MARIANO A. ALBERT, plaintiff-appellant, vs. UNIVERSITY PUBLISHING CO., INC., defendant-appellee G.R. No. L-19118 January 30, 1965

 

G.R. No. L-19118 January 30, 1965 MARIANO A. ALBERT, plaintiff-appellant, vs. UNIVERSITY PUBLISHING CO., INC., defendant-appellee.

Uy & Artiaga and Antonio M. Molina for plaintiff-appellant.

Aruego, Mamaril & Associates for defendant-appellees.

(BENGZON, J.P., J.)

Facts:

No less than three times have the parties here appealed to this Court.

In Albert vs. University Publishing Co., Inc., L-9300, April 18, 1958, we found plaintiff entitled to damages (for breach of contract) but reduced the amount from P23,000.00 to P15,000.00.

Then in Albert vs. University Publishing Co., Inc., L-15275, October 24, 1960, we held that the judgment for P15,000.00 which had become final and executory, should be executed to its full amount, since in fixing it, payment already made had been considered.

Now we are asked whether the judgment may be executed against Jose M. Aruego, supposed President of University Publishing Co., Inc., as the real defendant.

The University Publishing Co. Inc. through its President Jose Aruego entered into a contract with Mariano Albert whereby the corporation agreed to pay a certain sum in installments for the exclusive right to publish his revised commentaries in the RPC and for his share in the previous sale of the book’s first edit edition. The corporation failed to pay the second installment thereby making the whole amount due and demandable (i.e. there was an acceleration clause). Albert then sued the corporation.

The lower court rendered judgment in favor of Albert and a writ of execution was issued against the corporation. Albert however, petitioned for a writ of execution against Aruego, as the real defendant, stating that there is no such entity as University Publishing Co. Inc. Albert annexed to his petition a certification from the SEC saying that their records contain no such registered corporation. The corporation countered by saying that Aruego is not a party to this case and that, therefore, Albert’s petition should be denied.

The corporation countered by saying that Aruego is not a party to this case, and that therefore, Albert’s petition should be denied. The corporation, actually did not want Aruego to be declared a party to the present case is because there would be no need to institute a separate action against Aruego to be declared a party to the present case is because there would then be a need to institute a separate action against Aruego; and if this is done, Aruego can set up the defense of prescription under the Statute of Limitations.

Issue: WON the non-registration of University Publishing Co., Inc. in the SEC is an existing corporation with an independent juridical personality.

 

Held:

1.) The corporation cannot invoke the doctrine of estoppel. The fact of non-registration of the corporation has not been disputed because the corporation only raised the point that it and not Aruego is the party defendant thereby assuming that the corporation is an existing corporation with an independent juridical personality. HOWEVER, precisely on account of non- registration, it cannot be considered a corporation not even a corporation de facto. It has therefore no personality separate from Aruego; it cannot be sued independently. The estoppel doctrine has not been invoked and even if it had been, it is not applicable to the case at bar:

(a) Aruego had represented a non-existing entity and induced not only Albert but also the court to believe in such representation

(b) He signed the contract as president of the corporation stating that this was a corporation duly organized and existing under the laws of the Philippines. One who induced another to act upon his willful 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.

2.) Aruego is the real defendant as he had control over the proceedings. Had Aruego been named as party defendant instead of or together with the corporation, there would be no room for debate as to his personal liability. Since he was not so named, matters of due process have arisen. 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 the case at bar, Aruego, was and in reality, the one who answered and litigated through his own firm as counsel. He was in fact, if not on name, the defendant. Clearly then Aruego had his day in court as the real defendant and due process of law has been substantially observed.

In this connection, it must be realized that parties to a suit are "persons who have a right to control the proceedings, to make defense, to adduce and cross-examine witnesses, and to appeal from a decision" (67 C.J.S. 887) — and Aruego was, in reality, the person who had and exercised these rights. Clearly, then, Aruego had his day in court as the real defendant; and due process of law has been substantially observed.

By "due process of law" we mean " "a law which hears before it condemns; which proceeds upon inquiry, and renders judgment only after trial. ... ." (4 Wheaton, U.S. 518, 581.)"; or, as this Court has said, " "Due process of law" contemplates notice and opportunity to be heard before judgment is rendered, affecting one's person or property" (Lopez vs. Director of Lands, 47 Phil. 23, 32)." (Sicat vs. Reyes, L-11023, Dec. 14, 1956.) And it may not be amiss to mention here also that the "due process" clause of the Constitution is designed to secure justice as a living reality; not to sacrifice it by paying undue homage to formality. For substance must prevail over form.

3.) Aruego is the real party in interest because he reaped the benefits from the contract.