Asiatic Petroleum v. Veloso
REITERATIONFacts
The Antecedents: The plaintiff and defendant entered into a written contract appointing the defendant as agent to sell the plaintiff's gasoline and oil products in Cebu City. The defendant was obliged to render an account of sales but failed to do so, retaining the proceeds. A liquidation on December 6, 1932, revealed that the defendant owed P25,557.62. On the same date, the defendant executed a promissory note for P25,000, payable in installments of P500 on the 10th and 25th of each month, starting January 25, 1933. The defendant paid seven installments (P3,500) but defaulted on the remainder. Due to repeated breaches, the defendant voluntarily surrendered the gasoline station and stock. From the second default until the rescission of contracts, the defendant sold gasoline worth P4,414.83, remitting only P16.80, leaving a balance of P4,398.03. He also incurred P335.92 for purchases on credit payable within 30 days, failed to return empty barrels worth P151, and had an outstanding balance of P57.62 for oil purchased on credit. The plaintiff filed an action for non-payment upon demand. Procedural History: The trial court ordered the defendant to pay P8,182.51 with legal interest and costs. Both parties appealed. The plaintiff filed a supplemental complaint alleging that further installments on the note had become due, seeking judgment for P15,000 plus interest and remaining installments. The trial court rejected the supplemental complaint, stating that installments not yet due when the original complaint was filed could not be recovered. The plaintiff appealed this rejection and the failure to render judgment for all installments. The Petition: The plaintiff appealed the trial court's decision, primarily assigning as errors the non-admission of the supplemental complaint and the failure to render judgment for all installments due on the promissory note. The defendant appealed, asserting he did not violate the contracts and was entitled to indemnity for his counterclaim and cross-complaint.
Issue(s)
Whether the trial court erred in rejecting the plaintiff's supplemental complaint. Whether the plaintiff can recover all installments of the promissory note, including those that became due after the filing of the original complaint. Whether the defendant is entitled to damages for alleged wrongful attachment. Whether the defendant is entitled to damages for the plaintiff's alleged breach of the lease contract. Whether the defendant is entitled to reimbursement for the cost of his storehouse and the value of his personal property left in the leased premises.
Ruling
The Supreme Court affirmed the trial court's judgment regarding the sum of P5,388.13 (excluding installments from the note) and the dismissal of the defendant's counterclaim and cross-complaint. The judgment was set aside in other respects, and the case was remanded with instructions to admit the plaintiff's supplemental complaint, allow the defendant to file an answer, and conduct a new trial to determine the recovery of all due installments on the promissory note.
Ratio Decidendi
On the rejection of the supplemental complaint: The Court held that while the admission of a supplemental complaint is discretionary, it should have been admitted in this case because the alleged installments had already become due when the supplemental complaint was filed. The Court distinguished this from cases where no cause of action existed at the time of the original complaint. The admission of the supplemental complaint, even if it necessitated a retrial, would have been in furtherance of justice to settle all rights of the parties in a single litigation and avoid multiplicity of suits. On recovering installments not yet due: The Court reiterated the settled doctrine that in actions for debts payable in installments, those not yet due and payable cannot be demanded in the original complaint. However, to recover all installments due to date, it is necessary to admit the supplemental complaint and allow the plaintiff to allege the maturity and non-payment of the remaining installments. The Court found the plaintiff's prayer to set the judgment as to due installments and remand the case for a new trial after admitting the supplemental complaint to be the most just and practicable remedy. On the defendant's defenses, counterclaim, and cross-complaint: The Court found the evidence conclusive that the defendant repeatedly infringed the contract of agency by failing to turn over sales proceeds. The promissory note did not novate the contract but merely acknowledged the amount due. The plaintiff was entitled to rescind the contracts due to the defendant's breaches. Regarding the attachment, the Court found justification for its issuance, as the defendant had purchased an interest in a school for P35,000 without the plaintiff's knowledge or consent, and there were circumstances indicating he was disposing of property to the plaintiff's prejudice. Therefore, the damages claimed by the defendant on this ground were properly disallowed. On the storehouse and personal property: The Court acknowledged the defendant's claim for the cost of his storehouse (P505.62) and deducted it from the amounts the plaintiff was entitled to recover. This part of the judgment was not appealed by the plaintiff and was affirmed. The defendant's claim for personal property left in the premises was implicitly dismissed by the court's final adjudication. On attorney's fees: The Court awarded attorney's fees equivalent to ten percent (10%) of certain amounts owed by the defendant, which were included in the P5,388.13 total awarded to the plaintiff independently of the note.
Main Doctrine
In actions for the recovery of debts payable in installments, those not yet due and payable cannot be demanded in the complaint. However, a supplemental complaint seeking to recover installments that have become due after the filing of the original complaint should be admitted in furtherance of justice to avoid multiplicity of actions.