Good Earth Emporium vs CA (194 SCRA 544)

Good Earth Emporium Inc. vs Court of Appeals
194 SCRA 544 [GR No. 82797 February 27, 1991]

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 Php65,000. The building which was the subject of the contract of lease is a five story building located at the corner of Rizal Avenue and Bustos Street in Sta. Cruz, Manila. From March 1983 up to the complaint was filed, the lessee had defaulted in the payment of rentals, as a consequence of which, private respondent Roces-Reyes Realty Inc. filed on October 14, 1984 an ejectment case against herein petitioners, Good Earth Emporium Inc. and Lim Ka Ring. After the latter had tendered their responsive pleading, the lower court on motion of Roces rendered judgement on the pleadings dated April 17, 1984 to which petitioners were ordered to vacate the premises and surrender the same to the plaintiffs. On May 16, 1984, Roces filed a motion for execution which was opposed by petitioners on May 28, 1984 simultaneous with the latter’s filing of a notice of appeal. However, on August 15, 1984, GEE thru counsel filed a motion to withdraw said appeal citing as reason that they are satisfied with the decision of the lower court.

Issue: Whether or not the payment made by GEE to the Roces brothers constitute payment to private respondent corporation which would result to the extinguishment of the obligation.

Held: No. Under article 1240 of the civil code of the Philippines – Payment shall be made to the person in whose favor the obligation has been constituted, on 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 successors in interest nor is there positive evidence that payment was made to a person authorized to receive it. No such proof was submitted but merely inferred by the RTC from Marcos Roces having signed the lease contract as President which was witnessed by Jesus Marcos Roces. The later, however, was no longer President or even an officer of the Roces-Realty Inc at the time he received the money and signed the sale with pacto de retro. He, in fact denied being in possession of authority to receive payment for the respondent corporation nor does the receipt show that he signed in the same capacity as he did in the lease contract at a time when he was President for respondent corporation.

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. Share owners are in no legal sense the owners corporate property 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.


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