Related Doctrine: A person acting or purporting to act on behalf of a corporation that 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.
Facts: University Publishing Co. (UPC), through Jose Aruego, entered into a contract with Mariano Albert whereby UPC agreed to pay Albert for the exclusive right to publish his revised Commentaries on the Revised Penal Code and for his share in previous sales of the book’s first edition, in installments, with a stipulation that failure to pay one installment would render the rest due.
UPC failed to pay the second installment. Consequently, Albert sued UPC and won. Albert then filed a petition for writ of execution against Aruego, as the real defendant, because it was discovered that UPC is not registered with the SEC.
Issue: Whether the judgment may be executed against Jose Aruego, the supposed President of University Publishing Co., Inc., as the real defendant.
Decision: Yes. It was held in Salvatiera vs. Garlitos that a person acting or purporting to act on behalf of a corporation that 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.
UPC has no independent personality. Aruego was, in reality, the one who answered and litigated, through his own law firm as counsel. He was in fact, if not, in name, the defendant. He represented a non-existent entity and induced not only the plaintiff but even the court to believe in such representation. He signed the contract as “President” of “University Publishing Co., Inc.,” stating that this was “a corporation duly organized and existing under the laws of the Philippines,” and obviously misled Albert into believing the same. He was the one who reaped the benefits resulting from the contract and was the one who violated its terms.
Read the full case here.
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