Philippine Phosphate Fertilizer Corporation Vs Kamalig

Philippine Phosphate Fertilizer
Corporation vs. Kamalig

Resources, Inc.
Facts
Kamalig purchased fertilizer products from Philphos for resale to its
customers.
They agreed on advance payments to Philphos for Kamalig’s purchases

of fertilizer products, followed by Philphos’s issuance of a Sales Official
Receipt and an Authority to Withdraw, indicating the kind of fertilizer
and location of the warehouse.
Kamalig would subsequently resell the fertilizer products and issue to

its customers corresponding Delivery Orders signed only by its
authorized officers, which would be presented to the proper Philphos
warehouse for the release of the fertilizer products.
Kamalig made advance payments for fertilizer products of various
grades to Philphos in the total sum of P4,548,152.53.
Prior to the release of fertilizer products at the said supply points,

however, Kamalig requested for a readjustment of the various fertilizer
grades and a modification of the locations from which the fertilizer
stocks would be picked up. Subsequently, Kamalig requested another
adjustment.
All these requests were approved by Philphos.

Philphos informed Kamalig of its overwithdrawal of various fertilizer
stocks amounting to P1,016,994.21. But since Philphos also had an
obligation to Kamalig in the amount of P470,348.91 representing the
Capital Recovery Component, partial compensation took place by
operation of law thereby reducing Kamalig’s obligation to P546,645.30.
Thus, Philphos demanded that this sum be settled on or before 31 July
1986, otherwise Kamalig would be charged 34% interest per annum.
Kamalig, however, denied that it had exceeded its withdrawals of

fertilizer and thus contended that it should not be made liable for any
amount.
Philphos filed the case for collection of a sum of money against

Kamalig.
Issue
Whether or not there are overwithdrawals.
Whether or not Kamalig is liable for the 34% interest

per annum charged by PhilPhos.
Ratio Decidendi:
Kamalig claims that some of the withdrawals were made under
handwritten delivery orders and not through pre-printed and pre-
numbered forms, contrary to its company policy.
Philphos admits, too, that its policy is only to honor delivery orders in
the prescribed preprinted forms, but that it also allows withdrawals
pursuant to handwritten requests on a “case to case basis,” i.e. , for as
long as the handwritten request is signed by an authorized officer or
signatory of Kamalig.
The handwritten requests upon which the unauthorized withdrawals

were made were all signed by one of the officials authorized to sign the
prescribed delivery orders.
The pre-printed delivery orders are a vital security measure to prevent
unauthorized withdrawals of fertilizer, and benefits not only Kamalig
but Philphos as well.
The withdrawals of fertilizer in quantities more than what was paid for
was made possible by Philphos’s failure to comply with the policy to
use the prescribed forms. Philphos could have prevented the loss, it is
but fair that it should suffer the loss.
Thus, the value of the unauthorized withdrawals should be for the

account of Philphos and not shifted to Kamalig.
Under Article 1956 of the Civil Code, no interest shall be due unless it
has been expressly stipulated in writing.
No evidence was presented that would show that the parties stipulated
on the payment of interest. Philphos presented only its demand letters
insisting on payment of the value of the overwithdrawals and
imposition of 34% interest per annum if payment is not made in due
time. Said unilateral impositions of interest do not suffice as proof of
agreement on the alleged 34% per annum interest.
Ruling
Philippine Phosphate Fertilizer Corporation is ORDERED to
PAY Kamalig Resources, Inc. the amount of P411,144.84,
plus legal interest from the finality of this Decision, and
costs of the suit. The award of attorney’s fees by the Court
of Appeals in favor of Kamalig Resources, Inc. is DELETED.
P411,144.84 = P470,348.91 (Capital Recovery Component)

less P59,204.07 (authorized overwithdrawals)

Philippine Phosphate Fertilizer Corporation Vs Kamalig

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Philippine Phosphate Fertilizer Corporation Vs Kamalig

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Philippine Phosphate Fertilizer

Corporation vs. Kamalig

They agreed on advance payments to Philphos for Kamalig’s purchases

Kamalig would subsequently resell the fertilizer products and issue to

Prior to the release of fertilizer products at the said supply points,

All these requests were approved by Philphos.

Kamalig, however, denied that it had exceeded its withdrawals of

Philphos filed the case for collection of a sum of money against

Whether or not there are overwithdrawals.

Whether or not Kamalig is liable for the 34% interest

The handwritten requests upon which the unauthorized withdrawals

Thus, the value of the unauthorized withdrawals should be for the

P411,144.84 = P470,348.91 (Capital Recovery Component)

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