Title
Chevron Philippines, Inc. vs. Looyuko
Case
G.R. No. 236525
Decision Date
Mar 29, 2023
Chevron sued Noah’s Ark Sugar Refinery and Alberto Looyuko for unpaid petroleum invoices. SC reversed CA, upheld RTC with modified interest rates, and awarded attorney’s fees.

Case Summary (G.R. No. 236525)

Factual Background and Claims

Chevron alleged that respondents, through Alberto Looyuko and co-respondents Achilles and Julieta (claimed officers of Noah’s Ark Group of Companies), purchased petroleum products and services valued at ₱7,381,510.70 (as of September 30, 1998), including bunker fuel oil and pumping/sealing services. Deliveries were hauled from Chevron’s Pandacan terminal to Noah’s Ark Sugar Refinery’s Mandaluyong facility. These transactions were documented through 105 invoices addressed to Noah’s Ark Sugar Refinery, Inc.

Chevron contended that respondents failed to pay despite formal demand letters and sought recovery of the principal amount, interest, attorney’s fees, moral and exemplary damages, litigation expenses, and costs of suit. Respondents, particularly Alberto, challenged service of summons and disputed their liability, denying any contractual relationship and arguing that Noah’s Ark Sugar Refinery was a sole proprietorship registered in Alberto’s name but operated independently by others, including the Go family.

Trial Court Findings and Decision

The Regional Trial Court (RTC) of Manila ruled in favor of Chevron, holding:

  1. Alberto Looyuko was personally liable for the unpaid obligations despite not signing the invoices, because deliveries were made and accepted by employees of Noah’s Ark Sugar Refinery.
  2. Respondents Julieta and Achilles were deemed employees and agents of Alberto but were dropped as defendants due to lack of evidence against them.
  3. The refinery was a sole proprietorship under Alberto, and no formal contract was required for deliveries under existing credit line arrangements.
  4. The 24% interest on overdue accounts was enforceable as stipulated in the invoices.
  5. Moral and exemplary damages were not awarded due to lack of proof of reputational harm.
  6. Attorney’s fees and litigation expenses were awarded as prayed.
    Defendants were ordered to pay the principal, interest, attorney's fees, and costs.

Court of Appeals Ruling

The Court of Appeals (CA) reversed the RTC decision, dismissing Chevron’s complaint on grounds that:

  • No perfected contract of sale existed as there was no purchase order or sales agreement showing consent or meeting of the minds between Chevron and the respondents.
  • Lack of proof that delivered products were received by properly authorized employees of Noah’s Ark Sugar Refinery or by Looyuko personally.
  • Deliveries were made through third-party haulers, and Chevron failed to authenticate that products reached their intended recipients.
  • The partial execution doctrine to remove the case from the Statute of Frauds was inapplicable due to lack of essential contractual requisites.
  • Given the business history of Noah’s Ark as a good payer, the failure to pay was uncharacteristic and unsupported by evidence.
    The appellate court declined to address the interest rate and attorney’s fees issue.

Arguments on Appeal to the Supreme Court

Chevron petitioned to reinstate the RTC ruling, arguing that:

  • The CA improperly dismissed respondents’ appeal despite formal deficiencies in their appellant's brief.
  • Sufficient evidence demonstrated existence of a credit line and consummated sale by delivery of petroleum products, establishing contractual liability.
  • The CA failed to respect the trial court’s appreciation of evidence showing respondents’ liability and unjust enrichment by evading payment.

Respondents countered that:

  • Failure to cite page references in the appellant’s brief is formal but not fatal to the appeal.
  • There was no proof of contractual relationship or delivery/receipt of products by respondents.
  • Julieta and Achilles were not authorized representatives and thus respondents cannot be held liable for their actions.

Issues for Resolution by the Supreme Court

  1. Whether the respondents’ appeal should be dismissed for failure to comply with requirements on appellant’s brief format.
  2. Whether sufficient evidence exists to establish a contractual relationship and delivery of petroleum products to respondents.
  3. Whether the trial court correctly imposed the 24% interest rate as stipulated in the invoices.

Supreme Court’s Analysis on Procedural Issue

The Court reaffirmed that failure to cite page references is a formal defect not fatal to the appeal, citing precedent (Banco de Oro Unibank, Inc. v. Spouses Locsin). The Court proceeded to examine the merits.

Contractual Relationship and Evidence of Delivery

The Court revisited the elements of a valid contract of sale under Civil Code Article 1318: (a) consent or meeting of the minds; (b) determinate subject matter; and (c) certain price in money. Missing any element negates a perfected contract.

While no formal contract or purchase order existed between petitioner and respondents, the case turned on whether deliveries were accepted and received, thus implying and effecting a contract as per the Statute of Frauds exceptions (Article 1403 and 1405).

The 105 invoices, addressed to Noah’s Ark Sugar Refinery, circumstantially evidenced purchase transactions, specifying delivery quantities, prices, and stipulating interest and attorney’s fees conditions. Petitioner’s witnesses testified to the existence of a credit line and standard corporate practices on deliveries without formal contracts. Nonetheless, they lacked personal knowledge on actual delivery or receipt by refinery employees.

Respondents, particularly Alberto, denied ownership of the entities and knowledge of transactions, but admitted in his Answer to being the registered proprietor of Noah’s Ark Sugar Refinery, which had ceased operations in 1997. However, he failed to provide detailed or credible specific denials under oath contesting the invoices’ genuineness or the authority of the refinery employees who signed for deliveries.

The Court deliberated that this failure to specifically deny or dispute under oath amounted to admissions under the Rules of Court, especially given that the invoices constituted actionable documents (e.g., akin to bills of lading). The principle of negative pregnant denials applied, where a general denial coupled with admission of material facts effectively confirms the respondent’s liability.

Moreover, the doctrine of agency by estoppel (Articles 1910 and 1911, Civil Code) precluded respondent Alberto from disclaiming liability on the grounds that refinery employees apparently had authority to receive deliveries. His admission of proprietorship and reliance on those employees’ representations estopped him from avoiding responsibility.

Petitioner’s evidence collectively established contractual liability of respondents for the unpaid petroleum products and services delivered to Noah’s Ark Sugar Refinery. Respondents’ defensive evidence and denials were inadequate and conclusory, thus failing to overcome petitioner’s showing.

Authentication of Invoices and Evidence Admission

While petitioner failed to properly authenticate the invoices according to the requirements of the Revised Rules on Evidence, respondents did not object at trial. Their failure to raise such objections and failure to challenge the invoices as actionable documents led to the presumption of genuineness and due execution of the documents.

The Court distinguished the invoices from mere bills or accomplishment reports (which are evidentiary but not actionable). Here, the invoices bore signatures of refinery employees accepting deliveries, rendering them prima facie evidence of the underlying contracts and deliveries.

Interest Rate on Overdue Accounts

The trial court’s imposition of 24% interest was premised on the invoices’ stipulation of “prevailing duly authorized maximum interest” and the calculation in petitioner’s summary. However, the Court clarified that the applicable interest rate at the time was 12% per annum until June 30, 2013, as per prevailing laws before the later Bangko Sentral ng Pilipinas circular. From July 1, 2013 onwards, the rate applies at 6% per annum per Article 2212 of the Civil Code.

Thus, interest should be recalculated imposing:

  • 12% interest from August 21, 1998 (receipt of demand letter) to June 30, 2013;
  • 6% interest from July 1, 2013 until full payment;
  • 6% interest on principal for the period from the last invoice generation to judicial demand filing at 6% (January 25, 1999 onward).

Attorney’s fees shall be 20% of the principal indebtedness as stipulated in the invoices, replacing the lump sum award previously granted.

Dismissal of Respondents Julieta an

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