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Cases on Corporation

Cases on Corporation

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Published by: Jen Park on Jul 04, 2012
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Republic of the PhilippinesSUPREME COURTManilaSECOND DIVISIONG.R. No. 82797 February 27, 1991GOOD EARTH EMPORIUM INC., and LIM KAPING,
A.E. Dacanay for petitioners.Antonio Quintos Law Office for private respondent.
 This is a petition for review on
of the December29, 1987 decision * of the Court of Appeals in CA-G.R. No.11960 entitled "ROCES-REYES REALTY, INC. vs.HONORABLE JUDGE REGIONAL TRIAL COURT OFMANILA, BRANCH 44, GOOD EARTH EMPORIUM, INC.and LIM KA PING" reversing the decision of respondentJudge ** of the Regional Trial Court of Manila, Branch 44 inCivil Case No. 85-30484, which reversed the resolution ofthe Metropolitan Trial Court Of Manila, Branch 28 in CivilCase No. 09639, ***
denying herein petitioners' motion toquash the
writ of execution issued against them.As gathered from the records, the antecedent facts of thiscase, are as follows:A Lease Contract, dated October 16, 1981, was enteredinto by and between ROCES-REYES REALTY, INC., aslessor, and GOOD EARTH EMPORIUM, INC., as lessee,for a term of three years beginning November 1, 1981 andending October 31, 1984 at a monthly rental of P65,000.00(
, p. 32; Annex "C" of Petition). The building whichwas the subject of the contract of lease is a five-storeybuilding located at the corner of Rizal Avenue and BustosStreet in Sta. Cruz, Manila.From March 1983, up to the time the complaint was filed,the lessee had defaulted in the payment of rentals, as aconsequence of which, private respondent ROCES-REYESREALTY, INC., (hereinafter designated as ROCES forbrevity) filed on October 14, 1984, an ejectment case(Unlawful Detainer) against herein petitioners, GOODEARTH EMPORIUM, INC. and LIM KA PING, hereinafterdesignated as GEE, (
, p. 21; Annex "B" of thePetition). After the latter had tendered their responsivepleading, the lower court (MTC, Manila) on motion ofRoces rendered judgment on the pleadings dated April 17,1984, the dispositive portion of which states:Judgment is hereby rendered ordering defendants (hereinpetitioners) and all persons claiming title under him tovacate the premises and surrender the same to theplaintiffs (herein respondents); ordering the defendants topay the plaintiffs the rental of P65,000.00 a monthbeginning March 1983 up to the time defendants actuallyvacate the premises and deliver possession to the plaintiff;to pay attorney's fees in the amount of P5,000.00 and topay the costs of this suit. (
, p. 111; Memorandum ofRespondents)On May 16, 1984, Roces filed a motion for execution whichwas opposed by GEE on May 28, 1984 simultaneous withthe latter's filing of a Notice of Appeal (
, p. 112,
.).On June 13, 1984, the trial court resolved such motionruling:After considering the motion for the issuance of a writ ofexecution filed by counsel for the plaintiff (hereinrespondents) and the opposition filed in relation thereto andfinding that the defendant failed to file the necessarysupersedeas bond, this court resolved to grant the samefor being meritorious. (
, p. 112)On June 14, 1984, a writ of execution was issued by thelower court. Meanwhile, the appeal was assigned to theRegional Trial Court (Manila) Branch XLVI. However, onAugust 15, 1984, GEE thru counsel filed with the RegionalTrial Court of Manila, a motion to withdraw appeal
asreason that they are satisfied with the decision of theMetropolitan Trial Court of Manila, Branch XXVIII, whichsaid court granted in its Order of August 27, 1984 and therecords were remanded to the trial court (
, p. 32; CADecision). Upon an
Motion of ROCES, the trialcourt issued an
Writ of Execution dated February 25,1985 (
, p. 104; Annex "D" of Petitioner'sMemorandum), which was implemented on February 27,1985. GEE thru counsel filed a motion to quash the writ ofexecution and notice of levy and an urgent
Ex- parte 
Supplemental Motion for the issuance of a restrainingorder, on March 7, and 20, 1985, respectively. On March21, 1985, the lower court issued a restraining order to thesheriff to hold the execution of the judgment pendinghearing on the motion to quash the writ of execution (
,p. 22; RTC Decision). While said motion was pendingresolution, GEE filed a Petition for Relief from judgmentbefore another court, Regional Trial Court of Manila,Branch IX, which petition was docketed as Civil Case No.80-30019, but the petition was dismissed and the injunctivewrit issued in connection therewith set aside. Both partiesappealed to the Court of Appeals; GEE on the order ofdismissal and Roces on denial of his motion for indemnity,both docketed as CA-G.R. No. 15873-CV. Going back tothe original case, the Metropolitan Trial Court after hearingand disposing some other incidents, promulgated thequestioned Resolution, dated April 8, 1985, the dispositiveportion of which reads as follows:Premises considered, the motion to quash the writ ishereby denied for lack of merit.The restraining orders issued on March 11 and 23, 1985are hereby recalled, lifted and set aside. (
, p. 20, MTCDecision)GEE appealed and by coincidence. was raffled to the sameCourt, RTC Branch IX. Roces moved to dismiss the appealbut the Court denied the motion. On
, the Court ofAppeals dismissed Roces' petition and remanded the caseto the RTC. Meantime, Branch IX became vacant and thecase was re-raffled to Branch XLIV.On April 6, 1987, the Regional Trial Court of Manila, findingthat the amount of P1 million evidenced by Exhibit "I" andanother P1 million evidenced by the
pacto de retro 
saleinstrument (Exhibit "2") were in full satisfaction of the judgment obligation, reversed the decision of the MunicipalTrial Court, the dispositive portion of which reads:Premises considered, judgment is hereby renderedreversing the Resolution appealed from quashing the writof execution and ordering the cancellation of the notice oflevy and declaring the judgment debt as having been fullypaid and/or Liquidated. (
, p. 29).On further appeal, the Court of Appeals reversed thedecision of the Regional Trial Court and reinstated theResolution of the Metropolitan Trial Court of Manila, thedispositive portion of which is as follows:WHEREFORE, the judgment appealed from is herebyREVERSED and the Resolution dated April 8, 1985, of theMetropolitan Trial Court of Manila Branch XXXIII is herebyREINSTATED. No pronouncement as to costs. (
, p.40).GEE's Motion for Reconsideration of April 5, 1988 wasdenied (
, p. 43). Hence, this petition.The main issue in this case is whether or not there was fullsatisfaction of the judgment debt in favor of respondentcorporation which would justify the quashing of the Writ ofExecution.A careful study of the common exhibits (Exhibits 1/A and2/B) shows that nowhere in any of said exhibits was thereany writing alluding to or referring to any settlementbetween the parties of petitioners' judgment obligation(
, pp. 45-48).Moreover, there is no indication in the receipt, Exhibit "1",that it was in payment, full or partial, of the judgment
obligation. Likewise, there is no indication in the
pacto de retro 
sale which was drawn in favor of Jesus Marcos Rocesand Marcos V. Roces and not the respondent corporation,that the obligation embodied therein had something to dowith petitioners' judgment obligation with respondentcorporation.Finding that the common exhibit, Exhibit 1/A had beensigned by persons other than judgment creditors (Roces-Reyes Realty, Inc.) coupled with the fact that said exhibitwas not even alleged by GEE and Lim Ka Ping in theiroriginal motion to quash the
writ of execution (
,p. 37) but produced only during the hearing (
.) whichproduction resulted in petitioners having toclaim
that there was an "overpayment" of abouthalf a million pesos (
, pp. 25-27) and remarking on theutter absence of any writing in Exhibits "1/A" and "2/B" toindicate payment of the judgment debt, respondentAppellate Court correctly concluded that there was infact
payment of the judgment debt. As aptly observed bythe said court:What immediately catches one's attention is the totalabsence of any writing alluding to or referring to anysettlement between the parties of private respondents'(petitioners') judgment obligation. In moving for thedismissal of the appeal Lim Ka Ping who was then assistedby counsel simply stated that defendants (hereinpetitioners) are satisfied with the decision of theMetropolitan Trial Court (Records of CA, p. 54).Notably, in private respondents' (petitioners') Motion toQuash the Writ of Execution and Notice of Levydated
March 7, 1985,
there is absolutely no reference tothe alleged payment of one million pesos as evidenced byExhibit 1 dated
September 20, 1984 
. As pointed out bypetitioner (respondent corporation) this was brought out byLinda Panutat, Manager of Good Earth only in the courseof the latter's testimony. (
, p. 37)Article 1240 of the Civil Code of the Philippines providesthat:Payment shall be made to the person in whose favor theobligation has been constituted, or his successor ininterest, or any person authorized to receive it.In the case at bar, the supposed payments were not madeto Roces-Reyes Realty, Inc. or to its successor in interestnor is there positive evidence that the payment was madeto a person authorized to receive it. No such proof wassubmitted but merely inferred by the Regional Trial Court(
, p. 25) from Marcos Roces having signed the LeaseContract as President which was witnessed by JesusMarcos Roces. The latter, however, was no longerPresident or even an officer of Roces-Reyes Realty, Inc. atthe time he received the money (Exhibit "1") and signed thesale with
pacto de retro 
(Exhibit "2"). He, in fact, deniedbeing in possession of authority to receive payment for therespondent corporation nor does the receipt show that hesigned in the same capacity as he did in the LeaseContract at a time when he was President for respondentcorporation (
, p. 20, MTC decision).On the other hand, Jesus Marcos Roces testified that theamount of P1 million evidenced by the receipt (Exhibit "1")is the payment for a loan extended by him and MarcosRoces in favor of Lim Ka Ping. The assertion is home bythe receipt itself whereby they acknowledged payment ofthe loan in their names and in no other capacity.A corporation has a personality distinct and separate fromits individual stockholders or members. Being an officer orstockholder of a corporation does not make one's propertyalso of the corporation, and vice-versa, for they areseparate entities (Traders Royal Bank v. CA-G.R. No.78412, September 26, 1989; Cruz v. Dalisay, 152 SCRA482). Shareowners are in no legal sense the owners ofcorporate property (or credits) which is owned by thecorporation as a distinct legal person (ConcepcionMagsaysay-Labrador v. CA-G.R. No. 58168, December 19,1989). As a consequence of the separate juridicalpersonality of a corporation, the corporate debt or credit isnot the debt or credit of the stockholder, nor is thestockholder's debt or credit that of the corporation (Prof.Jose Nolledo's "The Corporation Code of the Philippines, p.5, 1988 Edition,
Professor Ballantine).The absence of a note to evidence the loan is explained byJesus Marcos Roces who testified that the IOU wassubsequently delivered to private respondents (
, pp.97-98). Contrary to the Regional Trial Court's premise thatit was incumbent upon respondent corporation to prove thatthe amount was delivered to the Roces brothers in thepayment of the loan in the latter's favor, the delivery of theamount to and the receipt thereof by the Roces brothers intheir names raises the presumption that the said amountwas due to them. There is a disputable presumption thatmoney paid by one to the other was due to the latter (Sec.5(f) Rule 131, Rules of Court). It is for GEE and Lim KaPing to prove otherwise. In other words, it is for the latter toprove that the payments made were for the satisfaction oftheir judgment debt and not vice versa.The fact that at the time payment was made to the twoRoces brothers, GEE was also indebted to respondentcorporation for a larger amount, is not supportive of theRegional Trial Court's conclusions that the payment was infavor of the latter, especially in the case at bar where theamount was not receipted for by respondent corporationand there is absolutely no indication in the receipt fromwhich it can be reasonably inferred, that said payment wasin satisfaction of the judgment debt. Likewise, no suchinference can be made from the execution of the
pacto de retro 
sale which was not made in favor of respondentcorporation but in favor of the two Roces brothers in theirindividual capacities without any reference to the judgmentobligation in favor of respondent corporation.In addition, the totality of the amount covered by the receipt(Exhibit "1/A") and that of the sale with
pacto de retro 
(Exhibit "2/B") all in the sum of P2 million, far exceedspetitioners' judgment obligation in favor of respondentcorporation in the sum of P1,560,000.00 by P440,000.00,which militates against the claim of petitioner that theaforesaid amount (P2M) was in full payment of the judgment obligation.Petitioners' explanation that the excess is interest andadvance rentals for an extension of the lease contract(
, pp. 25-28) is belied by the absence of any interestawarded in the case and of any agreement as to theextension of the lease nor was there any such pretense inthe Motion to Quash the
Writ of Execution.Petitioners' averments that the respondent court hadgravely abused its discretion in arriving at the assailedfactual findings as contrary to the evidence and applicabledecisions of this Honorable Court are therefore, patentlyunfounded. Respondent court was correct in stating that it"cannot go beyond what appears in the documentssubmitted by petitioners themselves (Exhibits "1" and "2")in the absence of clear and convincing evidence" thatwould support its claim that the judgment obligation hasindeed been fully satisfied which would warrant the quashalof the
Writ of Execution.It has been an established rule that when the existence of adebt is fully established by the evidence (which has beendone in this case), the burden of proving that it has beenextinguished by payment devolves upon the debtor whooffers such a defense to the claim of the plaintiff creditor(herein respondent corporation) (Chua Chienco v. Vargas,11 Phil. 219; Ramos v. Ledesma, 12 Phil. 656; Pinon v. DeOsorio, 30 Phil. 365). For indeed, it is well-entrenched inOur jurisprudence that each party in a case must prove hisown affirmative allegations by the degree of evidencerequired by law (Stronghold Insurance Co. v. CA, G.R. No.83376, May 29,1989; Tai Tong Chuache & Co. v.Insurance Commission, 158 SCRA 366).
The appellate court cannot, therefore, be said to havegravely abused its discretion in finding lack of convincingand reliable evidence to establish payment of the judgmentobligation as claimed by petitioner. The burden of evidenceresting on the petitioners to establish the facts upon whichtheir action is premised has not been satisfactorilydischarged and therefore, they have to bear theconsequences.PREMISES CONSIDERED, the petition is hereby DENIEDand the Decision of the Respondent court is herebyAFFIRMED, reinstating the April 8, 1985 Resolution of theMetropolitan Trial Court of Manila.SO ORDERED.[G.R. No. 140923. September 16, 2005]MANUEL M. MENDOZA and EDGARDO A.YOTOKO,
.:Before us is a petition for review on
,assailingthe Decision
 of the Court of Appeals dated September 21,1998 in CA-
G.R. No. 41544, entitled ―
‖ and Resolution dated December 3, 1999.
 The petition alleges
inter alia 
that on August 7, 1985, theBoard of Directors of Technical Video, Inc. (TVI) passed aResolution authorizing its President, Eduardo A. Yotoko,petitioner, or its General Manager-Secretary-Treasurer,Manuel M. Mendoza, also a petitioner, to apply for andsecure a loan from the Pasay City Banco RealDevelopment Bank (now LBC Development Bank), hereinrespondent.On September 11, 1985, respondent bank extended a loanof P500,000.00 to TVI. In his capacity as GeneralManager, petitioner Mendoza executed a promissory noteand chattel mortgage over 195 units of Beta videomachines and their equipment and accessories belongingto TVI in favor of respondent bank.On October 3, 1986, TVI and two other video firms, FoxVideo and Galactica Video, organized a new corporationnamed FGT Video Network Inc. (FGT). It was registeredwith the Securities and Exchange Commission.
 PetitionerMendoza was the concurrent President of FGT andOperating General Manager of TVI. Thus, the office of TVIhad to be transferred to the building of FGT for easiermonitoring of the distribution and marketing aspects of thebusiness.
For TVI’s failure to pay its loan upon maturity, respondent
bank, on January 26, 1987, filed with the Office of the Clerkof Court of the Regional Trial Court (RTC), Pasay City, apetition for Extra Judicial Foreclosure and Sale of ChattelMortgage.
However, the Sheriff’s Report/Return
 dated January 27,1987 shows that TVI is no longer doing business at itsgiven address; that its General Manager, Mr. Manuel M.Mendoza, is presently employed at FGT Video Networkwith offices at the Philcemcor Bldg., No. 4 Edsa cor.Connecticut St., Greenhills, San Juan, Metro Manila; thatwhen asked about the whereabouts of the video machines,in the presence of the representative of respondent bankand its counsel, Mr. Mendoza denied any knowledge oftheir whereabouts; and that
action on respondent’s petition
is indefinitely postponed until further notice from the bank.Respondent then wrote TVI demanding the surrender ofthe video machines. In his letter dated February 19, 1987,petitioner Mendoza requested the bank to give him
―additional time to enable us to pay our total obligations‖
and proposed a repayment scheme to start not later thanMarch 10, 1987.
 Still, no payment was received by thebank. TVI simply refused and ignored the demand andkept silent as to the whereabouts of the video machines.
Meanwhile, in a case entitled ―
Republic of the Philippines,plaintiff vs. FGT Video Network Inc., Manuel Mendoza,Alfredo C. Ongyangco, Eric Apolonio, Susan Yang ang Eduardo A. Yotoko, defendants 
,‖ the RTC, Branch 167,
Pasig City issued a search warrant. The agents of theNational Bureau of Investigation (NBI) confiscated at theoffices of FGT 638 machines and equipment including the195 Beta machines mortgaged with respondent bank.On May 29, 1987, upon motion of FGT and hereinpetitioners, the same court issued another Order directingthe NBI to release and return the said machines to them.However, Columbia Pictures Inc., Orion Pictures Corp.,Paramount Pictures Corp., Universal City Studios Inc., TheWalt Disney Company and Warner Bros. filed with thisCourt a petition for
 assailing the Order of thelower court.On June 18, 1987, this Court issued a temporaryrestraining order enjoining the RTC from enforcing itsassailed order. The machines and equipment were left inthe custody of the NBI until the petition for
shallhave been resolved with finality.On July 13, 1990, respondent bank filed with the RTC,Branch 110, Pasig City,
 a complaint for collection of asum of money
 against TVI, FGT and petitioners. Onlypetitioners filed their joint answer to the complaint.In their joint answer, petitioners specifically denied theallegations in the complaint, raising the defense that theloan is purely a corporate indebtedness of TVI.On April 29, 1991, the trial court rendered a Decision,holding that:
―As by these considerat
ions, the Court finds that TVI wasthe mere alter ego or business conduit of Yotoko andMendoza, and additionally considering 1) that Mendozadisclaimed knowledge of the whereabouts of the TVI
mortgaged property at the time plaintiff’s petition for 
extrajudicial foreclosure was being effected, and 2) thatMendoza and Yotoko transferred the mortgaged property to
FGT without first securing plaintiff’s consent despite their 
awareness that under the chattel mortgage, such consentwas necessary, the doctrine of corporate entity must be
pierced and the two must be held personally liable for TVI’s
obligation to plaintiff for said doctrine cannot be used todefeat public convenience, justify wrong, protect fraud or
avoid a legal obligation.‖
 The dispositive portion
of the trial court’s Decision reads:
―WHEREFORE, judgment is hereby rendered in favor of 
plaintiff and against defendants TECHNICA VIDEO, INC.,Mendoza and Yotoko, ordering them,1) to pay plaintiff the sum of P500,000.00 plus interests,charges and penalties as agreed upon in the promissorynote of September 11, 1985, until the same is fully paid;2) to pay plaintiff the sum equivalent to ten (10%) of the
total unpaid obligation as and for attorney’s fees, and
 3) to pay the costs.
 Upon appeal by herein petitioners, the Court of Appealsrendered its Decision dated September 21, 1998,affirming
in toto 
the Decision of the trial court.
motion for reconsideration was denied in its Resolutiondated December 3, 1999.Hence, the instant petition.The basic issue for our resolution is whether herein
petitioners are personally liable for TVI’s indebtedness
of P500,000.00 with respondent bank.Both the trial court and the Appellate Court found that thepetitioners transferred the Beta video machines from TVI toFGT without the consent of respondent bank. Also, uponinquiry of the sheriff, petitioner Mendoza declinedknowledge of the whereabouts of the mortgaged videomachines. Moreover, the fact that the NBI seized the videomachines from FGT glaringly shows that petitionerstransferred the same from TVI. More importantly, acomparison of the list of video machines in the ChattelMortgage Contract and the list of video machines seized by

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