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EN BANC

[G.R. No. 2437. February 13, 1906.]

MONICA CASON, plaintiff-appellant, vs. FRANCISCO WALTERIO RICKARDS, ETAL., defendants-appellees.

W.A. Kincaid, for appellant.

Pillsbury & Sutro, for appellees.

SYLLABUS

1.DEPOSIT; AGENT AND PRINCIPAL. When money is received as a deposit by anagent, and that money is by the agent turned over to his principal, with notices that it is the moneyof the depositor, the principal is bound to deliver it to the depositor, even if his agent was notauthorized to receive such deposits.

2.BOOKS IN EVIDENCE. When a witness has testified that he has seen th e books ofthe defendant, and if produced they would prove the liability of the latter, the failure of thedefendant to present his books in evidence strongly corroborates the testimony of the witness.

3.JUDGMENT; REVERSAL; DISCRETION OF THE COURT. When the record requires areversal of the judgment below, this court may, in its discretion, ent er final judgment, or it mayremand the case to the lower court for a new trial in whole or in part.

D E C I S I O N

WILLARD, J p:

From the 1st day of November, 1895, until the 31st day of October, 1896, the defendantRickards was the agent at Dagupan, in the Province of Pangasinan, of the other defendant, Smith,Bell & Co. While he was such agent he received from the plaintiff, as a deposit, the sum of 2,000pesos. When he left the employ of the defendant company the 2,000 pesos were, by his orders,delivered to another agent of Smith, Bell & Co. received and used the same. This money was notmingled with other money belonging either to Rickards or to Smith, Bell & Co., and at the time ofits delivery by Rickards to the other agent he notified Smith, Bell & Co. that it was not the money ofSmith, Bell & Co., but was the money of the plaintiff. The judgment of the court below holding

Smith, Bell & Co. responsible for this amount was clearly right. The question as to whether Rickardswas authorized by Smith, Bell & Co. to receive deposits of this character for third persons is a

matter of no consequence. The identical money which he received from the plaintiff was by h imturned over to Smith, Bell & Co., with notice that it was the money of the plaintiff, and they nowhave it in their possession, and are therefore bound to pay it to her.

At the trial of this case Rickards testified that a few days after he received the 2,000pesos from the plaintiff, and about the 8th day of October, 1896, he received from her an order orwarrant upon the Spanish treasury for the sum of 4,200 pesos; that he wrote Smith, Bell & Co.,asking if it could be collected; that they told him to send it to Manila. It was sent to Manila, and

collected through the Hongkong and Shanghai Bank. Rickards testified that he received the moneyfrom the Hongkong and Shanghai Bank, and paid all of it out in the business of Smith, Bell & Co.;that after he had received it he entered upon the books of Smith, Bell & Co. at Dagupan a credit infavor of the plaintiff of 4,200 pesos, less 5 per cent commission for collection, of which c ommissionSmith, Bell & Co. received the benefit. He testified that all these transactions took place prior to the31st day of October, 1896, when he left the employ of Smith, Bell & Co. He also testified that hehad seen the books of Smith, Bell & Co.; that they were in court in action commenced in regard tothis same amount in 1896 or 1897, and that the books which were then produced in court bySmith, Bell & Co. contained an entry or entries of the receipt by Smith, Bell & Co. of this 4 ,200pesos. If this testimony is to be believed there is no doubt as to the liability of Smith, Bell & Co. torepay to the plaintiff the sum of 4,200 pesos, less the commission of 5 per cent.

The question as to the general authority of Rickards to receive money on deposit forSmith, Bell & Co. has nothing to do with this cause of action, for Rickards testified that h e received

express directions in regard to this particular transaction. Rickards in his testimony stated that hehad several conversations with different agents and employees of Smith, Bell & Co. in Manila inregard to the transaction. At the trial of this case Smith, Bell & Co. did not present as witnesses anyof these employees or agents, and did not present any of their books which the witness Rickardsdeclared would corroborate his statement, if produced, but contented themselves with calling as awitness one who was then a bookkeeper of the Hongkong and Shanghai Bank. He, testifying fromentries which appeared in the books of that bank, stated that there was received for Rickards, inNovember, 1896, 4,200 pesos, a p art of which was credited to his accounts in that bank, and thebalance, amounting to about 2,616 pesos, was paid in cash. The witness could not testify to whomthis cash was paid. Although he testified that he had some independent recollection of thistransaction, yet it is apparent that his testimony is substantially, if not entirely, based upon theentries made in the books of the bank, which were in his handwriting.

The question in this case is this: Can t he positive testimony of Rickards, which has beenset forth above, be overcome by the testimony of t he agent of the bank in view of the fact that

Smith, Bell & Co. had it in their power to demonstrate the falsity of the testimony of Rickards byproducing their books? No reason appears in the case why the books were not produced. The trialwas had in Manila, where is located the main office of Smith, Bell & Co. Rickards gave his testimonyat the opening of the trial. If it were false its falsity could have been easily proved by theintroduction of those books, and their production was more imperatively demanded consideringthe statement of Rickards that he had seen them, and that they did contain the entries in regard tothis amount of 4,200 pesos.

Under these circumstances the judgment of the court below relieving Smith, Bell & Co.of the responsibility for this 4,200 pesos can not be affirmed. The evidence as it stands in therecord strongly preponderates against them, and the judgment must be reversed.

The question arises as to what disposition should be made of this case; whether finaljudgment should be entered in this court against Smith, Bell & Co., or whether the case should beremanded for further proceedings. Under the Code of Civil Procedure we have authority, when thejudgment must be reversed, either to enter final judgment in this court or to remand the case for anew trial or for further proceedings. In the present case we think that the ends of justice require

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that there should be a new trial as to the 4,200 pesos. (Regalado vs. Luchsinger & Co., 1 Phil. Rep.,619.) If at the new trial Smith, Bell & Co. still fail to produce their books, and no additional evidenceis offered to overcome the testimony of Rickards, final judgment should be entered against them inreference to this 4,200 pesos. In accordance with the provisions of section 505 of the Code of CivilProcedure, upon the new trial it will not be necessary to retake any of the evidence which hasalready been taken.

The judgment is reversed, and the case is remanded to the court below for a new trial

only of the issue relating to the 4,200 pesos. After the new trial judgment will, as a matter ofcourse, be entered for the plaintiff against Smith, Bell & Co. in reference to the 2,000 pesos, and foror against them in respect to the 4,20 0 pesos, as the results of the new trial may require. No costswill be allowed to either party in this court. So ordered.

Torres, Mapa, Johnson and Carson, JJ., concur.

SECOND DIVISION

[G.R. No. 23181. March 16, 1925.]

THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellee , vs. GABRIELAANDREA DE COSTER Y ROXAS ET AL., defendants . LA ORDEN DE DOMINICOS orPP. PREDICADORES DE LA PROVINCIA DEL SANTISIMO ROSARIO , defendants-appellees; GABRIELA ANDREA DE COSTER Y ROXAS, defendant-appellant.

Antonio M. Opisso for appellant.

Araneta & Zaragoza for the bank as appellee.

Perfecto Gabrielfor the Dominican Corporation as appellee.

SYLLABUS

1. WHEN SERVICE SHOULD BE SET ASIDE. Where it appears that the defendant wife"has been absent from the Philippine Islands and residing in the City of Paris, France, from 1908 toApril 30, 1924, service of complaint and summons was made on her in the Philippine Islands by thesheriff of the City of Manila by delivering a copy of the summons and complaint to her husband athis usual place of residence in the City of Manila, the service is voidable and should be set aside andacted upon the application the wife when a proper showing is made.

2. A MOTION TO QUASH SERVICE SHOULD BE MADE BY SPECIAL APPEARANCE ONLY. In such a case where it is designed by the wife to question the jurisdiction of the court, she shouldfile a motion to quash the service in a special appearance only to question the jurisdiction of the

court which should be for that purpose only, to which should be attached the necessary proof.

3. A MOTION UNDER THE PROVISIONS OF SECTION 113 (CODE OF CIVIL PROCEDURE)CONSTITUTES A GENERAL APPEARANCE. Where a wife, under the terms and provisions ofsection 113 of the Code of Civil Procedure, applies to the court to have a judgment against her setaside and vacated and for leave to file an answer and defend on the merits, it constitutes a generalappearance as distinguished from a special appearance by reason of which she submits herself tothe jurisdiction of the court.

4. WHEN THE PRINCIPAL IS NOT ESTOPPED. Where a person gave a power of attorney

to an agent to appear for and represent her in all court proceedings, and where the agent fails andneglects to appear and make a defense, the principal in ka proper showing is not estopped fromobtaining relief under section 113 of the Code of Civil Procedure.

5. WHEN A MERITORIOUS DEFENSE IS A CONDITION PRECEDENT TO THE GRANTING OFRELIEF. It is elementary that to entitle a party to relief from a judgment "taken against him

through his mistake, inadvertence, surprise, or excusable neglect," that as a condition precedent t othe granting of relief, he must show to the court that he has a meritorious defense.

6. WHEN PARTY HAS RIGHT TO DEFEND. Where it appears that a judgment wasrendered against a person through her mistake, inadvertence, surprise, or excusable neglect, and itfurther appears upon the face of the record that she has a meritorious defense, the judgmentshould be set aside with leave to answer and defend on the merits.

7. WHEN WIFE IS NOT LIABLE UNDER HER POWER OF ATTORNEY FOR THE PREEXISTINGDEBT OF HER HUSBAND. Where it appears that a wife gave her husband a power of attorney "toloan and borrow money" and to mortgage her property, that the fact does not carry with it or implythat he has a legal right to sign her na me to a promissory note which would make her liable for thepayment of a preexisting debt of the husband or that of his firm, for which she was not previouslyliable, or to mortgage her property to secure the debt.

8. LIMITATION ON AUTHORITY OF AGENT. Where it appears that an agent under awritten authority signed his wife's name to a promissory note and executed a mortgage on her realproperty to secure its payment, the powers and duties of the agent are confined and limited tothose which are specified and defined in his power of attorney, which limitation is a notice to, andis binding upon, the person dealing with such agent.

9. WHAT BILL OF INTERVENTION SHOULD ALLEGE AND UPON WHOM IT SHOULD BESERVED. Where a third person, holding a prior mortgage, desires to intervene in an original suitand obtain a decree or closing its mortgage, its bill of intervention should state all of the materialfacts with the same formality as an original complaint, and a copy of the plea should be served

both upon the plaintiff and, in particular, upon the defendants against whom it is sought to obtainthe foreclosure decree.

10. HEN COURT DOES NOT HAVE JURISDICTION. Where such material facts are notalleged in the bill of intervention in which there is no prayer for a decree, and where a copy f thebill was not served upon the parties against whom the foreclosure was sought, the court does nothave any jurisdiction to render a foreclosure decree on the bill of intervention, and for such reasonany decree on the bill of intervention is null and void.

11. WHEN A DECREE SHOULD BE REVOKED WITHOUT PREJUDICE. In such a case, thedecree rendered in the bill of intervention should be set aside and revoked without prejudice tothe right of the intervenor to file an original suit to fo reclose its mortgage or to file a new bill ofintervention in the original suit, alleging all material facts, and serving copies of it on all adverseparties.

12. WHEN WIFE IS BOUND.

Where a wife gave her husband a power of attorney "toloan and borrow money," and for such purpose to mortgage her property, and where the husband

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signed his wife's name to a note and gave a mortgage on her property to secure the note and theamount of the loan was actually paid to her husband in money at the time the note and mortgagewere executed, the transaction is binding upon the wife under her power of attorney, regardless ofwhat the husband may have done with the money which he obtained in the loan.

D E C I S I O N

STATEMENT

March 10, 1924, the plaintiff filed a complaint in which it was alleged that it was adomestic banking corporation with its principal office and place of business in the City of Manila;that the defendant Gabriela Andrea de Coster y Roxas was the wife of the defendant Jean M.Poizat, both of whom were residents of the City of Manila; that the defendant J.M. Poizat & Co.was a duly registered partnership with its principal and place of business in the City of Manila; thatthe defendant La Orden de Dominicos or PP. Redicadores del al Provincia del Santisimo Rosario wasa religious corporation duly organized and existing under the laws of the Philippine Islands with itsprincipal office and place of business in the City Of Manila; that on December 29, 1921, for value,the defendant Gabriela Andrea de Coster y Roxas, having the consent and permission of herhusband, and he acting as her agent, said defendants made to the plaintiff a certain promissorynote of P292,000, payable one year after dat e, with interest of 9 per cent per annum, payablemonthly, in which, among other things, it is provided that in the event of a suit or action, thedefendants should pay the further sum of P10,000 , as attorney's fees; that the note in questionwas a joint and several note; that to secure the payment thereof, the defendants Jean M. Poizatand J.M. Poizat & Co. executed a chattel mortgage to the plaintiff on the steamers Roger Poizatand

Gabrielle Poizat, with the machinery and materials belonging to the Poizat Vegetable Oil Mills andcertain merchandise; that at the same time and for the same purpose, the defendant GabrielaAndrea de Coster y Roxas, having the consent and permission of her husband, and he acting as heragent, they acknowledged and delivered to this plaintiff a mortgage in certain real property lyingand being situated in the City of Manila, which is specifically described in the mortgage; that thereal property was subject to a prior mortgage in favor of La Orden de Dominicos or PP.Predicadores de la Provincia del Santisimo Rosario, hence it is made a party defendant; that thenote in question is long past due and owing. The plaintiff having brought action against the

defendants on the note in the Court of First Instance of the City of Manila, civil case No. 25218; thatin such case the court rendered judgment against the defendants Gabriela Andrea de Coster yRoxas, Jean M. Poizat and J.M. Poizat & Co. jointly and severally for P292 ,000, with interest at therate of 9 per cent per annum from the 31st of August, 1923, P10,000 as attorney's fees, and P2,500for and on account of insurance upon the steamer Gabrielle Poizat, with interest on that amountfrom February 9, 1924, at the rate of 9 per annum, and costs; that the said defendants have notpaid the judgment or any part thereof, and that the full amount of the debt secured by themortgage on the property described in the complaint is now due and owing. Whereof, plaintiffprays for an order of the court to direct the sheriff of the City of Manila to take immediatepossession of the property described in the chattel mortgage and sell the same according to theChattel Mortgage Law; that the property described in the real mortgage or so much thereof as maybe required to pay the amount due the plaintiff be sold according to law; that out of such salesplaintiff shall be paid the amount due and owing it; and that such defendants be adjudged to payany remaining deficiency.

Copies of the chattel and real mortgage are attached to, and made a part of, thecomplaint and marked, respectively, Exhibits A and B.

On April 24, 1924, the La Orden de Dominicos or PP. Predicadores de la Provincia delSantisimo Rosario appeared in the suit and filed the following plea:

"The defendant corporation, La Orden de Dominicos or PP.Predicadores de la Provincia del Santisimo Rosario, for answer to the complaint,

shows:"I. That the encumbrance above-mentioned, but not determined in

paragraph V of the complaint, consisting of a first mortgage in favor of theaforesaid religious corporation on the property described in paragraph IV of thesame complaint is P125,000, with interest of 10 per cent per annum;

"II. That the mortgagors Jean M. Poizat and Gabriela Andrea deCoster y Roxas, have not paid the principal or the interest stipulated and agreedupon from the 16th of December, 192 1, up to the present date;

"III. The interest due up to the 30th of April of the present year 1924amounts to a total sum of P27,925.34.

"Wherefore, it is prayed that the credit above-mentioned be taken

into account when the second mortgage is foreclosed."

May 3, 1924, in motion of the plaintiff, for failure to appear or answer, the defendantsGabriela Andrea de Coster y Roxas and Jean M. Poizat and J.M. Poizat & Co. were declared indefault.

Without giving any notice to the defendants Jean M. Poizat, J.M. Poizat & Co. andGabriela Andrea de Coster y Roxas, and after the introduction of evidence on the part of theplaintiff and the defendant Dominican Fathers, on June 24, 19 24, the court rendered an opinion insubstance and to the effect that the plaintiff should have judgment as prayed for in its complaint,and that the Dominican Fathers should have judgment for the amount of their claim, and that theproperty should be sold and the proceeds applied to satisfy the respective judgments.

About August 26, through her attorney, the defendant Gabriela Andrea de Coster yRoxas filed a motion in which she recites that she is t he legitimate wife of the defendant Jean M.Poizat; that she had been absent from the Philippine Islands and residing in the City of Paris from

the year 1908 to April 30, 1924, when she returned to Manila; that the time of filing of thecomplaint and the issuance of the summons, she was absent from the Philippine Islands; that thesummons was delivered by the sheriff of the City of Manila to her husband, and that through hismalicious negligence, default was taken and judgment entered for the respective amounts; thatshe never had any knowledge of the actual facts until the latter part of July, 1924, when, throughthe local newspapers, she learned that a default judgment had been rendered against her on July28, 1924; that when she first knew of that fact, she was unable to obtain the rendition of accountsbecause her husband had rendition of accounts because her husband had left the Philippine Islandstwo days previous and gone to Hongkong; that she then went to Hongkong and learned that herhusband had left there under a false name and had gone to the port of Singapore from whence hewent to other places unknown to third defendant; tha t she then returned to Manila, and that inAugust, 1924, she came into possession of documents showing the illegality of the notes and

mortgage in question; that she has a good and legal defense to the action, which involves thevalidity of the order of the Dominican Fathers in this, that their mortgage does not guarantee any

loan made to this defendant; that it is a security only given for a credit of a third person; that themortgage was executed without the marital consent of the wife; and that he did not have any

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authority to make her liable as surety on the debt of a third person; that as regards the notes to theplaintiff: First, it does not represent any money paid to th e defendant by the bank; second, that it isexclusively the personal debt of the defendants Jean M. Poizat and J.M. Poizat & Co.; third, that itwas executed by her husband, because the bank desired more security for the payment of herhusband's debt to the bank; fourth, that it was executed by her husband in excess of the powersgiven to him under his power of attorney fifth that it was executed as the result of collusionbetween the bank and the defendant Jean M. Poizat, for the purpose of making this defendant

liable for the obligation of a third person. That as to the mortgage: First, it was executed to s ecure avoid obligation; second, it does not guarantee any loan made to this defendant; third, it wasexecuted without the express marital consent which the law requires; fourth, it was executedthrough collusion. That if the judgment is not set aside, the defendant will suffer irreparable injury;that through surprise and negligence for which she was not responsible, this defendant wasprevented from defending herself in this action; that this is a case which comes under section 113of the Code of Civil Procedure. She prays that the judgment be annulled and set aside and the casebe reopened, and that she be permitted to file an answer, and that the case be tried on its merit,and that a final judgment be rendered, absolving her from all liability.

The motion was based upon, and supported by, the affidavit of the defendant wife, towhich was attached a large number of exhibits all of which tended to support the motion.

After counter showings by the bank and the Dominican Fathers and the arguments ofrespective counsel, the motion to set aside and vacate the judgment was denied. A motion for a

reconsideration was the made, and the motion of the defendants file an answer and make adefense was again denied. The defendant Gabriela Andrea de Coster y Roxas appeals, assigning thefollowing errors:

PART I

"AS TO THE JURISDICTION

"I. The lower court erred in holding that it had acquired jurisdictionon the defendant Gabriela Andrea de Coster y Roxas,

"(1) There having been no personal service of the summons on her inthe manner required by section 396 of the Code of the Civil Procedure, shebeing absent from the Philippine Islands at the time of the filing of thecomplaint and of the issuance of the summons in this case, and a resident ofParis, France, where she had lived permanently and continuously for fifteenyears prior thereto, and

"(2) There having been no service by publication in the mannerrequired by section 398 of the Code of the Civil Procedure.

"II. The lower court erred in considering that in a case where the wifeis the only necessary party, service of the summons on the husband, at a placewhich is not 'the usual place of residence' of the wife and where the wife hasnever lived or resided, is sufficient to give the court jurisdiction on the personand property of the wife and to render judgment by default against her.

"III. The court erred in admitting and considering evidence, outsideof the sheriff's return, of the fact that the husband of the defendant GabrielaAndrea de Coster y Roxas was her attorney in fact with power to appear for thedefendant in court.

"IV. The court erred in holding that the non-appearance of an agent

of the defendant when service of the summons has been made on him not asthe agent of the defendant but in other capacity, will entitle the plaintiff who

misstated the material jurisdictional facts of the complaint to a judgment bydefault against the principal.

"V. The lower erred in refusing to vacate a judgment by defaultagainst the defendant against the defendant Gabriela Andrea de Coster y Roxasrendered on a defective summons, served in a manner not provided for by thelaw, and in a case where the complaint shows that plaintiff has no right ofaction.

"PART II

"AS TO THE MERITS OF THE DEFENSE

"I. The lower court erred, with abuse of discretion, in holding thatthe negligence, if any, of J.M. Poizat in not appearing on behalf of the defendantGabriela Andrea de Coster y Roxas, can be imputed to this defendant, withoutredress, and to the advantage of the plaintiff bank who in collusion with saidJ.M. Poizat caused the latter to contract beyond the scope of his powers asagent of this defendant the obligation which is the subject matter of this case.

"II. The lower court erred in holding that the belief on the part ofJ.M. Poizat that other was no defense against the claim of the plaintiff on anobligation contracted by said J.M. Poizat apparently as agent of the defendantGabriela Andrea de Coster y Roxas, by in truth beyond the scope of his

authority, and with knowledge in the part if the plaintiff bank that he was soacting beyond his powers, was such an error as can be imputed to thisdefendant, and against which she can obtain no redress.

"III. The lower court erred in not holding that a principal is not liablefor an obligation contracted by his agent beyond his power even when both thecreditor and the agent believed that the latter was acting within the scope of hispowers.

"IV. The court erred in holding that because the agent of thedefendant Gabriela Andrea de Coster y Roxas had power to appear for her incourt, his non-appearance could render third defendant liable to a judgment bydefault, when the record shows that there was no service of the summons inaccordance with any of the forms of s ervice provided by law.

"V. The lower court erred in holding that J.M. Poizat was summoned

as agent of his wife, the defendant Gabriela Andrea de Coster y Roxas, and was,in that capacity, notified of all the decisions rendered in this case, there beingnothing in the record to support the truth of such finding.

"VI. The lower court erred in holding that in contracting theobligations in favor of the plaintiff Bank of the Philippine Islands and of thedefendant Orden de PP. Predicadores de la Provincia del Santisimo Rosario, theagent of the defendant Gabriela Andrea de Coster y Roxas acted within thescope of his powers.

"VII. The lower court erred in not holding that the plaintiff Bank ofthe Philippine Islands and the defendant Orden de PP. Predicadores de laProvincia del Santisimo Rosario had knowledge of the fact that J.M. Poizat in

contracting the respective obligations in their favor, pretending to act as agentof the defendant Gabriela Andrea de Coster y Roxas, was acting beyond th e

scope of his powers as such agent.

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"VIII. The lower court erred in making the following statement:

"'It is however alleged, by the petitioner, that these loans wereobtained to pay debts, of strangers. Even so, this would not render the loanobtained by the attorney in fact null and void. The circumstance that the agentused the money, borrowed by him within the scope of his powers, to purposesfor which he was not authorized by his principal, may entitle the latter todemand from him the corresponding liability for the damages suffered, but it

cannot prejudice the creditor and cause the nullity of the loan. But, evenadmitting that the money borrowed was used by Poizat to pay debts which didnot belong to his principal, even then, he would have acted within his powerssince his principal, together with the power to borrow money, and the paymentof the debts of a stranger would amount to a loan made by the agent on behalfof his principal to the person or entity whose debt was paid with the moneyobtained from the creditors.'

"IX. The lower court erred in applying to this case the principleinvolved in the case of Palanca vs. Smith, Bell & co., 9 Phil., 131.

"X. The court erred in supplying from its own imagination facts whichdid not take place, of which there is no evidence in the record, and which t heparties never claimed to have existed, and then draw the conclusion that ifunder those hypothetical facts the transaction between J.M. Poizat and theBank of the Philippine Islands might have been legal, then the transaction as itactually took place was also legal.

"XI. The lower court erred in holding that defendant has not allegedany of the grounds enumerated in section 113 of the Code of Civil Procedure.

"XII. The lower court erred in holding that this defendant-appellanthas no meritorious defense against the Dominican Order and the Bank of t hePhilippine Islands.

"XIII. the lower court erred in taking into consideration Exhibit Aappearing at pages 156-165 of the bill of exceptions.

"XIV. The lower court erred in denying the motion filed by thisdefendant-appellant.

"XV. The lower court has acted throughout these proceedings with aclear abuse of discretion."

JOHNS, J p:

We will decide the case of the bank first.

The petition of the appellant states under oath:

"II. That this defendant has been absent from the Philippine Islandsand residing in the City of Paris, France, since the year 190 8 (1909), up to April30, 1924, on which date she arrived in this City of Manila, Philippine Islands.

"III. That at the time when the complaint in this case was filed and

the summons issued, she was still absent from the Philippine Islands and had noknowledge either of the filing of third action or of the facts which led to it."

Under oath the plaintiff, through its acting president, says:

"I-II. That it admits the allegations contained in paragraphs I and II ofthe aforesaid motion.

"III. That it admits the first part of this paragraph, to wit: That at thetime that the complaint in the above entitled case was filed, the defendantGabriela Andrea de Coster y Roxas was absent from the Philippine Islands."

Paragraph 6 of section 396 of the Code of Civil Procedure provides:

"In all other cases, to the defendant p ersonally, or by leaving a copyat his usual place of residence, in the hands of some person resident therein, ofsufficient discretion to receive the same. But service upon a corporation, asprovided in subsections one and two, my be made by leaving the copy at theoffice of the proper officer thereof if such officer cannot be found."

The return of the sheriff as to the service is as follows:

"On this date I have served a copy of the within summons, and of thecomplaint attached, upon Jean M. Poizat, personally, and the copiescorresponding to J.M. Poizat & Co., a company duly organized under the laws ofthe Philippine Islands, by delivering said copies to its President Mr. Jean M.Poizat, personally, and the copies corresponding to Gabriela Andrea de Coster yRoxas, by leaving the same in the place of her usual residence in the City ofManila and in the hands of her husband, Mr. J.M. Poizat, a person residingtherein and of sufficient discretion to receive it, personally.

"Done at Manila, P.I., this 13th day of March, 1924.

RICARDO SUMMERS

"Sheriff of Manila

"BY GREGORIO GARCIA"

"I hereby certify that on this date I have delivered a copy of thissummons and of the complaint corresponding to the 'La Orden de Dominicos orPP. Predicadores de la Provincia del Santisimo Rosario,' through Father PedroPratt, Procurador General of said Orden de Domonicos or PP. Predicadores de laProvincia del Santisimo Rosario, personally.

"Manila, P.I., April 1, 1924.

"RICARDO SUMMERS

Sheriff of Manila

"BY SIMEON D. SERDEA"

It will be noted that the service of summons and complaint was made in this defendant

on the 13th day of March, 1924, and that it is a stipulated fact that since the year 1908 and up toApril 30, 1924, she was "residing in the City of Paris, France." Even so, it is contended that theservice was valid by reason of the fact that it was made at the usual place of residence and abodeof there defendant husband, and that legally the residence of the wife is that of the husband. Thatcontention is in direct conflict with the admission of the plaintiff that since the year 1908 and up toApril 30, 1924, the wife was residing in the City of Paris. The residence of the wife in the City ofParis covered a period of sixteen years.

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It may be that where in the ordinary course of business the wife is absent from theresidence of the husband on a pleasure trip ir for business reasons or to visit friends or relativesthat, in the nature of such things, the residence of the wife would continue and remain to be thatof the husband. That is not t his case. For sixteen years the residence of the husband was in the Cityof Manila, and the residence of the wife was in the City of Paris.

Upon the admitted facts, we are clearly of the opinion that the residence of thehusband was not the usual place of residence of the wife. Giving full force and effect to the legal

presumption that the usual place of residence of the wife is that if her husband, that presumptionis overcome by the admitted fact that the wife was "residing in the City of Paris, France, since theyear 1908 up to April 30, 1924."

Without placing a limitation upon the length of time sufficient to overcome the legalpresumption, suffice it to say that sixteen years is amply sufficient.

It follows that the substituted service attempted to be made under the provisions ofsection 396 of the Code of Civil Procedure is null and void, and that by such service the court neveracquired jurisdiction of the person of the defendant wife. In that event the plaintiff contends thatunder his power of attorney, the husband was the general agent of the wife with authority toaccept service of process for her and in her name, and that by reason of the fact that the husbandwas duly served and that he failed or neglected to appear or answer, his actions and conduct werebinding in the defendant wife. Be that as it may, there is nothing in the record tending to show thatthe husband accepted service of any process for or on account of his wife or as her agent, or that

he was action for or representing her in his failure and neglect to appear or answer.

The first appearance in court if the defendant wife was made when she filed the motionof August 26, 1924, in which she prays in legal effect that the judgment against her be annulled andset aside and the case reopened, and that she be permitted to file an answer and to have the casetried on its merits. That was a general appearance as distinguished from a special appearance.When she filed that motion asking to be relieved from the legal force and effect of the judgment,she submitted herself to the jurisdiction of the court. If, in the first instance, she had made a specialappearance to question only the jurisdiction of the court, and had not appeared for any other ordifferent purpose, another and a different question would have been presented. Having made ageneral appearance for one purpose, she is now in court for all purposes.

It is an elementary rule of the law that as a condition precedent, to entitle a party torelief from a judgment "taken against him through his mistake, inadvertence, surprise or excusableneglect," that, among other things, he must show to the court that he has a meritorious defense.

Based upon that legal principal the bank contends that no such a showing has been made by thedefendant wife. That involves the legal construction of the power of attorney which, it is admitted,the wife gave to her husband on August 25, 1903, which, among other things material to thisopinion, recites that she gave to him:

"Such full and ample power as required or necessary, to th e end thathe may perform on my behalf and in may name and availing himself of all myrights and actions, the following acts:

"5. Loan or borrow any sums of money or fungible things at the rateof interest and for the time and under the conditions which he might deemconvenient, collecting or paying the capital or the interest on their respectivedue dates; executing and signing the corresponding public or private documentsrelated thereto, and making all these transactions with or without mortgages,pledges or personal guaranty.

"6. Enter into any kind of contrac ts whether civil or mercantile,gibing due form thereof either by private documents or public deeds with all

clauses and requisites provided by law for their validity and effect, having dueregard to the nature of each contract.

"7. Draw, endorse, accept, issue and negotiate any drafts, bill ofexchange, letters of credit, letters of payment, bills, vales, promissory notes andall kinds of documents representative of value; paying or collecting the valuethereof on their respective due dates, or protesting them for non -acceptance ornon-payment, utilizing in this case the rights granted by the Code of Commerce

now in force, in order to collect the value thereof, interests, expenses anddamages against whomsoever should be liable therefor.

"8. Institute before the competent courts the corresponding actioninjustification the possession which I have or might have over any real estate,filing the necessary pleadings, evidencing them by means of documentary or

oral testimony admissible by law; accepting notices and summons, andinstituting all necessary proceedings for the termination thereof and theconsequent inscription of said action in the corresponding office of the Registerof Deeds, in the same manner in which I might do if personally present andacting.

"9. Represent me in all cases before the municipal courts, justice ofthe peace courts, courts of first instance, supreme court and all other courts ofregular or any other special jurisdiction, appearing before them in any civil or

criminal proceedings, instituting and filing criminal and ordinary civil actions,claims in intestate and testamentary proceedings, insolvencies and otheractions provided by law; filing complaints, answers, counterclaims, crosscomplaints, criminal complaints and such other pleadings as might benecessary; filing demurrers, taking and offering judicial admission,documentary, expert, oral evidence, and others provided by law, objecting toand opposing whatever contrary actions are taken, offered and presented;accepting notices, citations and summons and acknowledging their receipt tothe proper judicial officials.

10. For to the end stated above and the incidents related thereto, Iconfer on him ample and complete power, binding myself in the most solemnmanner as required by law to recognized as existing and valid all that he might

do by virtue hereof."It is admitted that on December 29, 1921, the defendant husband signed the name of

the defendant wife to the promissory note in question, and t hat to secure the payment of the note,upon the same date and as attorney in fact for his wife, the husband signed the real mortgage inquestion in favor of the bank, and that the mortgage was duly executed.

Based upon such admissions, the bank vigorously contends that the defendant wife hasnot shown a meritorious defense. In fact that it appears from her own showing that she does nothave a legal defense. It must be admitted that upon the face of the instruments, that fact appearsto be true. To meet that con tention, the defendant wife points out, first, that the note in questionis a joint and several note, and second, that it appears from the evidence, which she submitted,that she is nothing more than an acco mmodation maker of the note. She also submits evidencewhich tends to show:

"First. That prior to July 25, 19 21, Jean m. Poizat was personally

indebted to the Bank of the Philippine Islands in the sum of P290,050.02(Exhibit H, page 66, bill of exceptions);

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"Second. That on July 25, 192 1, the personal indebtedness of JeanM. Poizat was converted into six promissory notes aggregating the sum ofP308,458.58 of which P16,180 were paid, leaving an outstanding balance ofP292,278.58 (Exhibit D, E, F, G, H and I, pages 75-80, bill of exceptions);

"Third. That on December 29, 192 1, the above promissory noteswere cancelled and substituted by a joint and several note signed by Jean M.Poizat in his personal capacity and as agent of Gabriela Andrea de Coster y

Roxas and as member of the firm J. M. Poizat & Co."

In other words, that under the power of attorney, the husband had no authority for andon behalf of the wife to execute a joint and several note or to make her liable as anaccommodation maker. That the debt in question was a preexisting debt of her husband and of thefirm of J. M. Poizat & Co., to which sh e was not a party, and for which she was under no legal

obligation to pay. That she never borrowed any money from the bank, and that previous to thesigning of the note, she never had any dealings with the bank and was not indebted to the bank inany amount. That the old, original debts of her husband and J. M. Poizat & Co. to the bank, towhich she was no a party, were all taken up and merged in the new note of December 29, 1921, inquestion, and that at the time the note was signed, she did not borrow any money, and that nomoney was loaned by the bank to the makers of the note.

Assuming such facts to be true, it would be a valid defense by the defendant wife to thepayment of the note. There is no claim r pretense that the bank was misled or deceived. If it had

made an actual loan P292,000 at the time the note was executed, another and a different questionwould be presented. In the ordinary course of its business, the bank knew that not a dollar wasloaned or borrowed on the strength of the no te. It was given at the urgent and pressing demand ofthe bank to obtain security for the six different notes which it held against J. M. Poizat & Co. andJean M. Poizat of date July 25, 1921 , aggregating about P292,000, and at the time it was given,those note were taken up and merged in the note of December 29, 1921, now in question. Uponthe record before us, there is no evidence that the defendant wife was a party to the notes of July25, 1921, or that she was under any legal liability t pay them.

The note and mortgage in question show upon their face that at the time they wereexecuted, the husband was attorney in fact for the defendant wife, and the bank knew or shouldhave known the nature and extent of his authority and the limitations upon his power.

You will search the terms and provisions of the power of attorney in vain to find anyauthority for the husband to make his wife liable as a surety for the payment of the preexisting

debt of a third person.Paragraph 5 of the power of attorney above quoted authorizes the husband for and in

the name of his wife to "loan or borrow any sums of money or fungible things, etc." This shouldconstrued to mean that the husband had power only to loan his wife's money and to borrowmoney for or on account of his wife as her agent and attorney in fact. T hat does not carry with it orimply that he had the legal right to make his wife liable as a surety for the preexisting debt of athird person.

Paragraph 6 authorizes him to "enter into any kind of contracts whether civil ormercantile, giving due form thereof either by private documents or public deeds, etc."

Paragraph 7 authorizes him to "draw, endorse, accept, issue and negotiate any drafts,bill of exchange, letters of credit, letters of payment, bills, vales, promissory notes, etc."

The foregoing are the clauses in the power of attorney upon which the bank relies forthe authority of the husband to execute promissory notes for and on behalf of his wife and as heragent.

It will be noted that there is no p rovision in either of them which authorizes orempowers him to sign anything or to do anything which would make his wife liable as a surety for apreexisting debt.

It is fundamental rule of construction that where in an instrument powers and dutiesare specified and defined, that all of such powers and duties are limited and confined those whichare specified and defined, and that all other powers and duties are excluded.

Paragraph 8 of the power of attorney authorizes the husband to institute, prosecute anddefend all actions or proceedings in a court of justice, including "accepting notices and summons."

There is nothing in the record tending to show that the husband accepted the service ofany notice or summons in the action on behalf of the bank, and even so, if he had, it would not be adefense to open up and vacate a judgment under section 113 of the Code of Civil Procedure. Thesame thing is true as to paragraph 9 of the power of attorney.

The fact that an agent failed and neglected to perform his duties and to represent theinterests of his principal is not a bar to the principal obtaining legal relief for the negligence of heragent, provided that the application for such a relief is duly and properly made under theprovisions of section 113.

It is very apparent from the face of th e instrument that the whole purpose and intent o fthe power of attorney was t empower and authorize the husband to look after in her name totransact any and all of her business. But nowhere does it provide or authorize him to make her

liable as a surety for the payment of the preexisting debt of a third person.

Hence, it follows that the husband was not authorized or empowered to sign the note inquestion for and on behalf of the wife as her act and deed, and that as to her the note is void forwasn't of power of her husband to execute it.

The same thing is true as to the real mortgage to the bank. It was given to secure th e

note in question and was not given for any other purpose. The real property described in themortgage to the bank was and is the property of the wife. The note being void as to h er, it followsthat as to her the real mortgage to the bank is also void for want of power to execute it.

It appears that before the motion in question was filed, there were certain negotiationsbetween the bank and the attorney for the wife with a view of compromise or settlement of thebank's claim against her, and that during such negotiations, there was some evidence or admissionson the part of her attorney that she was liable for the bank's claim. It contends that as a result ofsuch negotiations and admissions, the wife is estopped to deny her liability. But it also appears that

during such negotiations, both the wife and her attorney did no t have any knowledge of the actualfacts, and that she was then ignorant of the defense upon which she now relies. Be that as it may,such negotiations were more or less in the nature of a compromise which was rejected by thebank, and it appears that in any event both the wife and her attorney did not have any knowledgeof the facts upon which they now rely as a defense.

There is no claim or pretense that the debt in question was contracted for or on accountof the "usual daily expenses of the family, incurred by the wife or by her order with the tacitconsent of the husband," as provided for in article 1362 of the Civil Code. Neither is there anyevidence tending to show that the wife was legally liable for any portion of the original debtevidenced by the note in question.

This decision as to the bank on this motion is based on the assumption that the fac ts are

true as set forth and alleged n the petition to set aside and vacate the judgment as to the wife, butwe are not making any finding as to the actual t ruth of such facts. That remains for the defendant

wife to prove such allege facts when the case is tried on its merits.

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It follows that the opinion of the lower court in refusing to set aside and vacate thejudgment of the plaintiff bank against the defendant wife is reversed, and that judgment is vacatedand set aside, and as to the bank the case is remanded to the lower c ourt, with leave for the wife tofile an answer to plaintiff's cause of action, and to have the case tried on its merits and for anyfurther proceedings not inconsistent with this opinion.

As to the judgment in favor of the Dominicans Fathers, it appears that their plea abovequoted in the statement of facts was filed on April 24, 1924. In that plea they say that they have a

first mortgage on the property described in paragraph IV of the complaint for P125,000 withinterest at 10 per cent per annum. That the mortgagors Jean M. Poizat and Gabriela Andrea deCoster y Roxas have not paid the principal or the stipulated interest from December 16, 1921, todate, which up to the 30th day of April, 1924, amounts to P27, 925.34. Wherefore, it is prayed thatthe second mortgage is foreclosed.

No other plea of any kind, nature or d escription was filed by it. The record shows that acopy of this alleged plea was served upon the attorneys for the plaintiff bank. There is nothing inthe record which shows or tends to show that a copy of it was ever served on either one of thedefendants. Neither is there any evidence that either if the defendant ever appeared in the originalaction. In fact, judgment was rendered against them by default.

Under such s state of facts, the judgment in favor of the Dominican Fathers cannot besustained. In the first place, the plea above quoted filed on April 24, 1924, would not be sufficientto sustain a judgment. It does not even ask for a judgment or the foreclosure of its mortgage. In thesecond place, no copy of the plea was ever served upon either of the defendants, who were therest parties in interest, and against whom a judgment was rendered for th e full amount of the noteand the foreclosure of the mortgage. Such a proceeding cannot be sustained on any legal principle.

Unless waived, a defendant has a legal right to service of process, to his day in court andto be heard in his defense.

From what has been said, it follows that, if the transaction between the DominicanFathers and Jean M. Poizat as attorney in fact for his wife was an original one and the P125,00 0 wasactually loaned at the time the note and mortgage were executed and the money was in good faithdelivered to the husband as the agent and attorney in fact of the wife, it would then be a validexercise of the power given to the husband, regardless of the question as to what he may havedone with the money.

Paragraph 5 of the power of attorney specifically authorizes him to borrow money forand on account of his wife and in her name, "and making all these transactions with or withoutmortgages, pledges or personal guaranty."

It follows that the judgment of the lower court in favor of La Orden de Dominicos or PP.Predicadores de la Provincia del Santisimo Rosario is reversed, without prejudice to its right toeither file an original suit to foreclose its mortgage or to file a good and sufficient plea s intervenorin the instant suit, setting forth the facts upon which it relies for a judgment on its note and theforeclosure of its mortgage, copies of which should be served upon which it relies for a judgmenton its note and the foreclosure of its mortgage, copies should be served upon the defendants.

Neither party to recover costs. So ordered.

Ostrandand Romualdez, JJ., concur.

Johnson and Malcolm, JJ., concur in the result.

Separate Opinions

VILLAMOR, J., concurring and dissenting:

I concur in the result reached by the court in ordering the remanding of the case forfurther proceedings, for in my opinion, the defendant-appellant against whom a judgment by

default was rendered, has the right, under section 113 of the Code of Civil Procedure, to have saidjudgment set aside and to be given an opportunity to appear, having alleged facts which, if proven,would constitute a good defense, but I dissent from t he opinion of the majority in so far as itattempts to decide certain features of the cased raised by the defendant-appellant, withoutwaiting for the outcome of the new trial wherein the other parties must naturally have the sameopportunity to present their defenses against the facts alleged by the appellant. In my opinion, themerits of the question should not now be discussed without giving the trial court an opportunity topass upon the allegations and evidence of the parties litigant.

SECOND DIVISION

[G.R. No. 103737. December 15, 1994.]

NORA S. EUGENIO AND ALFREDO Y. EUGENIO, petitioners, vs. HON. COURT OFAPPEALS AND PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES , INC.,respondents .

D E C I S I O N

REGALADO,J p:

Private respondent Pepsi-Cola Bottling Company of the Philippines, Inc. is engaged inthe business of manufacturing, bottling and selling soft drinks and beverages to the general public.Petitioner Nora S. Eugenio was a dealer of the softdrink products of private respondentcorporation. Although she had only one store located at 27 Diamond Street, Emerald Village,Marikina, Metro Manila, Eugenio had a regular charge account in both the Quezon City plant(under the name "Abigail Minimart"** ) as well as in the Muntinlupa plant (under the name "NoraStore") of respondent corporation. Her husband and co-petitioner, Alfredo Y. Eugenio, used to be aroute manager of private respondent in its Quezon City plant. cdphil

On March 17, 1982, private respondent filed a complaint for a sum of money againstpetitioners Nora S. Eugenio and Alfredo Y. Eugenio, docketed as Civil Case No. Q-34718 of the thenCourt of First Instance of Quezon City, Branch 9 (now Regional Trial Court, Quezon City, Branch 97).In its complaint, respondent corporation alleged that on several occasions in 1979 and 1980,

petitioners purchased and received on credit various products from its Quezon City plant. As ofDecember 31, 1980, petitioners allegedly had an outstanding balance of P20,437.40 therein.

http://cdasiaonline.com/search/show_article/15470?search=gr%3A+%28103737%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/15470?search=gr%3A+%28103737%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/15470?search=gr%3A+%28103737%2A%29#footnoteshttp://cdasiaonline.com/search/show_article/15470?search=gr%3A+%28103737%2A%29#footnotes

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Likewise, on various occasions in 1980, petitioners also purchased and received on credit variousproducts from respondent's Muntinlupa plant and, as of December 3 1, 1989, petitionerssupposedly had an outstanding balance of P38,357.20 there. In addition, it was claimed thatpetitioners had an unpaid obligation for the loaned "empties" from the same plant in the amountof P35,856.40 as of July 11, 1980. Altogether, petitioners had an outstanding account of P94, 651.00which, so the complaint alleged, they failed to pay despite oral and written demands.1

In their defense, petitioners presented four trade provisional receipts (TPRs) allegedly

issued to and received by them from private respondent's Route Manager Jovencio Estrada of itsMalate Warehouse (Division 57), showing payments in the total sum of P80,500.00 made byAbigail's Store. Petitioners contended that had the amounts in the TPRs been credited in theirfavor, they would not be indebted to Pepsi-Cola. The details of said receipts are as follows:

TPR No.Date of IssueAmount

500320600Fulls returned5/ 6/80P23,520.00500326600Fulls returned5/10/80P23,520.00500344600Fulls returned5/14/80P23,520.00500346Cash5/15/80P10,000.002

TotalP80,560.00

Further, petitioners maintain that the signature purporting to be that o f petitioner NoraS. Eugenio in Sales Invoice No. 85366 dated May 15, 1980 in the amount of P5,631.00,3which wasincluded in the computation of their alleged debt, is a falsification. In sum, petitioners argue that ifthe aforementioned amounts were credited in their favor, it would be respondent corp orationwhich would be indebted to them in the sum of P3,546.02 representing overpayment. llcd

After trial on the merits, the court a quo rendered a decision on February 17, 1986,ordering petitioners, as defendants therein to jointly and severally pay private respondent theamount of P74,849.00, plus 12% interest per annum until the principal amount shall have been fullypaid, as well as P20,000.00 as attorney's fees.4On appeal in CA-G.R. CV No. 10623, the Court ofAppeals declared said decision a nullity for failure to comply with the requirement in Section 14,Article VIII of the 1987 Constitution that decisions of courts should clearly and distinctly state thefacts and the law on which they are based. The Court of Appeals accordingly remanded the recordsof the case to the tr ial court, directing it to render another decision in accordance with therequirements of the Constitution. 5

In compliance with the directive of the Court of Appeals, the lower c ourt rendered a

second decision on September 29, 1989. In this new decision, petitioners were this time ordered topay, jointly and severally, the reduced amount of P64,188.60, plus legal interest of 6% per annumfrom the filing of the action until full payment of the amount adjudged.6On appeal therefrom, theCourt of Appeals affirmed the judgment of the trial court in a decision promulgated on September27, 1991.7A motion for the reconsideration of said judgment of respondent court wassubsequently denied in a resolution dated January 23, 1992.8

We agree with petitioners and respondent court that the crux of the dispute in the caseat bar is whether or not the amounts in the aforementioned trade provisional receipts should becredited in favor of herein petitioner spouses. In so-called encyclopedic sense, however, our courseof action in this case and the denouement of the controversy therein takes into account th ejurisprudential rule that in the present recourse we would normally have restricted ourselves toquestions of law and eschewed questions of fact were it no t for our perception that the lowercourts manifestly overlooked certain relevant factual considerations resulting in a misapprehensionthereof. Consequentially, that position shall necessarily affect our analysis of the rules on theburden of proof and the burden of evidence, and ultimately, whether the proponent of the

corresponding claim has preponderated or rested on an equipoise or fallen short ofpreponderance.

First, the backdrop. It appears that on August 1, 1981, private respondent through thehead of its Legal Department, Atty. Antonio N. Rosario, sent an inter-office correspondence topetitioner Alfredo Eugenio inviting him for an interview/interrogation on August 3, 1981 regardingalleged "non-payment of debts to the company, inefficiency, and loss of tru st and confidence."9The interview was reset to August 4, 1981 to enable said petitioner to bring along with him their

union president, Luis Isip. On said date, a statement of overdue acc ounts were prepared showingthat petitioners owed respondent corporation the following amounts:

Muntinlupa Plant

Nora's StoreTrade AccountP38,357.20 (as of 12/3/80) 10Loaned EmptiesP35,856.40 (as of 7/11/81)11

Quezon City Plant

Abigail MinimartRegular AccountP20,437.40 (as of 1980)12

TotalP94,651.00

A reconciliation of petitioners' account was then conducted. The liability of petitionersas to the loaned empties (Muntinlupa plant, Nora Store) was reduced to P21,686.00 after areevaluation of the value of the loaned empties. 13 Likewise, the amount of P5,63 1.00 underInvoice No. 85366, which was a spurious document, was deducted f rom their liability in their tradeaccount with the Muntinlupa plant. 14Thereafter Eugenio and Isip signed the reconciliation sheetsreflecting these items:

Muntinlupa Plant

Nora StoreTrade AccountP32,726.2015Loaned EmptiesP21,686.0016

Quezon City Plant

Abigail MinimartTrade AccountP20,437.2017

TotalP74,849.40

After the meeting, private respondent alleged that petitioner Alfredo Y. Eugeniorequested that he be allowed to retire and the existing accounts be deducted from his retirementpay, but that he later withdrew his retirement plan. Said petitioner disputed that allegation and, infact, he subsequently filed a complaint for illegal dismissal. The finding of labor arbiter, lateraffirmed by the Supreme Court, showed that this petitioner was indeed illegally dismissed, and thathe never filed an application for retirement. In fact, this Court made a finding that the retirementpapers allegedly filed in the name of this petitioner were forged.18This makes two falsifieddocuments to be foisted against petitioners.

With their aforesaid accounts still unpaid, petitioner Alfredo Y. Eugenio submitted toAtty. Rosario the aforementioned four T PRs. Thereafter, Atty. Rosario ordered Daniel Azurin,assistant personnel manager, to conduct an investigation to verify this claim of petitioners.According to Azurin, during the investigation on December 4, 1981, Estrada allegedly denied that

he issued and signed the aforesaid TPRs.19He also presented a supposed affidavit which Estradaallegedly executed during that investigation to affirm his verbal statements therein. Surprisingly,

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however, said supposed affidavit is inexplicably dated February 5, 1982. 20At this point, it shouldbe noted that Estrada never testified thereafter in court and what he is supposed to have done orsaid was merely related by Azurin.

Now, on this point, respondent disagreed with herein petitioners that the t estimony onthe alleged denial of Jovencio Estrada regarding his signatures on the disputed TPRs, as well as hisaffidavit dated February 5, 198221wherein he affirmed his denial, are hearsay evidence becauseEstrada was not presented as a witness to testify and be cross-examined thereon. Except for the

terse statement of respondent court that since petitioner Alfredo Eugenio was supposedly presenton December 4, 1981, " (t)he testimony of Jovencio Estrada at the aforementioned investigationcategorically denying that he issued and signed the disputed TPRs is, therefore, not hearsay," 22

there was no further explanation on this unusual doctrinal departure. prcd

The rule is clear and explicit. Under the hearsay evidence rule, a witness can testify only

to those facts which he knows of his personal knowledge; that is, which are derived from his ownperception, except as otherwise provided in the Rules.23In the present case, Estrada failed toappear as a witness at the trial. It was only Azurin who testified that during the investigation heconducted, Estrada supposedly denied having signed the TPRs. It is elementary that under themeasure on hearsay evidence, Azurin's testimony cannot constitute legal proof as to the truth ofEstrada's denial. For that matter, it is not admissible in evidence, petitioners' counsel havingseasonably objected at the trial to such testimony of Azurin as hearsay. And, even if not objected toand thereby admissible, such hearsay evidence has no probative value whatsoever.24

It is true that the testimony or deposition of a witness deceased or unable to testify,given in a former case or proceeding, judicial or administrative, involving the same parties andsubject matter, may be given in evidence against the adverse party who had t he opportunity tocross-examine him. 25 Private respondent cannot, however, seek sanctuary in this exception to thehearsay evidence rule.

Firstly, the supposed investigation conducted by Azurin was neither a judicial trial nor anadministrative hearing under statutory regulations and safeguards. It was merely an inter-officeinterview conducted by a personnel officer through an ad hoc arrangement. Secondly, a perusal ofthe alleged stenographic notes, assuming arguendo that these notes are admissible in evidence,would show that the "investigation" was more of a free-flowing question and answer type o fdiscussion wherein Estrada was asked some questions, after which Eugenio was likewise askedother questions. Indeed, there was no opportunity for Eugenio to obj ect, much less to cross-

examine Estrada. Even in a formal prior trial itself, if the opportunity for cros s-examination did notexist therein or if the accused was not afforded opportunity to fully cross-examine the witnesswhen the testimony was offered, evidence relating to the testimony given therein is thereafterinadmissible in another proceeding, absent any conduct on the part of the accused amounting to awaiver of his right to cross-examine.26

Thirdly, the stenographer was not even presented to authenticate the stenographicnotes submitted to the trial court. A c opy of the stenographic report of the entire testimony at theformer trial must be supported by the oath of the stenographer that it is a correct transcript of hisnotes of the testimony of the witness as a sine qua non for its competency and admissibility inevidence. 27The supposed stenographic notes on which respondent corporation relies isunauthenticated and necessarily inadmissible for the purpose intended.

Lastly, although herein private respondent insinuated that Estrada was not presented asa witness because he had disappeared, no evidence whatsoever was offered to show or evenintimate that this was due to any machination or instigation of petitioners. T here is no showingthat his absence was procured , or that he was eloigned, through acts imputable to petitioners. In

the case at bar, except for the self-serving statement that Estrada had disappeared, no plausibleexplanation was given by respondent corporation. Estrada was an employee of private respondent,hence it can be assumed that it cou ld easily trace or ascertain his whereabouts. It had theresources to do so, in contradistinction to petitioners who even had to seek the help of the PublicAttorney's Office to defend them here. Private respondent could not have been unaware of theimportance of Estrada's testimony and the consequent legal necessity for presenting him in thetrial court, through coercive process if necessary.

Obviously, neither is the affidavit of Estrada admissible; it is likewise barred as evidenceby the hearsay evidence rule. 28This is aside from the fact that, by their nature, affidavits aregenerally not prepared by the affiants themselves but by another who uses his own language inwriting the affiant's statements, which may thus be either omitted or misunderstood by the onewriting them.29The dubiety of that affidavit, as earlier explained, is further underscored by thefact that it was executed more than two months after the investigation, presumably for curativepurposes as it were.

Now, the authenticity of a handwriting may be proven, among other means, by itscomparison made by the witness or the court with writings admitted or treated as genuine by theparty against whom the evidence is offered or proved to be genuine to the satisfaction of thejudge. 30The alleged affidavit of Estrada states ". . . that the comparison that was made as to theauthenticity of the signature appearing in the TPRs and that of my signature showed that there wasan apparent dissimilarity between the two signatures, xerox copy of my 201 F ile is attached hereto

as Annex 'F' of this affidavit.31However, a search of the Folder of Exhibits in this case does not

reveal that private respondent ever submitted any document, not even the aforementioned 201File, containing a specimen signature of Estrada which the Court can use as a basis for comparison.Neither was any document containing a specimen of Estrada's signature presented by respondentin the formal offer of its exhibits.32

Respondent court made the further observation that "Estrada was even asked by Atty.Azurin at said investigation to sign three times to provide specimens of his genuine signature."33There is, however, no showing that he did, but assuming that Estrada signed the stenographicnotes, the Court would still be unable to make the necessary comparison because two signatures

appear on the right margin of each and every page of the stenographic notes, without anyindication whatsoever as to which of the signatures is Estrada's. The whole document was markedfor identification but the signatures were not. In fact, although formally offered, it was merelyintroduced by the private respondent "in order to show that Jovencio Estrada had beeninvestigated and categorically denied having collected from Abigail Minimart and denying having

signed the receipts claimed by Alfredo Eugenio to be his payment,"34and not for the purpose ofpresenting any alleged signature of Estrada on the document as a basis for comparison.

This is a situation that irresistibly arouses judicial curiosity, if not suspicion. Respondentcorporation was fully aware that its case rested, as it were, on the issue of whether the TPRs wereauthentic and which issue, in turn, turned on the genuineness of Estrada's signatures thereon. Yet,aside from cursorily dismissing the non-presentation of Estrada in court by the glib assertion thathe could not be found, and necessarily aware that his alleged denial of his signatures on said TPRsand his affidavit rendered the same vulnerable to the challenge that they are hearsay andinadmissible, respondent corporation did nothing more. In fact, Estrada's disappearance has notbeen explained up to the present. cdll

The next inquiry then would be as to what exactly is the nature of the TPRs insofar asthey are used in the day-to-day business transactions of the company. These trade provisionalreceipts are bound and given in booklets to the company sales representatives, under properacknowledgment by them and with a record of distribution thereof. After every transaction, whena collection is made the customer is given by the sales representative a copy of the trade

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provisional receipt, that is the triplicate copy or customer's copy, properly filled up to reflect thecompleted transaction. All unused TPRs, as well as the collections made, are turned over by thesales representative to the appropriate company officer.35

According to respondent court, "the questioned TPR's are merely 'provisional' and were,as printed at the bottom of said receipts, as to be officially confirmed by plaintiff within fifteen (15)days by delivering the original copy thereof stamped paid and signed by its cashier to the customer.. . . Defendants-appellants (herein petitioners) failed to present the original copies of the TPRs in

question, showing that they were never confirmed by the plaintiff, nor did they demand fromplaintiff the confirmed original copies thereof."36

We do not agree with the strained implication intended to be adverse to petitioners.The TPRs presented in evidence by petitioners are disputably presumed in evidence as evidentiaryof payments made on account of petitioners. There are presumptions juris tantum in law that

private transactions have been fair and regular and that the ordinary course of business has beenfollowed.37The role of presumptions in the law on evidence is to relieve the party enjoying thesame of evidential burden to prove the proposition that he contends for, and to shift the bu rden ofevidence to the adverse party. Private respondent having failed to rebut the aforestatedpresumptions in favor of valid payment by petitioners, these would necessarily continue to stand infavor in this case.

Besides, even assuming arguendo that herein private respondent's cashier neverreceived the amounts reflected in the TPRs, still private respondent failed to prove that Estrada,

who is its duly authorized agent with respect to petitioners, did no t receive those amounts fromthe latter. As correctly explained by petitioners, "in so far as the private respondent's customersare concerned, for as long as they pay their obligations to the sales representative of the privaterespondent using the latter's official receipt, said payment extinguishes their obligations."38Otherwise, it would unreasonably cast the burden of supervision over its employees fromrespondent corporation to its customers.

The substantive law is that payment shall be made to the person in whose favor theobligation has been constituted, or his successor-in-interest or any person authorized to receive it.39As far as third persons are concerned, an act is deemed to have been performed within thescope of the agent's authority, if such is within the terms of the power of att orney, as written, evenif the agent has in fact exceeded the limits of his authority according to an understanding betweenthe principal and his agent. 40 In fact, Atty. Rosario, private respondent's own witness, admittedthat "it is the responsibility of the collector to turn over the collection."41

Still pursuing its ruling in favor of respondent corporation, the Court of Appeals makesthe following observation:

". . . Having allegedly returned 600 Fulls to the plaintiff's representative on May6, 10, and 14, 1980, appellant-wife's Abigail Store must have received morethan 1,800 cases of softdrinks from plaintiff before those dates. Yet theStatement of Overdue Account pertaining to Abigail Minimart (Exhs. 'D', 'D-1' to'D-3') which appellant-husband and his representative Luis Isip signed on August3, 1981 does now show more than 1,800 cases of soft drinks were delivered toAbigail Minimart by plaintiff's Quezon City Plant (which supposedly issued thedisputed TPRs) in May, 1989 or the month before."42

We regret the inaccuracy in said theory of respondent court which was impelled by itssole and limited reliance on a mere statement ofoverdue amounts. Unlike a statement of accountwhich truly reflects the day-to-day movement of an account, a statement of an overdue amount isonly a summary of the account, simply reflecting the balance due thereon. A statement of account,being more specific and detailed in nature, allows one to readily see and verify if indeed, deliverieswere made during a specific period of time, unlike a bare statement of overdue payments.Respondent court cannot make its aforequoted categorical deduction unless supporting documentsaccompanying the statement of overdue amounts were submitted to enable easy and accurateverification of the facts.

A perusal of the statement of overdue accounts shows that, except for a referencenumber given for each entry, no further details were volunteered nor offered. It is entirely possiblethat the statement of overdue account merely reflects the outstanding debt of a particular client,and not the specific particulars, such as deliveries made, particularly since the entries therein weresurprisingly entered irrespective of their chronological order. Obviously, therefore, one can not usethe statement of overdue amounts as conclusive proof of deliveries done within a particular timeframe.

Except for its speculation that petitioner Alfredo Y. Eugenio could have ha d easy accessto blank forms of the TPRs because he was a former route manager no evidence whatsoever waspresented by private respondent in support of that theory. We are accordingly intrigued by such anunkind assertion of respondent corporation since Azurin himself admitted that their accounting

department could not even inform them regarding the persons to whom the T PRs were issued.43

In addition, it is significant that respondent corporation did not take proper action if indeed somereceipts were actually lost, such as the publication of the fact of loss of the receipts, with thecorresponding investigation into the matter.

We, therefore, reject as attenuated the comment of the trial court that the TPRs, whichEugenio submitted after the reconciliation meeting, "smacks too much of an afterthought."44Thereconciliation meeting was held on August 4, 1981. Three months later, on November, 1981,petitioner Alfredo Y. Eugenio submitted the four TPRs. He explained, and this was not disputed,that at the time the reconciliation meeting was held, his daughter Nanette, who was helping his

wife manage the store, had eloped and she had possession of the TPRs. 45 It was only inNovember, 1981 when petitioners were able to talk to Nanette that th ey were able to retrieve saidTPRs. He added that during the reconciliation meeting, Atty. Rosario assured him that any receipthe may submit later will be credited in his favor, hence he signed the reconciliation documents.Accordingly, when he presented the TPRs to private respondent, Atty. Rosario directed Mr. Azurin

to verify the TPRs. Thus, the amount stated in the reconciliation sheet was not final, as it was stillsubject to such receipts as may thereafter be presented by petitioners.

On the other hand, petitioners claimed that the signature of petitioner Nora S. Eu