[G.R. No. 125862.

April 15, 2004]

FRANCISCO CULABA and DEMETRIA CULABA, doing business under

the name and style Culaba Store, petitioners, vs. COURT OF
APPEALS and SAN MIGUEL CORPORATION, respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review under Rule 45 of the Revised Rules of Civil
Procedure of the Decision[1] of the Court of Appeals in CA-G.R. CV No. 19836
affirming in toto the Decision[2] of the Regional Trial Court of Makati, Branch
138, in Civil Case No. 1033 for collection of sum of money, and the
Resolution[3] denying the motion for reconsideration of the said decision.

The Undisputed Facts

The spouses Francisco and Demetria Culaba were the owners and
proprietors of the Culaba Store and were engaged in the sale and distribution
of San Miguel Corporations (SMC) beer products. SMC sold beer products on
credit to the Culaba spouses in the amount of P28,650.00, as evidenced by
Temporary Credit Invoice No. 42943. [4] Thereafter, the Culaba spouses made
a partial payment of P3,740.00, leaving an unpaid balance of P24,910.00. As
they failed to pay despite repeated demands, SMC filed an action for
collection of a sum of money against them before the RTC of Makati,
Branch 138.

The defendant-spouses denied any liability, claiming that they had

already paid the plaintiff in full on four separate occasions. To substantiate
this claim, the defendants presented four (4) Temporary Charge Sales (TCS)
Liquidation Receipts, as follows:

April 19, 1983 Receipt No. 27331 for P8,000[5]

April 22, 1983 Receipt No. 27318 for P9,000[6]

April 27, 1983 Receipt No. 27339 for P4,500[7]

April 30, 1983 Receipt No. 27346 for P3,410[8]

Defendant Francisco Culaba testified that he made the foregoing

payments to an SMC supervisor who came in an SMC van. He was then
showed a list of customers accountabilities which included his account. The
defendant, in good faith, then paid to the said supervisor, and he was, in
turn, issued genuine SMC liquidation receipts.

For its part, SMC submitted a publishers affidavit [9] to prove that the
entire booklet of TCSL Receipts bearing Nos. 27301-27350 were reported lost
by it, and that it caused the publication of the notice of loss in the July 9,
1983 issue of the Daily Express, as follows:

NOTICE OF LOSS

OUR CUSTOMERS ARE HEREBY INFORMED THAT TEMPORARY CHARGE SALES

LIQUIDATION RECEIPTS WITH SERIAL NOS. 27301-27350 HAVE BEEN LOST.

ANY TRANSACTION, THEREFORE, ENTERED INTO WITH THE USE OF THE

ABOVE RECEIPTS WILL NOT BE HONORED.

SAN MIGUEL CORPORATION

BEER DIVISION

Makati Beer Region[10]

The Trial Courts Ruling

After trial on the merits, the trial court rendered judgment in favor of
SMC, and held the Culaba spouses liable on the balance of its obligation,
thus:

Wherefore, judgment is hereby rendered in favor of the plaintiff, as follows:

1. Ordering defendants to pay the amount of P24,910.00 plus legal interest

of 6% per annum from April 12, 1983 until the whole amount is fully paid;

2. Ordering defendants to pay 20% of the amount due to plaintiff as and for
attorneys fees plus costs.

SO ORDERED.[11]

According to the trial court, it was unusual that defendant Francisco

Culaba forgot the name of the collector to whom he made the payments and
that he did not require the said collector to print his name on the receipts.
The court also noted that although they were part of a single booklet, the
TCS Liquidation Receipts submitted by the defendants did not appear to have
been issued in their natural sequence. Furthermore, they were part of the
lost booklet receipts, which the public was duly warned of through the Notice
of Loss the plaintiff caused to be published in a daily newspaper. This
confirmed the plaintiffs claim that the receipts presented by the defendants
were spurious ones.

The Case on Appeal

On appeal, the appellants interposed the following assignment of errors:

THE TRIAL COURT ERRED IN FINDING THAT THE RECEIPTS PRESENTED BY

DEFENDANTS EVIDENCING HIS PAYMENTS TO PLAINTIFF SAN MIGUEL
CORPORATION, ARE SPURIOUS.

II

THE TRIAL COURT ERRED IN CONCLUDING THAT PLAINTIFF-APPELLEE HAS

SUFFICIENTLY PROVED ITS CAUSE OF ACTION AGAINST THE DEFENDANTS.

III

THE TRIAL COURT ERRED IN ORDERING DEFENDANTS TO PAY 20% OF

THE AMOUNT DUE TO PLAINTIFF AS ATTORNEYS FEES.[12]

The appellants asserted that while the trial courts observations were
true, it was the usual business practice in previous transactions between
them and SMC. The SMC previously honored receipts not bearing the
salesmans name. According to appellant Francisco Culaba, he even lost some
of the receipts, but did not encounter any problems.

According to appellant Francisco, he could not be faulted for paying the

SMC collector who came in a van and was in uniform, and that any regular
customer would, without any apprehension, transact with such an SMC
employee. Furthermore, the respective receipts issued to him at the time he
paid on the four occasions mentioned had not yet then been declared lost.
Thus, the subsequent publication in a daily newspaper declaring the booklets
lost did not affect the validity and legality of the payments
made. Accordingly, by its actuations, the SMC was estopped from
questioning the legality of the payments and had no cause of action against
the appellants.
 Anent the issue of attorneys fees, the order of the trial court for payment
thereof is without basis. According to the appellant, the provision for
attorneys fees is a contingent fee, already provided for in the SMCs contract
with the law firm. To further order them to pay 20% of the amount due as
attorneys fees is double payment, tantamount to undue enrichment and
therefore improper.[13]

The appellee, for its part, contended that the primary issue in the case at
bar revolved around the basic and fundamental principles of agency. [14] It was
incumbent upon the defendants-appellants to exercise ordinary prudence
and reasonable diligence to verify and identify the extent of the alleged
agents authority. It was their burden to establish the true identity of the
assumed agent, and this could not be established by mere representation,
rumor or general reputation. As they utterly failed in this regard, the
appellants must suffer the consequences.

The Court of Appeals affirmed the decision of the trial court, thus:

In the face of the somewhat tenuous evidence presented by the appellants,

we cannot fault the lower court for giving more weight to appellees
testimonial and documentary evidence, all of which establish with some
degree of preponderance the existence of the account sued upon.

ALL CONSIDERED, we cannot find any justification to reject the factual

findings of the lower court to which we must accord respect, for which
reason, the judgment appealed from is hereby AFFIRMED in all respects.

SO ORDERED.[15]

Hence, the instant petition.

The petitioners pose the following issues for the Courts resolution:

I. WHETHER OR NOT THE RESPONDENT HAD PROVEN BY PREPONDERANT

EVIDENCE THAT IT HAD PROPERLY AND TIMELY NOTIFIED PETITIONER OF
LOST BOOKLET OF RECEIPTS

II. WHETHER OR NOT RESPONDENT HAD PROVEN BY PREPONDERANT

EVIDENCE THAT PETITIONER WAS REMISS IN THE PAYMENT OF HIS
ACCOUNTS TO ITS AGENT.[16]

According to the petitioners, receiving receipts from the private

respondents agents instead of its salesmen was a usual occurrence, as they
had been operating the store since 1979. Thus, on four occasions in April
1983, when an agent of the respondent came to the store wearing an SMC
uniform and driving an SMC van, petitioner Francisco Culaba, without
question, paid his accounts. He received the receipts without fear, as they
were similar to what he used to receive before. Furthermore, the petitioners
assert that, common experience will attest that unless the attention of the
customers is called for, they would not take note of the serial number of the
receipts.

The petitioners contend that the private respondent advertised its

warning to the public only after the damage was done, or on July 9, 1993. Its
belated notice showed its glaring lack of interest or concern for its customers
welfare, and, in sum, its negligence.

Anent the second issue, petitioner Francisco Culaba avers that the agent
to whom the accounts were paid had all the physical and material attributes
or indications of a representative of the private respondent, leaving no doubt
that he was duly authorized by the latter. Petitioner Francisco Culabas
testimony that he does not necessarily check the contents of the receipts
issued to him except for the amount indicated if [the] same accurately
reflects his actual payment is a common attitude of customers. He could,
thus, not be faulted for paying the private respondents agent on four
occasions. Petitioner Francisco Culaba asserts that he made the payment in
good faith, to an agent who issued SMC receipts which appeared to be
genuine. Thus, according to the petitioners, they had duly paid their
obligation in accordance with Articles 1240 and 1242 of the New Civil Code.

The private respondent, for its part, avers that the burden of proving
payment is with the debtor, in consonance with the express provision of
Article 1233 of the New Civil Code. The petitioners miserably failed to prove
the self-serving allegation that they already paid their liability to the private
respondent. Furthermore, under normal circumstances, an obligor would not
just pay a substantial amount to someone whom he saw for the first time,
without even asking for the latters name.

The Ruling of the Court

The petition is dismissed.

The petitioners question the findings of the Court of Appeals as to

whether the payment of the petitioners obligation to the private respondent
was properly made, thus, extinguishing the same. This is clearly a factual
issue, and beyond the purview of the Court to delve into. This is in
consonance with the well-settled rule that findings of fact of the trial court,
especially when affirmed by the Court of Appeals, are accorded the highest
degree of respect, and generally will not be disturbed on appeal. Such
findings are binding and conclusive on the Court. [17]Furthermore, it is not the
Courts function under Rule 45 of the Rules of Court, as amended, to review,
examine and evaluate or weigh the probative value of the evidence
presented.[18]

To reiterate, the issue being raised by the petitioners does not involve a
question of law, but a question of fact, not cognizable by this Court in a
petition for review under Rule 45. The jurisdiction of the Court in such a case
is limited to reviewing only errors of law, unless the factual findings being
assailed are not supported by evidence on record or the impugned judgment
is based on a misapprehension of facts.[19]

A careful study of the records of the case reveal that the appellate court
affirmed the trial courts factual findings as follows:

First. Receipts Nos. 27331, 27318, 27339 and 27346 were included in the
private respondents lost booklet, which loss was duly advertised in a
newspaper of general circulation; thus, the private respondent could not
have officially issued them to the petitioners to cover the alleged payments
on the dates appearing thereon.

Second. There was something amiss in the way the receipts were issued
to the petitioners, as one receipt bearing a higher serial number was issued
ahead of another receipt bearing a lower serial number, supposedly covering
a later payment. The petitioners failed to explain the apparent mix-up in
these receipts, and no attempt was made in this regard.

Third. The fact that the salesmans name was invariably left blank in the
four receipts and that the petitioners could not even remember the name of
the supposed impostor who received the said payments strongly argue
against the veracity of the petitioners claim.

We find no cogent reason to reverse the said findings.

The dismissal of the petition is inevitable even upon close perusal of the
merits of the case.

Payment is a mode of extinguishing an obligation. [20] Article 1240 of the

Civil Code provides that payment shall be made to the person in whose favor
the obligation has been constituted, or his successor-in-interest, or any
person authorized to receive it.[21] In this case, the payments were
purportedly made to a supervisor of the private respondent, who was clad in
an SMC uniform and drove an SMC van. He appeared to be authorized to
accept payments as he showed a list of customers accountabilities and even
issued SMC liquidation receipts which looked genuine. Unfortunately for
petitioner Francisco Culaba, he did not ascertain the identity and authority of
the said supervisor, nor did he ask to be shown any identification to prove
that the latter was, indeed, an SMC supervisor. The petitioners relied solely
on the mans representation that he was collecting payments for SMC. Thus,
the payments the petitioners claimed they made were not the payments that
discharged their obligation to the private respondent.

The basis of agency is representation.[22] A person dealing with an agent

is put upon inquiry and must discover upon his peril the authority of the
agent.[23] In the instant case, the petitioners loss could have been avoided if
they had simply exercised due diligence in ascertaining the identity of the
person to whom they allegedly made the payments. The fact that they were
parting with valuable consideration should have made them more
circumspect in handling their business transactions. Persons dealing with an
assumed agent are bound at their peril to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to establish it. [24] The
petitioners in this case failed to discharge this burden, considering that the
private respondent vehemently denied that the payments were accepted by
it and were made to its authorized representative.

Negligence is the omission to do something which a reasonable man,

guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something, which a prudent and
reasonable man would not do.[25] In the case at bar, the most prudent thing
the petitioners should have done was to ascertain the identity and authority
of the person who collected their payments. Failing this, the petitioners
cannot claim that they acted in good faith when they made such payments.
Their claim therefor is negated by their negligence, and they are bound by its
consequences. Being negligent in this regard, the petitioners cannot seek
relief on the basis of a supposed agency.[26]

WHEREFORE, the instant petition is hereby DENIED. The assailed

Decision dated April 16, 1996, and the Resolution dated July 19, 1996 of the
Court of Appeals are AFFIRMED. Costs against the petitioners.

SO ORDERED