Chapman v. Sanz
REITERATIONFacts
The Antecedents: Louis Chapman was a partner in Philippine Lumber Co. He sold his participation to Gil Garcia and Jesus Sanz. A liquidation declared P1,500 as Chapman's share in profits, evidenced by Exhibit A. Chapman, a building contractor, obtained lumber on credit from the company. After Jesus Sanz's death, his widow, Asuncion Viuda de Sanz (appellant), acquired the company's rights and obligations. She admitted Chapman's P1,500 claim but counterclaimed P3,109.77 for unpaid lumber, citing company books (Exhibits 1, 2, 3). Procedural History: The Court of First Instance of Leyte ordered Asuncion Viuda de Sanz to pay Chapman P1,500 with legal interest and costs, dismissing her counterclaim. The Petition: The defendant-appellant appealed, assigning six errors, primarily questioning the admissibility of the company's books and the dismissal of her counterclaim.
Issue(s)
Whether the account books (Exhibits 1 and 2) of the Philippine Lumber Co. are admissible as evidence to support the counterclaim. Whether the court erred in not sustaining the counterclaim of the defendant-appellant. Whether the payment of the P1,500 credit should be in money or in lumber.
Ruling
The appealed judgment is affirmed, with costs to the appellant. Subsequently, in a Resolution, the judgment was modified to order the payment of P1,500 in lumber at the price established in Exhibit A, with legal interest from the date of the filing of the complaint.
Ratio Decidendi
On the admissibility of account books: The Court held that the account books (Exhibits 1 and 2) were not admissible as evidence. Article 38 of the Code of Commerce requires account books to be kept in accordance with its provisions, and Article 48 governs their evidentiary weight. In this case, the daybook (Exhibit 1) was not kept daily, with some entries made five to ten months after the transactions, as testified by the appellant's own witness. Furthermore, the bookkeeper, Basilio Moreto, was not presented as a witness, nor was his deposition taken, to attest to the correctness of the entries. Therefore, the books lacked proper authentication and were not competent evidence, citing F. M. Yap Tico and Co. vs. Lopez Vito. On the counterclaim: As the counterclaim was based solely on the inadmissible account books, the court correctly dismissed it. The plaintiff-appellee's claim was based on Exhibit A, a liquidation voucher expressly admitted by the defendant-appellant. A liquidation presupposes the settlement of all prior accounts and is competent evidence unless proven to have omitted items, which was not established in this case. The plaintiff-appellee alleged that he had settled all his accounts prior to the November 2, 1927 liquidation and had ceased transactions three months earlier. On the manner of payment: The Court reconsidered its decision regarding the manner of payment. The memorandum Exhibit A stated that Mr. Louis Chapman had a credit of P1,500 "worth of lumber at the prices usually charged him heretofore." The Court found this well-founded and modified the dispositive portion of the decision. The defendant-appellant, having acquired the rights and obligations of the Philippine Lumber Co., was obliged to pay the P1,500 in lumber, not in money, at the prices established in Exhibit A.
Main Doctrine
Account books of a merchant are not admissible as evidence if not kept in accordance with the Code of Commerce and if the entries are not properly authenticated by the bookkeeper who made them.