Case Summary (G.R. No. 116682)
Factual Background
In 1985 Contractors Equipment Corporation (CEC) leased construction equipment to Roblett Industrial Construction Corporation (RICC). CEC presented a statement of account in the amount of P376,350.18 covering the period March 28, 1985 to July 12, 1985. Deductions of P3,440.80 and payments of P30,000.00 left a balance of P342,909.38. On 19 December 1985 RICC, through its Assistant Vice President for Finance Candelario S. Aller Jr., signed an Agreement with CEC that confirmed the account and reflected an offset of construction materials valued at P115,000.00, reducing the balance to P227,909.38. On 18 December 1985 RICC had delivered postdated checks totaling P10,000.00 which were dishonored when deposited, causing CEC to debit that amount and increase the claimed balance to P237,909.38. CEC sent a letter of demand on 24 July 1986 seeking payment by 31 July 1986. RICC requested thirty days to secure funds and later contended that it had in fact overpaid by approximately P12,000.00 based on Equipment Daily Time Reports for May 2 to June 14, 1985 which, at P540.00 per hour for 191 hours, yielded P103,140.00 as the correct rental obligation. RICC also asserted that the Agreement lacked Board approval and that Aller Jr. lacked authority to bind the corporation.
Trial Court Proceedings
CEC sued RICC for sum of money and the Regional Trial Court, Makati, rendered judgment on 19 December 1990 in favor of CEC. The trial court ordered RICC to pay P237,909.38 with legal interest from 31 July 1986 until full payment, P2,000.00 litigation expenses, twenty percent attorney’s fees, and costs of suit. The trial court found the Agreement valid and reflective of the parties’ true intention and held that RICC’s answer, not being under oath, deemed admission of the document’s genuineness under Section 8, Rule 8, Rules of Court. The court rejected RICC’s claim of full payment or overpayment, finding RICC’s daily time reports incomplete because they covered only May 2 to June 14, 1985, whereas CEC’s exhibits covered the entire lease period from March 28 to July 12, 1985.
Court of Appeals Disposition
On 29 July 1994 the Court of Appeals affirmed the trial court decision. The appellate court agreed that RICC had limited its assignment of error in the proceedings below to the question of full payment or overpayment and had not properly challenged the Agreement’s validity. The Court of Appeals upheld the trial court’s factual findings and application of the doctrine of estoppel in pais where RICC received the statement of account and the demand without timely protest.
Issues on Appeal to the Supreme Court
RICC presented two principal grounds in its petition: first, that the Agreement was unenforceable because Aller Jr. lacked authority to execute it on behalf of the corporation; and second, that RICC had fully paid, and in fact overpaid by about P12,000.00, its obligation to CEC on the basis of the daily time reports.
Parties’ Contentions
Petitioner argued that the Agreement was an unauthorized corporate act and therefore unenforceable, and that documentary proof in Exhibits “2” through “2-Z” established usage of only 191 hours, yielding a rental liability of P103,140.00 which, after the P115,000.00 offset, resulted in overpayment. Respondent CEC maintained that its statement of account for P376,350.18 covering March 28 to July 12, 1985 was received by RICC without protest, that the Agreement reflected the true transactions between the parties, and that RICC’s evidence was incomplete and limited to a portion of the lease period.
Supreme Court Ruling
The Supreme Court denied the petition and affirmed the decisions of the Court of Appeals and the Regional Trial Court. The Court held that RICC, having limited its assignment of error before the Court of Appeals to the issue of full payment or overpayment, could not thereafter assail the validity of the Agreement. The Court sustained the factual findings that RICC’s daily time reports were incomplete as they did not cover the entire lease period reflected in CEC’s statement of account, and that RICC’s conduct — receiving the statement and failing to object and asking for time to pay — gave rise to estoppel in pais precluding denial of the indebtedness.
Legal Basis and Reasoning
The Court applied Section 8, Rule 8, Rules of Court to treat RICC’s answer, which was not under oath, as an admission of the genuineness and due execution of the Agreement. The Court invoked Art. 1431, Civil Code on estoppel and Art. 1308, New Civil C
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Case Syllabus (G.R. No. 116682)
Parties and Procedural Posture
- Roblett Industrial Construction Corporation filed a petition for review from the decision of the Court of Appeals affirming a Regional Trial Court judgment.
- Contractors Equipment Corporation instituted the original action for a sum of money before the Regional Trial Court of Makati.
- The Regional Trial Court rendered judgment on 19 December 1990 in favor of Contractors Equipment Corporation.
- The Court of Appeals affirmed the trial court in a decision dated 29 July 1994.
- The Supreme Court denied the petition and affirmed the decisions below.
Key Factual Allegations
- Contractors Equipment Corporation alleged that in 1985 it leased various construction equipment to Roblett Industrial Construction Corporation resulting in unpaid accounts claimed at P342,909.38.
- On 19 December 1985 Roblett Industrial Construction Corporation, through its Assistant Vice President for Finance Candelario S. Aller Jr., executed an Agreement confirming the account and reflecting an offset of construction materials worth P115,000.00, reducing the balance to P227,909.38.
- On 18 December 1985 Roblett Industrial Construction Corporation delivered postdated checks totalling P10,000.00 that were later dishonored and were debited back to its account, increasing the balance to P237,909.38.
- On 24 July 1986 Contractors Equipment Corporation sent a demand letter for P237,909.38 and sought settlement on or before 31 July 1986, to which Roblett Industrial Construction Corporation requested thirty days to obtain funds.
- Roblett Industrial Construction Corporation contended that it overpaid by approximately P12,000.00 based on Equipment Daily Time Reports for May 2 to June 14, 1985 that showed 191 hours and a rental obligation of P103,140.00.
- Roblett Industrial Construction Corporation further alleged that the Agreement was not approved by its Board and that Aller Jr. lacked authority to sign.
- Contractors Equipment Corporation produced a statement of account covering March 28 to July 12, 1985 in the amount of P376,350.18, from which deductions produced the P342,909.38 figure reflected in the Agreement.
Issues Presented
- Whether the Agreement executed on 19 December 1985 was unenforceable as an unauthorized contract because Aller Jr. purportedly lacked authority and the Board did not approve it.
- Whether Roblett Industrial Construction Corporation had fully paid its obligation and even overpaid Contractors Equipment Corporation by approximately P12,000.00.
Contentions of the Parties
- Roblett Industrial Construction Corporation argued that the Agreement was unauthorized and that the Equipment Daily Time Reports established a rental obligation of only P103,140.00, producing an overpayment after offset.
- Contractors Equipment Corporation argued that the Agreement reflected the true intention of the parties, that the larger statement of account was accurate, and that Roblett Industrial Construction Corporation received and did not dispute the account.
- The trial court relied on the Agreement, statements of account, and the absence of timely