G.R. No. 165608 ; December 13, 2007
PHILIPPINE PHOSPHATE FERTILIZER CORPORATION, Petitioner, vs. KAMALIG RESOURCES, INC., Respondent.

FACTS

Petitioner Philphos filed a collection case against respondent Kamalig for alleged overwithdrawals of fertilizer stocks from its Iloilo and Manila warehouses. Kamalig purchased fertilizer from Philphos through advance payments, with withdrawals by Kamalig’s customers facilitated by Delivery Orders. Philphos claimed Kamalig overwithdrew stocks worth ₱1,016,994.21, later reduced to ₱546,645.30 after compensating Philphos’s own debt to Kamalig. Kamalig denied liability, asserting it only withdrew stocks equivalent to its payments.
The Regional Trial Court (RTC) ruled for Philphos, finding Kamalig liable for the overwithdrawals. The RTC rejected Kamalig’s defense that some withdrawals were made using non-standard forms or by unauthorized officers, holding this was an uncommunicated internal policy. The Court of Appeals (CA) reversed the RTC, dismissing the complaint. The CA found Philphos failed to prove the overwithdrawals were authorized by or for the account of Kamalig, noting the withdrawals in question were made using irregular handwritten requests instead of Kamalig’s official pre-printed Delivery Orders.

ISSUE

Whether the Court of Appeals erred in reversing the RTC’s finding that Kamalig is liable for the value of the overwithdrawn fertilizer stocks.

RULING

The Supreme Court denied the petition and affirmed the CA Decision. The Court held that Philphos, as the plaintiff, bore the burden of proof to establish its claim by preponderance of evidence. It failed to discharge this burden. The evidence showed the disputed withdrawals were made using handwritten requests, not the official pre-printed and pre-numbered Delivery Orders that Kamalig prescribed for its transactions. Philphos’s own warehouse personnel admitted they released stocks based on these irregular documents.
The legal logic is that for Philphos to hold Kamalig liable, it must prove that the withdrawals were made by Kamalig or its authorized agents. The use of non-standard withdrawal forms, contrary to Kamalig’s established procedure, created serious doubt that these transactions were authorized by Kamalig. Philphos could not simply presume authority from the mere presentation of a withdrawal slip; it had a duty to ensure the documents conformed to the agreed procedure. Since Philphos released the stocks based on irregular documents at its own peril, it cannot now charge Kamalig for those releases. The CA correctly found that Philphos’s evidence was insufficient to overcome Kamalig’s denial and establish liability.