently leads a third person to believe that another is his agent and to deal with that person as such, the principal is estopped from denying the agency. The Court applied this because Looyuko, as the proprietor, allowed the refinery employees to receive the fuel deliveries without protest, leading Chevron to believe they were authorized.
• Actionable Documents — A written instrument upon which an action or defense is founded is an actionable document. Its genuineness and due execution are deemed admitted unless specifically denied under oath by the adverse party. The Court held the 105 invoices were the foundation of Chevron's cause of action for collection, and Looyuko's failure to deny them under oath constituted an admission.
• Negative Pregnant — A denial that is equivocal or contains an admission of the substantial fact alleged. Looyuko's denials of "personal knowledge" or "participation" were deemed pregnant with an admission that the refinery's employees, in the ordinary course of business, received the deliveries.

• "By operating as a single proprietorship registered in respondent Alberto's name, and by barely attending to the management of its affairs and operations, he cannot escape the inevitable flood or deluge of collection cases surely to follow if the single proprietorship he owns cannot pay its debts. He (or more appropriately, his estate) should be made to answer for the refinery's indebtedness to petitioner." — This underscores the legal consequence of sole proprietorship liability and the estoppel argument.
• "Respondents are therefore deemed to have waived their right to object to the 105 invoices as both actionable documents that form the bases of petitioner's claim, and as private documentary evidence in support of said claim." — This highlights the critical procedural consequence of failing to properly contest actionable documents.

• Banco de Oro Unibank, Inc. v. Spouses Locsin, 739 Phil. 486 (2014) — Cited for the rule that the absence of page references in an appellant's brief is a formal, non-fatal defect.
• Coronel v. Court of Appeals, 331 Phil. 294 (1996) — Cited for the essential elements of a contract of sale (consent, object, cause).
• Young Builders Corp. v. Benson Industries, Inc., G.R. No. 198998, June 19, 2019 — Distinguished. While Young Builders held an accomplishment billing was not an actionable document, the Court found the invoices in this case were different as they were the very foundation of the collection suit and evidenced receipt of goods.
• Chua v. Court of Appeals, 283 Phil. 253 (1992) — Cited for the exception that authentication of a private document is unnecessary when its genuineness and due execution are admitted by the adverse party.

• Article 1318, Civil Code — Cited for the essential requisites of a contract: consent, object certain, and cause.
• Article 1403(2), Civil Code (Statute of Frauds) — Cited for the requirement that contracts for the sale of goods at a price not less than ₱500 must be in writing, unless the buyer accepts and receives part of the goods.
• Articles 1910 & 1911, Civil Code — Cited for the rules on agency, particularly that a principal is solidarily liable if he allowed the agent to act as though he had full powers (agency by estoppel).
• Section 8, Rule 8, Rules of Court — Cited for the rule on how to contest actionable documents; genuineness and due execution are deemed admitted unless specifically denied under oath.
• Section 10, Rule 8, Rules of Court — Cited for the rule on specific denials; a general denial of knowledge is insufficient when the facts are presumed to be known by the party.
• Section 1(f), Rule 50, Rules of Court — Cited as the ground for dismissal of appeal that was not applied in this case.

• Justice Alfredo Benjamin S. Caguioa (Ponente)
• Justice Henri Jean Paul B. Inting
• Justice Rodil V. Zalameda
• Justice Maria Filomena D. Singh