### Facts:
The case revolves around a lease contract entered on October 16, 1981, between Roces-Reyes Realty, Inc. (ROCES) as the lessor, and Good Earth Emporium, Inc. (GEE) as the lessee, involving a five-storey building in Sta. Cruz, Manila, with a monthly rent of P65,000.00. From March 1983, GEE defaulted in rental payments, prompting ROCES to file an ejectment case against GEE and Lim Ka Ping in October 1984. The Metropolitan Trial Court (MTC) of Manila, on April 17, 1984, rendered a judgment against GEE, ordering them to vacate the premises and pay the rental arrears. GEE filed a motion for execution opposed by GEE, who also filed a Notice of Appeal. The trial court approved the motion for execution citing GEE’s failure to post the necessary supersedeas bond.
GEE attempted to appeal this decision, later withdrawing their appeal and satisfied with the MTC’s decision, leading to the issuance of an Alias Writ of Execution. GEE moved to quash the writ, claiming the judgment debt had been fully paid, based on a receipt (Exhibit “1”) and a pacto de retro sale (Exhibit “2”), suggesting a payment of P2 million in total, an overpayment from the judgment obligation. The MTC denied the motion, a decision upheld by the Court of Appeals, reversing the earlier RTC’s decision favoring GEE’s position that the judgment debt was satisfied.
### Issues:
1. Whether the payments evidenced by Exhibit “1” and Exhibit “2” constituted full satisfaction of the judgment obligation.
2. The appropriateness of quashing the Alias Writ of Execution based on these purported payments.
### Court’s Decision:
The Court ruled against GEE, holding that the payments indicated by Exhibits “1” and “2” did not satisfy the judgment debt. The Court pointed out that neither Exhibit “1” nor “2” explicitly mentioned settling the judgment obligation. Moreover, the payment was made to individuals not authorized by ROCES-Reyes Realty, Inc., to receive such payments. The Supreme Court emphasized the distinction between corporate and personal debts and reaffirmed the principle that payments must be made to the obligee or an authorized representative, which was not the case here.
### Doctrine:
The Supreme Court’s decision reinforced several legal principles, including:
– The distinct legal personality of a corporation separates its obligations from those of its officers or stockholders.
– The obligation to prove the extinguishment of a debt through payment lies with the debtor.
– Payments intended to settle a judgment obligation must be clearly designated as such and made to the correct party or its authorized representative.
### Class Notes:
– Corporations have a legal personality separate from their members or officers. Transactions affecting the corporation must be properly documented and made with authorized representatives.
– The debtor bears the burden of proof in demonstrating payment and satisfaction of a judgment debt.
– Legal documentation (e.g., payment receipts) must explicitly state their purpose, especially when intended to settle specific obligations.
### Historical Background:
This case highlights the complexities of fulfilling judgment obligations and the importance of clarity in transactions intended to settle such obligations. It underscores the procedural and substantive considerations involved in executing and quashing writs of execution and showcases the Philippine judiciary’s mechanisms in resolving commercial disputes, particularly those involving lease agreements and contract enforcement.
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