Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 96202 April 13, 1999

ROSELLA D. CANQUE, petitioner,
vs.
THE COURT OF APPEALS and SOCOR CONSTRUCTION CORPORATION, respondents.

MENDOZA, J

This petition for review on certiorari seeks a reversal of the decision   of the Court of Appeals
1

affirming the judgment   of the Regional Trial Court of Cebu City ordering petitioner —
2

. . . to pay [private respondent] the principal sum of Two Hundred Ninety Nine
Thousand Seven Hundred Seventeen Pesos and Seventy Five Centavos
(P299,717.75) plus interest thereon at 12% per annum from September 22, 1986,
the date of the filing of the complaint until fully paid; to pay [private respondent] the
further sum of Ten Thousand Pesos (P10,000.00) for reasonable attorney's fees; to
pay the sum of Five Hundred Fifty Two Pesos and Eighty Six Centavos (P552.86) for
filing fees and to pay the costs of suit. Since [private respondent] withdrew its prayer
for an alias writ of preliminary attachment vis-a-vis the [petitioner's] counterbound,
the incident on the alias writ of preliminary attachment has become moot and
academic.

The facts are as follows:

Petitioner Rosella D. Canque is a contractor doing business under the name and style RDC
Construction. At the time material to this case, she had contracts with the government for (a) the
restoration of Cebu-Toledo wharf road; (b) the asphalting of Lutopan access road; and (c) the
asphalting of Babag road in Lapulapu City.   In connection with these projects, petitioner entered into
3

two contracts with private respondent Socor Construction Corporation. The first contract (Exh.
A),   dated April 26, 1985, provided:
4

The Sub-Contractor (SOCOR Corporation) and the Contractor (RDC Construction)

for the consideration hereinafter named, hereby agree as follows:

1. SCOPE OF WORK:

a. The Sub-Contractor agrees to

perform and execute the Supply, Lay
and Compact Item 310 and Item 302;
 b. That Contractor shall provide the
labor and materials needed to
complete the project;

c. That the Contractor agrees to pay

the Sub-Contractor the price of One
Thousand Pesos only (P1,000.00) per
Metric Ton of Item 310 and Eight
Thousand Only (P8,000.00) per Metric
Ton of Item 302.

d. That the Contractor shall pay the

Sub-Contractor the volume of the
supplied Item based on the actual
weight in Metric Tons delivered, laid
and compacted and accepted by the
MPWH;

e. The construction will commence

upon the acceptance of the offer.

The second contract (Exh. B),   dated July 23, 1985, stated:
5

The Supplier (SOCOR Construction) and the Contractor (RDC Construction) for the
consideration hereinafter named, hereby agree as follows:

1. SCOPE OF WORK:

a. The Supplier agrees to perform and

execute the delivery of Item 310 and
Item 302 to the jobsite for the
Asphalting of DAS Access Road and
the Front Gate of ACMDC, Toledo
City;

b. That the Contractor should inform

or give notice to the Supplier two (2)
days before the delivery of such items;

c. That the Contractor shall pay the

Supplier the volume of the supplied
items on the actual weight in metric
tons delivered and accepted by the
MPWH fifteen (15) days after the
submission of the bill;

d. The delivery will commence upon

the acceptance of the offer.

On May 28, 1986, private respondent sent petitioner a bill (Exh. C), containing a revised
computation,   for P299,717.75, plus interest at rate of 3% a month, representing the balance of
6
petitioner's total account of P2,098,400.25 for materials delivered and services rendered by private
respondent under the two contracts. However, petitioner refused to pay the amount, claiming that
private respondent failed to submit the delivery receipts showing the actual weight in metric tons of
the items delivered and the acceptance thereof by the government.  7

Hence, on September 22, 1986, private respondent brought suit in the Regional Trial Court of Cebu
to recover from petitioner the sum of P299,717.75, plus interest at the rate of 3% a month.

In her answer, petitioner admitted the existence of the contracts with private respondent as well as
receipt of the billing (Exh. C), dated May 28, 1986. However, she disputed the correctness of the bill
—

. . . considering that the deliveries of [private respondent] were not signed and
acknowledged by the checkers of [petitioner], the bituminous tack coat it delivered to
[petitioner] consisted of 60% water, and [petitioner] has already paid [private
respondent] about P1,400,000.00 but [private respondent] has not issued any receipt
to [petitioner] for said payments and there is no agreement that [private respondent]
will charge 3% per month interest.  8

Petitioner subsequently amended her answer denying she had entered into sub-contracts with
private respondent.  9

During the trial, private respondent, as plaintiff, presented its vice-president, Sofia O. Sanchez, and
Dolores Aday, its bookkeeper.

Petitioner's evidence consisted of her lone testimony.  10

On June 22, 1988, the trial court rendered its decision ordering petitioner to pay private respondent
the sum of P299,717.75 plus interest at 12% per annum, and costs. It held:

. . . . [B]y analyzing the plaintiff's Book of Collectible Accounts particularly page 17

thereof (Exh. "K") this Court is convinced that the entries (both payments and
billings) recorded thereat are credible. Undeniably, the book contains a detailed
account of SOCOR's commercial transactions with RDC which were entered therein
in the course of business. We cannot therefore disregard the entries recorded under
Exhibit "K" because the fact of their having been made in the course of business
carries with it some degree of trustworthiness. Besides, no proof was ever offered to
demonstrate the irregularity of the said entries thus, there is then no cogent reason
for us to doubt their authenticity. 11

The trial court further ruled that in spite of the fact that the contracts did not have any stipulation on
interest, interest may be awarded in the form of damages under Article 2209 of the Civil Code.  12

On appeal, the Court of Appeals affirmed. It upheld the trial court's' reliance on private respondent's
Book of Collectible Accounts (Exh. K) on the basis of Rule 130, §37   of the Rules of Court.
13

Hence, this appeal. Petitioner contends that —

I. THE RESPONDENT COURT ERRED IN ADMITTING IN

EVIDENCE AS ENTRIES IN THE COURSE OF BUSINESS THE
ENTRIES IN PRIVATE RESPONDENT'S BOOK OF COLLECTIBLE
 ACCOUNTS CONSIDERING THAT THE PERSON WHO MADE
SAID ENTRIES ACTUALLY TESTIFIED IN THIS CASE BUT
UNFORTUNATELY HAD NO PERSONAL KNOWLEDGE OF SAID
ENTRIES.

II. THE DECISION OF THE RESPONDENT COURT SHOULD BE

REVERSED AS IT HAS ONLY INADMISSIBLE EVIDENCE TO
SUPPORT IT.

First. Petitioner contends that the presentation of the delivery receipts duly accepted by the then
Ministry of Public Works and Highways (MPWH) is required under the contracts (Exhs. A and B) and
is a condition precedent for her payment of the amount claimed by private respondent. Petitioner
argues that the entries in private respondent's Book of Collectible Accounts (Exh. K) cannot take the
place of the delivery receipts and that such entries are mere hearsay and, thus, inadmissible in
evidence. 14

We agree with the appellate court that the stipulation in the two contracts requiring the submission of
delivery receipts does not preclude proof of delivery of materials by private respondent in some other
way. The question is whether the entries in the Book of Collectible Accounts (Exh. K) constitute
competent evidence to show such delivery. Private respondent cites Rule 130, §37 of the Rules of
Court and argues that the entries in question constitute "entries in the course of business" sufficient
to prove deliveries made for the government projects. This provision reads:

Entries in the course of business. — Entries made at, or near the time of the
transactions to which they refer, by a person deceased, outside of the Philippines or
unable to testify, who was in a position to know the facts therein stated, may be
received as prima facie evidence, if such person made the entries in his professional
capacity or in the performance of duty and in the ordinary or regular course of
business or duty.  15

The admission in evidence of entries in corporate books requires the satisfaction of the following
conditions:

1. The person who made the entry must be dead, outside the country or unable to
testify;

2. The entries were made at or near the time of the transactions to which they refer;

3. The entrant was in a position to know the facts stated in the entries;

4. The entries were made in his professional capacity or in the performance of a

duty, whether legal, contractual, moral or religious; and

5. The entries were made in the ordinary or regular course of business or duty.  16

As petitioner points out, the business entries in question (Exh. K) do not meet the first and third
requisites. Dolores Aday, who made the entries, was presented by private respondent to testify on
the account of RDC Construction. It was in the course of her testimony that the entries were
presented and marked in evidence. There was, therefore, neither justification nor necessity for the
presentation of the entries as the person who made them was available to testify in court.
 Necessity is given as a ground for admitting entries, in that they are the best
available evidence. Said a learned judge: "What a man has actually done and
committed to writing when under obligation to do the act, it being in the course of the
business he has undertaken, and he being dead, there seems to be no danger in
submitting to the consideration of the court." The person who maybe called to court
to testify on these entries being dead, there arises the necessity of their admission
without the one who made them being called to court be sworn and subjected to
cross-examination. And this is permissible in order to prevent a failure of justice. 17

Moreover, Aday admitted that she had no personal knowledge of the facts constituting the entry. She
said she made the entries based on the bills given to her. But she has no knowledge of the truth or
falsity of the facts stated in the bills. The deliveries of the materials stated in the bills were
supervised by "an engineer for (such) functions."   The person, therefore, who has personal
18

knowledge of the facts stated in the entries, i.e., that such deliveries were made in the amounts and
on the dates stated, was the company's project engineer. The entries made by Aday show only that
the billings had been submitted to her by the engineer and that she faithfully recorded the amounts
stared therein in the books of account. Whether or not the bills given to Aday correctly reflected the
deliveries made in the amounts and on the dates indicated was a fact that could be established by
the project engineer alone who, however, was not presented during trial. The rule is stated by former
Chief Justice Moran, thus:

[W]hen the witness had no personal knowledge of the facts entered by him, and the
person who gave him the information is individually known and may testify as to the
facts stated in the entry which is not part of a system of entries where scores of
employees have intervened, such entry is not admissible without the testimony of the
informer. 19

Second. It is nonetheless argued by private respondent that although the entries cannot be
considered an exception to the hearsay rule, they may be admitted under Rule 132, §10   of the
20

Rules of Court which provides:

Sec. 10. When witness may refer to memorandum. — A witness may be allowed to
refresh his memory respecting a fact, by anything written by himself or under his
direction at the time when the fact occurred, or immediately thereafter, or at any
other time when the fact was fresh in his memory and he knew that the same was
correctly stated in the writing; but in such case the writing must be produced and may
be inspected by the adverse party, who may, if he chooses, cross-examine the
witness upon it, and may read it in evidence. So, also, a witness may testify from
such a writing, though he retain no recollection of the particular facts, if he is able to
swear that the writing correctly stated the transaction when made; but such evidence
must be received with caution.

On the other hand, petitioner contends that evidence which is inadmissible for the purpose for which
it was offered cannot be admitted for another purpose. She cites the following from Chief Justice
Moran's commentaries:

The purpose for which the evidence is offered must be specified. Where the offer is
general, and the evidence is admissible for one purpose and inadmissible for
another, the evidence should be rejected. Likewise, where the offer is made for two
or more purposes and the evidence is incompetent for one of them, the evidence
should be excluded. The reason for the rule is that "it is the duty of a party to select
the competent from the incompetent in offering testimony, and he cannot impose this
 duty upon the trial court." Where the evidence is inadmissible for the purpose stated
in the offer, it must be rejected, though the same may be admissible for another
purpose. The rule is stated thus: "If a party . . . opens the particular view with which
he offers any part of his evidence, or states the object to be attained by it, he
precludes himself from insisting on its operation in any other direction, or for any
other object; and the reason is, that the opposite party is prevented from objecting to
its competency in any view different from the one proposed.  21

It should be noted, however, that Exh. K is not really being presented for another purpose. Private
respondent's counsel offered it for the purpose of showing the amount of petitioner's indebtedness.
He said:

Exhibit "K," your Honor — faithful reproduction of page (17) of

the book on Collectible Accounts of the plaintiff, reflecting the
principal indebtedness of defendant in the amount of Two
hundred ninety-nine thousand seven hundred seventeen
pesos and seventy-five centavos (P299,717.75) and reflecting
as well the accumulated interest of three percent (3%)
monthly compounded such that as of December 11, 1987, the
amount collectible from the defendant by the plaintiff is Six
hundred sixteen thousand four hundred thirty-five pesos and
seventy-two centavos (P616,435.72);  22

This is also the purpose for which its admission is sought as a memorandum to refresh the
memory of Dolores Aday as a witness. In other words, it is the nature of the evidence that is
changed, not the purpose for which it is offered.

Be that as it may, considered as a memorandum, Exh. K does not itself constitute evidence. As
explained in Borromeo v. Court of Appeals: 23

Under the above provision (Rule 132, §10), the memorandum used to refresh the
memory of the witness does not constitute evidence, and may not be admitted as
such, for the simple reason that the witness has just the same to testify on the basis
of refreshed memory. In other words, where the witness has testified independently
of or after his testimony has been refreshed by a memorandum of the events in
dispute, such memorandum is not admissible as corroborative evidence. It is self-
evident that a witness may not be corroborated by any written statement prepared
wholly by him. He cannot be more credible just because he supports his open-court
declaration with written statements of the same facts even if he did prepare them
during the occasion in dispute, unless the proper predicate of his failing memory is
priorly laid down. What is more, even where this requirement has been satisfied, the
express injunction of the rule itself is that such evidence must be received with
caution, if only because it is not very difficult to conceive and fabricate evidence of
this nature. This is doubly true when the witness stands to gain materially or
otherwise from the admission of such evidence . . . .  24

As the entries in question (Exh. K) were not made based on personal knowledge, they could only
corroborate Dolores Aday's testimony that she made the entries as she received the bills.

Third. Does this, therefore, mean there is no competent evidence of private respondent's claim as
petitioner argues?   The answer is in the negative. Aside from Exh. K, private respondent presented
25

the following documents:

 1) Exhibits A — Contract Agreement dated 26 April 1985 which contract covers both
the Toledo wharf project and the Babag Road project in Lapulapu City.

2) Exhibit B — Contract Agreement dated 23 July 1985 which covers the DAS
Asphalting Project.

3) Exhibit C — Revised Computation of Billings submitted on May 28, 1986.

4) Exhibit D — an affidavit executed by [petitioner] to the effect that she has no more
pending or unsettled obligations as far as Toledo Wharf Road is concerned.

5) Exhibit D-1 — Statement of Work Accomplished on the Road Restoration of Cebu-

Toledo wharf project.

6) Exhibit E — another affidavit executed by [petitioner] attesting that she has

completely paid her laborers at the project located at Babag, Lapulapu City

7) Exhibits F, G, G-1, G-2, G-3 — Premiums paid by [private respondent] together

with the receipts for filing fees.

8) Exhibits H, I, J — certifications issued by OIC, MPWH, Regional Office; Lapulapu

City, City Engineer; Toledo City Treasurer's Office respectively, proving that RDC
construction has no more collectibles with all the said government offices in
connection with its projects.

10) Exhibit L — Bill No. 057 under the account of RDC Construction in the amount of
P153,382.75 dated August 24, 1985.

11) Exhibit M — Bill No. 069 (RDC's account), in the amount of P1,701,795.00 dated
November 20, 1985.

12) Exhibit N — Bill No. 071 (RDC's account) in the amount of P47,250.00 dated
November 22, 1985.

13) Exhibit O — Bill No. 079 (RDC's account) in the amount of P7,290.00 dated
December 6, 1985.

As the trial court found:

The entries recorded under Exhibit "K" were supported by Exhibits "L", "M", "N", "O"
which are all Socor Billings under the account of RDC Construction. These billings
were presented and duly received by the authorized representatives of defendant.
The circumstances obtaining in the case at bar clearly show that for a long period of
time after receipt thereof, RDC never manifested its dissatisfaction or objection to the
aforestated billings submitted by plaintiff. Neither did defendant immediately protest
to plaintiff's alleged incomplete or irregular performance. In view of these facts, we
believe Art. 1235 of the New Civil Code is applicable.

Art. 1235. When the obligee accepts the performance, knowing its
incompleteness and irregularity and without expressing any protest or
objection, the obligation is deemed complied with.
 FINALLY, after a conscientious scrutiny of the records, we find Exhibit "D-1" (p. 85
record) to be a material proof of plaintiff's complete fulfillment of its obligation.

There is no question that plaintiff supplied RDC Construction with Item 302
(Bitunimous Prime Coat), Item 303 (Bituminous Tack Coat) and Item 310
(Bitunimous Concrete Surface Course) in all the three projects of the latter. The
Lutopan Access Road project, the Toledo wharf project and the Babag-Lapulapu
Road project.

On the other hand, no proof was ever offered by defendant to show the presence of
other contractors in those projects. We can therefore conclude that it was Socor
Construction Corp. ALONE who supplied RDC with Bituminous Prime Coat,
Bituminous Tack Coat and Bituminous Concrete Surface Course for all the
aforenamed three projects.  26

Indeed, while petitioner had previously paid private respondent about P1,400,000.00 for deliveries
made in the past, she did not show that she made such payments only after the delivery receipts
had been presented by private respondent. On the other hand, it appears that petitioner was able to
collect the full amount of project costs from the government, so that petitioner would be unjustly
enriched at the expense of private respondent if she is not made to pay what is her just obligation
the contracts.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED. 1âwphi1.nêt

SO ORDERED.

Bellosillo, Puno, Quisumbing and Buena, JJ., concur.

Footnotes

1 Per Justice Pedro A. Ramirez and concurred in by Justices Rodolfo A. Nocon and
Jesus M. Elbinias.

2 Per Judge Juanito A. Bernad.

3 CA Decision, p. 1; Rollo, p. 15.

4 Records-RTC, p. 53.

5 Records-RTC, p. 54.

6 Exhibit C, Records-RTC, p. 55.

7 CA Decision, p. 2; Rollo, p. 16.

8 Answer, p. 1; Records-RTC, p. 25.

9 Amended Answer, pp. 1-2; Records-RTC, pp. 35-36.

10 RTC-Decision, p. 3.
11 Id., at 4.

12 Id., at 6-7.

13 Now Rule 130, §43 of the Revised Rules on Evidence.

14 Id. at 8-9; id. at 10-11.

15 Now Rule 130, §43 of the Revised Rules on Evidence.

16 2 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM 616 (1995).

17 7 VICENTE J. FRANCISCO, THE REVISED RULE OF COURT (EVIDENCE)

538-539 (1973).

18 TSN, pp. 35-36, Jan. 4, 1988.

19 5 MANUEL V. MORAN, COMMENTS ON THE RULES OF COURT 374 (1980).

20 Now Rule 132, §16 of the present Rules on Evidence.

21 6 MORAN, COMMENTS ON THE RULES OF COURT 123 (1980).

22 TSN, p. 49, Jan. 4, 1988.

23 70 SCRA 329 (1976).

24 Supra, at 349.

25 Petition, p. 11, Rollo, p. 13.

26 RTC Decision, p. 5.