Food Terminal, Inc. v. Tao Development, Inc.
REITERATIONFacts
The Antecedents: Food Terminal, Inc. (FTI), a government-owned corporation, entered into a contract of storage with Tao Development, Inc. (TAO) for the warehousing of export-quality onions. An ammonia leak in FTI's facilities damaged TAO's deposited onions, rendering them unfit for export. TAO subsequently filed a complaint for damages against FTI. Procedural History: The Regional Trial Court ruled in favor of TAO, finding FTI negligent. The Court of Appeals affirmed with modifications, awarding actual damages, unearned profits, and attorney's fees. This Court, in G.R. No. 120097, affirmed the appellate court's decision with modifications regarding interest rates. The judgment became final and executory. TAO demanded payment, but FTI disputed the computation, offering a lesser amount. TAO filed a motion for execution, which the trial court granted. FTI's motion for reconsideration was denied. FTI then filed a petition for certiorari with the Court of Appeals, arguing it had satisfied the judgment. The Court of Appeals dismissed FTI's petition and denied its motion for reconsideration, finding that FTI failed to establish TAO's accession to its computation and that a key letter presented by FTI was a forgery. The Petition: This petition for review on certiorari under Rule 45 of the Rules of Court assails the decision and resolution of the Court of Appeals. FTI argues that the appellate court erred in sustaining the holding that its total obligation exceeded P7,148,433.72, in not finding that the delay in satisfaction was due to TAO's refusal to accept its offered payment, in not excusing FTI from paying interest after April 2, 1997, and in not holding that the judgment award had been settled. The core issue is whether FTI's payment of P7,148,433.72 extinguished its obligation under the final and executory judgment.
Issue(s)
Whether the Court of Appeals committed reversible error in sustaining the holding that the total obligation of petitioner to private respondent exceeds P7,148,433.72. Whether the Court of Appeals committed reversible error in not holding that the delay in the satisfaction of the judgment award was caused solely by private respondent's unjustified refusal to accept petitioner's offer/tender of payment. Whether the Court of Appeals committed serious error in not holding that petitioner is not delinquent in its obligation and that it should be excused from paying the necessary interest after April 2, 1997. Whether the Court of Appeals committed serious error in not holding that the judgment award sought to be executed against petitioner, or at least P7,148,433.72 thereof, had long been settled.
Ruling
The petition is DISMISSED, and the assailed issuances of the Court of Appeals are AFFIRMED.
Ratio Decidendi
On the issue of whether the total obligation exceeds P7,148,433.72: The Court reiterated Article 1248 of the Civil Code, which states that unless there is an express stipulation, a creditor cannot be compelled to receive partial payment, nor can a debtor be required to make partial payments. Since TAO was demanding P7,194,453.60 and FTI offered only P7,148,433.72, TAO was justified in its initial refusal to accept the lesser amount. The acceptance of the partial payment after filing the motion for execution did not extinguish the entire obligation, as there was no showing that TAO had freed FTI from its remaining liability. On the issue of delay and refusal to accept payment: The Court found that TAO's refusal to accept the partial payment was justified under Article 1248 of the Civil Code, as FTI was offering less than what was demanded and what was due. Therefore, the delay in the satisfaction of the judgment award was attributable to FTI's attempt to make a partial payment that was not fully accepted as full satisfaction. TAO's subsequent encashment of the check for P7,148,433.72 was an opportunity to receive a substantial portion of the debt, not an acceptance of it as full payment. On the issue of delinquency and interest: Since the partial payment was not accepted as full satisfaction of the judgment, FTI remained liable for the outstanding balance, including the stipulated interest. The Court did not find any basis to excuse FTI from paying the necessary interest after April 2, 1997, as its obligation was not fully settled by the partial payment. The interest rates as modified by the Supreme Court in G.R. No. 120097 remained applicable to the outstanding balance. On the issue of settlement of the judgment award: The Court held that the judgment award was not settled by FTI's payment of P7,148,433.72 because this amount was less than what TAO was demanding and what was ultimately determined to be due. The encashment of the check for a lesser amount did not constitute full payment or settlement of the entire judgment. Furthermore, the Court noted that it was too late for FTI to raise the factual issue of TAO's alleged accession to its computation, especially since the CA had already concluded that the supporting letter was a forgery, a factual finding that the Supreme Court generally does not disturb.
Main Doctrine
A creditor cannot be compelled to receive partial payment of a debt unless there is an express stipulation to that effect, and a debtor cannot be required to make partial payments, except when the debt is partly liquidated and partly unliquidated. The acceptance of a partial payment, without freeing the debtor from the obligation, does not extinguish the entire debt.