NATIONAL POWER CORPORATION, Petitioner, vs. LUCMAN M. IBRAHIM, ATTY. OMAR G.

MARUHOM, et. al., Respondents.

G.R. No. 175863 February 18, 2015
Contributor: Theresa T. Godinez

PRINCIPLE

"Payment made in good faith to any person in possession of the credit shall release the debtor."
(Article 1242 of the Civil Code)

PROBLEM

G’s Corporation took possession of a 1,000sq/m parcel of land in Liloan, Cebu in the year
2010. In the year 2015, G’s Corporation constructed a building. However, it mistakenly
included a parcel of land that belonged to Mr. Apat.

Mr. Apat, demanded compensation upon discovery that G’s Corporation mistakenly
constructed a building in some parts of his land. G’s Corporation having not paid anything,
Mr. Apat filed a a complaint for reconveyance against petitioner before the Regional Trial
Court (RTC) of Mandaue in March 2022. In his complaint, Mr. Apat asked for, among others,
the recovery of the subject land and the payment by petitioner of a monthly rental from 2010
until the return of such land. However, G’s Corporation filed an expropriation complaint
before the RTC Mandaue in April 2022. The two cases (Civil Case No. 605-92 and Civil Case
No. 610-92) were consolidated before Branch 8 of RTC. The decision upheld G’s Corporation
right to expropriate the subject land: it denied Mr. Apat’s claim for reconveyance and decreed
the subject land condemned in favor of the G’s Corporation, effective April 2022, subject to
payment by the latter of just compensation from 2010 to 2022.

Aggrieved, Mr. Apat file an appeal. During the pendency of appeal, Spouse Ginoo files a case
against G’s Corporation and Mr. Apat, disputing Mr. Apat’s ownership of the lands.

On an appeal filed by Mr. Apat, the court rendered a decision in favor of him, the court
rendered a Resoulution, ordering the issuance of a writ of execution in favor of Mr. Apat in
Civil Case No. 605-92 and Civil Case No. 610-92. In which G’s Corporation solely complied.

On December 2022, the case filed by Spouses Ginoo against G’s Corporation and Mr. Apat
was decided in favor of the Spouses, in which it held both G’s Corporation and the Mr. Apat
solidarily liable to the Spouses Ginoo for the rental fees and expropriation indemnity
adjudged in Civil Case No. 605-92 and Civil Case No. 610-92.

Is G’s Corporation liable to pay the Spouses Ginoo for the rental fees and expropriation
indemnity adjudged due for the subject land.

SUGGESTED ANSWER

No, G’s Corporation is not liable to Spouses Ginoo.

The payment to Mr. Apat was not a product of a deliberate choice on the part of G’s Corporation but
was made only in compliance to the lawful orders of a court with jurisdiction.

As provided by, Article 1242 of the Civil Code, "Payment made in good faith to any person in
possession of the credit shall release the debtor."
Article 1242,is an exception to the rule that a valid payment of an obligation can only be made to the
person to whom such obligation is rightfully owed.64 It contemplates a situation where a debtor pays
a "possessor of credit" i.e., someone who is not the real creditor but appears, under the
circumstances, to be the real creditor. 65 In such scenario, the law considers the payment to the
"possessor of credit" as valid even as against the real creditor taking into account the good faith of
the debtor.

Mr. Apat—being the judgment creditor in Civil Case No. 605-92 and Civil Case No. 610-92 as well
as the registered owner of the subject land at the time—may be considered as a "possessor of
credit" with respect to the rental fees and expropriation indemnity adjudged due for the subject land
in the two cases, if the Spouses Ginoo turn out to be the real owners of the subject land. Hence, G’s
Corporatios’ payment to Mr. Apat of the fees and indemnity due for the subject land as a
consequence of the execution of Civil Case No. 605-92 and Civil Case No. 610-92 could still validly
extinguish its obligation to pay for the same even as against the Spouses Ginoo.