Philippine Airlines v. Court of Appeals

Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie!

PAL, Inc. vs CA
G.R. No. L-49188
January 30, 1990

Facts:

Amelia Tan under the name and style of Able Printing Press commenced or filed a complaint for damages against petitioner Philippine Airlines with the CFI Manila ruling in her favor. Upon appeal, the Court of Appeals upheld the decision of the CFI’s decision with only minor modifications as to the damages to be awarded to Amelia Tan. The corresponding writ of execution was duly referred to Deputy Sheriff Emilio Z. Reyes for enforcement with checks in the name of Sheriff Reyes. Four months later, Amelia 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.

However, the Philippine Airlines answered that it has already satisfied its obligation, as evidenced by check vouchers signed and received by Sheriff Reyes. The Court has summoned the sheriff to explain the delay but apparently he absconded or disappeared.

Issues:

Is the payment rendered through a check made by PAL to the absconding sheriff in his name operate to satisfy the judgment debt?

Who shall bear the loss for the amount encashed check by the absconding sheriff?

Held:

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.

Under ordinary circumstances, payment by the judgment debtor to the sheriff should be valid payment to extinguish the judgment debt. There are circumstances, however, which compel a different conclusion such as when the payment made by the petitioner to the absconding sheriff was not in cash or legal tender but in checks.

Article 1249 of the Civil Code provides that, 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.

Consequently, unless authorized to do so by law or by consent of the obligee a public officer has no authority to accept anything other than money in payment of an obligation under a judgment being executed. Strictly speaking, 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.

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 check, 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 (Art. 1249, Civil Code, par. 3).

PAL created a situation which permitted the said Sheriff to personally encash said checks and misappropriate the proceeds thereof to his exclusive personal benefit. For the prejudice that resulted, the petitioner himself must bear the fault. As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss. (Blondeau, et al. v. Nano, et al., L-41377, July 26, 1935, 61 Phil. 625).