TL;DR

The Supreme Court ruled that business records, like a book of collectible accounts, are inadmissible as primary evidence to prove a debt if the person who made the entries testifies but lacks personal knowledge of the transactions. While contracts requiring specific documentation (like delivery receipts) can be supplemented by other evidence, the entries must meet strict requirements to be considered reliable, including the entrant’s personal knowledge and unavailability. The court ultimately affirmed the debt based on other presented documents, such as the contracts themselves, affidavits, and billings, demonstrating complete fulfillment of the obligation. This case highlights that debts can be proven even without perfect documentation if sufficient corroborating evidence exists.

Beyond the Ledger: Can Business Records Speak for Themselves to Prove a Debt?

This case, Rosella D. Canque v. Court of Appeals and Socor Construction Corporation, revolves around a debt dispute between a contractor, Rosella Canque (RDC Construction), and a supplier, Socor Construction Corporation. Socor sued Canque to recover P299,717.75 for materials delivered and services rendered under two contracts. Canque argued that Socor failed to submit delivery receipts, a condition precedent for payment. The central legal question is whether Socor’s book of collectible accounts can serve as sufficient evidence to prove the debt, especially when the bookkeeper who made the entries lacked direct knowledge of the deliveries.

At the heart of this legal battle is the admissibility of business records as evidence. Socor relied heavily on its Book of Collectible Accounts (Exh. K) to prove that materials were indeed delivered to Canque’s government projects. To understand the court’s decision, we must delve into the rules governing the admissibility of such records. The Rules of Court, specifically Rule 130, Section 43, addresses “Entries in the course of business.” These entries, made by someone deceased, outside the Philippines, or unable to testify, can be prima facie evidence if the entrant was in a position to know the facts and made the entries in their professional capacity or in the regular course of business.

However, the Supreme Court found that Socor’s Book of Collectible Accounts did not meet all the requirements for admissibility. Key among the unmet conditions was that the bookkeeper, Dolores Aday, who made the entries, testified in court. This negated the necessity requirement, as the rule applies when the entrant is unavailable. Moreover, Aday admitted she lacked personal knowledge of the deliveries; she merely recorded information from bills submitted to her. Therefore, the court deemed the entries inadmissible as “entries in the course of business.”

The court also considered whether the book could be used to refresh Aday’s memory under Rule 132, Section 16. However, even as a memorandum to refresh memory, the book could not independently constitute evidence. The court cited Borromeo v. Court of Appeals, emphasizing that the witness must testify independently of the memorandum, and the memorandum itself is not corroborative evidence unless a proper foundation of failing memory is laid.

Despite the inadmissibility of the book, the Court emphasized that the requirement for delivery receipts didn’t preclude Socor from proving delivery through other means. The court took into account the other evidence presented, which ultimately supported Socor’s claim. These included the contract agreements, an affidavit from Canque stating she had no pending obligations, a statement of work accomplished, certifications from government offices confirming Canque had no collectibles related to the projects, and several billings submitted to Canque over time. The Court gave weight to the fact that Canque never objected to the billings and had previously made payments, suggesting an acceptance of the services rendered.

Furthermore, Article 1235 of the Civil Code was deemed applicable. This article states that when the obligee (Canque) accepts performance knowing its incompleteness or irregularity without protest, the obligation is considered fulfilled. The court found that Socor had supplied materials to Canque’s projects and Canque had not proven the presence of other contractors providing the same materials.

Ultimately, the Supreme Court affirmed the Court of Appeals’ decision, ordering Canque to pay Socor the remaining debt. The decision highlights that while proper documentation is important, a debt can be established through a combination of contractual agreements, affidavits, billings, and the conduct of the parties, even if specific pieces of evidence like business records are deemed inadmissible on their own.

FAQs

This case underscores the importance of maintaining accurate and admissible business records, while also demonstrating that debts can be proven through a variety of evidence. The court’s focus on the totality of the circumstances highlights that fairness and equity must be considered alongside strict adherence to evidentiary rules.

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CANQUE v. CA, G.R. No. 96202, April 13, 1999