Philippine Airlines v CA

Facts:

Resp Amelia Tan under name and style of Able Printing Press commenced a
complaint for damages on Nov 8, 1967
CFI Manila rendered a decision in favour of Resp
o P75,000 as actual damages with legal interest from July 20, 1967
(extrajudicial demand of Tan to PAL)
o P18,200 with unrealized profit of 10%
o P20,000 for moral damages
o P5,000 attorneys fees
Pal appealed to CA
o CA: Modification of P25,000 as damages, P5,000 attorneys fees
CA sent notice of judgement to trial court
o MR from Tan, opposed by PAL
CA rejected MR. NO further appeals. Judgement final and executor on May 31,
1977.
Case remanded to trial court for execution.
o on Sept 2, 1977: Tan filed for issuance of a writ of execution
o Oct 11, TC ordered writ in favour of respondent Tan
Duly referred to Deputy Sheriff Emilio Reyes
FOUR months later (Feb 11), Tan moved for issuance of an alias writ of
execution as the judgement remained unsatisfied.
(Mar 1), Pet opposed motion and said that the obligation was full paid already
(Mar 3) CA said second writ of execution is premature. Instead of issuance, it
ordered executing Sheriff Reyes to appear and explain why it was not able to
surrender the amounts paid to him by PAL. But order could not be served as
Reyes absconded.
(Mar 28) Motion of a partial alias writ of execution filed by Tan which she
eventually withdrew on Apr to file a Substitute Motion for Alias Writ of
Execution.
CA: Alias Writ of Execution issued against PAL directing Sheriff del Rosario o
levy on execution in the sum of P25,000 with legal interest from Tans
extrajudicial demand
o PAL: urgent motion to quash on the ground that they already paid,
evidenced by cash voucher, signed and receipted by Sheriff Reyes
o Sheriff del Rosario still served a notice of garnishment on the
depository bank of PAL
Thus this petition to review on certiorari the CA decision

WN PALs payment to Sheriff Reyes operated as a satisfaction of the judgement

debt? NO

Art 1240 of CC: 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.
o The theory is where payment is made to a person authorized and
recognized by the creditor, the payment to such a person so
authorized is deemed payment to the creditor. Under ordinary
circumstances, payment by the judgment debtor in the case at bar, to
the sheriff should be valid payment to extinguish the judgment debt.
o There are circumstances in this case, however, which compel a
different conclusion.
Article 1249 of the Civil Code provides:
o 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.
PALs argument: if they had paid in cash then there would have been
payment in full legal contemplation
SC: but they didnt!
And payment in cash has certain cautions because nobody ever brings with
them a shitload of cash such that it can be stolen. Payment of checks is
precisely intended to avoid the possibility of the money going to the wrong
party. Having paid with checks PAL should have done so properly.
o escrow arrangements with a bank and carefully supervised by the
court would be the safer procedure. Actual transfer of funds takes
place within the safety of bank premises.
o Making the checks payable to the judgment creditor would
have prevented the encashment or the taking of undue
advantage by the sheriff, or any person into whose hands the
checks may have fallen, whether wrongfully or in behalf of the
creditor. The issuance of the checks in the name of the sheriff
clearly made possible the misappropriation of the funds that
were withdrawn.

SC also cited what the CA said: this instance, without prudence, departed
from what is generally observed and done, and placed as payee in the checks
the name of the errant Sheriff and not the name of the rightful payee.
Petitioner thereby 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.
Execution was also differentiated with satisfaction of judgement
o Execution: for the sheriff to accomplish which carries into effect a
decree or judgement
o Satisfaction of a judgement: payment of the amount of the writ which
is for the creditor to achieve

Dissents
1) Narvasas dissent lists the various duties of a sheriff that are listed under the
Rules of Court
a. Sheriffs principal function is to execute final judgement
b. Empowered to levy property
c. Receive payments.etc
The sheriff is an adjunct of the court; a court functionary whose competence
involves both discretion and personal liability. Being an officer of the court
and acting within the scope of his authorized functions, the sheriff s
receipt of the checks in payment of the judgment execution, may be deemed,
in legal contemplation, as received by the court itself.
The checks being made out in the sheriffs name (in a by the way
manner was pointed out to be a long and common acceptance) is of little
consequence because the sheriff is given the power to execute and
implement court judgemets. Such was an assertion of his authority only.
If payment had been in cash, there would be no question to the
extinguishment of the obligation of PAL. Thus payment in cash should not
warrant a different conclusion.
2) Feliciano
Failure of sheriffs turnover do not have the effect of frustrating the
debtors payment, otherwise this would be making the debtor
answerable for whatever failures the sheriff might have.
3) Padilla
PAL had every right to assume that as an officer of the law, Sheriff
Reyes would perform his duties and it was his duty to turn over the
money to Ta