Del Mar v. Rehabilitation Finance Corporation
REITERATIONFacts
The Antecedents: The Rehabilitation Finance Corporation (RFC), now the Development Bank of the Philippines (DBP), granted a loan to Quirico del Mar. As of March 26, 1957, Del Mar owed P4,423.04 on his loan. On the same date, Del Mar offered to pay this debt using a backpay acknowledgment certificate issued pursuant to Republic Act 897. Procedural History: The RFC initially refused to accept the backpay certificate as payment. Del Mar filed a suit (Civil Case No. R-5324, CFI of Cebu) to compel the RFC to accept the certificate, and the court ordered the RFC to do so. This decision became final. In accepting the certificate, which had a face value of approximately P20,000.00, the RFC discounted it at 2% per annum, considering its 30-year maturity period and the remaining 315 months until maturity. The RFC calculated the discount to be P4,888.62, making the total value assigned to the certificate P9,311.66 to cover the P4,423.04 debt. The Appeal: Del Mar filed a second suit (Civil Case No. R-6455, CFI of Cebu) on January 21, 1960, seeking to compel the RFC to accept his backpay certificate without any discount, arguing that the RFC had no power to charge such a discount. The RFC opposed this, and the Court of First Instance dismissed Del Mar's petition on June 28, 1963, ruling that Republic Act 897 authorized the 2% per annum discount. Del Mar appealed this decision to the Supreme Court.
Issue(s)
Whether the Rehabilitation Finance Corporation (RFC) is barred by the rule of omnibus motion from raising the issue of its right to charge a discount on a backpay certificate, as it did not raise this point in the first suit. Whether Republic Act 897 authorizes the RFC to charge a discount on a backpay acknowledgment certificate when it is used to settle an obligation prior to the certificate's maturity.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, ruling that the RFC is not barred from raising the issue of its right to charge a discount, and that Republic Act 897 indeed authorizes such a discount not exceeding 2% per annum.
Ratio Decidendi
On Whether the RFC is barred by the rule of omnibus motion: The Supreme Court held that the RFC is not barred by the rule of omnibus motion from raising the issue of its right to charge a discount. The Court reasoned that the right of the RFC to charge a discount was not at issue in the first suit (Civil Case No. R-5324), which only sought to compel the acceptance of the certificate. The present case (Civil Case No. R-6455) is where Del Mar specifically questioned this right, making it the proper venue for its determination. Therefore, the RFC was not precluded from asserting its right to charge a discount in this subsequent action. On whether Republic Act 897 authorizes the RFC to charge a discount: The Supreme Court ruled in the affirmative, affirming that Republic Act 897, specifically Section 2 thereof, authorizes the charging of a discount not exceeding 2% per annum on backpay acknowledgment certificates when they are indorsed to settle an obligation. The Court explained that the law permits this discount because the certificate is not yet due and payable; it matures in thirty years from its issuance. Until maturity, it is not worth its full face value. The discount compensates for the time value of money and the risk associated with accepting a certificate before its redemption date. The Court distinguished this from redemption at maturity, which does not involve a discount. Furthermore, the Court clarified that the principle of compensation, as provided in Article 1279(3) of the Civil Code, applies only when both debts are due. In this case, while Del Mar's debt to RFC was due, the National Government's liability to redeem the backpay certificate was not yet due, thus precluding compensation.
Main Doctrine
Republic Act 897, as amended, explicitly permits the charging of a discount not exceeding two percentum per annum when a backpay acknowledgment certificate is used to settle an obligation by indorsement prior to its maturity date. This is because the certificate's face value is not yet fully realized until it matures, and the entity accepting it before maturity is entitled to compensation for the time value of money.