Good Earth Emporium Inc. v.

CA
GR 82797 February 27, 1991 Paras J.

Petitioners:
 Good Earth Emporium Inc. (Good Earth) - Lessee
 Lim Ka Ping
o Petition for review on Certiorari of the decision of CA

Respondents
 Honorable Court of Appeals - reversing decision of RTC which reversed the resolution of MTC in denying etitioners’
motion to quash.
 Roces-Reyes Realty (RRR) - Lessor

Facts:
 October 16, 1981 – Lease Contract was enteres between RRR (Lessor) and Good Earth (Lessee)
o 3 years term from Nov. 1, 1981 until Oct. 31, 1984
o Monthly rental of PHP 65, 000.00
o Building which was subject is a five-storey building allocated at the corner of Rizal Avenue and Bustos street
in Sta. Cruz, Manila
 From March 1983 until the complaint is filed – lessee had defaulted rent payments

MTC of Manila Br 28 CC-09639

 October 14, 1984 – RRR filed an ejectment case (Unlawful detainer) against Good eart and Lim Ka Ping
 April 17, 1984 – MTC ordered Good Earth and Lim Ka Ping and all persons claiming title under him to vacate the
premises and surrender the same to the RRR and pay rentals and Atty fees and cost od suit.
 May 16, 1984 – RRR filed a motion for execution which was opposed by Good Earth and the latter failed to file a
supersedes bond
 June 14, 1984 – a writ of execution was issued

RTC Br. 44
 August 15, 1984 – Good Earth filed a motion to withdraw appeal for the reason that they are satisfied with MTC’s
decision
 August 27, 1984 – RTC granted the motion and remanded to MTC
 February 25, 1985 – Trial court issued an Alias writ of execution
 March 7, 1985 – Good earth filed a motion to quash the writ of execution and notice of levy
 March 20, 1985 - Good Earth filed an urgent ex-parte supplemental motion for the issuance of a restraining order
 March 21, 1985 – Lower court issued a restraining order to hold the execution
 Petition for relief was filed by Good Earth and was dismissed by the RTC br. 6 and the latter set aside the injunctive
writ issued

CA (CA- G.R. 15873-CV)

 Good earth appealed on the order of dismissal
 RRR appealed on denial of his motion for indemnity

Orders of the Lower courts

 April 8, 1985 – MTC denied the motion for quash for lack of merit and recalled, lifted and set aside the restraining
orders issued on March 11 and 23, 1985
o RTC Br.9 denied RRR’s motion to dismiss the appeal
o CA dismissed RRR’s petition on certiorari and remanded the case to the RTC
o The case was re-raffled to Br. 44
 April 6, 1987 – RTC of Manila reversed the decision of MTC appealed from quashing the writ of execution and
ordering the cancellation of the notice of levy and declaring the judgment debt as having been fully paid
o Finding that the amount of PHP 1 million and another PHP 1 Million evidenced by the pacto de retro sale
instrument were in full satisfaction of the judgment obligation
 CA reversed the decision of RTC and reinstated MTC’s resolution
o MR was denied
SC Facts
 Exhibit 1/A had been signed by other persons (Jesus Marcos Reyes) other than Judgment creditors RRR coupled with
the fact that said exhibit was not even alleged by petitioner in their original motion to quash the alias writ of execution
but produced only during the hearing which production resulted in petitioners having to claim belatedly hat there was
an overpayment of PHP 500,000 and remarking on the utter absence of any writing in Exhibits 1/A and 2/B to indicate
payment
 Petitioners’ Expalanation – that the excess is interest and advance rentals for an extension of the lease contract is
belied by the absence of any interest awarded in the case and of any agreement as to the extension of the ease nor was
there any such pretense in the motion to quash the alias writ of execution.

Issue: Whether or not there was full satisfaction of the judgment debt in favor of the RRR which would justify the quashing of
the writ of Execution. (no)

Held: NO
 Nowhere in the Exhibit 1 (Received the money) and Exhibit 2 (signed the sale with pacto de retro) was there any
writing alluding to or referring to any settlement between the parties of Good earth’s obligation
o There is no indication in the receipt that it was a payment
o 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 RRR
o The obligation embodied therein had something to do with Good Earth’s judgment obligation with RRR
 Art. 1240, CC- 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 received it.
 In the case at bar – the supposed payments were not made to RRR or its successor in interest nor is there positive
evidence that the payment was made to a person authorized to received it
o No proof was submitted bit merely inferred by RTC from Marcos Roces having signed the Lease Contract as
President which was witnessed by Jesus Marcos Roces.
o Jesus Marcos Roces was no longer President or even an officer of RRR at the time he received the money
(Exhibit 1) and signed the sale with pacto de retro (Exh 2)
 He denied being in possession of authority to receive payment for the RRR nor does the receipt
show that he signed in the same capacity as he did in the lease contract when he was president.
 He testified that the amount of PHP 1 Million (Exh 1) is the payment for a loan extended by him
and Marcos Roces in favor of Lim Ka Ping
 The receipt was an acknowledgement of payment of a loan in their names and in no other capacity
 Traders Royal Bank v. CA and Cruz v. Dalisay - Corporation has a personality distinct and separate from its
individual stockholders or members.
o 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
 Conception Magsaysay-Labrador v. CA – Shareowners are in no legal sense the owners of corporate property (or
credits) which is owned by the corporation as a distinct legal person
 Nolledo’s Book – 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
 Sec. 5 (f), Rule 131, ROC - There is a disputable presumption that the money paid by one to the other was due to the
latter
 Chua Chienco v. Vargas – It has been an established rule that when the existence of a debt is fully established by the
evidence (which has been done in this case), burden of proving that it has been extinguished by payment devolves upon
the debtor who offers such a defense to the claim of the plaintiff creditor