Cembrano vs City of Butuan GR No 163605

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http://sc.judiciary.gov.ph/jurisprudence/2006/september2006/G.R.%20No.%20163605.htm 1/20

FIRSTDIVISION

GILM.CEMBRANOG.R.No.163605andDOLLFUSSR.GO,

Petitioners,Present:PANGANIBAN,C.J.,Chairperson,

versusYNARESSANTIAGO,AUSTRIAMARTINEZ,CALLEJO,SR.,and

CHICONAZARIO,JJ.CITYOFBUTUAN,representedbyCITYMAYORLEONIDESR.THERESAPLAZA,CVCLUMBERPromulgated:INDUSTRIES,INC.,MONICOPAGONGandISIDROPLAZA,

Respondents.September20,2006xx

DECISION

CALLEJO,SR.,J.:

BeforetheCourtisaPetitionforReviewonCertiorarioftheDecision[1]

oftheCourtof

Appeals(CA)inC.A.G.R.SPNo.75328,nullifyingtheOrders[2]

oftheRegionalTrialCourt(RTC), Butuan City, Agusan Del Norte, Branch 4, in Civil Case No. 3851, as well as the

Resolution[3]

oftheCAdenyingthemotionforreconsiderationthereof.TheassailedOrders[4]

oftheRTCdirectedtheSherifftogarnishthebankaccountof theCityofButuanamountingtoP926,845.00anddirected theDevelopmentBankofthePhilippines(DBP)toreleasetheamounttopetitionersAtty.GilM.CembranoandAtty.DollfussR.Go.

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TheAntecedents

CVC Lumber Industries, Inc. (CVC) was a timber concession licensee in Bunawen andVeruela, Agusan del Sur. Cembrano, then its Marketing Manager, participated in abiddingforthesupplyofpilesandpoleswhichweretobeusedfortheconstructionofthenewCityHallofButuanCity.ThecontractwasawardedtoCVC,underwhichitwastodelivertotheCityofButuan757timberpilesataunitcostofP1,485.00oratotalofP1,124,145.00 within 60 days from receipt of the order in the event of delay in thedelivery, CVCwould be liable for liquidated damages, to be deducted from the totalvalueofthecontractprice,andincaseofpartialdelivery,liquidateddamageswouldbedeductedfromthetotalvalueofthedeliveredportion,perRule9ofPresidentialDecree

(P.D.)No.526.[5]

OnMay6,1991,theCityofButuanissuedaPurchaseOrder[6]

for757timberpilestoCVCorGilCembrano.Topartlyfinancethepurchaseofthemerchandise,petitionerCembrano,alongwith Gener Cembrano, secured a P150,000.00 loan from the DBP, as evidenced by a

Promissory Note[7]

dated June 4, 1991. To secure the loan, they executed a real estate

mortgageoveraparceloflandcoveredbyTransferCertificateofTitle(TCT)No.T5491.[8]

ThepurchaseorderwasmodifiedonAugust22,1991withrespecttothespecificationsofthe

timberpiles.Theseller/supplierfurnishedthesametoCVCorGilM.Cembrano.[9]

Withinthe60dayperiod,CVCwasabletomaketwo(2)deliveriesof117and57pieceswhichrespondentacceptedandpaidfor.OnAugust26andSeptember9,1991,Cembrano receivedpayment of P148,574.25 and P84,645.00, respectively, for the aforesaid deliveries, asevidencedbythedisbursementvouchersissuedbytheCityinfavorofCVCLumberIndustries,

Inc.ItappearsonthefaceofthevouchersthatthepayeeisCVCorGilCembrano.[10]

OnNovember13,1991,the60dayperiodforCVCtomakedeliveriesofthetimberpiles

expired.CVCoffered todeliver100timberpilesworthP148,500.00,but respondent refused.OnNovember19,1991,CVC,throughpetitionerCembrano,requestedforanextension,until

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December 11, 1991, to complete the delivery of timber piles.[11]

CityEngineerEdgardoT.Sanchezdeniedthisrequest,andrecommendedthatanewbiddingbeheldontheunexecuted

portionofthecontract.[12]

TherebiddingwasheldonDecember2,1991withtheapprovalofformerCityMayorGuillermoSanchez,withoutnoticetoCVC.

At the instance of CVC, through Cembrano, an investigation regarding the unilateral

cancellation of the contract and the subsequent rebidding was conducted. The City LegalOfficer rendered a report upholding the validity of the contractwithCVC and the purchaseorderissuedbytheCitytoit,consideringthesuspicioushasteattendanttoitsterminationand

the irregularities surrounding the rebidding process.[13]

The City Legal Officer made thefollowingrecommendationtotheMayor:

1.TohonorthecontractwithCVCLumberIndustries,Inc.orMr.GilM.Cembranoand

compromisewiththesamebyrequiringthesaidcontractortocompletedeliveryoftimberpileswithintheperiodof45calendardayswithoutchargingtheprovidedliquidateddamages,whichCompromiseAgreementshallprovideforitsautomaticexpirationafterthelapseoftheabovementionedperiod

2.TodeclaretheDecember2,1991biddingNullandVoidandconfirmthestoppayment

orderofthisofficepermanently3. To endorse to the Committee on Good Government and to the Office of the

Ombudsman the irregular acts of the City General Service Department Head for appropriateAdministrativeandCriminalaction[s],respectively

4.TosuspendtheCityGeneralServiceDepartmentHeadforaperiodofnotmorethan

90 days for him to fully face the charges filed against him before the Committee on GoodGovernment

5. To request the Committee on Good Government to conduct further investigation

within theOffice of theCityGeneral Service to determine involvement of other government

employeesinthesaidirregularities[14]

CVCandCembrano,throughGoascounsel,filedacomplaintforbreachofcontractanddamagesagainstrespondent,claimingthatCVCsustaineddamagesamountingtoP856,695.00thevalueofthetimberpileswhichitwasreadytodeliverandthevalueofthoseitfailedtodeliveronaccountofthecancellationofthecontractonNovember13,1992.CembranoallegedthereinthathewastheMarketingSupervisorandanagentofCVC,thathesecuredaloanfromtheDBPandexecutedarealestatemortgageoverhispropertyascollateraltopartlyfinancethe

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purchaseofthetimberpoles/piles.ThecasewasdocketedasCivilCaseNo.3851.InitsAnswer,theCityofButuanadmittedtheallegationsinthecomplaint.

Meanwhile,duringameetingof theCVCBoardofDirectorsonSeptember3,1992,Monico

PagOng was elected President and Isidro B. Plaza as Corporate Secretary.[15]

Plaza alsobecametheresidentmanagerofthecorporation.

OnMay 27, 1996, the trial court rendered judgment in favor of the defendants andorderedthedismissalofthecomplaintonthefollowingratiocination:

It may be recalled that as of November 13, 1991 the contract had already been

terminated for failure of the plaintiff [CVC and Cembrano] to complete deliveries on theoriginalperiod.Sincetherequestforextensionbytheplaintiffwasdenied,thedefendant[City]wasnolongerobligedtoacceptanydeliveryassaidacceptancecanbeconsideredawaiverorabandonment of the right to rescind. The obligation of plaintiff tomake complete delivery,according to the contract, expired onNovember 13, 1991. The law is clear that obligationsarising from contracts have the force of law between the contracting parties and should becompliedwithingoodfaith.Thepowertorescindisgiventotheinjuredpartywhich,inthiscaseis thedefendant.Theplaintiffbeingapartywhodidnotperformtheundertakingwhich[sic]hewasboundbythetermsoftheagreementtoperform,itisnotentitledtoinsistuponthe

performanceofthecontractbythedefendantorrecoverdamagesbyreasonofthebreach.[16]

Cembranoappealed thedecision to theCA.TheappealwasdocketedasCAG.R.CVNo.55049.TheCArenderedjudgmentreversingthedecisionofthetrialcourtandorderedtheCity of Butuan to pay its liability to Cembrano and CVC. The dispositive portion of the

Decision[17]

reads:INVIEWOFTHEFOREGOING,thedecisionappealedfromisherebyREVERSEDandSETASIDE.DefendantCityofButuanisdirectedtopaytheplaintiffsthetotalsumofP926,845.00inaccordancewiththeabovecomputation,with6%interestasofthedatethisdecisionattainsfinality.

Costsagainstdefendantappellee.

SOORDERED.[18]

The appellate court declared that it was undisputed that CVC, through Cembrano, its

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MarketingSupervisor,participatedandwonthebiddingforthesupplyof757timberpilesand

poles,[19]

and that thecontractwasbetweenCVCand theCityofButuan.TheCA likewiseaffirmed the findingsof the InvestigationReportmadeby theCityLegalOfficer, andCVCs

entitlementtodamagesamountingtoP926,845.00.[20]

TheCityofButuan thereafter filed apetition for reviewoncertiorariwith thisCourt,

docketed asG.R.No. 149466.However, the petitionwasdeniedonNovember 12, 2001 for

failuretoobservethe15dayperiodtoappeal,andfailuretoserveacopythereoftotheCA.[21]

TheCityfiledamotionforreconsideration,whichtheCourtdeniedwithfinalityonJanuary16,

2002.[22]

Thus,theCAdecisionbecamefinalandexecutory.OnMarch1,2002,Cembrano,inhisbehalfandasattorneyinfactofCVC,executeda

DeedofAssignment[23]coveringofthemonetaryawardoftheCAinfavorofGo,hisuncle.

In a letter[24]

dated March 19, 2002, Go wrote the City Mayor of Butuan City,requesting payment of the P926,845.00 awarded to it via the decision in CAG.R. CVNo.55049plusinterests,toavoidtheembarrassmentoftheimplementationofawritofexecution

against the City. However, in a letter[25]

dated July 15, 2002, CVC, through its ResidentManager Isidro B. Plaza, informed the CityMayor that it was laying claim to the moneyjudgmentandrequestedthattheamountberemittedit.

Ina2ndIndorsement[26]

datedJuly17,2002,theCityLegalOfficerrecommendedthattheSangguniangPanglungsodappropriateP926,845.00topayfortheawardinfavorofCVCunder CAG.R. CV No. 55049. During a meeting with the Sangguniang PanglungsodChairmanandMembersof theCommitteeonAppropriationandFinance,CembranoandGoagreedthatunderthedecision,theamountduetoCVCwasP926,845.00with6%interestper

year.TheSanggunianresolvedtoreferthemattertotheCityBudgetOfficer.[27]

Inaletter[28]

datedOctober30,2002,theCityLegalOfficerrequestedtheCityBudget

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OfficertoreleaseP926,845.00plus6%legalinteresttoCVC.TheCityTreasurerandtheCity

Mayorsignedacheck[29]

datedNovember5,2002forthesaidamountwithCVCLUMBERINDUSTRIES, INC/MONICOE.PAGONGaspayee.The checkwas receivedbyPagOng

forCVC,asevidencedbyadisbursementvoucher.[30]

Thereafter, Atty. Go, acting as counsel for CVC and Cembrano, filed a Alternative

MotionforIssuanceofaWritofExecutionorEntryofJudgment[31]

intheRTCinCivilCaseNo.3851.Thecourtissuedanordergrantingthemotion.TheSheriffsarrivedintheOfficeoftheCityMayor to enforce thewrit onNovember 28, 2002, butwere told that the City hadalreadyremitted theamount.Thus, theSheriffssubmittedaReturnon theWritofExecutiondeclaringthattheyfailedtoenforcethewritonaccountoftheCitysclaimthatithadalreadyremittedtheP926,845.00toCVC.

In a letter[32]

dated November 29, 2002, Plaza wrote the City Treasurer that theproceedsof the210pilesofpolesandpilesdeliveredto theCityat thepriceofP311,850.00hadnotbeenremittedtoCVC.HerequestedthatCVCbefurnishedcopiesofvouchers,checks,officialreceipts,includingCembranosauthoritytotransactbusinesswiththecitygovernmentand other documents. Plaza, likewise, informed Go that the amount of P120,000.00 as hisattorneysfeesandlitigationexpensesunderthedecisioninCAG.R.CVNo.55049wasready

forclaiming.[33]

TheCityLegalOfficerfiledaManifestation,[34]

alsodatedNovember29,2002, that ithadalreadypaidtheP926,845.00toCVC,throughPagOng,itsPresident.GofiledanUrgent

Motion (To Direct Sheriffs To Garnish Defendants Bank Account),[35]

alleging that thepaymentbytheCityofButuantoMonicoPagOngwasnotincompliancewiththedecisioninCAG.R.CVNo.55049,asaffirmedbytheSupremeCourt.Itwas,likewise,assertedthatthecreditorsunder theCAdecisionwereCVCUnitVIandCembrano,notPlazaorPagOng. Itinsisted that the payment made by the City to PagOng did not discharge its obligation toCembrano.Itwas,likewise,assertedthatthecreditorsundertheCAdecisionwereCVCUnitIVandCembrano,notPlazaorPagOng.ItinsistedthatthepaymentmadebytheCitytoPagOng did not discharge its obligation to Cembrano. It was alos averred that the loggingoperations of CVC and TriumphTimber Corporation were consolidated in one timber

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concession license, and that the two corporations conducted the operations under anindependentandseparateentitywhichwasCVCUnitVI.Theplaintiffsmovantsprayedthat:

WHEREFORE, it is respectfully prayed of this Honorable Court to issue an order

directingSheriffsROGERKINANAHAS,withtheassistanceofVICENTETIUandARTHURCALO, to enforce thewrit of execution byway of garnishment of defendants bank accountspursuanttoSection9,Rule39,specificallyparagraph(c)oftheRevisedRulesofCourt.

Plaintiffs further pray for such other remedies that may be just and equitable in the

premises.[36]

The City opposed the motion, contending that Cembrano was merely the agent or

marketing supervisor of CVC as alleged in the complaint in Civil CaseNo. 3851 althoughCembranowasimpleadedasoneoftheplaintiffs,therealpartyininterestentitledtothesumofP926,845.00wasCVC.Cembranowasboundbyhisallegationinthecomplaintthathewasmerely the Marketing Supervisor for CVC. It pointed out that Go and Cembrano failed toimpleadPlazaandPagOng,whowereindispensablepartiesintheirmotionhence,themotionwas a mere scrap of paper. The City of Butuan suggested that the issue of who betweenplaintiffCVCorCembranowasentitledtotheamountofP926,845.00shouldberesolvedby

them.[37]

Forhispart,PagOngfiledaManifestation,statingthatherefrainedfrominterveningin

thecaseforthesimplereasonthathewasthePresidentofCVC,thusclothedwiththeauthoritytoreceivetheP926,845.00.HeappendedtheretotheminutesofthemeetingoftheCVCBoard

ofDirectorsonSeptember3,1982,duringwhichhewasappointedPresident.[38]

On January 8, 2003, the court issued an Order[39]

granting the motion of Ong andCembrano, andordered theSheriff togarnish thebank accountof theCityofButuan in theDBPfortheenforcementofthewritofexecution.ItruledthatthepaymentmadebytheCityofButuantoPagOngwasillegalbecauseitwasmadeinamotionforwritofexecution,andPagOngwasnotapartytothecaseandhadnopersonality.Fortheirpart,GoandCembranofiledamotion tocompel theDBPtoremit thegarnishedamount to them.OnFebruary3,2003, the

trialcourtissuedanOrder[40]grantingthemotionandorderedtheDBPtoremitP926,845.00toCembranoandGoincash.ThedispositiveportionoftheOrderreads:

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WHEREFORE, in view of the foregoing, the garnishee, Development Bank of the

Philippines,ButuanCityBranch,throughitsmanager,Mr.WilfredAlava,isherebyorderedtorelease one half of the garnished amount or the sumof P490,609.955 inCASH toAtty.DollfussR.Go.

Asthere isnoshowingfromthepleadings filedbydefendantCityofButuanthat

CVCLumberIndustries,Inc.,stillexist,Mr.WilfredAlavaislikewiseorderedtoreleasethe remaining half of the garnished amount in the sum of P490,609.955 in CASH toplaintiffGilM.Cembrano.

ITISSOORDERED.[41]

TheDBPcompliedandreleasedtheamountofP981,219.91toCVCandCembrano.[42]

On February 4, 2003, the City of Butuan filed a Petition for Certiorari and

Prohibition[43]

with the CA against CVC, PagOng, Plaza and Cembrano, assailing theJanuary8,2003Orderofthetrialcourt.ThecasewasdocketedasCAG.R.SPNo.75328.ItinsistedthatithadalreadypaidrespondentCVCandCembranoasorderedbytheCAinCAG.R.CVNo.55049.

Atty.GofiledaComment[44]

onthepetitionforandinbehalfrespondentsexceptPagOngandPlaza,allegingthattheRTChadtheinherentpowertorulethatsuchpaymentmadebytheCityofButuantoPagOngwasillegal.

Foritspart,theCityofButuanfiledaReply,[45]

claimingthatthepetitionhadbecomemootandacademicbecausetheDBPhadalreadyreleasedthemoneytoGoandCembranoonFebruary4,2003.

OnAugust5,2003,theCArenderedjudgmentgrantingthepetition.Thefalloreads:

IN VIEWOFALL THE FOREGOING, the instant petition is hereby GRANTED and the assailed

OrdersRECALLEDandSETASIDE,andanewoneenteredRECALLINGandDECLARINGNULL and VOID the Orders dated January 8, 2003 and February 3, 2003, and altogetherquashingthewritofexecutionorgarnishmentissuedinthiscase.Asafurtherconsequenceofthisorder,Atty.DollfussR.GoandplaintiffGilM.CembranoareorderedeachtoreturntothepetitionerCityofButuan theamountofP490,605.955,which they receivedas a resultof theimplementationofthewritofgarnishmentissuedinthecase.Costsagainsttherespondents.

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SOORDERED.[46]

The CA ruled that, under the Decision of the CA in CAG.R. CVNo. 55049, either

respondentCembranoorPagOngcouldreceivetheawardofP926,845.00fortherespondentCVC.Moreover,theCityofButuanactedingoodfaithindeliveringthechecktothePresidentofCVC.Inasmuchas ithadalready remitted the judgmentdebt, theCitywas releasedof itsobligation under the Decision in CAG.R. CVNo. 55049 hence, the trial court committedgrave abuse of its discretion amounting to excess of jurisdiction when it ordered thegarnishmentofthebankaccountofpetitionerButuanCitywiththeDBP,andinorderingthebanktoreleaseP490,609.955toAtty.DollfussR.Go,andtheremaininghalftoCembrano.

The CA, likewise, declared that: [w]hatever intracorporate disputes over any

controversy existing between Cembrano, on the one hand, and PagOng on the other, issomething which they have to thresh out in an appropriate proceeding and not in the case

beforeit.[47]

Consequently,theappellatecourtorderedGoandCembranotoreturnwhateachreceived from theDBP to theCity ofButuan. The appellate court also stated the judgmentcreditorcanverywellsatisfythejudgmentdebtevenbeforeawritofexecutionshallhavebeen

issuedbythecourtfortheimplementationofitsdecision.[48]

GoandCembrano filedaMotion forReconsideration, insisting that the trialcourtdid

notcommitanygraveabuseofitsdiscretioninissuingtheassailedordersofthetrialcourt.Asgleaned from the evidence on record inCivilCaseNo. 3851, the transaction subjectmatterthereof was between Cembrano and the City of Butuan, and Plaza and PagOng had noparticipation or involvement therein whatsoever. Cembrano maintained that it was he whofundedthepurchaseanddeliveryofthetimberpolesandpilestotheCityofButuan,sincehesecuredtheP150,000.00loanfromtheDBP,theamountCVCusedtofinancethepurchaseoftimberpolesandpiles.Thisisgleanedfromtheevidenceadducedduringthetrial,consistingofthePromissoryNoteheexecutedinfavorofDBPforP150,000.00,andtherealestatemortgageexecutedbyhiminfavor of theDBPover the property belonging to hismother covered byTCTNo. 17068 as

security for the payment of said loan.[49]

They appended to the motion the real estate

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mortgageexecutedbyCembranoinfavoroftheDBPandtheirformalofferofevidencefiledinCivilCaseNo.3851.

TheCA,however,deniedthemotionforreconsiderationinaResolution[50]

datedApril5,2005.

CembranoandGo,nowpetitioners,assailtheDecisionandResolutionoftheCAonthe

followinggrounds:I

BOTH PETITONERS WERE DEPRIVED OF THEIR CONSTITUTIONAL ANDPROCEDURAL DUE PROCESS WHEN THE HONORABLE COURT OF APPEALSORDERED THEM TO RETURN TO THE CITY OF BUTUAN THE AMOUNT OF

P490,609.955[51]

II

THATTHEHONORABLECOURTOFAPPEALSCOMMITTEDSERIOUSERRORSOFLAW NAY GRAVE ABUSE OF DISCRETION IN DECLARING PAYMENT BY THECITYOFBUTUANTOMONICO PAGONGAND ISIDRO PLAZA,WHOWERENOTPARTIES TO CIVIL CASE NO. 3851 AND CAG.R. CV No. 55049, IS A VALIDPAYMENTOF THE JUDGMENTDEBT IN CAG.R. CVNo. 55049AND IN SETTINGASIDEANDDECLARINGNULLANDVOIDTHEWRITOFGARNISHMENTISSUED

BYTHECOURTAQUO.[52]

III

THEDECISIONOFTHEHONORABLECOURTOFAPPEALSINCAG.R.CVNo.55049HADBECOMEFINALANDEXECUTORYANDCOULDNOTBECHANGEDBYTHEHONORABLE COURT OF APPEALS 1ST DIVISION ON A MERE PETITION FOR

CERTIORARIINCAG.R.SPNo.75328.[53]

PetitionerGoaversthathewasmerelythecounselofpetitionerCembranoinCivilCaseNo.3851, and was not a party in said case nor in CAG.R. CV No. 55049. He and petitionerCembranoweredeprivedof their right todueprocesswhen theywereorderedby theCA inCAG.R.SPNo.75328toreturntheP490,609.955garnishedbytheSheriffinCivilCaseNo.3851.TheproperrecourseoftherespondentCitywastofileaseparatecomplainttoresolvetheissueofwhoisentitledtotheamounttheissueofwhetherpetitionerGowasobligedtoreturntheamountwhichhereceivedasattorneysfeesandreimbursementoflitigationexpensesandwhetherpetitionerCembranowasentitledtotheP490,609.95wouldhavetobeventilatedand

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resolvedafterafullblowntrial.PetitionersaverthattheCAcommittedaseriouserrorwhenitdeclaredthatthepaymentbytherespondentButuanCitytorespondentCVC,throughitsPresidentPagOng,validlydischargeditfromitsobligationinCAG.R.CVNo.55049itlikewiseerredinrulingthattheacceptanceofP926,845.00byrespondentPagOngreleasedtheCityofButuanfromitsobligationsonthepremisethatPagOng,aspresidentofCVC,couldbeconsideredasapersoninpossessionofcredit.

PetitionerCembrano,beingoneoftheplaintiffsinCivilCaseNo.3851andanappellantinCAG.R.CVNo.55049,isentitledtoonehalfoftheaward,whichhehadalreadyassignedto petitioner Go hence, the latter is entitled to onehalf of the award, or P490,609.955.Petitioner Go maintains that the deed of assignment is a valid contract between him andpetitionerCembrano.PetitionerscitetherulingofthisCourtinHarryE.KeelerElectricCo.v.

Rodriguez.[54]

PetitionerGoavers thathewasnotaparty inCivilCaseNo.3851(CAG.R.CVNo.55049andCAG.R.SPNo.75328).Hewasmerely the counsel of the plaintiffs inCivilCaseNo.3851,andwhoweretheappellantsCAG.R. CVNo. 55049. Hence, the CA in CAG.R. SP No. 75328 cannot compel him toreturntheP490,609.955hereceivedfromtheDBP.PetitionersinsistthattheproperremedyofrespondentCityofButuanistofilethepropercomplaintagainstthemsothattheycanfiletheappropriatepleadingsintheirdefense.

For its part, the respondentCityofButuan avers that it compliedwith the decision inCAG.R.CVNo.55049whenitremittedthefullamountofP926,845.00torespondentCVC.Contrarytohisclaim,petitionerCembranoisnotentitledtoonehalfofthemonetaryawardinCAG.R.CVNo.55049forthesimplereasonthathewasmerelyCVCMarketingSupervisor,andhappenedtoparticipate in thepublicbiddingfor thesupplyof timberpilessolely in thatcapacity.AsruledbytheCAinCAG.R.SPNo.75328,petitionerCembranoadmittedinhisUrgentMotion(toDirectSherifftoGarnishDefendantsAccount)thathewasclothedwiththeproperauthoritytoparticipateinthebiddinganddeliverthetimberpilesunderthecontract.ItmaintainsthatwhatshouldprevailisthedispositiveportionofthedecisioninCAG.R.CVNo.55049,andthatawritofexecutionwhichdoesnotstrictlyadheretothedispositiveportionof

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thedecisionisinvalid.It further maintains that it acted on its honest belief that respondent PagOng, as CVCpresident,wasauthorizedtoreceivepaymentinbehalfofsaidcorporation.CitingArticle1240of the New Civil Code, respondent City maintains that its payment to CVC, through itsPresident,satisfieditsobligationsunderthedecisionoftheCAinCAG.R.CVNo.55049.ItwascompletelyunawareofanydisputebetweenCVCandCembrano.Moreover,ifpetitionersbelieved that theywere entitled to theP490,609.955 out of its remittance of P926,845.00 toCVC,theyshouldhavepresentedevidenceintheRTCtoprovetheirclaim.For their part, respondents PagOng and Plaza aver that as president of CVC and chiefexecutive officer, Pagong was authorized to receive the amount of P926,845.00 fromrespondentButuanCity.Thethresholdissuesinthiscaseare:(1)whetherornottheremittanceoftheP926,845.00madeby respondentCity ofButuan to the respondentCVC, through its president respondentPagOng, released it from its obligation under the decision in CAG.R. CVNo. 55049 and (2)whether theCA erred in ordering the petitioner to return the P981,219.91 to the account ofrespondentCitywiththeDBP.

TheRulingoftheCourt

On the first issue, the respondentCity, as judgment debtor, is burdened to provewithlegalcertainty that itsobligationunder theCAdecision inCAG.R.CVNo.55049hasbeendischargedbypayment,whichunderArticle1240oftheCivilCode,isamodeofextinguishing

anobligation.[55]

Article1240of theCivilCodeprovides thatpaymentshallbemade to thepersoninwhosefavor theobligationhasbeenconstituted,orhissuccessorininterest,orany

personauthorizedtoreceiveit.[56]

Paymentmadebythedebtortothepersonofthecreditorortooneauthorizedbyhimor

bythelawtoreceiveitextinguishestheobligation.[57]

Whenpayment ismade to thewrongparty, however, the obligation is not extinguished as to the creditorwho iswithout fault ornegligenceevenifthedebtoractedinutmostgoodfaithandbymistakeastothepersonofthe

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creditororthrougherrorinducedbyfraudofathirdperson.[58]

Ingeneral,apaymentinordertobeeffectivetodischargeanobligation,mustbemadeto

theproperperson.Thus,paymentmustbemadeto theobligeehimselfor toanagenthavingauthority,expressorimplied, toreceivetheparticularpayment.Paymentmadetoonehavingapparentauthoritytoreceivethemoneywill,asarule,betreatedasthoughactualauthorityhadbeengiven for its receipt.Likewise, if payment ismade toonewhoby law isauthorized to act for the creditor, it will work a discharge. The receipt of money due on a

judgmentbyanofficerauthorizedbylawtoacceptitwill,therefore,satisfythedebt.[59]

When there isaconcurrenceof severalcreditorsorof severaldebtorsorof severalcreditorsanddebtorsinoneandthesameobligation,it ispresumedthattheobligationisjointandnot

solidary.[60]

Themostfundamentaleffectofjointdivisibleobligationsisthateachcreditorcandemandonlyforthepaymentofhisproportionateshareofthecredit,whileeachdebtorcanbeheld liableonlyfor thepaymentofhisproportionateshareof thedebt.Asacorollary to thisrule, the credit or debt shall be presumed, in the absence of any law or stipulation to thecontrary, to be divided into asmany shares as there are creditors and debtors, the credits or

debtsbeingconsidereddistinctfromoneanother.[61]

Itnecessarilyfollowsthatajointcreditorcannotactinrepresentationoftheothers.Neithercanajointdebtorbecompelledtoanswerfor

the liability of the others.[62]

The pertinent rules are provided in Articles 1207[63]

and

1208[64]

oftheCivilCode.

Weagreewith thepetitionerscontention that,under the falloof theCAdecisioninCAG.R.CVNo.55049,respondentCitywasorderedtopayP926,845.00totheplaintiffsinCivilCaseNo.3851:

INVIEWOF THE FOREGOING, the decision appealed from is herebyREVERSED andSET ASIDE.Defendant City of Butuan is directed to pay the plaintiffs the total sum ofP926,845.00 in accordancewith the above computationwith 6% interest as of the date thisdecisionattainsfinality.

Costsagainstdefendantappellee.[65]

xxx

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The Court adopts with approval the investigation report of the City Legal Officer. As aconsequenceofwhich,Wefindplaintiffstobeentitledtodamagesasfollows:Thevalueofthetimberpilesdefendants

refusedtoacceptcomputedatP1,485.00pertimberpile..P148,500.00Thevalueof447timberpileswhichplaintiffswerereadyandcouldhavedeliveredwereitnotfortheunilateralterminationofthecontractP708,345.00AttorneysfeesP50,000.00LitigationexpensesP20,000.00

oratotalofP926,845.00[66]

As gleaned from the complaint in Civil Case No. 3851, the plaintiffs therein are

petitionerGilCembranoand respondentCVC as such, the judgment creditors under thefallooftheCAdecisionarepetitionerCembranoandrespondentCVC.Eachofthemisentitledtoonehalf(1/2)oftheamountofP926,845.00orP463,422.50each.IncompliancewiththedecisionoftheCAinCAG.R.CV55409,respondentCityremittedtheP926,845.00torespondentCVC,andthatrespondentPagOngreceivedtheamountforandinbehalfofCVCandnotinhispersonalcapacity.ConsideringthatrespondentPagongasCVCpresident was authorized to receive the money, respondent Citys payment dischargedrespondentCityofitsobligationunderthedecisioninCAG.R.CVNo.55049.However,sincepetitionerCembranodidnotreceiveanycentavooutoftheP926,845.00remittedtorespondentCVC,theobligationtoremitonehalfoftheamount,orP463,422.50, topetitionerCembranowasnotextinguished.

Thepetitioners and the respondentCity are correct in their contention that thegeneral

ruleisthatthefalloorthedispositiveportionofthedecisionisthesubjectofexecution.Wherethereisaconflictbetweenthedispositiveportionandtheopinionofthecourtcontainedinthetext or body of the decision, the former must prevail over the latter on the theory that thedispositiveportionisthefinalorder,whiletheopinionismerelyastatementorderingnothing.[67]

Theotherpartsofthedecisionmayberesortedtoinordertodeterminetheratiodecidendi

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ofthedispositiveportionofthedecision.[68]

Wheretheinevitableconclusionfromthebodyofthedecisionissoclearastoshowthattherewasamistakeinthedispositiveportion,thebody

ofthedecisionwillprevail.[69]

In thiscase, the falloordispositiveportionof theCAdecisioninCAG.R.CVNo.55049 isplainandunambiguousinthatrespondentCitywasorderedtopaytopetitionerCembranoandrespondentCVCtheamountofP926,845.00plusinterest.Inthebodyofitsdecision,theCAdeclaredthattheplaintiffsaretobeentitledtodamages,asfollows:

The Court adopts with approval the investigation report of the City Legal Officer. As aconsequenceofwhich,Wefindplaintiffstobeentitledtodamagesasfollows:Thevalueofthetimberpilesdefendants

refusedtoacceptcomputedatP1,485.00pertimberpile..P148,500.00Thevalueof447timberpileswhichplaintiffswerereadyandcouldhavedeliveredwereitnotfortheunilateralterminationofthecontractP708,345.00AttorneysfeesP50,000.00LitigationexpensesP20,000.00

oratotalofP926,845.00[70]

Wenotethatunderthedecisionoftheappellatecourt,thevalueof447timberpileswhichtheplaintiffscouldhavedeliveredtorespondentCitywasP708,345.00.WeagreewithrespondentscontentionthatunderthedecisionoftheCA,thewinningbidderforthesaleandsupplyof timberpiles/poleswas respondentCVC,and thatpetitionerCembranowasmerelytheCVCMarketingSupervisorwhorepresenteditduringthebidding,andthatthiswasalsoallegedinthecomplaintbeforetheRTC.TheCAinCAG.R.CVNo.55049furtherdeclaredthatrespondentCVC,notpetitionerCembrano,securedtheDBPloantoaugmentitscapital. Consequently, respondents argue, CVC being the contracting party and petitionerCembrano being a mere agent of CVC, the latter is entitled to the value of the timberpoles/piles subject to be supplied to respondentCity contrary to the plain and unambiguous

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fallo of the decision. However, if this contention of respondents had been correct, the CAshould have dismissed the complaint insofar as petitioner Cembranowas concerned, on thepremise that he had no cause of action against respondentCity. TheCAdid not do so, andinstead ordered respondentCity to pay P926,845.00 to petitionerCembranoand respondentCVC.

ItbearsstressingthatthereweretwoplaintiffsinCivilCaseNo.3851.ItappearsinthecomplaintthatpetitionerCembranowasapartyplaintiff.Heallegedthatitwashewhosecureda loan from the DBP of P150,000.00 and mortgaged the property of his uncle as securitytherefor to partly finance the purchase of timber poles/piles to the respondent City. TheplaintiffsadducedinevidencethePromissoryNoteexecutedbyCembranoandtheRealEstate

Mortgage he executed in favor of theDBP.[71]

The PurchaseOrder issued by theCitywasdelivered to respondent CVC or Cembrano. Based on the disbursement voucher for thepaymentoftheP24,640.00paidby the respondent City for the supply of poles/piles, it appears that the payee is CVC orCembrano.InthereportoftheCityLegalOfficerwhichwasapprovedbytheCourtofAppeals,itdeclaredthatthecontractofrespondentCityforthesupplyoftimberpoles/pileswasCVCorCembrano.Infine,CembranowasapartyplaintiffinhispersonalcapacityandnotmerelyasMarketing Supervisor of respondentCVC.The CA resolved that, based on the evidence onrecord,petitionerCembranoandrespondentCVCwereentitledtotheamountofP926,845.00.

Toreiterate,itisthedispositivepartofthejudgmentthatactuallysettlesanddeclaresthe

rights andobligations of the parties, finally, definitively, authoritatively, notwithstanding theexistenceofinconsistentstatementsinthebodythatmaytendtoconfuseit isthedispositive

partthatcontrols,forpurposesofexecution.[72]

RespondentCVCdidnotfileanymotionfor thereconsiderationof theCAdecisionin

CAG.R.CVNo.55049.SincepetitionerCembranohadassignedhisrightsandinterestsunderthedecisiontopetitionerGo,thelatterreceivedtheamountofP490,609.955onthebasisofthedeed of assignment executed by petitionerCembrano. PetitionerGo cannot be compelled toreturnthesametorespondentCity.

SincerespondentCVCwasentitledtoonlyP490,605.955undertheCAdecisioninCAG.R. CV No. 55049 but received P926,845.00, there was, in fine, an overpayment ofP490,605.955madebyrespondentCity.Thus,respondentCVCisobligedtoreturntheamount

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of P490,605.955 to respondent City. Since petitioner Cembrano had already assignedP490,609.955 to petitionerGo, the latter likewise had the right to receive the P490,609.955fromDBP.PetitionerCembranoshouldthusbemadetoreturntheamountofP490,609.955hereceivedfromtheDBPtorespondentCity.

INLIGHTOFALLTHEFOREGOING, the petition isPARTIALLYGRANTED.Thedecision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner GilCembranoisORDEREDtoreturntorespondentCityofButuantheamountofP490,609.955,with6%interestperannumtobecomputedfromthefinalityofthisdecision.RespondentCVCisORDERED to return to respondent Butuan City the amount of P490,609.955, with 6%interestperannumtobecomputedfromthedateoffinalityofthisdecision.Nocosts.

SOORDERED.

ROMEOJ.CALLEJO,SR.AssociateJusticeWECONCUR:

ARTEMIOV.PANGANIBANChiefJusticeChairperson

CONSUELOYNARESSANTIAGOMA.ALICIAAUSTRIAMARTINEZAssociateJusticeAssociateJustice

MINITAV.CHICONAZARIO

AssociateJustice

CERTIFICATION

Pursuant to Section 13,ArticleVIII of theConstitution, it is hereby certified that theconclusionsintheabovedecisionwerereachedinconsultationbeforethecasewasassignedto

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thewriteroftheopinionoftheCourtsDivision.ARTEMIOV.PANGANIBANChiefJustice

[1]PennedbyAssociateJusticeConradoM.Vasquez,Jr.withAssociateJusticesMercedesGozoDadole(retired)andRosmariD.

Carandangconcurringrollo,pp.1422.[2]PennedbyActingPresidingJudgeVictorA.Tomaneng.

[3]Supranote1,at66.

[4]CArollo,pp.15,79.

[5]Rollo,pp.6768.

[6]Id.,at106

[7]Id.at145.

[8]Id.at146.

[9]Id.at107.

[10]Id.at149150.

[11]Id.at151.

[12]Id.at152.

[13]Id.at155161.

[14]Rollo,pp.160161.

[15]CArollo,p.75.

[16]Rollo,p.71.

[17]PennedbyAssociateJusticeRodrigoV.Cosico,withAssociateJusticesRamonA.BarcelonaandAliciaL.Santos,concurring

rollo,pp.6774.[18]

Id.at7374.[19]

Id.at67(DecisioninCAG.R.CVNo.55049).[20]

Id.at73.[21]

CArollo,pp.2526.[22]

Id.at27.[23]

Rollo,p.190.[24]

CArollo,p.28.[25]

Id.at33.[26]

Id.at3435.[27]

Id.at5556.[28]

Id.at36.[29]

Id.at37.

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[30]Id.at38.

[31]Id.at2932

[32]Id.at212.

[33]Id.at213.

[34]Id.at3940.

[35]Id.at4150

[36]Id.at49.

[37]Id.at6265.

[38]Id.at7078.

[39]Id.at15.

[40]Id.at79.

[41]Id.(Emphasissupplied.)

[42]Rollo,p.89.

[43]CArollo,p.2

[44]Id.at95102.

[45]Id.at121127.

[46]Rollo,p.63.

[47]Id.at62

[48]Id.at63

[49]Id.at116118.

[50]Id.at66.

[51]Id.at37

[52]Id.at39

[53]Id.at293

[54]44Phil19(1922)

[55]Jimenezv.NationalLaborRelationsCommission,G.R.No.116960,April2,1996,256SCRA84,89.

[56]Culabav.CourtofAppeals,G.R.No.125862,April15,2004,427SCRA721,729730.

[57]BankofthePhilippineIslandsv.CourtofAppeals,G.R.No.104612,May10,1994,232SCRA302,310311.

[58]Id.at311.

[59]PhilippineAirlines,Inc.v.CourtofAppeals,G.R.No.49188,January30,1990,181SCRA557,567.

[60]D.Jurado,COMMENTSANDJURISPRUDENCEONOBLIGATIONSANDCONTRACTS,10thed(1993),p.174.

[61]Id.at177.

[62]Id.

[63]Art.1207.Theconcurrenceoftwoormorecreditorsortwoormoredebtorsinoneandthesameobligationdoesnotimplythat

eachoneoftheformerhasarighttodemand,orthateachoneofthelatterisboundtorenderentirecompliancewiththeprestations.There is solidarity liabilityonlywhen theobligationexpresslystates,orwhen the lawor thenatureof theobligations requiressolidarity.[64]

Art.1208.Iffromthelaw,orthenatureorthewordingoftheobligationstowhichtheprecedingarticlerefersthecontrarydoes

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notappear,thecreditordebtshallbepresumedtobedividedintoasmanyequalsharesastherearecreditorsordebtors,thecreditsordebtsbeingconsidereddistinctfromoneanother,subjecttotheRulesofCourtgoverningthemultiplicityofsuits.[65]

Rollo,pp.7374.(Emphasissupplied)[66]

Id.at73.[67]

PHCreditCorporationv.CourtofAppeals,421Phil.821,833(2001).[68]

Id.[69]

Id.at834Peoplev.Lacbayan,393Phil.800,810(2000).[70]

Rollo,p.73.(Emphasissupplied)[71]

ExhibitsCandC1.[72]

Espirituv.CourtofFirstInstanceofCavite,No.L44696,October18,1988,166SCRA394,399.

Documents

Cembrano vs City of Butuan GR No 163605