Instructions

1. Write the title of the case and the bibliographic record

2. Mention the parties involved in the case, duly identified as plaintiffs or defendants, etc.

3. What is the main controversy that arises in the case. (The controversy its always that question that the court asks itself to which it must respond to solve the problem at hand).

4. A summary of the facts that led to the case coming to court. (Those particularities that gave rise to the conflict between the parties)

5. A summary of the legal reasoning that the court used to resolve the controversy.

6. Indicate what the verdict was, that is, what was the final disposition made by the court supreme on the case.

7. What is the effect that the verdict or sentence have.

REECE CORPORATION, plaintiff and respondent v. ARIELA, INC., defendant and petitioner.

Number: CE-87-701

Result: June 30, 1988 JUNE 30, 1988

In the Supreme Court of Puerto Rico.

1. WORDS AND PHRASES. Commercial sale. Commercial sale will be the purchase and sale of movable things to resell them, either in the same way in which they were purchased or in a different way, with the aim of profiting from the resale. Art. 243 of the Commercial Code, 10 L.P.R.A. second. 1701.

2. COMMERCIAL LAW--TRADE IN GENERAL--POWER TO REGULATE IT--COMMERCIAL CODE--IN GENERAL. The art. 244(1) of the Commercial Code, 10 L.P.R.A. second. 1702(1), provides that purchases of goods intended for the sole consumption of the buyer or of the person for whose order is acquired.

3. PURCHASE--FURNITURE--INTERPRETATION OF THE CONTRACT--COMMERCIAL CHARACTER OF THE BUY AND SELL. The element of commerciality that distinguishes commercial sales from civil sales is recognized mainly by the intention of the buyer. In commercial sales, the buyer is motivated by the double purpose of subsequently reselling the things purchased and obtaining a profit. Lacking this intention or purpose, the sale lacks the commercial character that distinguishes it from those of civil traffic.

4. ID.--ID.--REQUIREMENTS AND SUFFICIENCY--PROPERTY SUBJECT OF THE SALE CONTRACT. The purchase and sale of machinery or parts to carry out the production of an industry is of a civil nature, since the object is not intended for resale, but for consumption or use by the purchaser.

5. ID.--ID.--ID.--CONTRACTING PARTIES. The fact that in a transaction the contracting parties are both merchants does not make it a commercial act.

6. COMMERCIAL LAW--TRADE IN GENERAL--POWER TO REGULATE IT--IN GENERAL. To define what constitutes an act of commerce, objective and subjective theories and the 'accessory theory' have been developed. This last assignment of commercial character to the so-called 'acts of relationship commerce'.

7. DNI.--DNI.--DNI.--DNI. The subjective theory defines commercial acts as all those carried out by a merchant that belongs to the exploitation of his commercial industry. Within this system, commercial law is the law of merchants and acts carried out by them outside that professional sphere are excluded.

8. DNI.--DNI.--DNI.--DNI. Commercial law, under the objective theory, is the law of a class of acts (commercial acts), which are not only those carried out by merchants. In this theory, attention is moved from the person to the act and the act is detached from the person of the merchant.

9. DNI.--DNI.--DNI.--DNI. The Supreme Court, when interpreting art. 2 of the Commercial Code, 10 L.P.R.A. second. 1002, ha highlighted that it rejects enumeration and doctrinal definition as criteria to establish what constitutes an act of commerce, and opens a wide field for the evaluation of the concept according to the changes that will occur in economic reality.

10. DNI.--DNI.--DNI.--DNI. The art. 2 of the Commercial Code, 10 L.P.R.A. second. 1002, refers to two (2) types or groups of commercial acts: (a) those regulated exclusively by the Commercial Code and (b) those regulated by both it and the Civil Code. The sale belongs to this second type or group.

11. DNI.--DNI.--DNI.--DNI. The analysis of Art. 2 of the Commercial Code, 10 L.P.R.A. second. 1002, shows that the factors Definitions of the commercial or civil nature of a transaction vary from case to case.

12. ID.--ID.--MATTERS OR OBJECTS SUBJECT TO REGULATION--IN GENERAL. When characterizing a transaction as civil or commercial, there are particular requirements for different businesses. However, there is a common thread, a common element, between the various commercial acts: their purpose, their connection with trafficking. commercial, its habituality and its attention to the interchangeable value of things.

13. ID.--ID.--POWER TO REGULATE IT--IN GENERAL. Commercial law is the right of a kind of acts. Even in the most subjective system, one has to start from the act to know who the merchants are. Hence, an act of commerce cannot exist merely because it is performed by a merchant.

14. ID.--ID.--ID.--TRADE CODE--IN GENERAL. Whoever invokes the Commercial Code has the burden of proof regarding its applicability.

15.CORPORATIONS-- OFFICERS AND AGENTS--POWERS AND FUNCTIONS--ADMINISTRATIVE AGENTS AND GENERAL AGENTS. In the absence of corporate or other documents that precisely define the powers and authority of a general manager, he or she is deemed to have the implied authority to perform. those functions that fall within the scope of the corporation's ordinary affairs. The position entails the granting of that degree of authority appropriate for the performance of the acts necessary for the proper direction of corporate business.

16. DNI.--DNI.--DNI.--DNI. Corporate managers may possess, apart from expressly delegated authority, implied authority, either by the nature of their positions or by the manner in which the corporation's business has been conducted in the past.

17. DNI.--DNI.--DNI.--DNI. In numerous corporations there is the position of manager, designated under the title of General Manager and Regional Manager. It has been argued that both titles have similarities. It is understood that the Regional Manager is the person who has the direction and control of corporate affairs in a region and who has sufficient authority to commit to the corporation in the scope of its ordinary business. The basic difference between the General Manager of a corporation and the manager of a district or region is that the latter holds authority that falls over a specific part or section of the business.

18. DNI.--DNI.--DNI.--DNI. The corporation that entrusts a manager with the general supervision of a division or section of its business, in the absence of documentation to the contrary, reviews said manager with those general management prerogatives coexisting with the business or operations with which he has been entrusted. Therefore, the corporation is bound by the contracts it made within the parameters of its authority.

19. ID.--ID.--ID.--ID. The division manager of a manufacturing corporation has the implied authority to make those contracts aimed at the sale of products, without the need to refer purchase orders to the corporation's central office, especially when in previous agreements or contracts between those same parties the ratification of the contract by the corporation was never required.

20. ID.--ID.--ID.--ID. The authority of a corporate manager extends to those matters or transactions that are incidental to the ordinary affairs of a corporation. At the moment when a general manager is faced with If an extraordinary matter, you would need the authorization of the corresponding corporate or official bodies to commit it. If the manager did not have that authorization, he would be acting outside the scope of his implied authority.

21. WORDS AND PHRASES. Settlement. Dation in payment is the act by virtue of which the debtor voluntarily performs, as payment, a benefit other than that owed to the creditor, who consents to receive it in lieu of the former. The execution of the new agreed benefit implies the extinction of the obligation preexisting.

22. OBLIGATIONS--EXTINCTION--PAYMENT OR PERFORMANCE--DATION IN PAYMENT--IN GENERAL. Dation in payment is based on the fact that nothing prevents the creditor and the debtor from reaching an agreement so that payment can be verified through a performance other than that originally agreed upon.

23. ID.--ID.--ID.--ID.--ID. The legal concept of 'dacin en pago' is distinguished from the transfer of assets, since dacin does not require the intervention of a plurality of creditors nor does it need to extend to all of the debtor's assets; Nor is it based on the assumption of a situation of insolvency on the part of the debtor. It only supposes an agreement that modifies the original obligation, replacing its object but fulfilling it voluntarily.

24. ID.--ID.--ID.--ID.--ID. The figure of 'dacin en pago' constitutes an agreement of an ordinary nature as it is an act by virtue of which the debtor, with the consent of the creditor, makes a payment other than the one originally agreed upon.

25. RULES OF EVIDENCE--GENERAL PROVISIONS--EVIDENCE--EVALUATION OF EVIDENCE--PRINCIPLES TO FOLLOW--IN GENERAL. The Supreme Court has held that the obligation to present evidence falls primarily on the party asserting the affirmative on the issue in controversy. Mere allegations or theories do not constitute evidence.

PETITION FOR CERTIORARI to review a JUDGMENT of Angel Gonzlez Romn, J. (Mayagez), which declared that in a certain lawsuit to collect money, the capacity of the manager of a corporation to accept in dacion in payment a merchandise that would substitute the money was not proven due. Revoked.

Jos M. Biaggi Junquera, attorney for the petitioner; Manuel E. Miranda, attorney for the respondent.

ASSOCIATE JUSTICE ALONSO ALONSO delivered the Court's opinion. **1 We express ourselves about the nature of a commercial contract, about the inherent powers of the regional managers of a corporation and about dation in payment of what is owed.

I

On December 5, 1985, Reece Corporation (hereinafter Reece) filed in the District Court, Mayagez Chamber, a lawsuit for collection of money against Ariela, Inc. (hereinafter Ariela), in which it claimed the amount of $4,037.01. for debts arising from late fees for leasing machinery.

The defendant and petitioner Ariela answered the complaint and denied the existence of the debt. He alleged that he had paid through 'dacin en pago' the amount of $3,157.48 in merchandise and the outstanding balance of $879.53 by check.

*274 The District Court concluded that the defendant and petitioner owed nothing to the plaintiff and respondent, since a dation in payment had occurred. The court found it proven that the plaintiff and defendant - who is dedicated to the sale and rental of sewing machines and spare parts - reorganized her corporate function in 1980. Following this reorganization process, Reece notified the defendant and petitioner, that he could not subsequently rent the sewing machines to her, but that he was willing to sell them to her if she so interested.

The defendant and petitioner - who is engaged in the clothing manufacturing business - informed Mr. Kemp House, Regional Manager of Reece in Puerto Rico, that she was not in a position to be able to purchase the sewing machines from him and that she would proceed to return them to him. . He also told him that he would return all those parts that he had acquired as replacements or spare parts. These parts were in Ariela's possession, since by virtue of the lease contract she was obliged to maintain the machines and use the aforementioned parts to keep the machinery in good condition.

The District Court further concluded that pursuant to an agreement reached between Ariela and Reece's Regional Manager, Ariela sent Reece all of the pieces in her possession, valued at $3,157.48, to settle part of the debt. Jointly, and in compliance with the agreement, the defendant and petitioner corporation sent a check for the amount of $879.33 which settled the entire debt.

The District Court concluded that Reece did not honor the agreement or commitment that Mr. Kemp House had made to Ariela. It also concluded that Reece originally accepted the payment agreement, but subsequently revoked it unilaterally and without explaining the reasons for *275 making that determination. In view of these facts, the court dismissed the claim.

The Superior Court, to which the ruling of the District Court was appealed, reversed the determination of the District Court on the grounds that the defendant and petitioner had to prove that Mr. Kempouse, as Regional Manager of Reece, had the authority to accept in giving in payment the returned pieces instead of the money owed. In the opinion of the Superior Court, no test had been passed regarding Mr. Kemp House's capacity to bind the corporation and, therefore, it could not be concluded that the plaintiff and respondent had accepted as dation in payment the value of the entire The pieces.

**2 Not satisfied, Ariela appeals to us through a writ of certiorari.

On November 18, 1987, we ordered the plaintiff and respondent to show cause why we should not revoke the ruling of the Superior Court of Puerto Rico, considering that Mr. Kemp House was empowered by reason of the position he held and by the manner in which he had performed it, to force the corporation in the transaction carried out.

The plaintiff and respondent have appeared. In his writing he tells us that if there has been a contract between the parties, it must be classified as commercial, in which case the testimony of witnesses would not be sufficient on its own to prove the existence of the contract. Art. 82 of the Commercial Code, 10 L.P.R.A. sec. 1302; [FN1] Vila & Brothers, *276 Inc. v. Owens Ill. of P.R., 117 D.P.R. 825 (1986). The plaintiff and respondent corporation also points out that it was up to the defendant and petitioner to demonstrate that Reece had accepted the dation in payment proposed by Ariela.

II

We will begin by discussing whether the purchase, by Ariela, of spare parts for the maintenance of the sewing machines rented by the plaintiff and defendant constitutes a commercial sale contract and, if so, whether the agreement to accept the offer of dacin en pago reached between Mr. Kemp House and Ariela became a contract of a commercial nature.

[1] Art. 243 of the Commercial Code provides the following:

The purchase and sale of movable things to resell them will be commercial, either in the same way in which they were purchased, or in a different way, with the aim of profiting from the resale. (Emphasis supplied.) 10 L.P.R.A. sec. 1701.

[2] Likewise, Art. 244(1) provides that:

The following will not be considered commercial:

(1) Purchases of goods intended for consumption by the buyer or the person on whose behalf they are purchased. (Emphasis supplied.) 10 L.P.R.A. sec. 1702.

[3-4] The element of commerciality that distinguishes commercial sales from civil sales is recognized mainly by the intention of the buyer. In commercial sales, the buyer is motivated by the double purpose of subsequently reselling the things purchased and of obtaining a *277 profit. Lacking this intention or purpose, the sale lacks the commercial nature that distinguishes it from civil traffic. R. Ura, Commercial Law, 10th ed., Madrid, Imprenta Aguirre, 1975, p. 474; J. Garrigues, Commercial Law Course, 7th ed. rev., Madrid, Imprenta Aguirre, 1979, Vol. II, page. 70. Therefore, the purchase of machinery or parts to carry out the production of an industry is of a civil nature, since the object is not intended for resale, but for consumption or use by the purchaser.

Spanish jurisprudence has been consistent in concluding the above in its interpretation of provisions analogous to ours. See: S. of January 27, 1945, No. 37, IX (2nd series) Civil Jurisprudence 255; S. of July 1, 1947, No. 51, XIX (Vol. III, 2nd series) Civil Jurisprudence 540; S. of June 7, 1969, No. 3285, 36 (II) Repertory of Jurisprudence 2215; S. of May 14, 1979, No. 1828, 46 (I) Repertory of Jurisprudence 1487; S. of December 21, 1981, No. 5280, 48 (II) Repertory of Jurisprudence 4240. Thus, when analyzing a contract entered into between merchants and in which one of the parties purchased machinery for the extraction of olive oil, the Supreme Court of Spain stated:

**3 '... [T]he essential characteristic of the commercial sale is the intention of the buyer, which must be to resell the things for profit and this being so and referring to the contract discussed to the sale of machinery for the grinding of the olive [...], with no intention of reselling the mill, its machinery, or its parts To obtain a profit on resale, the contract must be considered a civil sale and subject to the rules of the substantive [civil, clear] Code...' (STS 7-VI-1969 [Rep. Ar 3285/1969]). Commented ruling, An economic theory on the commerciality of sales, 36 An. Der. Civ. 943, 976 (1983).

The pieces that Ariela purchased from Reece would be used for the company's own consumption and use and not for *278 resale for profit. That is why we cannot classify said transaction between the parties as a commercial transaction. Nor can we classify the agreement reached as commercial. between Mr. Kemp House and Ariela to accept some pieces as payment in payment, since that agreement has its genesis and is the consequence of a contract of a civil nature.

[5] On the other hand, the fact that the contracting parties in the proceedings are both merchants does not convert the leasing of machinery and the sale of parts into commercial acts. Let's see.

[6] Today, in Pacheco v. Nat'l Western Life Ins. Co., 122 D.P.R. 56, 63 (1988), we express that to define what constitutes an act of commerce, objective and subjective theories and the 'accessory theory' have been developed, which attributes 'commercial character to the so-called acts of relationship commerce'. (Emphasis in the original.) See: A. Bergamo Llabrs, Institutions of Commercial Law, Madrid, Ed. Reus, 1951, T. I, pp. 55-56; J.M. Martnez Val, Commercial Law, Barcelona, Ed. Bosch, 1979, page. 24.

[7] The subjective theory coincides with what is established by the German Commercial Code, which in its Art. 343 defines commercial acts as "all" those carried out by a merchant that belong to the exploitation of his commercial industry. ''. Martnez Val, op. cit., p. 24. Within this system, commercial law is the right of a class of people: merchants. But acts carried out by a merchant outside such professional sphere are excluded from it. ID; Pescadera Rosas, Inc. v. Lozada, 116 D.P.R. 474 (1985).

[8] In the objective theory, commercial law becomes rather the law of a class of acts, acts of *279 commerce, which are not only those carried out by merchants in their capacity as such. Under this system, attention is transferred from the person to the act and the act is detached from the person of the merchant. Pescadera Rosas, Inc. v. Lozada, supra; J. Garrigues, Treatise on Commercial Law, Madrid, Ed. Rev. Der. Mercantil, 1947, T. I, Vol. 1, pp. 177-178.

**4 Ura comments, regarding the doctrinal definition of the commercial act, that the Spanish Commercial Code - from which ours comes - responds to an objective conception of commercial law. This focuses mainly on the nature of the acts or contracts to attribute or not the classification of commercial, regardless of the people who were in them.

[9-12] When interpreting Art. 2 of the Commercial Code, 10 L.P.R.A. sec. 1002, we have highlighted that it rejects the enumeration and doctrinal definition as criteria to establish what constitutes an act of commerce, and opens a wide field for the evolution of the concept according to the changes that occur in reality. economical. Pescadera Rosas, Inc. v. Lozada, supra. Said article necessarily refers to two types of acts: those regulated exclusively by the Commercial Code and those regulated both by it and by the Civil Code. This second group, to which we belong... the purchase and sale[,] ... highlights with particular rigor the difficulties in the identification of the commercial act. His analysis demonstrates that the differentiation criterion is in effect multiple.... [Therefore the] factors defining the nature, commercial or civil, of a transaction vary from case to case.... Outside of the particular requirements to different businesses there is, however, a common thread, a common element between various commercial acts: their purpose, their connection with commercial traffic, their habituality, their *280 attention to the interchangeable value of things. ' (Emphasis supplied.) Pescadera Rosas, Inc. v. Lozada, supra, p. 479.

[13] The fundamental criterion that must be kept in mind is that commercial law is the law of a class of acts. Even in the most subjective system, one has to start from the act to know who the merchants are. Hence, an act of commerce cannot exist merely because it is performed by a merchant. Garrigues, Treatise on Commercial Law, op. cit., pp. 177-178.

In the case at hand, an evaluation of the transactions carried out between the parties shows us that none of the contracts classified in the Commercial Code as commercial contracts are present in the case. Consequently, we cannot ascribe a commercial nature to the transactions carried out between the defendant and petitioner and the plaintiff and appealed party simply because both are merchants. This would entail that we adopt a standard under which we would classify as commercial any act in which, regardless of its substantive nature, two (2) merchants intervene.

[14] Nor should we ignore the rule adopted by this Court in terms of that The party that invokes the applicability of the Commercial Code to the controversy has the burden of proof regarding its applicability. Pescadera Rosas, Inc. v. Lozada, supra. The plaintiff and defendant herein has not complied with this requirement. It also emerges from the records that it was in the appeal to the Superior Court when he first raised the applicability of the Commercial Code to the controversy and the alleged commercial nature of the transactions carried out between the parties.

**5 *281 III

The plaintiff and respondent argue, secondly, that Reece's Regional Manager, Mr. Kemp House, did not have the authority to bind the corporation through the agreement reached between the parties and that Mr. House himself had conditioned the return of the pieces. as credit, to the acceptance of the same by Mr. Clark Blair, who was Regional Director of Reece.

After a careful examination of the documentary evidence presented in the record, as well as the transcript of the hearing itself. of the case held before the District Court of Puerto Rico, which was before the Superior Court, we conclude that Mr. House as Regional Manager of Reece and Ariela reached an agreement, in which Reece would accept as payment in payment the pieces that Ariela had returned and that the remaining amount due would be paid by check. Once this agreement was reached, Reece unilaterally revoked it without disclosing his reasons for doing so.

There is no controversy regarding the fact that Mr. Kemp House held the position of Regional Manager of Reece in Puerto Rico and that he was in charge of the corporation's business within Puerto Rico. Appendix, p. 62. Mr. Ades, who served as President of Ariela at the time of the disputed transaction, testified during the trial that Mr. Kemp House was Reece's representative in Puerto Rico. He also indicated that all the business his corporation carried out with Reece was negotiated with Mr. House. Appendix, p. 87.

Now, did Mr. Kemp House, as Reece's Regional Manager, have the authority to carry out the various transactions reached between the parties that gave rise to the dispute in question? We conclude yes.

[15-16] In the absence of corporate or other documents that precisely define the powers and *282 authority of a general manager, it is understood that he or she has as a general rule the implicit authority to carry out those functions that are framed within the scope of the corporation's ordinary affairs. 2A Fletcher Cyc. Corp. Sec. 667 (Perm. ed. 1982); H.G. Henn and J.R. Alexander, Laws of Corporations and Other Business Enterprises, 3rd ed., Minnesota, West Publishing Co., 1983, pp. 599-600; Maple Island Farm v. Bitterling, 209 F.2d 867 (8th Cir. 1954). The position entails the granting of that degree of authority appropriate for the performance of the acts necessary for the proper direction of corporate business. Fletcher, supra. In addition to expressly delegated authority, corporate managers may possess implied authority, either by the nature of their positions or by the way the corporation's business has been conducted in the past. R. Hamilton, The Law of Corporations in a Nutshell, Minnesota, West Publishing Co., 1983, p. 185.

**6 [17] Many corporations have general managers designated under the title of General Manager and Regional Manager. Henn and Alexander, op. cit., p. 587; Fletcher, supra, Vol. 2, Sec. 272; Sun Printing & Publishing Assn. v. Moore, 183 U.S. 642 (1902). In this sense, it has been argued that the term 'regional manager' has a similar connotation to 'general manager'. It is understood that the regional manager is the person who has the direction and control of corporate affairs in a region and who has sufficient authority to commit the corporation in the scope of its ordinary business. Franklin Life Ins. Co. v. Hill, 220 S.E.2d 707 (Ct. App. Ga. 1975). The basic difference between the general manager of a corporation and the manager of a district or region is that the latter holds authority that falls over a specific part or section of the business. Fletcher, supra, Vol. 2A, Sec. 666.*283

[18-19]The corporation that entrusts a manager with the general supervision of a division or section of its business, in the absence of documentation to the contrary, vests said manager with those general management prerogatives coexisting with the business or operations being carried out. They have entrusted him. Therefore, the corporation is bound by the contracts it makes within the parameters of its authority. Fletcher, supra, Vol. 2A, Sec. 670. Thus, the division manager of a manufacturing corporation has the implied authority to make those contracts directed at the sale of products without the need to refer purchase orders to the office of the corporation, especially when in previous agreements or contracts between those same parties the ratification of the contract by the corporation was never required. Fletcher, supra, Vol. 2A, Sec. 670; F.W. Stock & Sons v. Owen & Barker, 105 S.E. 587 (Ct. App. Va. 1921).

[20] Now, the authority of a corporate manager extends to those matters or transactions that are incidental to the ordinary affairs of a corporation. Fletcher, supra, Vol. 2A, Sec. 667. When a general manager has an extraordinary matter before him, he would need the authorization of the corresponding corporate or official bodies to commit it. If the manager did not have that authorization, he would be acting outside the scope of his implied authority. Porshin v. Snider, 212 N.E.2d 216 (Mass. 1965).

When Mr. Kemp House leased the sewing machines to Ariela and sold her the spare parts, he was carrying out ordinary transactions of the corporate operation, T.M. Gilmore & Co. v. W.B. Samuels & Co., 123 S.W. 271 (Ct. App. Ky. 1909), for which he never needed the authorization of the Board of Directors of the Corporation. Therefore, he could receive payment of the *284 rental fees and the value of the pieces purchased by Ariela without the need for authorization from the Board of Directors, since they were also ordinary transactions.

**7V

Closely related to the above, it is worth asking whether the receipt of some pieces returned as payment in payment constituted an ordinary act of corporate business that Mr. Kemp House could carry out. We conclude yes.

[21] Dation in payment is the act by virtue of which the debtor voluntarily performs, as payment, a benefit other than that owed to the creditor, who consents to receive it in lieu of the former. J. Castn Tobeas, Common and Foral Spanish Civil Law, 10th ed., Madrid, Ed. Reus, 1967, Volume III, page. 317. The execution of the new agreed benefit implies the extinction of the pre-existing obligation. J. Puig Brutau, Fundamentals of Civil Law, 3rd ed., Barcelona, Ed. Bosch, 1985, T. I, Vol. 2, page. 324.

[22] Dation in payment is based on the fact that nothing prevents the creditor and the debtor from agreeing so that payment can be verified through a performance other than that originally agreed upon. Puig Brutau, op. cit., p. 320.

[23] This legal figure is distinguished from the transfer of assets, since dation does not require the intervention of a plurality of creditors nor does it need to extend to all of the debtor's assets. Nor is it based on the assumption of a situation of insolvency on the part of the debtor, since it only involves an agreement that modifies the original obligation, replacing its object, but fulfilling it voluntarily. J.M. Manresa and Navarro, Comments on the Spanish Civil Code, 6th ed. rev., Madrid, Ed. Reus, 1967, *285 T. VIII, Vol. 1, page. 705; Castn Tobeas, op. cit., p. 319; J.R. Vlez Torres, Civil Law Course, San Juan, Ed. Art Printing, 1981, Volume IV, Vol. 1, page. 153.

[24] Since dation in payment is an act by virtue of which the debtor, with the consent of the creditor, makes a payment other than the one originally agreed upon, it constitutes an agreement of an ordinary nature.

If Mr. Kemp House was authorized to sell merchandise and receive payment for it, he could also accept a few returned parts and a check as payment in full without the need for prior authorization from the Board of Directors of the corporation of which he He was Regional Manager, particularly in this case in which the parts or spare parts for the machinery were not going to be of any use, since said machinery would no longer be leased to him. The purchase of spare parts was an obligation incidental to the main obligation of the lease. Without the last, the first had no justification.

Because the agreement reached between the parties is an act of an ordinary nature, and similar transactions have been carried out in the past, it binds the corporation. Therefore, Mr. Ades (President of Ariela) had the right to assume that he was contracting with a person who had the authority to bind the Reece corporation with his actions. Fletcher, supra, Vol. 2A, Sec. 667.

**8 In the instant case, this presumption is supported by the fact that the corporation never questioned the corporate actions carried out in the past by Mr. Kemp House, in his capacity as Regional Manager, nor did it indicate to him when suing him the limitations of the corporate activity of this. Fletcher, supra, Vol. 2A, Sec. 670.

SAW

It remains for us to consider the claim of the plaintiff and respondent in the sense that it was up to *286 the defendant and petitioner corporation to prove the intrinsic powers of the position of Regional Manager, as well as the corporate capacity of Mr. House to accept the pieces returned in 'Settlement'.

Before the District Court, the representatives of the Reece corporation themselves admitted that Mr. Kemp House was working, at the time of the transaction in question, as Regional Manager of the corporation in Puerto Rico.

It was then up to the plaintiff and respondent to prove that Mr. Kemp House was not authorized to accept the dation in payment and that he did not possess the typical powers assigned to a corporate agent holding the position of Regional Manager, which he did not did.

[25] We have held that the obligation to present evidence rests primarily on the party asserting the affirmative on the issue in controversy. [FN2] Mere allegations or theories do not constitute evidence. Authentic Employee Assoc. v. Municipality of Bayamn, 111 D.P.R. 527 (1981). Reece simply presented witnesses who had no direct knowledge of the original negotiation between Reece and Ariela. Nor did he present Mr. Kemp House as a witness to refute the agreement reached with Ariela.

For the reasons stated, the order is issued and the ruling issued on September 14, 1987 by the Superior Court, Mayagez Chamber, in case CS-87-35 is revoked and that of the District Court of December 15 is reinstated of 1986.

Associate Judge Mr. Rebollo Lpez did not in- ended.

FN1. As pertinent, it provides:

'Commercial contracts will be valid and will produce an obligation and action in court, regardless of the form and language in which they are concluded, the class to which they correspond and the amount for which they are intended, provided that their existence is stated by one of the parties. means that civil law has established. However, the testimony of witnesses alone will not be sufficient to prove the existence of a contract, the amount of which exceeds three hundred dollars, absent some other evidence.' (Emphasis supplied.) 10 L.P.R.A. sec. 1302.

FN2. Rule 10(B) of Evidence of 1979 (32 L.P.R.A. App. IV).

REECE CORPORATION, plaintiff and respondent v. ARIELA, INC., defendant and petitioner.