G.R. No. 176897.December 11, 2013.*

ADVANCE PAPER CORPORATION and GEORGE HAW,in his capacity as President of Advance Paper Corporation,petitioners, vs. ARMA TRADERS CORPORATION,MANUEL TING, CHENG GUI and BENJAMIN NG,respondents.

ANTONIO TAN and UY SENG KEE WILLY, respondents.

Corporation Law Doctrine of Apparent Authority AgencyThe doctrine of apparent authority provides that a corporation willbe estopped from denying the agents authority if it knowinglypermits one of its officers or any other agent to act within the scopeof an apparent authority, and it holds him out to the public aspossessing the power to do those acts.The doctrine of apparentauthority provides that a corporation will be estopped fromdenying the agents authority if it knowingly permits one of itsofficers or any other agent to act within the scope of an apparentauthority, and it holds him out to the public as possessing thepower to do those acts. The doctrine of apparent authority doesnot apply if the principal did not

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*SECOND DIVISION.

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commit any acts or conduct which a third party knew and reliedupon in good faith as a result of the exercise of reasonableprudence. Moreover, the agents acts or conduct must haveproduced a change of position to the third partys detriment.

Same Same Same In the absence of a charter or bylawprovision to the contrary, the president is presumed to have theauthority to act within the domain of the general objectives of itsbusiness and within the scope of his or her usual duties.

Inasmuch as a corporate president is often given generalsupervision and control over corporate operations, the strict rulethat said officer has no inherent power to act for the corporation isslowly giving way to the realization that such officer has certainlimited powers in the transaction of the usual and ordinarybusiness of the corporation. In the absence of a charter orbylaw provision to the contrary, the president is presumedto have the authority to act within the domain of thegeneral objectives of its business and within the scope ofhis or her usual duties.

Remedial Law Evidence Admissibility of Evidence The ruleis that failure to object to the offered evidence renders itadmissible, and the court cannot, on its own, disregard suchevidence.The rule is that failure to object to the offered evidencerenders it admissible, and the court cannot, on its own, disregardsuch evidence. When a party desires the court to reject theevidence offered, it must so state in the form of a timely objectionand it cannot raise the objection to the evidence for the first timeon appeal. Because of a partys failure to timely object, theevidence becomes part of the evidence in the case. Thereafter, allthe parties are considered bound by any outcome arising from theoffer of evidence properly presented.

Same Same Witnesses The issue of credibility of witnesses isto be resolved primarily by the trial court because it is in the betterposition to assess the credibility of witnesses as it heard thetestimonies and observed the deportment and manner of testifyingof the witnesses.The issue of credibility of witnesses is to beresolved primarily by the trial court because it is in the betterposition to assess the credibility of witnesses as it heard thetestimonies and observed the deportment and manner oftestifying of the witnesses. Accordingly, its findings are entitled togreat respect and will not be disturbed on appeal in the absence ofany showing that the trial

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court overlooked, misunderstood, or misapplied some facts orcircumstances of weight and substance which would have affectedthe result of the case.

PETITION for review on certiorari of the decision andresolution of the Court of Appeals.The facts are stated in the opinion of the Court. Numeriano F. Rodriguez, Jr. for petitioners. Ernest Ang, Jr. and Ferrer Co for respondents.

BRION,J.:

Before us is a Petition for Review1 seeking to set asidethe Decision of the Court of Appeals (CA) in CAG.R. CVNo. 71499 dated March 31, 2006 and the Resolution datedMarch 7, 2007.2 The Decision reversed and set aside theruling of the Regional Trial Court (RTC) of Manila, Branch18 in Civil Case No. 9472526 which ordered Arma TradersCorporation (Arma Traders) to pay Advance PaperCorporation (Advance Paper) the sum of P15,321,798.25with interest, and P1,500,000.00 for attorneys fees, plusthe cost of the suit.3

Factual AntecedentsPetitioner Advance Paper is a domestic corporation

engaged in the business of producing, printing,manufacturing, distributing and selling of various paperproducts.4 Petitioner

_______________1Rule 45 of the Revised Rules of Court Rollo, pp. 844.2Penned by Associate Justice Vicente S.E. Veloso, and concurred in by

Associate Justices Portia AlioHormachuelos and Amelita G. Tolentinoid., at pp. 4669.

3 Civil Case No. 9472526 dated August 20, 2011 penned by JudgePerfecto A.S. Laguio, Jr. id., at pp. 7577.

4Id., at p. 48.

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George Haw (Haw) is the President while his wife, ConnieHaw, is the General Manager.5

Respondent Arma Traders is also a domestic corporationengaged in the wholesale and distribution of school andoffice supplies, and novelty products.6 Respondent AntonioTan (Tan) was formerly the President while respondent UySeng Kee Willy (Uy) is the Treasurer of Arma Traders.7They represented Arma Traders when dealing with itssupplier, Advance Paper, for about 14 years.8

On the other hand, respondents Manuel Ting, ChengGui and Benjamin Ng worked for Arma Traders as VicePresident, General Manager and Corporate Secretary,respectively.9

On various dates from September to December 1994,Arma Traders purchased on credit notebooks and otherpaper products amounting to P7,533,001.49 from AdvancePaper.10

Paper.10Upon the representation of Tan and Uy, Arma Traders

also obtained three loans from Advance Paper in November1994 in the amounts of P3,380,171.82, P1,000,000.00, andP3,408,623.94 or a total of P7,788,796.76.11 Arma Tradersneeded the loan to settle its obligations to other suppliersbecause its own collectibles did not arrive on time.12Because of its good business relations with Arma Traders,Advance Paper extended the loans.13

_______________5 Id., at p. 288.6 Ibid.7 Id., at p. 48.8 Records, Vol. 3, pp. 170178 referring to the Sworn Statement of

Haw dated November 18, 1996.9 Id., at p. 48.10Ibid.11Ibid.12Ibid.13Id., at p. 75.

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As payment for the purchases on credit and the loantransactions, Arma Traders issued 82 postdated checks14payable to cash or to Advance Paper. Tan and Uy wereArma Traders authorized bank signatories who signed andissued these checks which had the aggregate amount ofP15,130,636.87.15

Advance Paper presented the checks to the drawee bankbut these were dishonored either for insufficiency of fundsor account closed. Despite repeated demands, however,Arma Traders failed to settle its account with AdvancePaper.16

On December 29, 1994, the petitioners filed acomplaint17 for collection of sum of money with applicationfor preliminary attachment against Arma Traders, Tan,Uy, Ting, Gui, and Ng.Claims of the petitioners

The petitioners claimed that the respondentsfraudulently issued the postdated checks as payment forthe purchases and loan transactions knowing that they didnot have sufficient funds with the drawee banks.18

To prove the purchases on credit, the petitionerspresented the summary of the transactions and theircorresponding sales invoices as their documentaryevidence.19

During the trial, Haw also testified that within one ortwo weeks upon delivery of the paper products, ArmaTraders paid the purchases in the form of postdated checks.Thus, he

_______________14Marked as Exhibits E1 to E82. See Records, Vol. 2, pp. 418445.15Rollo, p. 48.16Id., at pp. 4849.17Amended on October 26, 1995.18Records, Vol. 2, p. 283 referring to the Amended Complaint.19 Records, Vol. 1, pp. 12109, and Vol. 2, pp. 290417 Marked as

Exhibits A1 to A32, B1 to B30, C to C31 and D to D3.

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personally collected these checks on Saturdays and uponreceiving the checks, he surrendered to Arma Traders theoriginal of the sales invoices while he retained theduplicate of the invoices.20

To prove the loan transactions, the petitionerspresented the copies of the checks21 which Advance Paperissued in favor of Arma Traders. The petitioners also filed amanifestation22 dated June 14, 1995, submitting a bankstatement from Metrobank EDSA Kalookan Branch. Thiswas to show that Advance Papers credit line withMetrobank has been transferred to the account of ArmaTraders as payee from October 1994 to December 1994.

Moreover, Haw testified to prove the loan transactions.When asked why he considered extending the loanswithout any collateral and loan agreement or promissorynote, and only on the basis of the issuance of the postdatedchecks, he answered that it was because he trusted ArmaTraders since it had been their customer for a long timeand that none of the previous checks ever bounced.23Claims of the respondents

The respondents argued that the purchases on creditwere spurious, simulated and fraudulent since there wasno delivery of the P7,000,000.00 worth of notebooks andother paper products.24

During the trial, Ng testified that Arma Traders did notpurchase notebooks and other paper products fromSeptember

_______________20Rollo, p. 193 Records, Vol. 3, pp. 170178 referring to the Sworn

Statement of Haw dated November 18, 1996.21Id., at p. 48 marked as Exhibits AA, BB and CC.22Records, Vol. 2, pp. 113116.23Records, Vol. 3, pp. 244245.24 Records, Vol. 3, pp. 7180 referring to par. 7, page 2 of Arma

Traders, Ting, Gui and Ngs Answer with Compulsory Counterclaim andCrossclaim dated February 23, 1996.

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to December 1994. He claimed that during this period,Arma Traders concentrated on Christmas items, not schooland office supplies. He also narrated that upon learningabout the complaint filed by the petitioners, heimmediately looked for Arma Traders records and found noreceipts involving the purchases of notebooks and otherpaper products from Advance Paper.25

As to the loan transactions, the respondents counteredthat these were the personal obligations of Tan and Uy toAdvance Paper. These loans were never intended to benefitthe respondents.

The respondents also claimed that the loan transactionswere ultra vires because the board of directors of ArmaTraders did not issue a board resolution authorizing Tanand Uy to obtain the loans from Advance Paper. Theyclaimed that the borrowing of money must be done onlywith the prior approval of the board of directors becausewithout the approval, the corporate officers are acting inexcess of their authority or ultra vires. When the acts of thecorporate officers are ultra vires, the corporation is notliable for whatever acts that these officers committed inexcess of their authority. Further, the respondents claimedthat Advance Paper failed to verify Tan and Uys authorityto transact business with them. Hence, Advance Papershould suffer the consequences.26

The respondents accused Tan and Uy for conspiringwith the petitioners to defraud Arma Traders through aseries of transactions known as rediscounting of postdatedchecks. In rediscounting, the respondents explained that

Tan and Uy would issue Arma Traders postdated checks tothe petitioners in exchange for cash, discounted by as muchas 7% to 10% depending on how long were the terms ofrepayment. The

_______________25 Records, Vol. 4, pp. 141147 referring to Ngs Direct Testimony

dated February 4, 1999.26Id., at p. 241 referring to the Memorandum of the Defendants.

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rediscounted percentage represented the interest or profitearned by the petitioners in these transactions.27

Tan did not file his Answer and was eventually declaredin default.

On the other hand, Uy filed his Answer28 dated January20, 1995 but was subsequently declared in default upon hisfailure to appear during the pretrial. In his Answer, headmitted that Arma Traders together with its corporateofficers have been transacting business with AdvancePaper.29 He claimed that he and Tan have been authorizedby the board of directors for the past 13 years to issuechecks in behalf of Arma Traders to pay its obligations withAdvance Paper.30 Furthermore, he admitted that ArmaTraders checks were issued to pay its contractualobligations with Advance Paper.31 However, accordingto him, Advance Paper was informed beforehand that ArmaTraders checks were funded out of the P20,000,000.00worth of collectibles coming from the provinces.Unfortunately, the expected collectibles did not materializefor unknown reasons.32

Ng filed his Answer33 and claimed that the managementof Arma Traders was left entirely to Tan and Uy. Thus, henever participated in the companys daily transactions.34

Atty. Ernest S. Ang, Jr. (Atty. Ang), Arma Traders VicePresident for Legal Affairs and Credit and Collection,testified that he investigated the transactions involvingTan and Uy

_______________27 Records, Vol. 3, pp. 7180 referring to par. 89.5, page 2 of Arma

Traders, Ting, Gui and Ngs Answer with Compulsory Counterclaim andCrossclaim dated February 23, 1996.

28Records, Vol. 1, pp. 146154.

29Page 2 of Uys Answer dated January 20, 1995.30Ibid.31Ibid.32Id., at p. 3.33Records, Vol. 3, pp. 6468.34Page 3 of Ngs Answer dated February 19, 1996.

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and discovered that they were financing their own businessusing Arma Traders resources. He also accused Haw forconniving with Tan and Uy in fraudulently making ArmaTraders liable for their personal debts. He based thisconclusion from the following: First, basic humanexperience and common sense tell us that a lender will notagree to extend additional loan to another person whoalready owes a substantial sum from the lender in thiscase, petitioner Advance Paper. Second, there was no otherdocument proving the existence of the loan other than thepostdated checks. Third, the total of the purchase and loantransactions visvis the total amount of the postdatedchecks did not tally. Fourth, he found out that the certifiedtrue copy of Advance Papers report with the Securities andExchange Commission (SEC report) did not reflect theP15,000,000.00 collectibles it had with Arma Traders.35

Atty. Ang also testified that he already filed severalcases of estafa and qualified theft36 against Tan and Uyand that several warrants of arrest had been issuedagainst them.

In their pretrial brief,37 the respondents named SharowOng, the secretary of Tan and Uy, to testify on how Tanand Uy conspired with the petitioners to defraud ArmaTraders. However, the respondents did not present her onthe witness stand.

The RTC Ruling

On June 18, 2001, the RTC ruled that the purchases oncredit and loans were sufficiently proven by the petitioners.Hence, the RTC ordered Arma Traders to pay AdvancePaper

_______________35 Records, Vol. 4, pp. 169176 referring to the Direct Testimony of

Atty. Ernest S. Ang, Jr. dated May 12, 2000.36 Records, Vol. 3, pp. 208209 as supported by the Information in

Criminal Case No. 145888 dated September 11, 1995 which was markedas Exhibit 2.

37Id., at pp. 123126.

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the sum of P15,321,798.25 with interest, and P1,500,000.00for attorneys fees, plus the cost of the suit.

The RTC held that the respondents failed to presenthard, admissible and credible evidence to prove that thesale invoices were forged or fictitious, and that the loantransactions were personal obligations of Tan and Uy.Nonetheless, the RTC dismissed the complaint againstTan, Uy, Ting, Gui and Ng due to the lack of evidenceshowing that they bound themselves, either jointly orsolidarily, with Arma Traders for the payment of itsaccount.38

Arma Traders appealed the RTC decision to the CA.

The CA RulingThe CA held that the petitioners failed to prove by

preponderance of evidence the existence of the purchaseson credit and loans based on the following grounds:

First, Arma Traders was not liable for the loan in theabsence of a board resolution authorizing Tan and Uy toobtain the loan from Advance Paper.39 The CAacknowledged that Tan and Uy were Arma Tradersauthorized bank signatories. However, the CA explainedthat this is not sufficient because the authority to sign thechecks is different from the required authority to contract aloan.40

_______________38Rollo, pp. 49, 76.39Id., at p. 63, citing Sec. 23 of the Corporation Code, and AF Realty &

Development, Inc. v. Dieselman Freight Services, Co., G.R. No. 111448,January 16, 2002, 373 SCRA 385, 391, which held: [C]ontracts or acts of acorporation must be made either by the board of directors or by acorporate agent duly authorized by the board. Absent such validdelegation or authorization, the rule is that the declarations of anindividual director relating to the affairs of the corporation xxx are xxxnot binding on the corporation.

40Id., at p. 64.

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Second, the CA also held that the petitioners presentedincompetent and inadmissible evidence to prove thepurchases on credit since the sales invoices were hearsay.41The CA pointed out that Haws testimony as to theidentification of the sales invoices was not an exception tothe hearsay rule because there was no showing that thesecretaries who prepared the sales invoices are alreadydead or unable to testify as required by the Rules ofCourt.42 Further, the CA noted that the secretaries werenot identified or presented in court.43

Third, the CA ruling heavily relied on Ngs AppellantsBrief44 which made the detailed description of the badgesof fraud. The CA averred that the petitioners failed tosatisfactorily rebut the badges of fraud45 which include theinconsistencies in:(1)Exhibit E26, a postdated check, which was allegedly

issued in favor of Advance Paper but turned out to be acheck payable to Top Line, Advance Papers sistercompany46

(2) Sale Invoice No. 8946, an evidence to prove theexistence of the purchases on credit, whose photo

_______________41Id., at p. 61.42Id., at pp. 6263, citing Section 43, Rule 130 of the Rules of Court:Entries in the course of business.Entries made at, or near the time of

the transactions to which they refer, by a person deceased, or unableto testify, who was in a position to know the facts therein stated, may bereceived as prima facie evidence, if such person made the entries in hisprofessional capacity or in the performance of duty and in the ordinary orregular course of business or duty. (italics and emphasis supplied)

43Id., at pp. 6162.44Id., at pp. 5261.45Id., at p. 60.46Id., at pp. 6465.

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copy failed to reflect the amount stated in the duplicatecopy,47 and

(3) The SEC report of Advance Paper for the year ended1994 reflected its account receivables amounting toP219,705.19 only an amount far from the claimedP15,321,798.25 receivables from Arma Traders.48

Hence, the CA set aside the RTCs order for ArmaTraders to pay Advance Paper the sum of P15,321,798.25,P1,500,000.00 for attorneys fees, plus cost of suit.49 Itaffirmed the RTC decision dismissing the complaintagainst respondents Tan, Uy, Ting, Gui and Ng.50 The CAalso directed the petitioners to solidarily pay each of therespondents their counterclaims of P250,000.00 as moraldamages, P250,000.00 as exemplary damages, andP250,000.00 as attorneys fees.51

The Petition

The petitioners raise the following arguments.First, Arma Traders led the petitioners to believe that

Tan and Uy had the authority to obtain loans since therespondents left the active and sole management of thecompany to Tan and Uy since 1984. In fact, Ng testifiedthat Arma Traders stockholders and board of directorsnever conducted a meeting from 1984 to 1995. Therefore, ifthe respondents position will be sustained, they will havethe absurd power to question all the business transactionsof Arma Traders.52

_______________47Id., at p. 65.48Ibid.49Id., at p. 68.50Ibid.51Id., at p. 69.52Id., at pp. 207208.

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Citing Lipat v. Pacific Banking Corporation,53 thepetitioners said that if a corporation knowingly permits oneof its officers or any other agent to act within the scope ofan apparent authority, it holds him out to the public aspossessing the power to do those acts thus, the corporationwill, as against anyone who has in good faith dealt with itthrough such agent, be estopped from denying the agentsauthority.

Second, the petitioners argue that Haws testimony isnot hearsay. They emphasize that Haw has personalknowledge of the assailed purchases and loan transactionsbecause he dealt with the customers, and supervised anddirected the preparation of the sales invoices and thedeliveries of the goods.54 Moreover, the petitioners stress

deliveries of the goods.54 Moreover, the petitioners stressthat the respondents never objected to the admissibility ofthe sales invoices on the ground that they were hearsay.55

Third, the petitioners dispute the CAs findings on theexistence of the badges of fraud. The petitioners countered:(1)The discrepancies between the figures in the 15 out of

the 96 photocopies and duplicate originals of the salesinvoices amounting to P4,624.80 an insignificantamount compared to the total purchases ofP7,533,001.49 may have been caused by the failureto put the carbon paper.56 Besides, the remaining 81sales invoices are uncontroverted. The petitionersalso raise the point that this discrepancy is a nonissuebecause the duplicate originals were surrendered inthe RTC.57

(2) The respondents misled Haw during the crossexamination and took his answer out of context.58

_______________53G.R. No. 142435, April 30, 2003, 402 SCRA 339.54Rollo, p. 254.55Id., at p. 194.56Id., at p. 258.57Id., at p. 257.58Id., at p. 259. The petitioners explained:

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The petitioners argue that this maneuver is insufficient todiscredit Haws entire testimony.59

(3) Arma Traders should be faulted for indicating Top Lineas the payee in Exhibit E26 or PBC check no. 091014.Moreover, Exhibit E26 does not refer to PBC check no.091014 but to PBC check no. 091032 payable to theorder of cash.60

(4)The discrepancy in the total amount of the checks whichis P15,130,363.87 as against the total obligation ofP15,321,798.25 does not necessarily prove that thetransactions are spurious.61

(5)The difference in Advance Papers accounts receivablesin the SEC report and in Arma Traders obligation withAdvance Paper was based on nonexistent evidencebecause Exhibit 294NG does not pertain to any balancesheet.62 Moreover, the term accounts receivable is notsynonymous with cause of action. The respondents

cannot escape their liability by simply pointing the SECreport because the petitioners have established theircause of action that the purchases on credit and loantransactions took place, the respondents issued thedishonored

_______________By perusing the transcripts, it is obvious that the questions preceding

the one cited by the respondents referred to transactions which createdobligations on the part of Arma Traders. So, when Haw was asked:Aside from this, there were no other transaction (sic) between you xxx,he answered, No other transaction, believing that he was being asked ifthere were other transactions that could be added to those he mentionedalready, meaning, those UNPAID transactions. He truthfully said therewere no other.

59Id., at p. 259.60Id., at p. 260.61Ibid.62Id., at p. 261.

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checks to cover their debts, and they refused to settle theirobligation with Advance Paper.63

The Case for the Respondents

The respondents argue that the Petition for Reviewshould be dismissed summarily because of the followingprocedural grounds: first, for failure to comply with A.M.No. 02813SC64 and second, the CA decision is alreadyfinal and executory since the petitioners filed their Motionfor Reconsideration out of time. They explain that underthe rules of the CA, if the last day for filing of any pleadingfalls on a Saturday not a holiday, the same must be filed onsaid Saturday, as the Docket and Receiving Section of theCA is open on a Saturday.65

The respondents argue that while as a general rule, acorporation is estopped from denying the authority of itsagents which it allowed to deal with the general public thisis only true if the person dealing with the agent dealt ingood faith.66 In the present case, the respondents claimthat the petitioners are in bad faith because the petitionersconnived with Tan and Uy to make Arma Traders liable forthe nonexistent deliveries of notebooks and other paperproducts.67 They also insist that the sales invoices aremanufactured evidence.68

manufactured evidence.68As to the loans, the respondents aver that these were

Tan and Uys personal obligations with Advance Paper.69More

_______________63Id., at p. 262.64 Directing notary publics to no longer use the community tax

certificate as proof of the affiants identity because of its inherentunreliability effective August 1, 2004.

65Rollo, p. 292.66Id., at p. 310, Memorandum for Respondents, citing Lipat v. Pacific

Banking Corporation, supra note 53, at p. 350.67Id., at pp. 289, 311.68Id., at p. 311.69Id., at p. 289.

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over, while the three cashiers checks were deposited in theaccount of Arma Traders, it is likewise true that Tan andUy issued Arma Traders checks in favor of Advance Paper.All these checks are evidence of Tan, Uy and Hawssystematic conspiracy to siphon Arma Traders corporatefunds.70

The respondents also seek to discredit Haws testimonyon the basis of the following. First, his testimony as regardsthe sales invoices is hearsay because he did not personallyprepare these documentary evidence.71 Second, Hawsuspiciously never had any written authority from his ownBoard of Directors to lend money. Third, the respondentsalso questioned why Advance Paper granted theP7,000,000.00 loan without requiring Arma Traders topresent any collateral or guarantees.72

The Issues

The main procedural and substantive issues are:I. Whether the petition for review should be dismissed for

failure to comply with A.M. No. 02813SC.II. Whether the petition for review should be dismissed on

the ground of failure to file the motion forreconsideration with the CA on time.

III. Whether Arma Traders is liable to pay the loansapplying the doctrine of apparent authority.

IV. Whether the petitioners proved Arma Traders liability

on the purchases on credit by preponderance of evidence.

_______________70Supra note 68.71Rollo, p. 293.72Id., at pp. 169, 303.

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The Courts RulingWe grant the petition.

The procedural issues.First, the respondents correctly cited A.M. No. 02813

SC dated February 19, 2008 which refer to the amendmentof the 2004 Rules on Notarial Practice. It deleted theCommunity Tax Certificate among the accepted proof ofidentity of the affiant because of its inherent unreliability.The petitioners violated this when they used CommunityTax Certificate No. 05730869 in their Petition for Review.73Nevertheless, the defective jurat in theVerification/Certification of NonForum Shopping is not afatal defect because it is only a formal, not a jurisdictional,requirement that the Court may waive.74 Furthermore, wecannot simply ignore the millions of pesos at stake in thiscase. To do so might cause grave injustice to a party, asituation that this Court intends to avoid.

Second, no less than the CA itself waived the rules onthe period to file the motion for reconsideration. A review ofthe CA Resolution75 dated March 7, 2007, reveals that thepetitioners Motion for Reconsideration was denied becausethe allegations were a mere rehash of what the petitionersearlier argued not because the motion for reconsiderationwas filed out of time.

The substantive issues.

Arma Traders is liable to pay the loans on the basis of the doctrine of apparent authority.

_______________73Id., at p. 43.74 Galicto v. Aquino III, G.R. No. 193978, February 28, 2012, 667

SCRA 150, 175.75Rollo, p. 139.

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The doctrine of apparent authority provides that acorporation will be estopped from denying the agentsauthority if it knowingly permits one of its officers or anyother agent to act within the scope of an apparentauthority, and it holds him out to the public as possessingthe power to do those acts.76 The doctrine of apparentauthority does not apply if the principal did not commit anyacts or conduct which a third party knew and relied uponin good faith as a result of the exercise of reasonableprudence. Moreover, the agents acts or conduct must haveproduced a change of position to the third partysdetriment.77

In InterAsia Investment Industries v. Court ofAppeals,78 we explained:

Under this provision [referring to Sec. 23 of the CorporationCode], the power and responsibility to decide whether thecorporation should enter into a contract that will bind thecorporation is lodged in the board, subject to the articles ofincorporation, bylaws, or relevant provisions of law. However,just as a natural person who may authorize another to docertain acts for and on his behalf, the board of directorsmay validly delegate some of its functions and powers toofficers, committees or agents. The authority of suchindividuals to bind the corporation is generally

_______________76Peoples Aircargo and Warehousing Co., Inc. v. Court of Appeals, G.R. No.

117847, October 7, 1998, 297 SCRA 170, 184185, citing Francisco v. GovernmentService Insurance System, Nos. L18287 and L18155, March 30, 1963, 7 SCRA577, 583 and Maharlika Publishing Corporation v. Tagle, No. L65594, July 9,1986, 142 SCRA 553, 566.

77Banate v. Philippine Countryside Rural Bank (Liloan, Cebu), Inc., G.R. No.163825, July 13, 2010, 625 SCRA 21, 34, citing Yun Kwan Byung v. PhilippineAmusement and Gaming Corporation, G.R. No. 163553, December 11, 2009, 608SCRA 107, 132.

78 G.R. No. 125778, June 10, 2003, 403 SCRA 452, 456457, citing PeoplesAircargo and Warehousing Co., Inc. v. Court of Appeals, supra note 76.

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derived from law, corporate bylaws or authorization fromthe board, either expressly or impliedly by habit, customor acquiescence in the general course of business, viz.:

A corporate officer or agent may represent and bind thecorporation in transactions with third persons to the extentthat [the] authority to do so has been conferred upon him,and this includes powers as, in the usual course of theparticular business, are incidental to, or may be impliedfrom, the powers intentionally conferred, powers added bycustom and usage, as usually pertaining to the particularofficer or agent, and such apparent powers as thecorporation has caused person dealing with the officer oragent to believe that it has conferred.

[A]pparent authority is derived not merely frompractice. Its existence may be ascertained through (1) thegeneral manner in which the corporation holds out an officer oragent as having the power to act or, in other words the apparentauthority to act in general, with which it clothes him or (2) theacquiescence in his acts of a particular nature, with actualor constructive knowledge thereof, within or beyond thescope of his ordinary powers. It requires presentation ofevidence of similar act(s) executed either in its favor or infavor of other parties. It is not the quantity of similar actswhich establishes apparent authority, but the vesting of acorporate officer with the power to bind the corporation.[emphases and underscores ours]

In Peoples Aircargo and Warehousing Co., Inc. v. Courtof Appeals,79 we ruled that the doctrine of apparentauthority is applied when the petitioner, through itspresident Antonio Punsalan Jr., entered into the FirstContract without first

_______________79Supra note 76.

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securing board approval. Despite such lack of boardapproval, petitioner did not object to or repudiate saidcontract, thus clothing its president with the power tobind the corporation.

Inasmuch as a corporate president is often givengeneral supervision and control over corporate operations,the strict rule that said officer has no inherent power to act

for the corporation is slowly giving way to the realizationthat such officer has certain limited powers in thetransaction of the usual and ordinary business of thecorporation.80 In the absence of a charter or bylawprovision to the contrary, the president is presumedto have the authority to act within the domain of thegeneral objectives of its business and within thescope of his or her usual duties.81

In the present petition, we do not agree with the CAsfindings that Arma Traders is not liable to pay the loansdue to the lack of board resolution authorizing Tan and Uyto obtain the loans. To begin with, Arma Traders Articlesof Incorporation82 provides that the corporation mayborrow or raise money to meet the financialrequirements of its business by the issuance of bonds,promissory notes and other evidence of indebtedness.Likewise, it states that Tan and

_______________80Id., at p. 185, citing Western American Life Ins. Co. v. Hicks, 217 SE

2d 323, 324, May 19, 1975 and Cooper v. G.E. Construction Co., 158 SE 2d305, 308, October 30, 1967.

81Ibid., citing 19 Am Jur 2d 595 citing PegramWest, Inc. v. WinstonMut. Life Ins. Co., 56 SE 2d 607, 612, December 14, 1949 Cushman v.Cloverland Coal & Mining Co., 84 NE 759, 760, May 15, 1908 Ceedeer v.H.M. Loud & Sons Lumber Co., 49 NW 575, 575, July 28, 1891, MemorialHospital Asso. v. Pacific Grape, 50 ALR 2d 442, 445, November 29, 1955Lloyd & Co. v. Matthews & Rice, 79 NE 172, 173, December 5, 1906, andNational State Bank v. Vigo County National Bank, 40 NE 799, 800, May28, 1895.

82Records, Vol. 1, pp. 399407. Arma Traders was formerly known asDivisoria Advance Products Corp.

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Uy are not just ordinary corporate officers andauthorized bank signatories because they are also ArmaTraders incorporators along with respondents Ng andTing, and Pedro Chao. Furthermore, the respondents,through Ng who is Arma Traders corporate secretary,incorporator, stockholder and director, testified that thesole management of Arma Traders was left to Tanand Uy and that he and the other officers never dealtwith the business and management of Arma Traders

for 14 years. He also confirmed that since 1984 up tothe filing of the complaint against Arma Traders, itsstockholders and board of directors never had itsmeeting.83

Thus, Arma Traders bestowed upon Tan and Uy broadpowers by allowing them to transact with third personswithout the necessary written authority from itsnonperforming board of directors. Arma Traders failed totake precautions to prevent its own corporate officers fromabusing their powers. Because of its own laxity in itsbusiness dealings, Arma Traders is now estopped fromdenying Tan and Uys authority to obtain loan fromAdvance Paper.

We also reject the respondents claim that AdvancePaper, through Haw, connived with Tan and Uy. Therecords do not contain any evidence to prove that the loantransactions were personal to Tan and Uy. A differentconclusion might have been inferred had the cashierschecks been issued in favor of Tan and Uy, and had thepostdated checks in favor of Advance Paper been eitherTan and/or Uys, or had the respondents presentedconvincing evidence to show how Tan and Uy conspiredwith the petitioners to defraud Arma Traders.84 We

_______________83Rollo, pp. 207208.84Id., at p. 264. The petitioners argued:Significantly, in the PreTrial Brief filed by Respondents (citation

omitted), a certain Sharow Ong was supposed to testify on how AntonioTan and Uy Seng Kee Willy conspired with plaintiffs to defraud ArmaTraders Corporation. No such witness or substitute

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note that the respondents initially intended to presentSharow Ong, the secretary of Tan and Uy, to testify on howAdvance Paper connived with Tan and Uy. As mentioned,the respondents failed to present her on the witness stand.The respondents failed to objectto the admissibility of the sales invoices on the ground that they are hearsay

The rule is that failure to object to the offered evidencerenders it admissible, and the court cannot, on its own,disregard such evidence.85 When a party desires the court

to reject the evidence offered, it must so state in the form ofa timely objection and it cannot raise the objection to theevidence for the first time on appeal. Because of a partysfailure to timely object, the evidence becomes part of theevidence in the case. Thereafter, all the parties areconsidered bound by any outcome arising from the offer ofevidence properly presented.86

In Heirs of Policronio M. Ureta, Sr. v. Heirs of LiberatoM. Ureta,87 however, we held:

[H]earsay evidence whether objected to or not cannot be givencredence for having no probative value. This principle, however,has been relaxed in cases where, in addition to the failure toobject to the admissibility of the subject evidence, there wereother pieces of evidence

_______________was produced. No explanation for such failure was ever made either.

85Malayan Insurance Co., Inc. v. Alberto, G.R. No. 194320, February 1, 2012,664 SCRA 791, 805.

86Ibid., citing Asian Construction and Development Corporation v. COMFACCorporation, G.R. No. 163915, October 16, 2006, 504 SCRA 519, 524.

87 G.R. No. 165748, September 14, 2011, 657 SCRA 555, 568. See also TopWeld Manufacturing, Inc. v. ECED, IRTI, S.A., Eutectic Corp., 222 Phil. 424, 437138 SCRA 118, 132 (1985).

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presented or there were other circumstances prevailing tosupport the fact in issue. (emphasis and underscore ourscitation omitted)

We agree with the respondents that with respect to theidentification of the sales invoices, Haws testimony washearsay because he was not present during itspreparation88 and the secretaries who prepared them werenot presented to identify them in court. Further, thesesales invoices do not fall within the exceptions to thehearsay rule even under the entries in the course ofbusiness because the petitioners failed to show that theentrant was deceased or was unable to testify.89

_______________88During the crossexamination, Haw testified:

Q: Where were you when these sales invoices, Exhibits A1 and itssubmarkings, B1 and its submarkings, C1 and its submarkings, and

D1 and its submarkings, were prepared?A: Well, I was in the office also but the secretaries were the ones whoprepared the invoices. I am not the one who saw to it the secretarieswriting these invoices. (TSN, December 9, 1996, p. 5)

89Section 43, Rule 130 of the Rules of Court provides: Entries madeat, or near the time of transactions to which they refer, by a persondeceased, or unable to testify, who was in a position to know the factstherein stated, may be received as prima facie evidence, if such personmade the entries in his professional capacity or in the performance of dutyand in the ordinary or regular course of business or duty. (italicssupplied)In several cases, the following were the established requisites for theadmissibility of entries made in the course of business:

(a)Entries must have been made at or near the time of thetransaction to which they refer.

(b)Entrant must have been in a position to know the facts stated inthe entries.

(c)Entries must have been made by entrant in his professionalcapacity or in the performance of his duty.

(d)Entries were made in the ordinary or regular course of business orduty.

(e)Entrant must be deceased or unable to testify.

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But even though the sales invoices are hearsay,nonetheless, they form part of the records of the case forthe respondents failure to object as to the admissibility ofthe sales invoices on the ground that they are hearsay.90Based on the records, the respondents through Ng objectedto the offer for the purpose [to] which they are beingoffered only not on the ground that they werehearsay.91The petitioners have proven their claims for the unpaid purchases on credit by preponderance of evidence.

We are not convinced by the respondents argument thatthe purchases are spurious because no less than Uyadmitted that all the checks issued were inpayments of the contractual obligations of the ArmaTraders with Advance Paper.92 Moreover, there areother pieces of evidence to prove the existence of thepurchases other than the sales invoices themselves. For

one, Arma Traders postdated checks evince the existenceof the purchases on credit. Moreover, Haw testified thatwithin one or two weeks, Arma Traders paid the purchasesin the form of postdated checks. He personally collectedthese checks on Saturdays and upon receiving the checks,he surrendered to Arma Traders the original of the salesinvoices while he retained the duplicate of the invoices.93

The respondents attempted to impugn the credibility ofHaw by pointing to the inconsistencies they can find fromthe transcript of stenographic notes. However, we are notpersuaded that these inconsistencies are sufficientlypervasive to

_______________90Rollo, pp. 194, 105106.91Id., at p. 106.92Par. 9, page 2 of Answer dated January 20, 1995.93Rollo, p. 193.

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affect the totality of evidence showing the generalrelationship between Advance Paper and Arma Traders.

Additionally, the issue of credibility of witnesses is to beresolved primarily by the trial court because it is in thebetter position to assess the credibility of witnesses as itheard the testimonies and observed the deportment andmanner of testifying of the witnesses. Accordingly, itsfindings are entitled to great respect and will not bedisturbed on appeal in the absence of any showing that thetrial court overlooked, misunderstood, or misapplied somefacts or circumstances of weight and substance whichwould have affected the result of the case.94

In the present case, the RTC judge took intoconsideration the substance and the manner by which Hawanswered each propounded questions to him in the witnessstand. Hence, the minor inconsistencies in Haws testimonynotwithstanding, the RTC held that the respondents claimthat the purchase and loan transactions were spurious isnot worthy of serious consideration. Besides, therespondents failed to convince us that the RTC judgeoverlooked, misunderstood, or misapplied some facts orcircumstances of weight and substance which would haveaffected the result of the case.

On the other hand, we agree with the petitioners that

the discrepancies in the photocopy of the sales invoices andits duplicate copy have been sufficiently explained. Besides,this is already a nonissue since the duplicate copies weresurrendered in the RTC.95 Furthermore, the fact that thevalue of

_______________94People v. Sagarino, Jr., G.R. Nos. 13535658, September 4, 2001, 364

SCRA 438, 445.95TSN, p. 18, Hearing on December 9, 1996 Testimony of George Haw

Continuation of the crossexamination:ATTY. RODRIGUEZ, JR.:

Your Honor, we will surrender its custody to the Court the salesinvoice no. 8946.

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Arma Traders checks does not tally with the total amountof their obligation with Advance Paper is not inconsistentwith the existence of the purchases and loan transactions.

As against the case and the evidence Advance Paperpresented, the respondents relied on the core theory of analleged conspiracy between Tan, Uy and Haw to defraudArma Traders. However, the records are bereft ofsupporting evidence to prove the alleged conspiracy.Instead, the respondents simply dwelled on the minorinconsistencies from the petitioners evidence that therespondents appear to have magnified. From theseperspectives, the preponderance of evidence thus liesheavily in the petitioners favor as the RTC found. For thisreason, we find the petition meritorious.

WHEREFORE, premises considered, we GRANT thepetition. The decision dated March 31, 2006 and theresolution dated March 7, 2007 of the Court of Appeals inCAG.R. CV No. 71499 are REVERSED and SET ASIDE.The Regional Trial Court decision in Civil Case No. 9472526 dated June 18, 2001 is REINSTATED. No costs.

SO ORDERED.

Carpio (Chairperson), Del Castillo, PerlasBernabe andLeonen,** JJ., concur.

Petition granted, judgment and resolution reversed andset aside.

_______________ATTY. CO:

May we make it on record that the counsel is detaching the samefrom the booklet.

ATTY. RODRIGUEZ, JR.:And surrender it to the custody of the court.

THE COURT:Alright. Attach that to the record. [Emphasis and underscoreours]

** Designated as Acting Member in lieu of Associate Justice Jose P.Perez per Special Order No. 1627 dated December 6, 2013.

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Notes.Apparent authority is determined only by theacts of the principal and not by the acts of the agent theprincipal is not responsible where the agents own conductand statements have created the apparent authority.(Sargasso Construction & Development Corporation/Pick &Shovel, Inc./Atlantic Erectors, Inc. [Joint Venture] vs.Philippine Ports Authority, 623 SCRA 260 [2010])

A corporation like United Coconut Planters Bank(UCPB) is liable to innocent third persons where itknowingly permits its officer, or any other agent, toperform acts within the scope of his general or apparentauthority, holding him out to the public as possessingpower to do those acts. (United Coconut Planters Bank vs.Planters Products, Inc., 672 SCRA 285 [2012])

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