Eugenio vs. Court of Appeals

Trade provisional receipts presented by a debtor are disputably presumed to be evidentiary of payments made, and the creditor bears the burden of rebutting this presumption with admissible evidence. Hearsay testimony regarding a witness's denial of signatures on receipts has no probative value and cannot defeat the debtor's claim of payment.

Private respondent Pepsi-Cola Bottling Company of the Philippines, Inc. is engaged in manufacturing, bottling, and selling soft drinks to the general public. Petitioner Nora S. Eugenio was a dealer of Pepsi-Cola products, maintaining regular charge accounts at both the Quezon City plant (under the name "Abigail Minimart") and the Muntinlupa plant (under the name "Nora Store"). Her husband, petitioner Alfredo Y. Eugenio, was a former route manager of the respondent corporation at its Quezon City plant. The case involves the application of evidentiary rules on hearsay, burden of proof, and disputable presumptions in a collection suit.

Petitioner Nora S. Eugenio was a dealer of soft drink products of private respondent Pepsi-Cola Bottling Company of the Philippines, Inc., maintaining a regular charge account at both the Quezon City plant (under the name "Abigail Minimart") and the Muntinlupa plant (under the name "Nora Store"). Her husband, petitioner Alfredo Y. Eugenio, was a former route manager of the respondent corporation at its Quezon City plant.

On March 17, 1982, private respondent filed a complaint for sum of money against the petitioners, alleging that on several occasions in 1979 and 1980, petitioners purchased and received on credit various products from its Quezon City plant, with an outstanding balance of P20,437.40 as of December 31, 1980. Likewise, on various occasions in 1980, petitioners purchased products from the Muntinlupa plant, with an outstanding balance of P38,357.20 as of December 31, 1980, plus an unpaid obligation for loaned "empties" in the amount of P35,856.40 as of July 11, 1980. The total outstanding account was P94,651.00, which petitioners allegedly failed to pay despite demands.

In their defense, petitioners presented four trade provisional receipts (TPRs) allegedly issued to them by private respondent's Route Manager Jovencio Estrada of its Malate Warehouse (Division 57), showing payments totaling P80,560.00 made by Abigail's Store: TPR No. 500320 (600 Fulls returned, 5/6/80, P23,520.00); TPR No. 500326 (600 Fulls returned, 5/10/80, P23,520.00); TPR No. 500344 (600 Fulls returned, 5/14/80, P23,520.00); and TPR No. 500346 (Cash, 5/15/80, P10,000.00). Petitioners contended that had these amounts been credited, they would not be indebted to Pepsi-Cola. They also maintained that the signature purporting to be that of Nora S. Eugenio in Sales Invoice No. 85366 dated May 15, 1980 in the amount of P5,631.00 was a falsification.

On August 1, 1981, private respondent, through its Legal Department head Atty. Antonio N. Rosario, sent an inter-office correspondence to petitioner Alfredo Eugenio inviting him for an interview regarding alleged "non-payment of debts to the company, inefficiency, and loss of trust and confidence." The interview was reset to August 4, 1981 to enable Eugenio to bring along their union president, Luis Isip. On that date, a statement of overdue accounts was prepared showing petitioners owed P38,357.20 (Muntinlupa trade account), P35,856.40 (loaned empties), and P20,437.40 (Quezon City regular account), totaling P94,651.00. A reconciliation was conducted, reducing the loaned empties liability to P21,686.00 and deducting the P5,631.00 spurious invoice. Eugenio and Isip signed the reconciliation sheets reflecting total liability of P74,849.40.

After the meeting, private respondent alleged that Alfredo Eugenio requested to retire with the accounts deducted from his retirement pay, but later withdrew his retirement plan. Eugenio disputed this and subsequently filed a complaint for illegal dismissal, which resulted in a finding that he was illegally dismissed and that the retirement papers allegedly filed in his name were forged. This made two falsified documents foisted against petitioners.

With their accounts still unpaid, Alfredo Eugenio submitted the four TPRs to Atty. Rosario, who ordered Daniel Azurin, assistant personnel manager, to investigate. According to Azurin, during the investigation on December 4, 1981, Estrada allegedly denied issuing and signing the TPRs. Azurin also presented a supposed affidavit Estrada allegedly executed during the investigation, which was inexplicably dated February 5, 1982—more than two months after the investigation. Estrada never testified in court; his alleged statements were merely related by Azurin. The Court noted that the alleged affidavit stated a comparison was made between the signatures on the TPRs and Estrada's signature showing "apparent dissimilarity," but no document containing a specimen of Estrada's signature was ever submitted in evidence or formally offered.

Petitioners explained that they submitted the TPRs only in November 1981 because their daughter Nanette, who helped manage the store, had eloped and had possession of the TPRs at the time of the August 4, 1981 reconciliation meeting. They were only able to retrieve the TPRs in November 1981. Alfredo Eugenio added that Atty. Rosario assured him during the reconciliation meeting that any receipt he may submit later would be credited in his favor, which is why he signed the reconciliation documents.

• Crediting of TPRs: Petitioners argued that the four trade provisional receipts totaling P80,560.00 should be credited in their favor, and had they been credited, respondent corporation would actually be indebted to them in the sum of P3,546.02 representing overpayment.
• Hearsay Evidence: Petitioners contended that the testimony of Daniel Azurin regarding Estrada's alleged denial of his signatures on the TPRs, as well as Estrada's affidavit dated February 5, 1982, were hearsay evidence because Estrada was not presented as a witness to testify and be cross-examined.
• Falsified Invoice: Petitioners maintained that the signature purporting to be that of Nora S. Eugenio in Sales Invoice No. 85366 dated May 15, 1980 in the amount of P5,631.00 was a falsification and should be deducted from their alleged debt.
• Payment to Authorized Agent: Petitioners argued that as far as customers are concerned, payment to the sales representative using the latter's official receipt extinguishes their obligations, and it would unreasonably cast the burden of supervision over employees from the corporation to its customers.

• Non-Confirmation of TPRs: Respondent argued that the questioned TPRs were merely "provisional" and, as printed at the bottom of said receipts, were to be officially confirmed by the plaintiff within fifteen days by delivering the original copy stamped paid and signed by its cashier to the customer; petitioners failed to present the original copies showing they were never confirmed.
• Estrada's Denial as Non-Hearsay: Respondent contended that since petitioner Alfredo Eugenio was supposedly present on December 4, 1981, the testimony of Jovencio Estrada at the investigation categorically denying that he issued and signed the disputed TPRs was not hearsay.
• Impossibility of Deliveries: Respondent argued that having allegedly returned 600 Fulls on May 6, 10, and 14, 1980, Abigail's Store must have received more than 1,800 cases of soft drinks before those dates, yet the Statement of Overdue Account did not show such deliveries.
• Afterthought Theory: Respondent suggested that the TPRs, which Eugenio submitted after the reconciliation meeting, "smacked too much of an afterthought," and speculated that Alfredo Eugenio, as a former route manager, could have had easy access to blank TPR forms.

• Crediting of TPRs: Whether the amounts in the four trade provisional receipts totaling P80,560.00 should be credited in favor of the petitioners.
• Admissibility of Hearsay Evidence: Whether the testimony of Daniel Azurin regarding Estrada's alleged denial of his signatures on the TPRs, and Estrada's affidavit dated February 5, 1982, were admissible as evidence against the petitioners.
• Sufficiency of Respondent's Evidence: Whether private respondent discharged its burden of proof to establish the petitioners' alleged indebtedness.

• Crediting of TPRs: Yes. The TPRs presented by petitioners are disputably presumed as evidentiary of payments made on account, and private respondent failed to rebut the presumptions in favor of valid payment by petitioners.
• Admissibility of Hearsay Evidence: No. Azurin's testimony regarding Estrada's denial was hearsay and inadmissible, having no probative value whatsoever; the alleged affidavit of Estrada was likewise barred as hearsay evidence.
• Sufficiency of Respondent's Evidence: No. Private respondent dismally failed to comply with the pertinent rules for the admission of evidence and did not discharge the burden of preponderant proof necessary to prevail in the case.

• Crediting of TPRs: The Court applied the disputable presumptions under Section 3(p) and (q), Rule 131 of the Rules of Court that private transactions have been fair and regular and that the ordinary course of business has been followed. 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 contended for, and to shift the burden of evidence to the adverse party. Private respondent having failed to rebut these presumptions, they continued to stand in favor of petitioners. Even assuming the cashier never received the amounts reflected in the TPRs, private respondent failed to prove that Estrada, its duly authorized agent with respect to petitioners, did not receive those amounts. Under Article 1240 of the Civil Code, 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. Under Article 1900, 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. Atty. Rosario himself admitted that "it is the responsibility of the collector to turn over the collection."

• Admissibility of Hearsay Evidence: The Court applied Section 36, Rule 130 of the Rules of Court, which provides that a witness can testify only to those facts which he knows of his personal knowledge. Estrada failed to appear as a witness at trial; only Azurin testified that during the investigation, Estrada supposedly denied having signed the TPRs. Azurin's testimony could not constitute legal proof as to the truth of Estrada's denial, and it was not admissible in evidence, petitioners' counsel having seasonably objected. Even if not objected to, such hearsay evidence has no probative value whatsoever. The exception under Section 47, Rule 130 (testimony of a witness deceased or unable to testify given in a former case or proceeding) did not apply because: (1) the investigation was neither a judicial trial nor an administrative hearing under statutory regulations and safeguards, but merely an inter-office interview through an ad hoc arrangement; (2) there was no opportunity for Eugenio to object or cross-examine Estrada; and (3) the stenographer was not presented to authenticate the stenographic notes. The alleged affidavit of Estrada was likewise barred as hearsay, and its dubiety was underscored by the fact that it was executed more than two months after the investigation, "presumably for curative purposes as it were." The Court also noted that no document containing a specimen of Estrada's signature was ever presented for comparison, and the signatures appearing on the stenographic notes were not identified.

• Sufficiency of Respondent's Evidence: The Court rejected the Court of Appeals' observation regarding the impossibility of deliveries, noting that a statement of overdue amounts is only a summary of the account reflecting the balance due, unlike a statement of account which reflects the day-to-day movement of an account. The Court also rejected the trial court's comment that the TPRs "smacked too much of an afterthought," noting that Eugenio explained—and this was not disputed—that his daughter Nanette had eloped with the TPRs and they were only retrieved in November 1981. The Court found that respondent corporation's default in complying with evidentiary rules "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."

• Hearsay Evidence Rule — Under Section 36, Rule 130 of the Rules of Court, a witness can testify only to those facts which he knows of his personal knowledge, derived from his own perception, except as otherwise provided in the Rules. The Court applied this rule to exclude Azurin's testimony regarding Estrada's alleged denial of signatures on the TPRs, holding that such testimony could not constitute legal proof as to the truth of Estrada's denial and had no probative value whatsoever.

• Exception to Hearsay Rule (Former Testimony) — Under Section 47, Rule 130, 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. The Court held this exception did not apply because the investigation was merely an inter-office interview, not a judicial trial or administrative hearing; there was no opportunity for Eugenio to cross-examine Estrada; and the stenographic notes were unauthenticated.

• Disputable Presumptions — Under Section 3(p) and (q), Rule 131 of the Rules of Court, private transactions are presumed to have been fair and regular, and the ordinary course of business is presumed to have been followed. The role of presumptions is to relieve the party enjoying them of the evidential burden to prove the proposition contended for, and to shift the burden of evidence to the adverse party. The Court applied these presumptions in favor of the petitioners' TPRs as evidence of payment, which the respondent failed to rebut.

• Payment to Authorized Agent — Under Articles 1240 and 1900 of the Civil Code, 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; 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. The Court applied this doctrine to hold that payment to Estrada, the company's sales representative, extinguished the petitioners' obligations.

• "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." — This passage states the core hearsay rule applied in the case and establishes that hearsay evidence, even if admitted, carries no probative weight.

• "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." — This passage articulates the application of disputable presumptions in favor of the petitioners' claim of payment, which the respondent failed to rebut.

• "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." — This passage highlights the Court's criticism of the respondent's failure to present its own employee as a witness despite having the resources to do so.

• "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." — This passage states the ultimate conclusion that the respondent failed to meet its burden of proof.

• People vs. Valero, L-45283-84, March 19, 1982, 112 SCRA 661 — Cited for the proposition that hearsay evidence has no probative value whatsoever.
• People vs. Ola, L-47147, July 3, 1987, 152 SCRA 1 — Cited regarding the inadmissibility of prior testimony where the opportunity for cross-examination did not exist.
• Paa vs. Chan, L-25945, October 31, 1967, 21 SCRA 753 — Cited for the rule that affidavits are barred as hearsay evidence.
• People vs. Alacar, et al., 211 SCRA 580 — Cited in support of the rule that affidavits are hearsay.
• People vs. Brioso, et al., L-28482, January 30, 1971, 37 SCRA 336 — Cited for the proposition that affidavits are generally not prepared by affiants themselves but by another who uses his own language, which may omit or misunderstand the affiant's statements.

• Section 36, Rule 130, Rules of Court — The hearsay evidence rule; a witness can testify only to those facts which he knows of his personal knowledge. Applied to exclude Azurin's testimony regarding Estrada's alleged denial.
• Section 47, Rule 130, Rules of Court — The exception to the hearsay rule for testimony of a witness deceased or unable to testify, given in a former case or proceeding. Held inapplicable because the investigation was not a judicial or administrative proceeding and there was no opportunity for cross-examination.
• Section 22, Rule 132, Rules of Court — Authentication of handwriting by comparison with writings admitted or treated as genuine. Applied to note that no specimen of Estrada's signature was ever presented for comparison.
• Section 3(p) and (q), Rule 131, Rules of Court — Disputable presumptions that private transactions have been fair and regular and that the ordinary course of business has been followed. Applied in favor of petitioners' TPRs as evidence of payment.
• Article 1240, Civil Code — 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. Applied to hold that payment to Estrada, the authorized agent, extinguished petitioners' obligations.
• Article 1900, Civil Code — 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. Applied to bind the respondent to payments made to its agent.
• Section 14, Article VIII, 1987 Constitution — Requires decisions of courts to clearly and distinctly state the facts and the law on which they are based. The basis for the Court of Appeals' first nullification of the trial court's decision.

Narvasa, C.J. and Puno, J., concurred. Mendoza, J., took no part.