G.R. No. 42779 , December 21, 1935
THE ASIATIC PETROLEUM CO. (P.I.), LTD., plaintiff-appellant, vs. BUENAVENTURA M. VELOSO, defendant-appellant.

FACTS

The parties entered into a contract of agency on December 18, 1929, appointing Veloso as Asiatic Petroleum’s agent to sell its gasoline and oil products in Cebu. Veloso failed to account for and remit sales proceeds. A liquidation on December 6, 1932, revealed a debt of P25,557.62, leading Veloso to execute a promissory note (Exhibit C) for P25,000 payable in installments. He paid only P3,500 before defaulting. After repeated breaches, Veloso voluntarily surrendered the leased gasoline station and stock. Additional debts were incurred for unpaid gasoline sales (P4,398.03), chits (P335.92), unreturned empty barrels (P151), and oil purchases (P57.62). Asiatic Petroleum filed an action for recovery. The trial court ordered Veloso to pay P8,182.51. Both parties appealed. Asiatic Petroleum also filed a supplemental complaint to recover later-maturing installments under the note, which the trial court rejected. Veloso, in his answer, set up counterclaims for damages alleging wrongful attachment and breach of the lease contract.

ISSUE

1. Whether the trial court erred in rejecting the supplemental complaint.
2. Whether a judgment could be rendered for all installments of the promissory note, including those not yet due at the time of the original complaint.
3. Whether Veloso’s counterclaims for damages should be granted.

RULING

1. On the supplemental complaint: The trial court erred in rejecting it. While admission is discretionary under the Code of Civil Procedure, it should have been admitted because the installments sought to be recovered had already become due when the supplemental complaint was filed. The case of Limpangco vs. Mercado is distinguishable as there the cause of action did not exist when the original complaint was filed.
2. On recovery of future installments: The Court adhered to the settled doctrine that in actions for debts payable in installments, those not yet due cannot be demanded in the complaint. However, to avoid multiplicity of suits, the case should be remanded for admission of a supplemental complaint and a new trial to allow recovery of all installments that had since become due.
3. On Veloso’s counterclaims: The Court found no merit. The evidence conclusively showed Veloso repeatedly violated the agency contract by failing to remit sales proceeds, justifying rescission of both the agency and lease contracts. The attachment obtained by Asiatic Petroleum was justified due to Veloso’s disposition of property (e.g., purchasing an interest in a school for P35,000) to the prejudice of the creditor.
4. Final Disposition: The appealed judgment was affirmed insofar as it ordered Veloso to pay P5,388.13 (for separate debts unrelated to the promissory note) and dismissed his counterclaims. The judgment was set aside in other respects. The case was remanded to admit a supplemental complaint for recovery of all due installments under the note, after deducting P505.62 (awarded for Veloso’s storehouse) from the recoverable amount on the note. A new trial was ordered for that purpose. No costs were awarded.

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