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Good Earth Vs CA

- A lease contract was entered between Roces-Reyes Realty, Inc. and Good Earth Emporium, Inc. for rental of property from 1981-1984. Good Earth defaulted on payments. - Roces-Reyes filed for ejectment and the court ordered Good Earth to vacate. Good Earth claimed payment of 1 million evidenced by a pacto de retro sale to Jesus and Marcos Roces satisfied the judgment debt. - The Court of Appeals found the pacto de retro sale did not constitute payment to Roces-Reyes Realty Inc. because it was made to the Roces brothers individually, not the corporation, and did not reference the judgment obligation.

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167 views1 page

Good Earth Vs CA

- A lease contract was entered between Roces-Reyes Realty, Inc. and Good Earth Emporium, Inc. for rental of property from 1981-1984. Good Earth defaulted on payments. - Roces-Reyes filed for ejectment and the court ordered Good Earth to vacate. Good Earth claimed payment of 1 million evidenced by a pacto de retro sale to Jesus and Marcos Roces satisfied the judgment debt. - The Court of Appeals found the pacto de retro sale did not constitute payment to Roces-Reyes Realty Inc. because it was made to the Roces brothers individually, not the corporation, and did not reference the judgment obligation.

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Jay
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© © All Rights Reserved
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G.R. No.

82797             February 27, 1991

GOOD EARTH EMPORIUM INC., and LIM KA PING,  vs. CA

FACTS:

A Lease Contract, dated October 16, 1981, was entered into by and between ROCES-REYES REALTY, INC.,
as lessor, and GOOD EARTH EMPORIUM, INC. (GEE), as lessee, for a term of three years beginning
November 1, 1981 and ending October 31, 1984 at a monthly rental of P65,000.00.

Good Earth Emporium eventually defaulted in paying its obligations, which prompted Roces-Reyes Realty, Inc.
to file a complaint for ejectment. The court rendered its decision ordering GEE to vacate the premises and
surrender the same to Roces-Realty. A writ of execution was then issued by the court. However, GEE filed a
motion to quash the writ of execution, on the ground that there was already satisfaction of the judgment debt by
paying 1 million evidenced by a pacto de retro sale instrument drawn in favor of Jesus Marcos Roces and
Marcos V. Roces. It was however noted that Jesus Marcos Roces was no longer an officer of the company when
he allegedly received the payment. In fact, he testified that the amount of P1 million is the payment for a loan
extended by him and Marcos Roces in favor of Lim Ka Ping of GEE. So when the case reached the Court of
Appeals, it was held that the pacto de retro sale was NOT payment in favor of the corporation itself. In fact, it
was made in favor of the two Roces brothers in their individual capacities without any reference to the obligation
in favor of Roces-Reyes Realty.

ISSUES: Whether or not there was full satisfaction of the judgment debt in favor of Roces-Reyes Realty, Inc.
through the pacto de retro sale which was drawn in favor of Jesus and Marcos Roces.

RULING:

There is no indication in the pacto de retro sale which was drawn in favor of Jesus Marcos Roces and Marcos V.
Roces and not the respondent corporation, that the obligation embodied therein had something to do with
petitioners' judgment obligation with respondent corporation. Article 1240 of the Civil Code of the Philippines
provides that: 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 the case at bar, the supposed
payments were not made to Roces-Reyes Realty, Inc. or to its successor in interest nor is there positive
evidence that the payment was made to a person authorized to receive it. A corporation has a personality
distinct and separate from its individual stockholders or members. Being an officer or stockholder of a
corporation does not make one's property also of the corporation, and vice-versa, for they are separate
entities.

Shareowners are in no legal sense the owners of corporate property (or credits) which is owned by the
corporation as a distinct legal person. As a consequence of the separate juridical personality of a corporation,
the corporate debt or credit is not the debt or credit of the stockholder, nor is the stockholder's debt or credit that
of the corporation. The fact that at the time payment was made to the two Roces brothers, GEE was also
indebted to respondent corporation for a larger amount, is not supportive of the conclusions that the payment
was in favor of the latter, especially in the case at bar where the amount was not receipted for by respondent
corporation and there is absolutely no indication in the receipt from which it can be reasonably inferred, that said
payment was in satisfaction of the judgment debt. Likewise, no such inference can be made from the execution
of the pacto de retro sale which was not made in favor of respondent corporation but in favor of the two Roces
brothers in their individual capacities without any reference to the judgment obligation in favor of respondent
corporation.

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