314

c i a ac c d c hich a hi d a k e a d e ied
i g d fai h a a e f he e e ci e f ea ab e
de ce. M e e , he age ac c d c ha e
d ced a cha ge f ii he hi d a de i e .
Same; Same; Same; In he absence of a char er or b la
pro ision o he con rar , he presiden is pres med o ha e he
a hori o ac i hin he domain of he general objec i es of i s
b siness and i hin he scope of his or her s al d ies.
I a ch a a c ae e ide i f e gi e ge e a
e i i a dc e c ae e ai , he ic e
ha aid ffice ha i he e e ac f he c ai i
gi i g a he ea i a i ha ch ffice ha ce ai
i i ed e i he a ac i f he a a d di a
b i e f he c a i . In the absence of a charter or
G.R. N . 176897. D 11, 2013.* b la pro ision to the contrar , the president is pres med
to ha e the a thorit to act ithin the domain of the
general objecti es of its b siness and ithin the scope of
his or her s al d ties.
ADVANCE PAPER CORPORATION and GEORGE HAW, Remedial La ; E idence; Admissibili of E idence; The r le
in his capaci as Presiden of Ad ance Paper Corpora ion, is ha fail re o objec o he offered e idence renders i
pe i ioners, . ARMA TRADERS CORPORATION, admissible, and he co r canno , on i s o n, disregard s ch
MANUEL TING, CHENG GUI and BENJAMIN NG, e idence. The e i ha fai e bjec he ffe ed e ide ce
responden s. e de i ad i ib e, a d he c ca , i , di ega d
ch e ide ce. Whe a a de i e he c ejec he
ANTONIO TAN and UY SENG KEE WILLY, responden s. e ide ce ffe ed, i a e i he f fa i e bjec i
a d i ca ai e he bjec i he e ide ce f he fi i e
a ea . Beca e f a a fai e i e bjec , he
Corpora ion La ; Doc rine of Apparen A hori ; Agenc ; e ide ce bec e a f he e ide ce i he ca e. The eaf e , a
The doc rine of apparen a hori pro ides ha a corpora ion ill he a ie a e c ide ed b db a c ea i i gf he
be es opped from den ing he agen s a hori if i kno ingl ffe f e ide ce e e e ed.
permi s one of i s officers or an o her agen o ac i hin he scope
of an apparen a hori , and i holds him o o he p blic as Same; Same; Wi nesses; The iss e of credibili of i nesses is
possessing he po er o do hose ac s. The d c i e f a a e o be resol ed primaril b he rial co r beca se i is in he be er
a h i ide ha a c ai i be e ed f posi ion o assess he credibili of i nesses as i heard he
de i g he age a h i if i k i g e i e f i es imonies and obser ed he depor men and manner of es if ing
ffice a he age ac i hi he c e f a a a e of he i nesses. The i e f c edibi i f i e e i be
a h i , a d i h d hi he b ic a e i g he e ed i a i b he ia c beca e i i i he be e
e d h e ac . The d c i e f a a e a h i d e ii a e he c edibi i f i e e a i hea d he
a if he i ci a did e i ie a d b e ed he de e a d a e f
e if i g f he i e e . Acc di g , i fi di g a e e i ed
g ea e ec a d i be di bed a ea i he ab e ce f
_______________
a h i g ha he ia
* SECOND DIVISION.
 315 George Ha (Ha ) is he Presiden hile his ife, Connie
Ha , is he General Manager.5
Responden Arma Traders is also a domes ic corpora ion
c e ked, i de d, i a ied e fac engaged in he holesale and dis rib ion of school and
ci c a ce f eigh a d b a ce hich d ha e affec ed office s pplies, and no el prod c s.6 Responden An onio
he e f he ca e. Tan (Tan) as formerl he Presiden hile responden U
Seng Kee Will (U ) is he Treas rer of Arma Traders.7
PETITION for re ie on cer iorari of he decision and The represen ed Arma Traders hen dealing i h i s
resol ion of he Co r of Appeals. s pplier, Ad ance Paper, for abo 14 ears.
The fac s are s a ed in he opinion of he Co r . On he o her hand, responden s Man el Ting, Cheng
N a F. R , J . for pe i ioners. G i and Benjamin Ng orked for Arma Traders as Vice
E A ,J .a F C for responden s. Presiden , General Manager and Corpora e Secre ar ,
respec i el .
On ario s da es from Sep ember o December 1994,
BRION, J.:
Arma Traders p rchased on credi no ebooks and o her
paper prod c s amo n ing o P7,533,001.49 from Ad ance
Before s is a Pe i ion for Re ie 1 seeking o se aside
Paper.10
he Decision of he Co r of Appeals (CA) in CA-G.R. CV
Upon he represen a ion of Tan and U , Arma Traders
No. 71499 da ed March 31, 2006 and he Resol ion da ed
also ob ained hree loans from Ad ance Paper in No ember
March 7, 2007.2 The Decision re ersed and se aside he
1994 in he amo n s of P3,380,171.82, P1,000,000.00, and
r ling of he Regional Trial Co r (RTC) of Manila, Branch
P3,408,623.94 or a o al of P7,788,796.76.11 Arma Traders
18 in Ci il Case No. 94-72526 hich ordered Arma Traders
needed he loan o se le i s obliga ions o o her s ppliers
Corpora ion (A a T a ) o pa Ad ance Paper
beca se i s o n collec ibles did no arri e on ime.12
Corpora ion (A a c Pa ) he s m of P15,321,798.25
Beca se of i s good b siness rela ions i h Arma Traders,
i h in eres , and P1,500,000.00 for a orne s fees, pl s
Ad ance Paper e ended he loans.13
he cos of he s i .3

Fac al An eceden _______________

5 I ., a p. 288.
Pe i ioner Ad ance Paper is a domes ic corpora ion 6 Ib .
engaged in he b siness of prod cing, prin ing, 7 I ., a p. 48.
man fac ring, dis rib ing and selling of ario s paper 8 Reco d , Vol. 3, pp. 170-178; efe ing o he S o n S a emen of
prod c s.4 Pe i ioner Ha da ed No embe 18, 1996.
9 I ., a p. 48.
_______________ 10 Ib .
11 Ib .
1 R le 45 of he Re i ed R le of Co ;R , pp. 8-44.
12 Ib .
2 Penned b A ocia e J ice Vicen e S.E. Velo o, and conc ed in b
13 I ., a p. 75.
A ocia e J ice Po ia Ali o-Ho mach elo and Ameli a G. Tolen ino;
., a pp. 46-69.
3 Ci il Ca e No. 94-72526 da ed A g 20, 2011; penned b J dge
Pe fec o A.S. Lag io, J .; ., a pp. 75-77.
4 I ., a p. 48. 317

As pa men for he p rchases on credi and he loan

ransac ions, Arma Traders iss ed 82 pos da ed checks14
316 pa able o cash or o Ad ance Paper. Tan and U ere
Arma Traders a hori ed bank signa ories ho signed and
iss ed hese checks hich had he aggrega e amo n of manifes a ion22 da ed J ne 14, 1995, s bmi ing a bank
P15,130,636.87.15 s a emen from Me robank EDSA Kalookan Branch. This
Ad ance Paper presen ed he checks o he dra ee bank as o sho ha Ad ance Paper s credi line ih
b hese ere dishonored ei her for ins fficienc of f nds Me robank has been ransferred o he acco n of Arma
or acco n closed. Despi e repea ed demands, ho e er, Traders as pa ee from Oc ober 1994 o December 1994.
Arma Traders failed o se le i s acco n i h Ad ance Moreo er, Ha es ified o pro e he loan ransac ions.
Paper.16 When asked h he considered e ending he loans
On December 29, 1994, he pe i ioners filed a i ho an colla eral and loan agreemen or promissor
complain 17 for collec ion of s m of mone i h applica ion no e, and onl on he basis of he iss ance of he pos da ed
for preliminar a achmen agains Arma Traders, Tan, checks, he ans ered ha i as beca se he r s ed Arma
U , Ting, G i, and Ng. Traders since i had been heir c s omer for a long ime
and ha none of he pre io s checks e er bo nced.23
Claim of he e i ione
Claim of he e onden
The pe i ioners claimed ha he responden s
fra d len l iss ed he pos da ed checks as pa men for The responden s arg ed ha he c a c
he p rchases and loan ransac ions kno ing ha he did ere sp rio s, sim la ed and fra d len since here as
no ha e s fficien f nds i h he dra ee banks.1 no deli er of he P7,000,000.00 or h of no ebooks and
To pro e he c a c , he pe i ioners o her paper prod c s.24
presen ed he s mmar of he ransac ions and heir D ring he rial, Ng es ified ha Arma Traders did no
corresponding sales in oices as heir doc men ar p rchase no ebooks and o her paper prod c s from
e idence.1 Sep ember
D ring he rial, Ha also es ified ha i hin one or
o eeks pon deli er of he paper prod c s, Arma _______________
Traders paid he p rchases in he form of pos da ed checks.
Th s, he 20 R , p. 193; Reco d , Vol. 3, pp. 170-178; efe ing o he S o n
S a emen of Ha da ed No embe 18, 1996.
21 I ., a p. 48; ma ked a E hibi AA, BB and CC.
_______________
22 Reco d , Vol. 2, pp. 113-116.
14 Ma ked a E hibi E-1 o E-82. S Reco d , Vol. 2, pp. 418-445. 23 Reco d , Vol. 3, pp. 244-245.
15 R , p. 48. 24 Reco d , Vol. 3, pp. 71-80; efe ing o pa . 7, page 2 of A ma
16 I ., a pp. 48-49. T ade , Ting, G i and Ng An e i h Comp l o Co n e claim and
17 Amended on Oc obe 26, 1995. C o claim da ed Feb a 23, 1996.
18 Reco d , Vol. 2, p. 283; efe ing o he Amended Complain .
19 Reco d , Vol. 1, pp. 12-109, and Vol. 2, pp. 290-417; Ma ked a
E hibi A-1 o A-32, B-1 o B-30, C o C-31 and D o D-3.

31

o December 1994. He claimed ha d ring his period,

31
Arma Traders concen ra ed on Chris mas i ems, no school
and office s pplies. He also narra ed ha pon learning
personall collec ed hese checks on Sa rda s and pon abo he complain filed b he pe i ioners, he
recei ing he checks, he s rrendered o Arma Traders he immedia el looked for Arma Traders records and fo nd no
original of he sales in oices hile he re ained he receip s in ol ing he p rchases of no ebooks and o her
d plica e of he in oices.20 paper prod c s from Ad ance Paper.25
To pro e he a a ac , he pe i ioners As o he a a ac , he responden s co n ered
presen ed he copies of he checks21 hich Ad ance Paper ha hese ere he personal obliga ions of Tan and U o
iss ed in fa or of Arma Traders. The pe i ioners also filed a
Ad ance Paper. These loans ere ne er in ended o benefi T a c c a c ac a
he responden s. b a A a c Pa .31 Ho e er, according
The responden s also claimed ha he loan ransac ions o him, Ad ance Paper as informed beforehand ha Arma
ere a beca se he board of direc ors of Arma Traders checks ere f nded o of he P20,000,000.00
Traders did no iss e a board resol ion a hori ing Tan or h of collec ibles coming from he pro inces.
and U o ob ain he loans from Ad ance Paper. The Unfor na el , he e pec ed collec ibles did no ma eriali e
claimed ha he borro ing of mone m s be done onl for nkno n reasons.32
i h he prior appro al of he board of direc ors beca se Ng filed his Ans er33 and claimed ha he managemen
i ho he appro al, he corpora e officers are ac ing in of Arma Traders as lef en irel o Tan and U . Th s, he
e cess of heir a hori or a . When he ac s of he ne er par icipa ed in he compan s dail ransac ions.34
corpora e officers are l ra ires, he corpora ion is no A . Ernes S. Ang, Jr. (A . A ), Arma Traders Vice
liable for ha e er ac s ha hese officers commi ed in Presiden for Legal Affairs and Credi and Collec ion,
e cess of heir a hori . F r her, he responden s claimed es ified ha he in es iga ed he ransac ions in ol ing
ha Ad ance Paper failed o erif Tan and U s a hori Tan and U
o ransac b siness i h hem. Hence, Ad ance Paper
sho ld s ffer he conseq ences.26 _______________
The responden s acc sed Tan and U for conspiring
i h he pe i ioners o defra d Arma Traders hro gh a 27 Reco d , Vol. 3, pp. 71-80; efe ing o pa . 8-9.5, page 2 of A ma
series of ransac ions kno n as redisco n ing of pos da ed T ade , Ting, G i and Ng An e i h Comp l o Co n e claim and
checks. In redisco n ing, he responden s e plained ha C o claim da ed Feb a 23, 1996.
Tan and U o ld iss e Arma Traders pos da ed checks o 28 Reco d , Vol. 1, pp. 146-154.
he pe i ioners in e change for cash, disco n ed b as m ch 29 Page 2 of U An e da ed Jan a 20, 1995.
as 7% o 10% depending on ho long ere he erms of 30 Ib .
repa men . The 31 Ib .
32 I ., a p. 3.
33 Reco d , Vol. 3, pp. 64-68.
_______________
34 Page 3 of Ng An e da ed Feb a 19, 1996.
25 Reco d , Vol. 4, pp. 141-147; efe ing o Ng Di ec Te imon
da ed Feb a 4, 1999.
26 I ., a p. 241; efe ing o he Memo and m of he Defendan .

321

and disco ered ha he ere financing heir o n b siness

320
sing Arma Traders reso rces. He also acc sed Ha for
conni ing i h Tan and U in fra d len l making Arma
redisco n ed percen age represen ed he in eres or profi Traders liable for heir personal deb s. He based his
earned b he pe i ioners in hese ransac ions.27 concl sion from he follo ing: F , basic h man
Tan did no file his Ans er and as e en all declared e perience and common sense ell s ha a lender ill no
in defa l . agree o e end addi ional loan o ano her person ho
On he o her hand, U filed his Ans er2 da ed Jan ar alread o es a s bs an ial s m from he lender in his
20, 1995 b as s bseq en l declared in defa l pon his case, pe i ioner Ad ance Paper. S c , here as no o her
fail re o appear d ring he pre- rial. In his Ans er, he doc men pro ing he e is ence of he loan o her han he
admi ed ha Arma Traders oge her i h i s corpora e pos da ed checks. T , he o al of he p rchase and loan
officers ha e been ransac ing b siness i h Ad ance ransac ions - - he o al amo n of he pos da ed
Paper.2 He claimed ha he and Tan ha e been a hori ed checks did no all . F , he fo nd o ha he cer ified
b he board of direc ors for he pas 13 ears o iss e r e cop of Ad ance Paper s repor i h he Sec ri ies and
checks in behalf of Arma Traders o pa i s obliga ions i h E change Commission (SEC ) did no reflec he
Ad ance Paper.30 F , a a A a P15,000,000.00 collec ibles i had i h Arma Traders.35
 A . Ang also es ified ha he alread filed se eral F , Arma Traders as no liable for he loan in he
cases of a a and q alified hef 36 agains Tan and U absence of a board resol ion a hori ing Tan and U o
and ha se eral arran s of arres had been iss ed ob ain he loan from Ad ance Paper.3 The CA
agains hem. ackno ledged ha Tan and U ere Arma Traders
In heir pre- rial brief,37 he responden s named Sharo a hori ed bank signa ories. Ho e er, he CA e plained
Ong, he secre ar of Tan and U , o es if on ho Tan ha his is no s fficien beca se he a hori o sign he
and U conspired i h he pe i ioners o defra d Arma checks is differen from he req ired a hori o con rac a
Traders. Ho e er, he responden s did no presen her on loan.40
he i ness s and.
_______________
The RTC R ling
38 R , pp. 49, 76.
On J ne 18, 2001, he RTC r led ha he p rchases on 39 I ., a p. 63, ci ing Sec. 23 of he Co po a ion Code, and AF R a &
credi and loans ere s fficien l pro en b he pe i ioners. D , I c. . D a F S c , C ., G.R. No. 111448,
Hence, he RTC ordered Arma Traders o pa Ad ance Jan a 16, 2002, 373 SCRA 385, 391, hich held: [C]on ac o ac of a
Paper co po a ion m be made ei he b he boa d of di ec o o b a
co po a e agen d l a ho i ed b he boa d. Ab en ch alid
delega ion o a ho i a ion, he le i ha he decla a ion of an
_______________
indi id al di ec o ela ing o he affai of he co po a ion a e
35 Reco d , Vol. 4, pp. 169-176; efe ing o he Di ec Te imon of no binding on he co po a ion.
A . E ne S. Ang, J . da ed Ma 12, 2000. 40 I ., a p. 64.
36 Reco d , Vol. 3, pp. 208-209; a ppo ed b he Info ma ion in
C iminal Ca e No. 145888 da ed Sep embe 11, 1995 hich a ma ked
a E hibi 2.
37 I ., a pp. 123-126. 323

S c , he CA also held ha he pe i ioners presen ed

322
he s m of P15,321,798.25 i h in eres , and P1,500,000.00
for a orne s fees, pl s he cos of he s i .
The RTC held ha he responden s failed o presen
hard, admissible and credible e idence o pro e ha he
sale in oices ere forged or fic i io s, and ha he loan
ransac ions ere personal obliga ions of Tan and U .
None heless, he RTC dismissed he complain agains
Tan, U , Ting, G i and Ng d e o he lack of e idence
sho ing ha he bo nd hemsel es, ei her join l or
solidaril , i h Arma Traders for he pa men of i s
acco n .3
Arma Traders appealed he RTC decision o he CA.
The CA R ling
The CA held ha he pe i ioners failed o pro e b
preponderance of e idence he e is ence of he p rchases
on credi and loans based on he follo ing gro nds:
incompe en and inadmissible e idence o pro e he
p rchases on credi since he sales in oices ere hearsa .41
The CA poin ed o ha Ha s es imon as o he
iden ifica ion of he sales in oices as no an e cep ion o
he hearsa r le beca se here as no sho ing ha he
secre aries ho prepared he sales in oices are alread
dead or nable o es if as req ired b he R les of
Co r .42 F r her, he CA no ed ha he secre aries ere
no iden ified or presen ed in co r .43
T , he CA r ling hea il relied on Ng s Appellan s
Brief44 hich made he de ailed descrip ion of he badges
of fra d. The CA a erred ha he pe i ioners failed o
sa isfac oril reb he badges of fra d45 hich incl de he
inconsis encies in:
(1) E hibi E-26, a pos da ed check, hich as allegedl
iss ed in fa or of Ad ance Paper b rned o o be a
check pa able o Top Line, Ad ance Paper s sis er
compan ;46
(2) Sale In oice No. 8946, an e idence o pro e he
e is ence of he p rchases on credi , hose pho o-
_______________ _______________

41 I ., a p. 61. 47 I ., a p. 65.
42 I ., a pp. 62-63, ci ing Sec ion 43, R le 130 of he R le of Co : 48 Ib .
E c b . En ie made a , o nea he ime of 49 I ., a p. 68.
he an ac ion o hich he efe , b a e decea ed, ab e 50 Ib .
e if , ho a in a po i ion o kno he fac he ein a ed, ma be 51 I ., a p. 69.
ecei ed a a ac e idence, if ch pe on made he en ie in hi 52 I ., a pp. 207-208.
p ofe ional capaci o in he pe fo mance of d and in he o dina o
eg la co e of b ine o d . (i alic and empha i pplied)
43 I ., a pp. 61-62.
44 I ., a pp. 52-61. 325
45 I ., a p. 60.
46 I ., a pp. 64-65.
Ci ing L a . Pac c Ba C a ,53 he
pe i ioners said ha if a corpora ion kno ingl permi s one
of i s officers or an o her agen o ac i hin he scope of
an apparen a hori , i holds him o o he p blic as
324
possessing he po er o do hose ac s; h s, he corpora ion
ill, as agains an one ho has in good fai h deal ihi
cop failed o reflec he amo n s a ed in he d plica e hro gh s ch agen , be es opped from den ing he agen s
cop ,47 and; a hori .
(3) The SEC repor of Ad ance Paper for he ear ended S c , he pe i ioners arg e ha Ha s es imon is
1994 reflec ed i s acco n recei ables amo n ing o no hearsa . The emphasi e ha Ha has personal
P219,705.19 onl an amo n far from he claimed kno ledge of he assailed p rchases and loan ransac ions
P15,321,798.25 recei ables from Arma Traders.4 beca se he deal i h he c s omers, and s per ised and
Hence, he CA a he RTC s order for Arma direc ed he prepara ion of he sales in oices and he
Traders o pa Ad ance Paper he s m of P15,321,798.25, deli eries of he goods.54 Moreo er, he pe i ioners s ress
P1,500,000.00 for a orne s fees, pl s cos of s i .4 I ha he responden s ne er objec ed o he admissibili of
a he RTC decision dismissing he complain he sales in oices on he gro nd ha he ere hearsa .55
agains responden s Tan, U , Ting, G i and Ng.50 The CA T , he pe i ioners disp e he CA s findings on he
also direc ed he pe i ioners o solidaril pa each of he e is ence of he badges of fra d. The pe i ioners co n ered:
responden s heir co n erclaims of P250,000.00 as moral (1) The discrepancies be een he fig res in he 15 o of
damages, P250,000.00 as e emplar damages, and he 96 pho ocopies and d plica e originals of he sales
P250,000.00 as a orne s fees.51 in oices amo n ing o P4,624.80 a ca
a c a a c a
The Pe i ion P7,533,001.49 ma ha e been ca sed b he
fail re o p he carbon paper.56 Besides,
The pe i ioners raise he follo ing arg men s. a 81 a c a c .
F , Arma Traders led he pe i ioners o belie e ha The pe i ioners also raise he poin ha his
Tan and U had he a hori o ob ain loans since he discrepanc is a noniss e beca se he d plica e
responden s lef he ac i e and sole managemen of he originals RTC.57
compan o Tan and U since 1984. In fac , Ng es ified (2) The responden s misled Ha d ring he cross-
ha Arma Traders s ockholders and board of direc ors e amina ion and ook his ans er o of con e .5
ne er cond c ed a mee ing from 1984 o 1995. Therefore, if
he responden s posi ion ill be s s ained, he ill ha e _______________
he abs rd po er o q es ion all he b siness ransac ions
of Arma Traders.52 53 G.R. No. 142435, Ap il 30, 2003, 402 SCRA 339.
54 R , p. 254.
 55 I ., a p. 194.
56 I ., a p. 258.
327
57 I ., a p. 257.
58 I ., a p. 259. The pe i ione e plained:
checks o co er heir deb s, and he ref sed o se le
heir obliga ion i h Ad ance Paper.63

326 The Ca e fo he Re onden

The responden s arg e ha he Pe i ion for Re ie

The pe i ioners arg e ha his mane er is
ins fficien o discredi Ha s en ire es imon .5
(3) Arma Traders sho ld be fa l ed for indica ing Top
Line as he pa ee in E hibi E-26 or PBC check no.
091014. Moreo er, E hibi E-26 does no refer o PBC
check no. 091014 b o PBC check no. 091032
pa able o he order of cash.60
(4) The discrepanc in he o al amo n of he checks
hich is P15,130,363.87 as agains he o al
obliga ion of P15,321,798.25 does no necessaril
pro e ha he ransac ions are sp rio s.61
(5) The difference in Ad ance Paper s acco n s
recei ables in he SEC repor and in Arma Traders
obliga ion i h Ad ance Paper as based on
none is en e idence beca se E hibi 294-NG does
no per ain o an balance shee .62 Moreo er, he
erm acco n s recei able is no s non mo s i h
ca se of ac ion. The responden s canno escape heir
liabili b simpl poin ing he SEC repor beca se
he pe i ioners ha e es ablished heir ca se of ac ion
ha he p rchases on credi and loan ransac ions
ook place, he responden s iss ed he dishonored
sho ld be dismissed s mmaril beca se of he follo ing
proced ral gro nds: , for fail re o compl i h A.M.
No. 02-8-13-SC;64 and c , he CA decision is alread
final and e ec or since he pe i ioners filed heir Mo ion
for Reconsidera ion o of ime. The e plain ha nder
he r les of he CA, if he las da for filing of an pleading
falls on a Sa rda no a holida , he same m s be filed on
said Sa rda , as he Docke and Recei ing Sec ion of he
CA is open on a Sa rda .65
The responden s arg e ha hile as a general r le, a
corpora ion is es opped from den ing he a hori of i s
agen s hich i allo ed o deal i h he general p blic; his
is onl r e if he person dealing i h he agen deal in
good fai h.66 In he presen case, he responden s claim
ha he pe i ioners are in bad fai h beca se he pe i ioners
conni ed i h Tan and U o make Arma Traders liable for
he none is en deli eries of no ebooks and o her paper
prod c s.67 The also insis ha he sales in oices are
man fac red e idence.6
As o he loans, he responden s a er ha hese ere
Tan and U s personal obliga ions i h Ad ance Paper.6
More-

_______________
_______________

B pe ing he an c ip , i i ob io ha he q e ion p eceding

63 I ., a p. 262.
he one ci ed b he e ponden efe ed o an ac ion hich c ea ed
64 Di ec ing no a p blic o no longe e he comm ni a
b iga i he a f A a T ade . So, hen Ha a a ked:
ce ifica e a p oof of he affian iden i beca e of i inhe en
A ide f om hi , he e e e no o he an ac ion ( ic) be een o ,
n eliabili ; effec i e A g 1, 2004.
he an e ed, No o he an ac ion, belie ing ha he a being a ked if
65 R , p. 292.
he e e e o he an ac ion ha co ld be added o ho e he men ioned
66 I ., a p. 310, Memo and m fo Re ponden , ci ing L a . Pac c
al ead , meaning, ho e UNPAID an ac ion . He hf ll aid he e
Ba C a , a no e 53, a p. 350.
e e no o he .
67 I ., a pp. 289, 311.
59 I ., a p. 259.
68 I ., a p. 311.
60 I ., a p. 260.
69 I ., a p. 289.
61 Ib .
62 I ., a p. 261.
 32
F , he responden s correc l ci ed A.M. No. 02-8-13-
SC da ed Febr ar 19, 2008 hich refer o he amendmen
o er, hile he hree cashier s checks ere deposi ed in he
of he 2004 R les on No arial Prac ice. I dele ed he
acco n of Arma Traders, i is like ise r e ha Tan and
Comm ni Ta Cer ifica e among he accep ed proof of
U iss ed Arma Traders checks in fa or of Ad ance Paper.
iden i of he affian beca se of i s inheren nreliabili .
All hese checks are e idence of Tan, U and Ha s
The pe i ioners iola ed his hen he sed Comm ni
s s ema ic conspirac o siphon Arma Traders corpora e
Ta Cer ifica e No. 05730869 in heir Pe i ion for Re ie .73
f nds.70
Ne er heless, he defec i e a in he
The responden s also seek o discredi Ha s es imon
Verifica ion/Cer ifica ion of Non-For m Shopping is no a
on he basis of he follo ing. F , his es imon as regards
fa al defec beca se i is onl a formal, no a j risdic ional,
he sales in oices is hearsa beca se he did no personall
req iremen ha he Co r ma ai e.74 F r hermore, e
prepare hese doc men ar e idence.71 S c , Ha
canno simpl ignore he millions of pesos a s ake in his
s spicio sl ne er had an ri en a hori from his o n
case. To do so migh ca se gra e inj s ice o a par , a
Board of Direc ors o lend mone . T , he responden s
si a ion ha his Co r in ends o a oid.
also q es ioned h Ad ance Paper gran ed he
S c , no less han he CA i self ai ed he r les on
P7,000,000.00 loan i ho req iring Arma Traders o
he period o file he mo ion for reconsidera ion. A re ie of
presen an colla eral or g aran ees.72
he CA Resol ion75 da ed March 7, 2007, re eals ha he
pe i ioners Mo ion for Reconsidera ion as denied beca se
The I e
he allega ions ere a mere rehash of ha he pe i ioners
earlier arg ed b ca c a
The main proced ral and s bs an i e iss es are:
a .
I. Whe her he pe i ion for re ie sho ld be dismissed
for fail re o compl i h A.M. No. 02-8-13-SC.
The b an i e i e .
II. Whe her he pe i ion for re ie sho ld be dismissed
on he gro nd of fail re o file he mo ion for
A ma T ade i liable o a
reconsidera ion i h he CA on ime.
he loan on he ba i of he
III. Whe her Arma Traders is liable o pa he loans
doc ine of a a en a ho i .
appl ing he doc rine of apparen a hori .
IV. Whe her he pe i ioners pro ed Arma Traders
liabili on he p rchases on credi b preponderance _______________
of e idence. 73 I ., a p. 43.
74 Ga c . A III, G.R. No. 193978, Feb a 28, 2012, 667
_______________ SCRA 150, 175.
75 R , p. 139.
70 S a no e 68.
71 R , p. 293.
72 I ., a pp. 169, 303.

330

32 The doc rine of apparen a hori pro ides ha a

corpora ion ill be es opped from den ing he agen s
a hori if i kno ingl permi s one of i s officers or an
The Co R ling
o her agen o ac i hin he scope of an apparen
a hori , and i holds him o o he p blic as possessing
We gran he pe i ion.
he po er o do hose ac s.76 The doc rine of apparen
a hori does no appl if he principal did no commi an
The oced al i e .
ac s or cond c hich a hird par kne and relied pon
in good fai h as a res l of he e ercise of reasonable ffice age , a d ch a a e e a he
pr dence. Moreo er, he agen s ac s or cond c m s ha e c ai ha ca ed e dea i g i h he ffice
prod ced a change of posi ion o he hird par s age be ie e ha i ha c fe ed.
de rimen .77
In I -A a I I . C [A]pparent a thorit is deri ed not merel from
A a ,7 e e plained: practice. Its e istence ma be ascertained thro gh (1) he
ge e a a e i hich he c ai h d a ffice
U de hi i i [ efe i g Sec. 23 f he C ai age a ha i g he e ac ,i he d he a a e
C de], he e a d e ibi i decide he he he a h i ac i ge e a , i h hich i c he hi ; (2) the
c ai h d e e i a c ac ha i bi d he acq iescence in his acts of a partic lar nat re, ith act al
c ai i dged i he b a d, bjec he a ic e f or constr cti e kno ledge thereof, ithin or be ond the
i c ai , b a , ee a i i f a . Ho e er, scope of his ordinar po ers. It req ires presentation of
j st as a nat ral person ho ma a thori e another to do e idence of similar act(s) e ec ted either in its fa or or in
certain acts for and on his behalf, the board of directors fa or of other parties. It is not the q antit of similar acts
ma alidl delegate some of its f nctions and po ers to hich establishes apparent a thorit , b t the esting of a
officers, committees or agents. The a thorit of s ch corporate officer ith the po er to bind the corporation.
indi id als to bind the corporation is generall [e ha e a d de c e ]

_______________
In P A ca a Wa C ., I c. . C
76 P A ca a Wa C ., I c. . C A a , A a ,7 e r led ha he doc rine of apparen
G.R. No. 117847, Oc obe 7, 1998, 297 SCRA 170, 184-185, ci ing a hori is applied hen he pe i ioner, hro gh i s
F a c c . G S c I a c S , No . L-18287 and L- presiden An onio P nsalan Jr., en ered in o he Firs
18155, Ma ch 30, 1963, 7 SCRA 577, 583; and Ma a a P b Con rac i ho firs
C a . Ta , No. L-65594, J l 9, 1986, 142 SCRA 553, 566.
77 Ba a . P C R a Ba (L a , C b ), I c., _______________
G.R. No. 163825, J l 13, 2010, 625 SCRA 21, 34, ci ing Y K a B
. P A a Ga C a , G.R. No. 163553, 79 S a no e 76.

Decembe 11, 2009, 608 SCRA 107, 132.

78 G.R. No. 125778, J ne 10, 2003, 403 SCRA 452, 456-457, ci ing
P A ca a Wa C ., I c. . C A a , a
no e 76. 332

sec ring board appro al. Despi e s ch lack of board

appro al, pe i ioner did no objec o or rep dia e said
331 con rac , h s clo hing i s presiden i h he po er o
bind he corpora ion.
deri ed from la , corporate b la s or a thori ation from Inasm ch as a corpora e presiden is of en gi en
the board, either e pressl or impliedl b habit, c stom general s per ision and con rol o er corpora e opera ions,
or acq iescence in the general co rse of b siness, viz.: he s ric r le ha said officer has no inheren po er o ac
for he corpora ion is slo l gi ing a o he reali a ion
Ac a e ffice age a e e e a d bi d he ha s ch officer has cer ain limi ed po ers in he
c ai i a ac i i h hi d e he e e ransac ion of he s al and ordinar b siness of he
ha [ he] a h i d ha bee c fe ed hi , corpora ion. 0 I ab c a c a b a
a d hi i c de e a , i he a c e f he c a ,
a ic a b i e , a e i cide a , a be i ied a a ac a
f , he e i e i a c fe ed, e added b a b c b a
c a d age, a a e ai i g he a ic a c a . 1
 In he presen pe i ion, e do no agree i h he CA s ab sing heir po ers. Beca se of i s o n la i in i s
findings ha Arma Traders is no liable o pa he loans b siness dealings, Arma Traders is no es opped from
d e o he lack of board resol ion a hori ing Tan and U den ing Tan and U s a hori o ob ain loan from
o ob ain he loans. To begin i h, Arma Traders Ar icles Ad ance Paper.
of Incorpora ion 2 pro ides ha he corpora ion a We also rejec he responden s claim ha Ad ance
b a a ca Paper, hro gh Ha , conni ed i h Tan and U . The
b b he iss ance of bonds, records do no con ain an e idence o pro e ha he loan
promissor no es and o her e idence of indeb edne . ransac ions ere personal o Tan and U . A differen
Like ise, i s a es ha Tan and concl sion migh ha e been inferred had he cashier s
checks been iss ed in fa or of Tan and U , and had he
_______________ pos da ed checks in fa or of Ad ance Paper been ei her
Tan and/or U s, or had he responden s presen ed
80 I ., a p. 185, ci ing W A ca L I . C . . H c , 217 SE con incing e idence o sho ho Tan and U conspired
2d 323, 324, Ma 19, 1975; and C . G.E. C c C ., 158 SE 2d i h he pe i ioners o defra d Arma Traders. 4 We
305, 308, Oc obe 30, 1967.
81 Ib ., ci ing 19 Am J 2d 595; ci ing P a -W , I c. . W
_______________
M . L I . C ., 56 SE 2d 607, 612, Decembe 14, 1949; C a .
C a C a &M C ., 84 NE 759, 760, Ma 15, 1908; C . 83 R , pp. 207-208.
H.M. L &S L b C ., 49 NW 575, 575, J l 28, 1891, M a 84 I ., a p. 264. The pe i ione a g ed:
H a A . . Pac c G a , 50 ALR 2d 442, 445, No embe 29, 1955; Significan l , in he P e-T ial B ief filed b Re ponden (ci a ion
L & C . . Ma & R c , 79 NE 172, 173, Decembe 5, 1906, and omi ed), a ce ain Sha o Ong a ppo ed o e if on ho An onio
Na a Sa Ba .V C Na a Ba , 40 NE 799, 800, Ma Tan and U Seng Kee Will con pi ed i h plain iff o def a d A ma
28, 1895. T ade Co po a ion. No ch i ne o b i e
82 Reco d , Vol. 1, pp. 399-407. A ma T ade a fo me l kno n a
Di i o ia Ad ance P od c Co p.

334

333
no e ha he responden s ini iall in ended o presen
Sharo Ong, he secre ar of Tan and U , o es if on ho
U are no j s ordinar corpora e officers and a hori ed Ad ance Paper conni ed i h Tan and U . As men ioned,
bank signa ories beca se he are also Arma Traders he responden s failed o presen her on he i ness s and.
c a along i h responden s Ng and Ting, and
Pedro Chao. F r hermore, he responden s, hro gh Ng The e onden failed o objec
ho is Arma Traders corpora e secre ar , incorpora or, o he admi ibili of he ale
s ockholder and direc or, es ified ha he ole in oice on he g o nd ha he
managemen of A ma T ade a lef o Tan and U a e hea a
and ha he and he o he office ne e deal i h
he b ine and managemen of A ma T ade fo 14 The r le is ha fail re o objec o he offered e idence
ea . He al o confi med ha ince 1984 o he renders i admissible, and he co r canno , on i s o n,
filing of he com lain again A ma T ade , i disregard s ch e idence. 5 When a par desires he co r
ockholde and boa d of di ec o ne e had i o rejec he e idence offered, i m s so s a e in he form of
mee ing. 3 a imel objec ion and i canno raise he objec ion o he
Th s, Arma Traders bes o ed pon Tan and U broad e idence for he firs ime on appeal. Beca se of a par s
po ers b allo ing hem o ransac i h hird persons fail re o imel objec , he e idence becomes par of he
i ho he necessar ri en a hori from i s e idence in he case. Thereaf er, all he par ies are
nonperforming board of direc ors. Arma Traders failed o considered bo nd b an o come arising from he offer of
ake preca ions o pre en i s o n corpora e officers from e idence properl presen ed. 6
 In H P c M. U a, S . . H Lb a 89 Sec ion 43, R le 130 of he R le of Co p o ide : En ie made
7
M. U a, ho e er, e held: a , o nea he ime of an ac ion o hich he efe , b a pe on
decea ed, o nable o e if , ho a in a po i ion o kno he fac
[H]ea a e ide ce he he bjec ed ca be gi e he ein a ed, ma be ecei ed a a ac e idence, if ch pe on
c ede ce f ha i g ba i e a e. Thi i ci e, h e e , made he en ie in hi p ofe ional capaci o in he pe fo mance of d
ha bee e a ed i ca e he e, i addi i he fai e and in he o dina o eg la co e of b ine o d . (i alic
bjec he ad i ibi i f he bjec e ide ce, there ere pplied)
other pieces of e idence In e e al ca e , he follo ing e e he e abli hed eq i i e fo he
admi ibili of en ie made in he co e of b ine :
_______________ (a) En ie m ha e been made a o nea he ime of he
an ac ion o hich he efe .
a p od ced. No e plana ion fo ch fail e a e e made ei he .
(b) En an m ha e been in a po i ion o kno he fac a ed in
85 Ma a a I a c C ., I c. . A b , G.R. No. 194320, Feb a 1,
he en ie .
2012, 664 SCRA 791, 805.
(c) En ie m ha e been made b en an in hi p ofe ional
86 Ib ., ci ing A a C c a D C a .
capaci o in he pe fo mance of hi d .
COMFAC C a , G.R. No. 163915, Oc obe 16, 2006, 504 SCRA 519,
(d) En ie e e made in he o dina o eg la co e of b ine o
524.
d .
87 G.R. No. 165748, Sep embe 14, 2011, 657 SCRA 555, 568. See al o
(e) E a be decea ed ab e e if .
T -W Ma ac , I c. . ECED, IRTI, S.A., E c c C ., 222
Phil. 424, 437; 138 SCRA 118, 132 (1985).

336

335
B e en ho gh he sales in oices are hearsa ,
none heless, he form par of he records of he case for
presented or there ere other circ mstances pre ailing to
he responden s fail re o objec as o he admissibili of
s pport the fact in iss e. (e ha i a d de c e ;
he sales in oices on he gro nd ha he are hearsa . 0
ci a i i ed)
Based on he records, he responden s hro gh Ng objec ed
o he offer for he p rpose [ o] hich he are being
offered onl no on he gro nd ha he ere
We agree i h he responden s ha i h respec o he
hearsa . 1
iden ifica ion of he sales in oices, Ha s es imon as
hearsa beca se he as no presen d ring i s
The e i ione ha e o en
prepara ion and he secre aries ho prepared hem ere
hei claim fo he n aid
no presen ed o iden if hem in co r . F r her, hese
cha e on c edi b e-
sales in oices do no fall i hin he e cep ions o he
onde ance of e idence.
hearsa r le e en nder he en ries in he co rse of
b siness beca se he pe i ioners failed o sho ha he
We are no con inced b he responden s arg men ha
en ran as deceased or as nable o es if .
he p rchases are sp rio s beca se no less han U
a a a c c
_______________
a c ac a b a A a
88 D ing he c o -e amina ion, Ha e ified: T a A a c Pa . 2 Moreo er, here are
Q: Whe e e e o hen he e ale in oice , E hibi A-1 and i o her pieces of e idence o pro e he e is ence of he
bma king , B-1 and i bma king , C-1 and i bma king , and p rchases o her han he sales in oices hemsel es. For
D-1 and i bma king , e e p epa ed? one, Arma Traders pos da ed checks e ince he e is ence
A: Well, I a in he office al o b he ec e a ie e e he one ho of he p rchases on credi . Moreo er, Ha es ified ha
p epa ed he in oice . I a he e h a i he ec e a ie i hin one or o eeks, Arma Traders paid he p rchases
i i g he e i ice . (TSN, Decembe 9, 1996, p. 5) in he form of pos da ed checks. He personall collec ed
 5
hese checks on Sa rda s and pon recei ing he checks, s rrendered in he RTC. F r hermore, he fac ha he
he s rrendered o Arma Traders he original of he sales al e of
in oices hile he re ained he d plica e of he in oices. 3
The responden s a emp ed o imp gn he credibili of _______________
Ha b poin ing o he inconsis encies he can find from
he ranscrip of s enographic no es. Ho e er, e are no 94 P . Sa a , J ., G.R. No . 135356-58, Sep embe 4, 2001, 364
pers aded ha hese inconsis encies are s fficien l SCRA 438, 445.
per asi e o 95 TSN, p. 18, Hea ing on Decembe 9, 1996; Te imon of Geo ge Ha
Con in a ion of he c o -e amina ion:
ATTY. RODRIGUEZ, JR.:
_______________
Yo Hono , e ill ende i c od o he Co he ale
90 R , pp. 194, 105-106. in oice no. 8946.
91 I ., a p. 106.
92 Pa . 9, page 2 of An e da ed Jan a 20, 1995.
93 R , p. 193.

33

Arma Traders checks does no all i h he o al amo n

337
affec he o ali of e idence sho ing he general
rela ionship be een Ad ance Paper and Arma Traders.
Addi ionall , he iss e of credibili of i nesses is o be
resol ed primaril b he rial co r beca se i is in he
be er posi ion o assess he credibili of i nesses as i
heard he es imonies and obser ed he depor men and
manner of es if ing of he i nesses. Accordingl , i s
findings are en i led o grea respec and ill no be
dis rbed on appeal in he absence of an sho ing ha he
rial co r o erlooked, mis nders ood, or misapplied some
fac s or circ ms ances of eigh and s bs ance hich
o ld ha e affec ed he res l of he case. 4
In he presen case, he RTC j dge ook in o
considera ion he s bs ance and he manner b hich Ha
ans ered each propo nded q es ions o him in he i ness
s and. Hence, he minor inconsis encies in Ha s es imon
no i hs anding, he RTC held ha he responden s claim
ha he p rchase and loan ransac ions ere sp rio s is
no or h of serio s considera ion. Besides, he
responden s failed o con ince s ha he RTC j dge
o erlooked, mis nders ood, or misapplied some fac s or
circ ms ances of eigh and s bs ance hich o ld ha e
affec ed he res l of he case.
On he o her hand, e agree i h he pe i ioners ha
he discrepancies in he pho ocop of he sales in oices and
i s d plica e cop ha e been s fficien l e plained. Besides,
his is alread a noniss e since he d plica e copies ere
of heir obliga ion i h Ad ance Paper is no inconsis en
i h he e is ence of he p rchases and loan ransac ions.
As agains he case and he e idence Ad ance Paper
presen ed, he responden s relied on he core heor of an
alleged conspirac be een Tan, U and Ha o defra d
Arma Traders. Ho e er, he records are beref of
s ppor ing e idence o pro e he alleged conspirac .
Ins ead, he responden s simpl d elled on he minor
inconsis encies from he pe i ioners e idence ha he
responden s appear o ha e magnified. From hese
perspec i es, he preponderance of e idence h s lies
hea il in he pe i ioners fa or as he RTC fo nd. For his
reason, e find he pe i ion meri orio s.
WHEREFORE, premises considered, e GRANT he
pe i ion. The decision da ed March 31, 2006 and he
resol ion da ed March 7, 2007 of he Co r of Appeals in
CA-G.R. CV No. 71499 are REVERSED and SET ASIDE.
The Regional Trial Co r decision in Ci il Case No. 94-
72526 da ed J ne 18, 2001 is REINSTATED. No cos s.
SO ORDERED.
Ca (C a ), D Ca ,P a -B ab and
L ,** JJ., conc r.
P a , a a
a .
_______________
ATTY. CO:
 Ma e make i on eco d ha he co n el i de aching he ame
f om he bookle .
ATTY. RODRIGUEZ, JR.:
And ende i o he c od of he co .
THE COURT:
A igh . A ach ha he ec d. [Empha i and nde co e
o ]
** De igna ed a Ac ing Membe in lie of A ocia e J ice Jo e P.
Pe e pe Special O de No. 1627 da ed Decembe 6, 2013.

33

N . Apparen a hori is de ermined onl b he

ac s of he principal and no b he ac s of he agen he
principal is no responsible here he agen s o n cond c
and s a emen s ha e crea ed he apparen a hori .
(Sa a C c &D C a /P c &
S , I c./A a c E c , I c. [J V ] .
P P A , 623 SCRA 260 [2010])
A corpora ion like Uni ed Cocon Plan ers Bank
(UCPB) is liable o innocen hird persons here i
kno ingl permi s i s officer, or an o her agen , o
perform ac s i hin he scope of his general or apparen
a hori , holding him o o he p blic as possessing
po er o do hose ac s. (U C c Pa Ba .
Pa P c , I c., 672 SCRA 285 [2012])

o0o

C g 2021 Ce a B S , I c. A g e e ed.