G.R. No. 4816 - Gonzalez y Quiroz vs. Tan-Guinlay

The case stems from earlier related litigations between Quiros and Tan-Guinlay (Quiros vs. Tan-Guinlay, 5 Phil. Rep., 675; Palanca Tan-Guinlay vs. Quiros, 10 Phil. Rep., 360).
On April 18, 1906, the Court of First Instance of Manila rendered a judgment in favor of the plaintiff (Quiros) against Tan-Guinlay for 7,981.80 pesos, with interest accruing from January 1, 1894.

The plaintiff, Francisco Gonzalez y Quiros, based his claim on the assertion that Germann & Co., Limited, owed Tan-Guinlay an amount of 7,741.17 pesos, in addition to interest from January 1, 1894.
The underlying strategy was to have the alleged debt of Germann & Co. credited in payment of the judgment obtained against Tan-Guinlay.

The plaintiff’s theory hinges on an alleged transaction: Tan-Guinlay paid 15,100 pesos, allegedly to Germann & Co., from which a balance of 7,741.17 pesos remained after deducting a previously admitted credit of 7,358.83 pesos (an amount that Tan-Guinlay was shown to owe Germann & Co.).
Evidence presented included:

The books and records of Germann & Co. from 1893, which instead showed that Tan-Guinlay owed the company 7,358.83 pesos—not the reverse.
Seized documents from Tan-Guinlay’s store in Binondo, Manila, comprising seven papers (two promissory notes and five bills of exchange), which were part of the attachment order executed during the earlier suit initiated by Quiros on December 5, 1893.
Among these documents was a bill of exchange (example No. 4148) drawn at Calibo on September 7, 1893, for 5,150 pesos, indorsed with names including Tan-Guinlay and bearing a rubber stamp of Germann & Co., Manila.
Two promissory notes signed by third parties, yet also bearing endorsements of Tan-Guinlay and references to Germann & Co.

The documents were initially in Tan-Guinlay’s possession, later delivered to Germann & Co., and subsequently returned to Tan-Guinlay.
There were no entries in the books of Germann & Co. indicating any receipt of cash or collection on account of these instruments.

The evidence suggests that the bills were never paid by the primary obligors (such as Tan-Tuco, the party bound by the bills) and remained with Tan-Guinlay as an indorser.
Expert bookkeepers appointed in a separate criminal action confirmed these factual observations, yet their opinions were merely advisory and relied on secondary evidence from the books, not direct testimony.

The plaintiff argued that Germann & Co. had received a cash payment totaling 15,100 pesos for the instruments, and that after applying a credit of 7,358.83 pesos in satisfaction of Tan-Guinlay’s debt, a balance of 7,741.17 pesos should be recognized as still owing.
The plaintiff also relied heavily on expert reports from October 19, 1896, and March 22, 1898, which opined on the liability of Germann & Co. concerning the notes and bills.
However, these expert reports:

Offered legal opinion rather than evidentiary proof.
Arose from a proceeding in which Germann & Co. was not a party.
Were limited by their reliance solely on the accounting records, which did not support a receipt of 15,100 pesos.

Whether, based on the evidence provided, Germann & Co., Limited, in 1893, actually owed Tan-Guinlay the alleged net sum of 7,741.17 pesos (deriving from an initial 15,100 pesos less a credit of 7,358.83 pesos).

Whether the books and records of Germann & Co. sufficiently support the plaintiff’s claim of a cash receipt amounting to 15,100 pesos.
Whether the expert opinions, recounting the alleged payment and credit arrangements, can be deemed as establishing a factual basis for the claim, given they are not supported by direct testimony.

Whether the procedure adopted by the plaintiff—seeking to apply an alleged payment from one party (Germann & Co.) to satisfy a judgment against another (Tan-Guinlay)—is legally tenable under the rules of civil procedure.