Uncharacteristic silence

Silence means consent or admission. In law, this is known as estoppel in pais. This is the principle applied in this case of a company engaged in the sale of construction supplies (ECSI) and one of its customers (EEC).

In the sale of its merchandise, ECSI would prepare a Sales Invoice for the transaction in quadruplicate copies with the original and duplicate being sent to its customer (in this case EEC) for signature upon receipt of the merchandise. The delivery personnel of ECSI would then leave the duplicate copy with EEC and retain the original which it would later on return to the customer upon payment of the merchandise or append to the Statement of Account whenever it would make a collection. Clearly stated in the Sales Invoice is the phrase: “Payment not valid without our official receipt”.

Between the periods starting August 1980 to March 1981, ECSI delivered merchandise to EEC in the total amount of P681,316.70 covered by separate Sales Invoices that remained unpaid. On February 20, 1981, ECSI sent EEC Statements of Accounts indicating the price for each purchase and the total amount due appending thereto the original copies of the Sales Invoices from August 4, 1980 to January 15, 1981. ECSI retained the original Sales Invoice not yet due as of that date. EEC neither responded to the Statement of Account nor made any payment to ECSI despite the express reminder therein that “If this statement does not agree with your record, please notify us at once”.

Four years later, or on March 12, 1985, ECSI already sent a demand letter but it was likewise ignored by EEC. So on March 25, 1985, ECSI already filed a complaint for the collection of P681,316.70 against EEC.

On September 30, 1993, the trial court ruled in favor of ECSI but only for the sum of P37,055.20 plus 12% interest because ECSI was able to present the original Sales Invoices signed by EEC only for such amount. ECSI presented only copies of the Sales Invoices for the rest of the amount due, since, according to ECSI, the originals were already sent to EEC as they were appended to the Statements of Accounts. But the trial court did not accept this argument because if the Sales Invoices were already with EEC it gives rise to the presumption that the said sales invoices had already been paid. So the trial court concluded that EEC did not receive the goods covered by mere copies of the Sales Invoices and that such goods might have been delivered to somebody else. The trial court ruled that ECSI failed to discharge the burden of proving that a valid debt exists. Was the trial court correct?

The Court of Appeals (CA) as affirmed by the Supreme Court (SC) said no. Considering the practice of ECSI to require EEC to sign the duplicate and original of the Sales Invoices upon delivery of the goods and then retain the original copy to be appended to the Statement of Account when collection is made, it is impossible for ECSI to present the original or duplicate copies of the Sales Invoice duly signed by EEC because they are already both in EEC’s possession after the Statements of Accounts were sent to which the originals were appended. The original Sales Invoices accepted by the trial court were still retained by ECSI as they were not yet due when the Statement of Account was prepared.

Besides, the Sales Invoices are not evidence of payment. They are only evidence of receipt of the goods. This is very clear in the note on said Invoices stating “payment not valid without official receipt”. Thus the best evidence to prove payment is the official receipt. EEC failed to present any official receipt to prove that it had already paid the goods to ECSI.

Moreover, EEC did not do anything despite the clear reminder in the Statement of Account to notify ECSI at once if said statement does not agree with its record. EEC remained silent for four years from the time it received the Statements of Account until the filing of the case against it. It did not even bother to respond to ECSI’s demand letter. Its silence is uncharacteristic of persons who have just been asked to pay an obligation for which they are not liable. Such silence is tantamount to admission of the entries in the Statements of Account sent ECSI. The principle of estoppel in pais is applicable here. One who, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, can no longer deny the existence of such fact as it will prejudice the latter. So EEC should pay ECSI the total amount of P681,316.70 plus 12 % interest (El Oro Engraver Corp. vs. Court of Appeals et al., G.R. 125267, February 18, 2008). 

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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