Case Summary (G.R. No. 96202)
Factual Background
Petitioner contracted with government agencies to perform road restoration and asphalting works and engaged Socor Construction Corporation under two written agreements: a sub‑contract dated April 26, 1985 (Exh. A) for supply, laying and compaction of Items 310 and 302, and a supplier agreement dated July 23, 1985 (Exh. B) for delivery of the same items to specified projects. Both contracts contemplated payment based on actual weight in metric tons delivered, laid, compacted and accepted by the Ministry (MPWH), and contemplated submission of delivery documentation. On May 28, 1986 Socor submitted a revised computation (Exh. C) claiming P299,717.75 as a balance due; petitioner refused payment asserting that Socor had not submitted delivery receipts showing actual weights and government acceptance, that some material (bituminous tack coat) was defective (60% water), and that Socor had not issued receipts for prior payments.
Procedural History
Socor filed suit in the Regional Trial Court (RTC) of Cebu City on September 22, 1986 to recover P299,717.75 plus interest. At trial Socor presented two witnesses (its vice‑president and bookkeeper); petitioner testified on her own behalf. The RTC, by decision dated June 22, 1988, ordered petitioner to pay P299,717.75 with interest at 12% per annum from the filing of the complaint, attorney’s fees of P10,000, filing fees and costs. The Court of Appeals affirmed the RTC ruling. The appeal to the Supreme Court followed; the Supreme Court’s judgment was rendered on April 13, 1999, applying the 1987 Constitution as the governing charter.
Issues Presented
- Whether entries in Socor’s Book of Collectible Accounts (Exh. K) were admissible as business records under Rule 130 A37 (entries in the course of business) despite the presence and testimony of the bookkeeper who made those entries.
- Whether Exh. K could be admitted as a memorandum to refresh the memory under Rule 132 A10.
- Whether other documentary evidence sufficed to establish Socor’s claim despite deficiencies in the Book of Collectible Accounts.
- Whether interest could be awarded despite the absence of an express contractual stipulation.
Legal Standard for Admission of Business Records (Rule 130 A37)
Admissibility of entries in the course of business as prima facie evidence requires satisfaction of the following conditions: (1) the person who made the entry must be dead, outside the Philippines, or unable to testify; (2) entries were made at or near the time of the transaction to which they refer; (3) the entrant was in a position to know the facts stated; (4) entries were made in the performance of duty or professional capacity; and (5) entries were made in the ordinary or regular course of business. These requisites are strictly applied because business records are an exception to the hearsay rule.
Application of the Business‑Record Rule to the Facts
The Court found that Exh. K failed to satisfy at least two essential requisites. First, the person who made the entries, Dolores Aday (bookkeeper), was available and testified at trial; thus the necessity ground for admitting business records without the maker’s testimony was absent. Second, Aday expressly disclaimed personal knowledge of the underlying facts reflected in the entries: she testified that she recorded amounts based on bills submitted to her, but had no direct knowledge whether deliveries in the amounts and on the dates shown were actually made — that knowledge rested with the company’s project engineer. Where the preparer of the entry lacks personal knowledge and the informer (here, the project engineer) is available to testify, the entry cannot be admitted as an exception to the hearsay rule. The Court relied on established authority that a business entry prepared by a person who did not personally observe or know the transaction is not admissible without the testimony of the person who supplied the information.
On Use of Exh. K as a Memorandum to Refresh Memory (Rule 132 A10)
Socor sought alternatively to use Exh. K as a memorandum to refresh the memory of Aday. The Court reiterated that under Rule 132 A10 a writing used to refresh memory is not itself substantive evidence: it may be used to awaken a witness’s recollection, and the witness must then testify from memory; the writing is not admitted as independent proof unless the witness can swear that the writing correctly stated the transaction when made. Moreover, even if the memorandum serves to refresh recollection, it is to be received with caution and does not become corroborative evidence when a witness lacks independent recollection. Because Aday had no personal knowledge of the transactions and the entries merely reflected bills submitted to her, Exh. K could not serve as substantive proof under the refreshing‑memory rule.
Other Documentary and Circumstantial Evidence
Despite excluding Exh. K as substantive business records, the Court found that Socor presented other competent evidence sufficient to prove its claim. The record included: the two written contracts (Exhs. A and B), Socor’s revised computation (Exh. C), various bills under RDC’s account (Exhs. L, M, N, O), Socor’s statements of work (Exh. D‑1), affidavits by petitioner referencing payments or absence of unsettled obligations (Exhs. D and E), premiums and filing receipts (Exhs. F–G‑3), and official certifications from MPWH, the city engineer and the city treasurer indicating RDC had no outstanding collectables (Exhs. H, I, J). The RTC found the billings were presented and duly received by petitioner’s authorized representatives and that petitioner did not promptly object to the billings or allege the presence of other suppliers for the projects. The lack of timely protest, together with the documentary indicia of deliveries and certifications, led the court to apply Article 1235 of the
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Procedural Posture and Relief Sought
- Petition for review on certiorari to the Supreme Court from a Court of Appeals decision affirming the Regional Trial Court (RTC) of Cebu City.
- RTC judgment (per Judge Juanito A. Bernad) ordered petitioner to pay Socor Construction Corporation (private respondent) P299,717.75 plus interest at 12% per annum from September 22, 1986 until fully paid; P10,000 for attorney’s fees; P552.86 for filing fees; and costs of suit.
- Private respondent had originally prayed for an alias writ of preliminary attachment but later withdrew that prayer; the writ incident was therefore moot and academic.
- Supreme Court ruling: the decision of the Court of Appeals was affirmed.
Parties and Representation
- Petitioner: Rosella D. Canque, doing business as RDC Construction (contractor).
- Private respondent: Socor Construction Corporation (supplier/sub-contractor).
- Appellate respondent: The Court of Appeals (respondent in the certiorari petition).
- Decision authored by Justice Mendoza; concurred in by Justices Bellosillo (Chairman), Puno, Quisumbing, and Buena.
Underlying Government Projects and Contracts
- Petitioner had government contracts for:
- Restoration of Cebu-Toledo wharf road;
- Asphalting of Lutopan access road; and
- Asphalting of Babag road in Lapulapu City.
- Two agreements between petitioner (Contractor/RDC) and private respondent (Supplier/Sub-Contractor):
- Exhibit A (Contract dated April 26, 1985): Sub-Contractor (Socor) to perform Supply, Lay and Compact Item 310 and Item 302; Contractor to provide labor and materials; payment terms specified at P1,000.00 per metric ton for Item 310 and P8,000.00 per metric ton for Item 302; payment based on actual weight in metric tons delivered, laid, compacted and accepted by the MPWH; construction to commence upon acceptance of the offer.
- Exhibit B (Contract dated July 23, 1985): Supplier (Socor) to deliver Item 310 and Item 302 to the DAS Access Road and Front Gate of ACMDC, Toledo City; Contractor to notify Supplier two days before delivery; payment based on actual weight in metric tons delivered and accepted by MPWH, payable fifteen days after submission of the bill; delivery to commence upon acceptance of the offer.
Billing, Dispute and Claim
- On May 28, 1986 private respondent sent petitioner a revised bill (Exhibit C) for P299,717.75 plus interest at 3% per month, representing the balance of petitioner’s total account of P2,098,400.25 for materials delivered and services rendered under the two contracts.
- Petitioner refused to pay the billed amount, claiming:
- Private respondent failed to submit delivery receipts showing actual weight in metric tons and acceptance by the government;
- Deliveries were not signed and acknowledged by petitioner’s checkers;
- The bituminous tack coat allegedly consisted of 60% water;
- Petitioner had already paid about P1,400,000 without receipt issuance by private respondent;
- There was no agreement to charge 3% per month interest.
- On September 22, 1986, private respondent filed suit in the RTC to recover P299,717.75 plus interest at 3% per month.
Pleadings and Trial Presentation
- Petitioner admitted existence of contracts and receipt of Exhibit C billing in her answer but disputed correctness and later amended her answer to deny entry into sub-contracts.
- Private respondent presented:
- Witnesses: Vice-President Sofia O. Sanchez and bookkeeper Dolores Aday.
- Documentary evidence including numerous exhibits (see section “Exhibits and Documentary Evidence”).
- Petitioner’s defense consisted primarily of her lone testimony.
- Dolores Aday, who made the book entries (Exh. K), testified but admitted she had no personal knowledge of the underlying facts stated in the entries; she made entries based on bills given to her, and deliveries were supervised by the company’s project engineer.
Exhibits and Documentary Evidence Offered by Private Respondent
- Exhibit A: Contract Agreement dated April 26, 1985 (Toledo wharf and Babag Road projects).
- Exhibit B: Contract Agreement dated July 23, 1985 (DAS Asphalting Project).
- Exhibit C: Revised computation of billings submitted May 28, 1986.
- Exhibit D: Affidavit by petitioner asserting no more pending or unsettled obligations as to Toledo Wharf Road.
- Exhibit D-1: Statement of Work Accomplished on Road Restoration of Cebu-Toledo wharf project.
- Exhibit E: Affidavit by petitioner attesting complete payment of laborers on Babag, Lapulapu City project.
- Exhibits F, G, G-1, G-2, G-3: Premiums paid by private respondent with receipts for filing fees.
- Exhibits H, I, J: Certifications by OIC, MPWH Regional Office; Lapulapu City, City Engineer; Toledo City Treasurer’s Office proving RDC Construction had no more collectibles with said government offices in connection with its projects.
- Exhibit K: Page 17 of Socor’s Book of Collectible Accounts (entries of billings and payments).
- Exhibit L: Bill No. 057 under RDC account, P153,382.75, dated August 24, 1985.
- Exhibit M: Bill No. 069 (RDC account), P1,701,795.00, dated November 20, 1985.
- Exhibit N: Bill No. 071 (RDC account), P47,250.00, dated November 22, 1985.
- Exhibit O: Bill No. 079 (RDC account), P7,290.00, dated December 6, 1985.
Trial Court Findings and Rationale
- RTC found Exhibit K (Book of Collectible Accounts) credible and trustworthy in view of entries made in the course of business and no proof demonstrating irregularity of such entries.
- RTC concluded private respondent supplied Item 302 (Bituminous Prime Coat), Item 303 (Bituminous Tack Coat) and Item 310 (Bituminous Concrete Surface Course) for the thre