FELIPE TANCHOCO, PLAINTIFF AND APPELLEE, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, DEFENDANT AND APPELLEE. MANILA RAILROAD COMPANY, INTERVENOR AND APPELLANT.

Appeal by writ of error, taken by intervenor Manila Railroad
Company—hereafter referred to as the Company from an amended decision of the
Court of First Instance of Manila, sentencing defendant Government Service
Insurance System—hereafter referred to as the System—to pay to plaintiff Felipe
Tanchoco the sum of P868.65, with legal interest from June 6, 1956, until paid,
without pronouncement as to costs.

After working for over 39 years as employee of the Company, plaintiff applied
for retirement therefrom, pursuant to Republic Act No. 186, as amended. In due
course, he was notified by the System that his application had been approved,
effective August 23, 1955 and that, accordingly, treasury warrant No. 363047 in
the sum of P868.65, representing part of his gratuity, was already prepared for
payment to him. However, despite repeated demands by Tanchoco, the System
subsequently refused to deliver the warrant to him, upon representations made by
the Company, because, as cashier of the latter, he had paid the aggregate sum of
P10,936.20 for several treasury warrants which later turned out to have been
forged.

Hence, Tanchoco sued the System in the Municipal Court of Manila, for said
sum of P868.65, plus interest and costs. In due course, the Company intervened
as defendant in the case. Judgment having thereafter been rendered for Tanchoco,
the Company appealed to the Court of First Instance of Manila, which, after
appropriate proceedings, dismissed the complaint and ordered the System to pay
or turn over to the Company the sum of P868.65 due Tanchoco, as well as such
amounts as may subsequently be due him, up to the aforementioned sum of
P10,936.20. On motion for reconsideration filed by Tanchoco, said decision of
the Court of First Instance of Manila was set aside and an amended decision
rendered ordering the System to pay him said sum of P868.65, with interest
thereon at the legal rate from June 6, 1956, until paid, without costs. The
Company appealed to the Court of Appeals, which, however, certified the case to
us, only questions of law having been raised by the parties.

The main issue is whether or not the gratuity due Tanchoco under Commonwealth
Act No. 186 may be applied to the satisfaction of the sum of P10,936.20 lost by
the Company due to the payment by him of forged checks.

In support of its pretense, to the effect that the lower court erred in
deciding the matter in the negative, the Company cites sections 636 and 637 of
the Revised Administrative Code reading:

“SEC. 636. Measure of liability of officers accountable for government
property.—Every officer accountable for property shall be liable for its
money value in ease of the improper or unauthorized use, or misapplication
thereof, by himself or any person for whose acts he may be responsible; and
generally he shall be liable for all loss, damage, or deterioration occasioned
by negligence in the keeping or use of such property, whether it be at the time
in his actual custody or not.

“SEC. 637. Measure of liability of officers accountable for government
funds.—Persons accountable for government funds shall be liable for all
losses resulting from the unlawful or improper deposit, use, or application
thereof and for all losses attributable to negligence in the keeping of the
same.”

Section 636 has no bearing on the issue before us, for said provision refers
to government property, not to funds such as those involved in the
case at bar. Neither is section 637 in point for the same refers to the
“liability of officers accountable for government funds”, whereas
those handled by Tanchoco were funds belonging to the Company, which, although
owned by the government, is a private corporation and as such an entity,
separate and distinct from the latter, engaged in public service, like
any other business enterprise operating a similar undertaking. The funds in
question belonged, therefore, to said private corporation, not to the
government. Again, as company cashier, Tanchoco was not an officer of the
government.

More important still, the lower court held that the loss of said sum of
P10,936.20 “did not arise from the unlawful or improper deposit, use or
application of funds, nor is it a loss attributable to the negligence of
plaintiff” Tanchoco. Indeed, said court found:

“It is not disputed that eighteen treasury warrants in the total amount of
P10,936.20 were paid by plaintiff upon identification by his superior officer,
Mr. Geronimo Gatmaitan, of the signature of the one who cashed them; that
corresponding civil and criminal actions were instituted against the said Mr.
Gatmaitan therefor; that no such action, however, was taken against movant as
can be gleaned from the findings of the Board of Directors of intervenor in its
meeting held on June 25, 1953 (Exhibit A); when he was about to retire, he was
given a; certificate by the Accounting Department of intervenor dated September
9, 1955 that Felipe A. Tanchoco is ‘free from money or proper accountability to
the Manila Railroad Company’ (annex to answer), and certificate of meritorious
service for thirty-nine and one-half years issued by intervenor on February 1,
1956 (Exhibit B).”

In view of these findings of fact, the accuracy of which is not contested,
apart from being conclusive in this appeal, His Honor, the Trial Judge held,
and, we think, correctly:

“Under the facts thus found, Mr. Tanchoco can not be held liable for the
value of the encashed warrants. The mere fact that the amount involved can not
be reimbursed fully by Mr. Gatmaitan does not warrant proceeding against the
money and property of Mr. Tanchoco summarily without any judicial proceeding, as
intervenor seeks. Section 624, in relation to Section 650 of the Revised
Administrative Code does not authorize the withholding contemplated. The
indebtedness has not been satisfactorily and legally established, aside from the
fact that the Manila Railroad Company does not fall within the term ‘Government
of the Philippines’ as used in these two sections, as it is plainly not imbued
with governmental powers and can not even be classified as a public
corporation.”

Wherefore, the decision appealed from is hereby affirmed, without costs. It
is so ordered.

Bengzon, C. J., Padilla, Bautista, Angelo, Labrador, Reyes, J. B. L.,
Barrera, Paredes, Dizon, and De Leon, JJ., concur.