G.R. No. 197559 - Bernardez, Jr. vs. City Government of Baguio

Yutivo Sons Hardware Co. (plaintiff/appellee) extended credit to Tomas Confesor (defendant/appellant) for materials used in the construction of a house.
The subject property was located at the corner of Arkansas and Florida Streets in Ermita, City of Manila.
Construction materials, valued at ₱7,151.18, were acquired on credit from the plaintiff’s store.

Due to insufficient funds for construction, the defendant sought assistance from architect Fernando Ocampo, who had prepared the construction plans and had agreed to supervise the work.
Architect Ocampo introduced Confesor to Yutivo Sons Hardware Co., thereby facilitating a credit line of up to ₱2,000 for acquisition of materials.
The store’s manager, Yu Khe Tay, approved the credit based on the appellant’s public standing, promptly instructing assistants to deliver materials on credit.

Over time, construction materials totaling ₱7,151.18 were delivered to the construction site on credit, while the defendant carefully ensured that his pending accounts never exceeded the ₱2,000 limit.
Orders for materials were placed predominantly by telephone, either directly by the defendant or by architect Ocampo acting on his behalf.
From February 1929 to July 1931, Yutivo Sons Hardware Co. regularly sent monthly account statements to the defendant, who in turn made timely payments:

During 1929, payments ranged from ₱200 to ₱1,711.38, accumulating to a total of ₱4,085.93.
In 1930, payments varied between ₱12.35 and ₱500, amounting to ₱1,514.55.
An additional payment of ₱150 was made on July 2, 1931.

Overall, the defendant’s payments totaled ₱5,750.48, leaving an outstanding balance of ₱1,400.70 as claimed by the plaintiff.

Testimonies from architect Fernando Ocampo, the hardware store’s managers (Yu Khe Tay and Yu Tiam), and contractor Candido Liwanag.
Exhibit 1, a purported contract allegedly executed by the defendant and architect Ocampo.

The defendant’s own testimony was insufficient compared to the corroborative accounts of other witnesses and documentary evidence.
He failed to produce the supplement to Exhibit 1—which would have been adverse to him under Section 334, Paragraph 5, Act No. 190—thereby undermining his contention.

An arrangement whereby architect Ocampo would construct the house for a lump sum of ₱45,000, which purportedly included a contract supplement with contractor Candido Liwanag.
A clause (paragraph 7) specifying an additional fee of ₱3,000 payable to Ocampo for his services.

The document was prepared solely at the appellant’s request to facilitate a loan application for ₱45,000.
No comprehensive contract for the construction of the house was erroneously formalized; rather, the agreement was verbal, limited to the preparation of plans and supervision.

The inclusion of the service fee clause in Exhibit 1 corroborated that the construction materials were to be procured and paid for by the defendant himself.

Whether a bona fide business transaction existed between Yutivo Sons Hardware Co. and Tomas Confesor based on the ordering and delivery of materials on credit.
Whether the defendant, through his consistent payments and orders, recognized the authority and terms set by the hardware store.

Whether the regular issuance of monthly statements and the defendant’s adherence to a ₱2,000 credit limit substantiated a clear creditor-debtor relationship.
If the transactions and payments, as recorded, reflected an ongoing and acknowledged agreement between the parties.

Whether Exhibit 1, despite its contradictory elements (i.e., the service fee clause), could be regarded as evidence of a construction contract that included provision of materials.
If the defendant’s failure to produce the supplement to the contract should lead to an adverse inference against him under the applicable evidentiary rule.

Whether the lower court correctly held that the defendant’s pattern of orders and payments indicated his acceptance of the authority of those ordering the materials on his behalf.
If the lower court erred in ascribing to the defendant either a different business relationship or a misinterpretation of his credit account.