G.R. No. 72703 November 13,
1992
Art. 1253 – Payment shall be applied to interest first
Facts:
·
Asia Pacific Airways entered
into an agreement with petitioner Caltex, whereby petitioner agreed to supply
respondent's aviation fuel requirements for 2 years.
·
When respondent had an
outstanding obligation to petitioner, it executed a Deed of Assignment over its
receivables or refunds of Special Fund Import Payments from National Treasury
of the Philippines to be applied as payment.
·
The refund was then issued,
but the amount remitted to petitioner exceeded the amount covered by the Deed
of Assignment.
·
Asia Pacific demanded the
refund of the remaining amount. Caltex refused because the exceeded amount
served as interest and service charges at the rate of 18% per annum on
the unpaid and overdue account.
·
RTC Manila dismissed the
complaint, but reversed by the IAC.
Issue:
WoN
the Deed of Assignment constituted dacion en pago so that
the obligation is totally extinguished and no interest and service charges
could anymore be imposed on the respondent.
Held:
No, the Court holds that they did
not intend the Deed of Assignment to have the effect of totally extinguishing
the obligations of respondent without payment of the applicable interest
charges on the overdue account.
Art. 1253, Civil Code provides that "if the debt
produces interest, payment of the principal shall not be deemed to have been
made until the interests have been covered."
In the
instant case, the payment of applicable interest charges on overdue account,
separate from the principal obligation was expressly stipulated in the Deed of
Assignment as it speaks of three (3) obligations — (1) the outstanding
obligation of P4,072,682.13; (2) the applicable interest charges on overdue
accounts; and (3) the other avturbo fuel lifting and deliveries that assignor
(respondent) may from time to time receive from assignee (petitioner).
Thus, IAC decision is set aside and RTC decision is reinstated.
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