Republic v De Guzman

Petitioner: RP, represented by PNP Chief

Respondent: Thi Thu Thuy T. De Guzman
Petition: Petition for review on certiorari
Ponente: Leonardo-De Castro, J.

Facts:
Montaguz General Merchandise (MGM), owned by Respondent, is a contractor accredited by
PNP for supply of office and construction materials and equipment.

PNP Engineering Services (PNPES) released a Requisition and Issue Voucher for acquisition of
building materials amounting to P2,288,562.69 for the construction of a condominium.
Respondent averred that MGM and petitioner, represented by PNP through its chief that they
executed a Contract of Agreement to procure and deliver building materials, and that the
Contract and purchase order were approved by the PNP Chief. MGM delivered the materials as
evidenced by Delivery Receipt, Sales Invoice, and Report of PUblic Property Purchase issed by
PNP Receiving and Accounting Officers. PNP issued a disbursement voucher in favor of MGM.
Respondent sent a demand letter to PNP for the payment of the materials. PNP replied that the
payment was made via LBP Check as evidenced by Receipt No. 001.
Respondent denied having received the check and that Receipt No. 001 could not support
PNP's payment as the receipt belonged to her other company.
Respondent filed a Complaint for Sum of Money against petitioner, represented by Chief of PNP,
with RTC QC, docketed as Civil Case No. Q99-37717.
Petitioner filed a motion to dismiss on ground that the claim had already been paid or
extinguished. It further argued that respondent demanded the incorrect amount since it included
the withholding tax paid to BIR.
Respondent opposed the motion to dismiss wherein it posited that the check was issued to
Montaguz Builders and that the check issued on April 19, 1996 was belied by the receipt issued
for the check was dated April 23, 1996. Respondent averred that the Warrant Register of PNP
showed that it was Edgardo Cruz of Highlands Enterprises who signed the check due to MGM,
contrary to her usual practice.
RTC denied the Motion to Dismiss. After hearing the testimonies of the respondent and Cruz,
RTC rendered its judgment in favor of the respondent.
Petitioner appealed to CA, which affirmed RTC's ruling with modification. CA ruled that in order
to extinguish its obligation, the petitioner should have directed its payment to MGM unless the
latter authorized a third person to accept payment on its behalf.

Petitioner prayed for the reversal of the decisions of RTC and CA on the ground that CA
committed a serious error in law by affirming the decision of the trial court.

Issue:
WON petitioner's obligation has been extinguished by paying the materials delivered by MGM to
respondent.
Ruling:
Negative. The RTC and the Court of Appeals correctly ruled that the petitioner’s obligation has
not been extinguished. The petitioner's obligation consists of payment of a sum of money. In
order for a petitioner's payment to be effective in extinguishing its obligation, it must be made to
the proper person. Article 1240 of the Civil Code states:
“Art. 1240. 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.”

In Cembrano vs. City of Butuan, SC explained how payment will effectively extinguish an
obligation:
A payment in order to be effective to discharge an obligation, must be made to the proper
person. Thus, payment must be made to the obligee himself or to an agent having
authority,express or implied, to receive the particular payment.

The respondent was able to establish that the LBP check was not received by her or by her
authorized personnel and the PNP's Warrant Registry showed that the check was claimed by
Cruz. Without proof that the respondent agreed that the payment be made to Cruz or that she
authorized Cruz to claim the check, the payment is ineffective.

Dispositive: Petition is denied. CA decision is affirmed with modification.