Cembrano v. City of Butuan
REITERATIONFacts
The Antecedents: CVC Lumber Industries, Inc. (CVC) was awarded a contract to supply 757 timber piles to the City of Butuan. Petitioner Gil M. Cembrano, as CVC's Marketing Manager, secured a loan to finance the purchase. CVC delivered some piles within the stipulated period, but the City subsequently refused further deliveries and initiated a re-bidding process. CVC and Cembrano filed a complaint for breach of contract and damages against the City, claiming P856,695.00 in damages. Procedural History: The Regional Trial Court (RTC) initially dismissed the complaint, ruling that CVC failed to complete deliveries within the contract period. However, the Court of Appeals (CA) reversed this decision, ordering the City of Butuan to pay P926,845.00 to Cembrano and CVC. The City's subsequent petition for review to the Supreme Court was denied. After the CA decision became final, Cembrano assigned half of the award to his counsel, Atty. Dollfuss R. Go. When the City remitted the payment to CVC's President, Monico Pag-Ong, Go sought to garnish the City's bank account. The RTC granted the garnishment, ordering the Development Bank of the Philippines (DBP) to release the funds to Go and Cembrano. The CA, on petition for certiorari, nullified the RTC orders, ruling the City's payment to Pag-Ong was valid and ordered Go and Cembrano to return the garnished amounts. The Petition: Petitioners Cembrano and Go seek review of the CA's decision, arguing they were deprived of due process and that the CA erred in declaring the City's payment to Pag-Ong valid. They contend that the CA, in a petition for certiorari, could not alter a final and executory decision. They assert that Cembrano, as a party-plaintiff, was entitled to half the award, which he assigned to Go. The City argues it fulfilled its obligation by paying CVC through its President, Pag-Ong, and that Cembrano was merely an agent. The core issues are whether the City's payment to Pag-Ong discharged its obligation and whether the CA erred in ordering the return of the garnished funds.
Issue(s)
Whether the remittance of P926,845.00 by the City of Butuan to CVC, through its president Monico Pag-ong, released the City from its obligation under the CA decision. Whether the Court of Appeals erred in ordering petitioners Go and Cembrano to return the garnished amount to the City of Butuan.
Ruling
The petition is PARTIALLY GRANTED. The decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner Gil M. Cembrano is ORDERED to return to respondent City of Butuan the amount of P490,609.955, with 6% interest per annum to be computed from the finality of this decision. Respondent CVC is ORDERED to return to respondent Butuan City the amount of P490,609.955, with 6% interest per annum to be computed from the date of finality of this decision. No costs.
Ratio Decidendi
On the first issue (Validity of Payment to Pag-ong): The Court affirmed the CA's ruling that the City of Butuan acted in good faith when it remitted the P926,845.00 to CVC through its President, Monico Pag-ong. Under Article 1240 of the Civil Code, payment must be made to the person in whose favor the obligation was constituted, or his successor-in-interest, or any person authorized to receive it. As President of CVC, Pag-ong was authorized to receive the payment on behalf of the corporation. Therefore, the City of Butuan was released from its obligation under the CA decision. The Court noted that the City was unaware of any intra-corporate disputes between Cembrano and CVC. On the second issue (Return of Garnished Amount): The Court modified the CA's order. It clarified that the CA decision in CA-G.R. CV No. 55049 ordered the City of Butuan to pay P926,845.00 to the "plaintiffs" in Civil Case No. 3851, which were identified as petitioner Gil Cembrano and respondent CVC. Each was entitled to one-half of the award, or P463,422.50 each. Since CVC received the full P926,845.00 from the City, but was only entitled to P463,422.50, there was an overpayment of P463,422.50 to CVC. Consequently, CVC was ordered to return this overpaid amount to the City. Petitioner Cembrano, who had assigned his share to petitioner Go, did not receive any part of the P926,845.00 remitted to CVC. Therefore, Cembrano was ordered to return his share of P463,422.50 to the City. Petitioner Go, having received P490,609.955 based on the assignment from Cembrano, was not compelled to return the amount he received, as it was based on a valid assignment of Cembrano's rightful share. The Court clarified that the dispositive portion of the CA decision awarded the sum to both Cembrano and CVC, and that Cembrano was a party-plaintiff in his personal capacity, not merely as an agent of CVC.
Main Doctrine
Payment made to a party not authorized to receive it does not extinguish the obligation. The dispositive portion of a decision controls for purposes of execution, but the body of the decision may be resorted to clarify ambiguities or correct manifest errors in the dispositive portion. A joint creditor cannot act in representation of the others, and a joint debtor cannot be compelled to answer for the liability of the others.