Aranas v Tutaan

127 SCRA 828

Facts: The stocks of Universal Textile Mills (UTEX) were issued to co-defendants Manuel and
Castaneda. Subsequently, in 1971, the lower court declared that Luisa Aranas is the rightful owner
of the 400 shares of stocks at Universal Textile Mills (UTEX. Further, it ordered that dividends in
cash or stocks pertaining to the same be delivered to Aranas. UTEX then filed a motion to clarify
the phrase in said decision which states to deliver to her all dividends appertaining to the same,
whether in cash or in stocks meant dividends properly pertaining to the plaintiffs after the courts
declaration of her ownership. The said motion was granted, where the court ordered UTEX to pay
the plaintiff the cash dividends which accrued to the stocks in question after the current decision
was rendered but the cash dividends already paid to the co-defendants before the court decision
may not be claimed by the plaintiffs.
The co-defendants filed for a new trial and the decision was the same as the the 1971 ruling.
Upon appeal to the CA, the said ruling was affirmed. The lower court issued a writ of execution in
1979 directed to UTEX to 1) cancel the certificate of stocks of the co-defendants and issue new
ones in the name of the petitioners, and 2) Pay the cash dividends accrued from 1972 to 1979
(period from the new trial to the issuance of writ of execution). UTEX alleged that the cash
dividends had already been paid.
ISSUE: Whether or not there was valid payment
RULING: No. It is elementary that payment made by a judgment debtor to a wrong party cannot
extinguish the obligation of such debtor to its creditor. It was clear in the motion for clarification that
all dividends accruing to the said shares after the rendition of judgement belonged to the Aranas.
When UTEX paid the wrong parties, despite its knowledge and understanding of the final
judgment, it is still liable to pay Aranas as the lawful declared owners of the said shares. The
burden to recover the wrong payment is on UTEX and cannot be passed on to the Aranas as the
innocent parties.
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