Republic v De Guzman

G.R. No. 175021 June 15, 2011

Art. 1240 – Payment shall be made to person in whose favor obligation has been constituted.

Facts:

·          Respondent is the proprietress of Montaguz General Merchandise (MGM), a contractor accredited by the PNP for the supply of office and construction materials and equipment, and for the delivery of various services.

·          The PNP Engineering Services (PNPES) purchased various building materials for the construction of a four-storey condominium building with roof deck at Camp Crame, Quezon City.

·          Both parties executed a Contract of Agreement, wherein MGM will procure and deliver to the PNP the construction materials itemized in the purchase order, and the PNP will pay the former of ₱2,288,562.60.

·          After delivery, the MGM demanded the payment.

·          The PNP denied any liability as it already paid the respondent as evidenced by LBP Check No. 0000530631 issued to Montaguz Builders (her other company, which was also doing business with the PNP) and not to MGM, with which the contract was made.

·          But respondent averred, the PNP’s own Checking Account Section Logbook or the Warrant Register, showed that it was one Edgardo Cruz (another contractor) who received the check due to MGM, not her.

Issue:

WoN the respondent was paid under the Contract of Agreement.

Held:

            No, the Court holds that the respondent was not paid under the Contract of Agreement in accordance with Article 1240 of the Civil Code.

            Art. 1240. Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it.

            In the instant case, the LBP check was not received by her or by her authorized personnel as shown in PNP’s own records. In order for PNP’s payment to be effective in extinguishing its obligation, it must be made to the proper person. Since it was received by unauthorized person, its obligation has not been extinguished as it is deemed that she was not paid under the said agreement.

            Thus, the Petition is DENIED.

Culaba v CA

G.R. No. 125862 April 15, 2004

Art. 1240 – Payment shall be made to person in whose favor obligation has been constituted.

Facts:

·          The spouses Francisco and Demetria Culaba were the owners and proprietors of the Culaba Store and were engaged in the sale and distribution of San Miguel Corporation’s (SMC) beer products.

·          SMC sold beer products on credit to the Culaba.

·           The Culaba spouses made a partial payment.

·          They failed to pay despite repeated demands. Hence, SMC filed an action for collection of a sum of money against them.

·          In their defense, Culaba claimed that they had already paid the SMC in full on four separate occasions to an SMC supervisor who issued genuine SMC liquidation receipts.

·          But SMC countered that the issued LR were part of the lost booklet receipts as evidenced by publisher’s affidavit that SMC duly warned the public about it through the Notice of Loss.

Issue:

WoN the payments that the petitioners claimed they made were the payments that discharged their obligation to the respondent.

Held:

            No, the Court holds that the payments claimed by the Culaba are not the payments that extinguishes an obligation pursuant to Article 1240 of the Civil Code.

            Under the said law, payment shall be made to the person in whose favor the obligation has been constituted, or his successor-in-interest, or any person authorized to receive it.

In this case, the payments were purportedly made to a "supervisor" of the private respondent, who was clad in an SMC uniform and drove an SMC van. He appeared to be authorized to accept payments. Unfortunately, Caluba did not ascertain the identity and authority of the said supervisor, nor did he ask to be shown any identification to prove that the latter was, indeed, an SMC supervisor. The petitioners relied solely on the man’s representation that he was collecting payments for SMC. Thus, the payments the petitioners claimed they made were not the payments that discharged their obligation to the private respondent.

           Hence, the instant petition is hereby DENIED.

Baritua & Bitancor v CA

G.R. No. 82233 March 22, 1990

Art. 1240 – Payment shall be made to person in whose favor obligation has been constituted.

Facts:

·          The tricycle driven by the deceased Bienvenido Nacario figured in an accident with a bus driven by Bitancor and owned and operated by Baritua.

·          No criminal case was ever instituted, but only extra-judicial settlement.

·          The petitioners and bus insurer (Philippine First Insurance Company, Inc.) negotiated Nacario's widow, who received P18,500.00.

·          The widow Alicia executed a "Release of Claim" and an affidavit of desistance.

·          After more than one year, the respondents, who are the parents of the deceased Nacario, filed a complaint against the petitioners to be indemnified for the death of their son, for the funeral expenses incurred by reason thereof, and for the damage for the tricycle which they (the private respondents) only loaned to the victim.

·          The court a quo dismissed the complaint, but the CA ruled that the release executed by Alicia did not discharge the liability of the petitioners because she was not the one who suffered these damages arising from the death of the respondents’ son.

Issue:

WoN Alicia, the spouse and the one who received the petitioners' payment, is entitled to it.

Held:

            Yes, the Court holds that Alicia is entitled to the payment for damages because she is among the persons to whom payment to extinguish an obligation should be made as enumerated in Article 1240 of the Civil Code.

            Art 1240. Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it.

            Certainly there can be no question that Alicia and her son with the deceased are the successors in interest referred to in law as the persons authorized to receive payment. The petitioners therefore acted correctly in settling their obligation with Alicia as the widow of Bienvenido and as the natural guardian of their lone child.
             Thus, the petition is DENIED.

PAL v CA

G.R. No. L-49188 January 30, 1990

Art. 1240 – Payment shall be made to person in whose favor obligation has been constituted.

Art. 1249 – Payment of debts in money shall be made in currency.

Facts:

·          The petition involved the alias writ of execution when respondent Amelia Tan commenced a complaint for damages against PAL, which CDI Manila rendered a decision in her favor.

·          The CA affirmed the decision with modification that PAL shall pay Tan P25,000.00 as damages and P5,000.00 as attorney's fee, with costs.

·          The case was remanded to the trial court for execution and Tan filed a motion praying for the issuance of a writ of execution of the judgment rendered by the CA.

·          Four months later, Tan moved for the issuance of an alias writ of execution stating that the judgment rendered by the lower court, and affirmed with modification by the Court of Appeals, remained unsatisfied.

·          In opposition, PAL countered that it already fully paid its obligation to Tan through the deputy sheriff of the respondent court, Emilio Z. Reyes, as evidenced by cash vouchers properly signed and receipted by said sheriff who had absconded.

Issues:

(1) WoN the payment made to the absconding sheriff by check in his name did operate to satisfy the judgment debt.

(2) WoN such payments extinguish the judgment debt.

Held:

            (1) No, the Court disagrees that the payment made to the absconding sheriff by check in his name operates to satisfy the judgment debt. In general, a payment, in order to be effective to discharge an obligation, must be made to the proper person.

Article 1240 of the Civil Code provides that “Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it.”

In the instant case, because PAL did not issue the checks intended for her, in her name, but to the absconding sheriff, such payment did not extinguish the judgment debt.

(2) No, the Court rules that the acceptance by the sheriff of the petitioner's checks, in the case at bar, does not, per se, operate as a discharge of the judgment debt.

Article 1249 of the Civil Code provides:

The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.

In the meantime, the action derived from the original obligation shall be held in abeyance.

           Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. A check, whether a manager's check or ordinary cheek, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized.            
           Thus, the petition is hereby DISMISSED.