Caltex (Philippines), Inc. v. Intermediate Appellate Court
REITERATIONFacts
1. The Antecedents: Asia Pacific Airways, Inc. (respondent) entered into an agreement with Caltex (Philippines), Inc. (petitioner) for the supply of aviation fuel for two years. As of June 30, 1980, respondent had an outstanding obligation of P4,072,682.13 for fuel supplied. To settle this, respondent executed a Deed of Assignment on July 31, 1980, assigning its receivables from Special Fund Import Payments to petitioner. A Treasury Warrant for P5,475,294.00 was issued to petitioner. Respondent later claimed the amount exceeded their obligation and demanded a refund of P900,000.00. Petitioner retained P510,550.63, asserting it represented interest and service charges at 18% per annum on the overdue account from June 1, 1980, to July 31, 1981. 2. Procedural History: Respondent filed a complaint in the Regional Trial Court (RTC) to collect the P510,550.63. The RTC dismissed the complaint. Respondent appealed to the Intermediate Appellate Court (IAC), which reversed the RTC decision, ordering petitioner to return the P510,550.63 plus interest. Petitioner filed an urgent motion for an extension to file a motion for reconsideration, which was denied by the IAC, citing the Habaluyas ruling that such extensions are not allowed. The IAC subsequently denied petitioner's motion for reconsideration and granted respondent's motion for entry of judgment. Petitioner then filed the instant petition for certiorari with the Supreme Court. 3. The Petition: Petitioner seeks certiorari to annul the IAC's decision and resolutions. The petition raises two main issues: (1) whether the IAC erred in strictly applying the Habaluyas ruling to deny extensions for filing a motion for reconsideration, and (2) whether the Deed of Assignment constituted dacion en pago, thereby extinguishing the obligation and precluding petitioner from collecting further interest. Petitioner argues that the Deed of Assignment did not extinguish the entire obligation and that the parties' subsequent actions indicated an intent to include interest charges. The Supreme Court found merit in the petition, ruling that the motion for extension was filed within the grace period established in the clarified Habaluyas ruling and that the Deed of Assignment was not a dacion en pago, thus allowing for the imposition of interest charges.
Issue(s)
Whether the motion for extension of time to file a motion for reconsideration and the subsequent motion for reconsideration filed by petitioner were validly granted. Whether the Deed of Assignment constituted dacion en pago such that the obligation was totally extinguished, precluding the imposition of interest and service charges.
Ruling
The petition is granted. The decision of the Intermediate Appellate Court is set aside, and the trial court's decision is reinstated.
Ratio Decidendi
On the issue of the motion for extension of time to file a motion for reconsideration: The Court ruled in the affirmative. Initially, the IAC denied Caltex's motion for extension and subsequent motion for reconsideration, citing the ruling in Habaluyas Enterprises, Inc. vs. Japzon that the 15-day period for filing a motion for reconsideration cannot be extended. However, the Supreme Court clarified in a subsequent resolution in the same Habaluyas case that the rule on non-extendibility of the reglementary period for filing motions for reconsideration should be applied prospectively, with a one-month grace period from the promulgation of the clarificatory resolution. Since Caltex filed its motion for extension on September 20, 1985, which was within the one-month grace period that expired on June 30, 1986, the motion and the subsequent motion for reconsideration were deemed filed on time. Therefore, the IAC erred in denying these motions based on a strict application of the non-extendibility rule without considering the prospective application of the clarified doctrine. On the issue of whether the Deed of Assignment constituted dacion en pago: The Court ruled in the negative. The Intermediate Appellate Court erred in concluding that the Deed of Assignment constituted dacion en pago and totally extinguished APA's obligation. While dacion en pago extinguishes an obligation, it does so to the extent of the value of the thing delivered, unless the parties agree, expressly or impliedly, that the thing is equivalent to the obligation. In this case, the Deed of Assignment explicitly stated that the assignment was in payment of APA's outstanding obligation plus any applicable interest charges on overdue account and other avturbo fuel lifting and deliveries that ASSIGNOR may from time to time receive from the ASSIGNEE. These clauses clearly indicate that the parties did not intend the assignment to be a total extinguishment of the obligation, but rather a partial payment that still accounted for future charges and deliveries. Furthermore, the subsequent acts of the parties, such as Caltex continuing to charge interest on the overdue account and APA's request to limit interest charges, demonstrated that both parties understood the obligation was not fully settled by the assignment alone. The law also states that if a debt produces interest, payment of the principal is not deemed made until the interests are covered, reinforcing the idea that the principal obligation was not fully extinguished.
Main Doctrine
The Deed of Assignment, which explicitly includes applicable interest charges and future deliveries, does not constitute dacion en pago that totally extinguishes the obligation. The subsequent acts of the parties must be considered to ascertain their true intention.