FACTS:

The case involves a petition to review the decision of the Court of Appeals dismissing the petition for certiorari against the order of the Court of First Instance of Manila, which issued an alias writ of execution against the petitioner, Philippine Airlines, Inc. (PAL). The case started when respondent Amelia Tan, doing business as Able Printing Press, filed a complaint for damages against PAL. The trial court rendered judgment in favor of Tan, ordering PAL to pay various amounts as damages, moral damages, and attorney's fees. PAL appealed the decision to the Court of Appeals, but the decision was affirmed with modifications. The judgment became final and executory, and a writ of execution was issued. However, PAL claimed that it had already fully paid its obligation to Tan through the deputy sheriff, who had absconded or disappeared. Tan filed a motion for the issuance of an alias writ of execution, which was granted by the trial court. PAL received a copy of the first alias writ of execution, ordering the payment of damages and attorney's fees.

In this case, petitioner Philippine Airlines, Inc. (PAL) filed a petition for certiorari challenging the issuance of an alias writ of execution and the garnishment of its deposit in the bank. The petitioner argued that an alias writ of execution cannot be issued without a prior return of the original writ by the implementing officer. The petitioner also claimed that payment of the judgment to the implementing officer constitutes satisfaction of the judgment and that interest is not payable when the decision is silent as to payment. Lastly, the petitioner argued that Section 5, Rule 39 of the Rules of Court only refers to the levy of property of the judgment debtor and disposal or sale thereof to satisfy the judgment. The respondent court justified the issuance of the alias writ of execution because the returning officer had absconded and could not be brought to court despite earlier orders. The court ruled that technicalities should not be used to defeat the execution of a judgment. Additionally, the court ruled that the payment made to the absconding sheriff should be considered as satisfaction of the judgment debt. The court emphasized that the plaintiff, who had won the case, should not be adjudged as having sued in vain. The court highlighted the fact that the plaintiff had been deprived of what was rightfully hers for almost 22 years.

ISSUES:

1. Did the payment made to the absconding sheriff by check in his name operate to satisfy the judgment debt?

2. Did the payment made by the petitioner to the absconding sheriff extinguish the judgment debt?

3. Whether payment in checks made out in the name of the sheriff instead of the judgment creditor is valid.

4. Whether the petitioner should bear the fault for the misappropriation of the funds by the sheriff.

5. Whether the judgment debt can be considered satisfied even without payment made by the absconding sheriff to the judgment creditor.

6. Whether the inclusion of interests to be recovered under the alias writ of execution is appropriate.

RULING:

1. No, the payment made to the absconding sheriff by check in his name did not operate to satisfy the judgment debt.

2. No, the payment made by the petitioner to the absconding sheriff did not extinguish the judgment debt.

3. Payment in checks made out in the name of the sheriff instead of the judgment creditor is not valid. The petitioner should have made the checks payable to the judgment creditor to prevent the encashment or the taking of undue advantage by the sheriff or any person into whose hands the checks may have fallen. The issuance of the checks in the name of the sheriff facilitated the misappropriation of the funds.

4. The petitioner should bear the fault for the misappropriation of the funds by the sheriff. The petitioner failed to employ the proper safeguards to protect itself and created a situation that allowed the sheriff to personally encash the checks and misappropriate the proceeds for his exclusive personal benefit.

5. The judgment debt cannot be considered satisfied because payment by the officer to the judgment creditor is a requisite for execution of the judgment. Since no such payment had been made yet by the absconding sheriff to the judgment creditor, the judgment debt remains unsatisfied. Execution and satisfaction of judgment are distinct concepts. Execution is the process that carries into effect a decree or judgment, while satisfaction of a judgment is the payment of the amount of the writ or a lawful tender thereof. Levy and delivery by an execution officer are not prerequisites to the satisfaction of a judgment when the same has already been realized in fact.

6. The inclusion of interests to be recovered under the alias writ of execution is appropriate. This follows from the ruling that the petitioner is liable for both the lost checks and interest. The decision of the court of appeals does not supersede the trial court's judgment; it merely modifies the same as to the principal amount awarded as actual damages.

PRINCIPLES:

• Under Article 1240 of the Civil Code, 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.

• Payment, in order to be effective to discharge an obligation, must be made to the proper person.

• The receipt of money due on a judgment by an officer authorized by law to accept it will satisfy the debt.

• Payment by the judgment debtor to the sheriff should be valid payment to extinguish the judgment debt.

• 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.

• A negotiable instrument, such as a check, is only a substitute for money and not money itself.

• A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor.

• Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until payment by commercial document is actually realized.

• The courts encourage the practice of payments by check to prevent wrongful payment and illegal withdrawal or disbursement of funds.

• Payment in cash should not be required as it may result in damage or interminable litigations each time a sheriff with huge amounts of cash in his hands decides to abscond.

• Checks intended for a particular payee should be made out in the name of that payee to prevent the misappropriation of funds.

• The judgment debtor whose act made possible the loss should bear the fault for the misappropriation.

• The practice of requiring checks in satisfaction of judgment debts to be made out in the name of executing officers is improper and allows them to treat the moneys as their personal funds.

• Execution is the process that carries into effect a decree or judgment, while satisfaction of a judgment is the payment of the amount of the writ or a lawful tender thereof.

• Levy and delivery by an execution officer are not prerequisites to the satisfaction of a judgment when the same has already been realized in fact.

• Payment by the officer to the judgment creditor is a requisite for execution of the judgment.

• Inclusion of interests to be recovered under an alias writ of execution is appropriate when the judgment debtor is liable for both the principal amount awarded as damages and interest.