Case #5(First Set)

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

COURT OF APPEALS and ROCES-REYES REALTY INC.
G.R. No. 82797, February 27, 1991 ; PARAS, J.:
By: Fiona B. Elumba

DOCTRINE: 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 ones
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.
FACTS: A Lease Contract was entered into by and between ROCES-REYES REALTY, INC.,
(Roces) as lessor, and GOOD EARTH EMPORIUM, INC.,(GEE) as lessee, for a term of three
years at a monthly rental of P65,000.00. The building which was the subject of the contract of
lease is a five-storey building located at the corner of Rizal Avenue and Bustos Street in Sta.
Cruz, Manila. The lessee had defaulted in the payment of rentals, as a consequence of which,
private respondent filed an ejectment case (Unlawful Detainer) against herein petitioners. The
MTC of Manila rendered a decision ordering GEE and all persons under him to vacate the
premises and surrender the same to ROCES and pay the plaintiffs the rental from the time they
defaulted payment up to the time defendants actually vacate the premises.
A writ of execution was issued by the lower court. GEE filed a motion to quash the writ of
execution. The Metropolitan Trial Court after hearing and disposing some other incidents,
denied the motion to quash the writ for lack of merit.
GEE appealed to the RTC Manila. Roces moved to dismiss the appeal but the Court denied the
motion. On certiorari, the Court of Appeals dismissed Roces' petition and remanded the case to
the RTC. The Regional Trial Court of Manila, finding that the amount of P1 million and another
P1 million evidenced by the pacto de retro sale instrument were in full satisfaction of the
judgment obligation, reversed the decision of the Municipal Trial Court, reversing the Resolution
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 and/or Liquidated.
On further appeal, the Court of Appeals reversed the decision of the Regional Trial Court and
reinstated the Resolution of the Metropolitan Trial Court of Manila. GEE's Motion for
Reconsideration was denied, hence this petition.
ISSUE: Whether or not there was full satisfaction of the judgment debt in favor of respondent
corporation.

RULING: There is no indication in the receipt, 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 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 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. No such proof was submitted but merely inferred by the
Regional Trial Court from Marcos Roces having signed the Lease Contract as President which
was witnessed by Jesus Marcos Roces. On the other hand, Jesus Marcos Roces testified that
the amount of P1 million evidenced by the receipt is the payment for a loan extended by him
and Marcos Roces in favor of Lim Ka Ping. The assertion is home by the receipt itself whereby
they acknowledged payment of the loan in their names and in no other capacity. A corporation
has a personality distinct and separate from its individual stockholders or members. 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 stockholders 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 Regional Trial Court's
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.

Case # 33 (First Set)

PHILIPPINE NATIONAL BANK vs. THE COURT OF APPEALS, RITA GUECO TAPNIO,
CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
INC.,
G.R. No. L-27155 ; May 18, 1978 ;Antonio, J.
By: Fiona B. Elumba

DOCTRINE: A corporation is liable for tort whenever a tortuous act is committed by an officer or
agent under the express direction or authority of the stockholders or members acting as a body,
or, generally, from the directors as the governing body.

FACTS: Rita Tapnio owes PNB an amount of P2,000.00. The amount is secured by her sugar
crops about to be harvested including her export quota allocation worth 1,000 piculs. The said
export quota was later dealt by Tapnio to a certain Jacobo Tuazon at P2.50 per picul or a total of
P2,500. Since the subject of the deal is mortgaged with PNB, the latter has to approve it. The
branch manager of PNB recommended that the price should be at P2.80 per picul which was
the prevailing minimum amount allowable. Tapnio and Tuazon agreed to the said amount. And
so the bank manager recommended the agreement to the vice president of PNB. The vice
president in turn recommended it to the board of directors of PNB.

However, the Board of Directors wanted to raise the price to P3.00 per picul which Tuazon does
not want, hence, he backed out from the agreement. This resulted to Tapnio not being able to
realize profit and at the same time rendered her unable to pay her P2,000.00 crop loan which
would have been covered by her agreement with Tuazon.

Tapnio was sued by her other creditors and Tapnio filed a third party complaint against PNB
where she alleged that her failure to pay her debts was because of PNBs negligence and
unreasonableness.

The CFI Manila held that failure of the negotiation for the lease of the sugar quota allocation of
Rita Gueco Tapnio to Tuazon was due to the fault of the directors of the Philippine National
Bank, The refusal on the part of the bank to approve the lease at the rate of P2.80 per picul
which would have enabled Rita Gueco Tapnio to realize the amount of P2,800.00 which was
more than sufficient to pay off her indebtedness to the Bank, and its insistence on the rental
price of P3.00 per picul thus unnecessarily increasing the value by only a difference of P200.00.
inevitably brought about the rescission of the lease contract to the damage and prejudice of Rita
Gueco Tapnio in the aforesaid sum of P2,800.00.

The Court of appeals affirmed the decision of the CFI of Manila. And denied the motion for
reconsideration filed by the petitioner, hence this petition.

ISSUE: Whether or not PNB should be liable for tort.

RULING: Yes. In this type of transaction, time is of the essence considering that Tapnios sugar
quota for said year needs to be utilized ASAP otherwise her allotment may be assigned to
someone else, and if she cant use it, she wont be able to export her crops. It is unreasonable
for PNBs board of directors to disallow the agreement between Tapnio and Tuazon because of
the mere difference of 0.20 in the agreed price rate. What makes it more unreasonable is the
fact that the P2.80 was recommended both by the bank manager and PNBs VP yet it was
disapproved by the board. Further, the P2.80 per picul rate is the minimum allowable rate
pursuant to prevailing market trends that time.

A corporation is civilly liable in the same manner as natural persons for torts, because generally
speaking, the rules governing the liability of a principal or master for a tort committed by an
agent or servant are the same whether the principal or master be a natural person or a
corporation, and whether the servant or agent be a natural or artificial person. All of the
authorities agree that a principal or master is liable for every tort which it expressly directs or
authorizes, and this is just as true of a corporation as of a natural person.

While petitioner had the ultimate authority of approving or disapproving the proposed lease
since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility
of observing, for the protection of the interest of private respondents. The law makes it
imperative that every person "must in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith. Certainly, it
knew that the agricultural year was about to expire, that by its disapproval of the lease private
respondents would be unable to utilize the sugar quota in question.