Title
El Oro Engraver Corp. vs. Court of Appeals
Case
G.R. No. 125267
Decision Date
Feb 18, 2008
El Oro failed to pay P681,316.70 for construction supplies from Everett. Court ruled El Oro’s 4-year silence and lack of payment proof constituted admission of liability, affirming full payment plus interest.
liability
payment
goods received
A

Case Summary (G.R. No. 125267)

Factual Background

Everett Construction Supply, Inc. sold construction supplies to El Oro Engraver Corporation in separate transactions covered by quadruplicate Sales Invoices, with deliveries totaling P681,316.70 for the periods stated. Company practice, as testified by respondent’s treasurer, was to have delivery personnel bring the original and duplicate copies of the Sales Invoice to the customer for signature, leave the duplicate with the customer, and retain the original. When respondent later made collections it prepared a Statement of Account and sent it to the customer together with original copies of Sales Invoices for past deliveries; invoices not yet due remained with respondent. On February 20, 1981 respondent sent petitioner Statements of Account, appending original Sales Invoices for deliveries through January 15, 1981; petitioner did not object or pay. After a demand letter dated March 12, 1985 went unanswered, respondent sued for collection.

Trial Court Proceedings

The Regional Trial Court ruled in favor of respondent but awarded only P37,055.20 plus twelve percent interest from filing, litigation expenses of P3,016.00, and attorneys’ fees of P10,000.00, and dismissed petitioner’s counterclaim. The trial court placed on respondent the burden of proving a valid debt and accepted only those Sales Invoices in respondent’s possession that bore petitioner’s representatives’ signatures. The trial court did not accept respondent’s explanation of its billing practice and found that where original invoices were already with petitioner a presumption of payment arose; on that basis the trial court concluded that petitioner had not received some goods and that deliveries might have gone to others.

Court of Appeals Ruling

The Court of Appeals modified the trial court’s award and held that the merchandise had been sold and delivered to petitioner notwithstanding the absence of signed copies for some invoices before the trial court. The appellate court relied on respondent’s established billing and delivery practice, the attached original invoices to the Statements of Account, and petitioner’s failure to object to the Statements of Account for more than four years. The Court of Appeals held that petitioner’s prolonged silence and failure to respond to the demand letter amounted to an admission of liability and ordered respondent to recover the principal amount of P681,316.70 with interest at twelve percent per annum from February 20, 1981 until paid, together with P20,000.00 as attorneys’ fees. The Court of Appeals denied petitioner’s motion for reconsideration on June 13, 1996.

Issues Presented

The sole contested issue before this Court was whether the Court of Appeals committed reversible error in modifying the trial court’s Decision and increasing petitioner’s liability to respondent.

Ruling of the Supreme Court

This Court denied the petition and affirmed the Court of Appeals’ February 29, 1996 Decision and June 13, 1996 Resolution. The Court held that the findings of fact by the Court of Appeals merited deference and that, on the record, the appellate court’s factual conclusions were more convincing than those of the trial court. Costs were assessed against petitioner.

Legal Basis and Reasoning

The Court accepted the Court of Appeals’ factual finding that respondent followed a uniform business practice of issuing four copies of Sales Invoices, delivering the original and duplicate for signature, leaving the duplicate with the customer, and retaining the original when not yet due. The Court found it therefore impossible for respondent to produce originals or duplicate invoices bearing petitioner’s representative’s signatures at trial because those documents were in petitioner’s possession. The Court emphasized that Sales Invoices are evidence of receipt of goods and not evidence of payment, and that an official receipt is the best evidence of payment, a proof which petitioner did not produce. The Court also noted the express admonition on the Statements of Account urging prompt objection: “IMPORTANT: If this statement does not agree with your record, please notify us at once.” Petitioner’s silence for the four-year interval and its failure to answer the demand letter were held to be uncharacteristic of a party who was not liable and tantamount to admission of the entries in the Statements of Account. The Court applied the doctrine of estoppel in pais as articulated in prior decisions, finding petitioner’s silence and inaction to have induced respondent to believe the account was correct and to act accordingly, so that petitioner should not be permitted to deny the accounts. The Court relied on testimonial proof, including the treasurer’s trial testimony and the handwritten notation “recd original” by petitioner’s representative on the Statements of Account, and it cited precedent to support the application of estoppel and the binding nature of the appellate factual findings (including Roblett Industrial Construction Corp. v. Court of Appeals

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