Mariano Alber v University Publishing Co., Inc.
Bengzon, J.P. J. | 1965
Facts:
“No less than three times have the parties here appealed
to this Court.”
In 1949, Albert sued University Publishing Co.
(UPC). He alleged that UPC was organized and existing
under PH laws and that thru its president Jose Aruego
(Aruego), they entered into a contract where UPC would
pay him 30 thousand pesos for the exclusive right to
publish his revised Commentaries on the RPC and for his
share in previous sales of the book’s 1st edition; that UPC
undertook to pay in 8 instalments of 3.5k and failure to
pay one instalment would render the rest due
Albert said UPC failed to pay the 2nd instalment
but the latter countered that it was the former who
violated their contract by his failure to deliver the
manuscript.
Later, Albert died and Justo Albert (his
administrator) substituted him. The CFI then favoured
Justo and ordered UPC to pay him 23 thousand. The cases
went to SC which reduced it to 15 thousand pesos.
The CFI then ordered for the execution against
UPC but at some point, Justo petitioned for a writ of
execution against Aruego (its president) because he and
the sheriff discovered that UPC wasn’t registered in the
SEC. UPC countered by saying that Aruego was not a
party to the case so the petition should be denied.
SC notes that UPC doesn’t want Aruego to be a
party to the case because if he’s not a party, a separate
action will have to be filed by Justo which will result in him
dealing with the statute of limitations.
The CFI denied the petition so Justo appealed.
W/N Aruego considered a party in the case. Yes.
Ratio:
Non-registration of UPC:
Undisputed;
on account of the non-registration it cannot be
considered a corporation, not even a corporation de
facto;
UPC then has no personality separate from Aruego, thus
cannot be sued independently;
Corporation-by-estoppel not invoked by UPC:
Even if invoked, it’s not applicable;
Aruego represented a non-existent entity and
induced not only Justo but also the court to
believe such representation; (he signed the
contract as president and stated the UPC was
registered);
One who has induced another to act upon his wilful
misrepresentation that a corporation was duly organized
and existing under the law, cannot thereafter set up
against his victim the principle of corporation by estoppel
(Salvatiera vs. Garlitos, 56 O.G. 3069);
Aruego is the real defendant:
-
-
UPC who came to the court, but as said, it does
not have independent personaility; it is just a
name;
In reality, it was Aruego, in reality, the one who
answered and litigated, through his own law firm as
counsel;
On Agency:
A person acting or purporting to act on behalf of a
corporation which has no valid existence assumes such
privileges and obligations and becomes personally
liable for contracts entered into or for other acts
performed as such agent;
On due process question (since Aruego wasn’t named
in the case):
Aruego was given his day in court;
Parties to a suit are "persons who have a right to control
the proceedings, to make defense, to adduce and crossexamine witnesses, and to appeal from a decision; in
reality, it was Aruego who exercised these rights;
By due process of law we mean a law which hears
before it condemns; which proceeds upon inquiry, and
renders judgment only after trial;
Summary: The evidence is patently clear that Jose M.
Aruego, acting as representative of a non-existent principal,
was the real party to the contract sued upon; that he was the
one who reaped the benefits resulting from it, so much so that
partial payments of the consideration were made by him; that
he violated its terms, thereby precipitating the suit in question;
and that in the litigation he was the real defendant.
CASE REMANDED: Lower court to hold supplementary
proceedings for the purpose of carrying the judgment into
effect against University Publishing Co., Inc. and/or Jose M.
Aruego (because others might be liable to him for
reimbursement or contribution).