Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-19118             June 16, 1965

MARIANO A. ALBERT, plaintiff-appellant,
vs.
UNIVERSITY PUBLISHING CO., INC., defendant-appellee.

Uy and Artiaga and Antonio M. Molina for plaintiff-appellant.
Aruego, Mamaril and Associates for defendant-appellee.

R E S O L U T I O N*

BENGZON, J.P., J.:

Defendant-appellee University Publishing Co., Inc. has two prayers before us: First, that said defendant-appellee be granted leave to present original papers not included in the records of this case because they were never presented in the trial of the case; and second, that the decision promulgated by this Court on January 30, 1965 be reconsidered.

For a proper appraisal of all the facts and circumstances of this case it becomes necessary and convenient to trace the origin of the same.

Plaintiff Albert, almost sixteen (16) years ago, sued University Publishing Co., Inc. for breach of contract. On April 18, 1958, in L-9300, this court awarded the sum of P15,000.00 as damages. On October 24, 1960, in L-15275, to clarify whether the P7,000.00 paid on account should be deducted therefrom, this Court decided that the amount should be paid in full because said partial payment was already taken into consideration when it fixed P15,000.00 as damages.

From the inception until the time when the decision in L-15275 was to be executed, corporate existence on the part of University Publishing Co., Inc. seems to have been taken for granted, for it was not put in issue in either of the cases abovementioned. However, when the Court of First Instance of Manila issued on July 22, 1961 an order of execution against University Publishing Co., Inc., plaintiff, speaking also for the Sheriff of Manila, reported to the Court by petition of August 10, 1961 that there is no such entity as University Publishing Co., Inc., thereupon praying that, Jose M. Aruego being the real defendant, the writ of execution be issued against him. Attached to said petition was a certification from the Securities and Exchange Commission dated July 31, 1961 attesting: "The records of this Commission do not show the registration of UNIVERSITY PUBLISHING CO., INC., either as a corporation or partnership." The issue of its corporate existence was then clearly and squarely presented before the court.

University Publishing Co., Inc., instead of informing the lower court that it had in its possession copies of its certificate of registration its by-laws, and all other pertinent papers material to the point in dispute corporate existence chose to remain silent thereon. It merely countered the aforesaid petition by filing through counsel (Jose M. Aruego's own law firm) a manifestation stating that Jose M. Aruego is not a party to this case and, therefore, plaintiff's petition should be denied. After the court a quo denied the request that a writ of execution be issued against Jose M. Aruego, plaintiff brought this present appeal on the issue of the corporate existence of University Publishing Co., Inc., as determinative of the responsibility of Jose M. Aruego, the person or official who had always moved and acted for and in behalf of University Publishing Co., Inc.

It may be worth noting again that Jose M. Aruego started the negotiation which culminated in the contract between the parties, signing said contract as president of University Publishing Co., Inc. Likewise he was the one who made partial payments up to the amount of P7,000.00 for, and in behalf of University Publishing Co., Inc. He also appeared not only as a witness but as lawyer, signing some pleadings or motions in defense of University Publishing Co., Inc., although in other instances it is one of his associates or members of his law firm who did so. Known is the fact that even a duly existing corporation can only move and act through natural persons. In this case it was Jose M. Aruego who moved and acted as or for University, Publishing Co., Inc.

It is elemental that the courts can only decide the merits of a given suit according to the records that are in the case. It is true that in the two previous cases decided by this Court, the first, awarding damages (L-9300), the second, clarifying the amount of P15,000.00 awarded as such (L-15275), the corporate existence of University Publishing Co., Inc. as a legal entity was merely taken for granted.

However, when the said issue was squarely presented before the court, and University Publishing Co., Inc. chose to keep the courts in the dark by withholding pertinent documents and papers in its possession and control, perforce this Court had to decide the points raised according to the records of the case and whatever related matters necessarily included therein. Hence, as a consequence of the certification of the Securities and Exchange Commission that its records "do not show the registration of University Publishing Co., Inc., either as a corporation or partnership," this Court concluded that by virtue of its non-registration, it can not be considered a corporation. We further said that it has therefore no personality separate from Jose M. Aruego and that Aruego was in reality the one who answered and litigated through his own law firm counsel. Stated otherwise, we found that Aruego was in fact, if not in name, the defendant. 1 Indeed, the judge of the court of first instance wrote in his decision thus: "Defendant Aruego (all along the judge who pens this decision considered that the defendant here is the president of the University Publishing Co., Inc. since it was he who really made the contract with Justice Albert) 2" And this portion of the decision made by the court a quo was never questioned by the defendant.

The above statement made by the court a quo in its decision compelled this Court to carefully examine the facts surrounding the dispute starting from the time of the negotiation of the business proposition, followed by the signing of the contract; considered the benefits received; took into account the partial payments made, the litigation conducted, the decisions rendered and the appeals undertaken. After thus considering the facts and circumstances, keeping in mind that even with regard to corporations shown as duly registered and existing, we have in many a case pierced the veil of corporate fiction to administer the ends of justice, 3 we held Aruego personally responsible for his acts on behalf of University Publishing Co., Inc.

Defendant would reply that in all those cases where the Court pierced the veil of corporate fiction the officials held liable were made party defendants. As stated, defendant-appellee could not even pretend to possess corporate fiction in view to its non-registration per the evidence so that from the start Aruego was the real defendant. Since the purpose of formally impleading a party is to assure him a day in court, once the protective mantle of due process of law has in fact been accorded a litigant, whatever the imperfection in form, the real litigant may be held liable as a party. Jose M. Aruego definitely had his day in court, and due process of law was enjoyed by him as a matter of fact as revealed by the records of the case. 4

The dispositive portion of the decision the reconsideration of which is being sought is the following: "Premises considered, the order appealed from is hereby set aside and the case remanded ordering the 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."

According to several cases a litigant is not allowed to speculate on the decision the court may render in the case. 5 The University Publishing Co., Inc. speculated on a favorable decision based on the issue that Jose M. Aruego, not being a formal party defendant in this case, a writ of execution against him was not in order. It, therefore, preferred to suppress vital documents under its possession and control rather than to rebut the certification issued by the Securities and Exchange Commission that according to its records University Publishing Co., Inc. was not registered. If the lower court's order is sustained, collection of damages becomes problematical. If a new suit is filed against Aruego, prescription might be considered as effective defense, aside from the prospect of another ten years of pending litigation. Such are the possible reasons for adopting the position of speculation of our decision. Our ruling appeared to be unfavorable to such speculation. It was only after the receipt of the adverse decision promulgated by this Court that University Publishing Co., Inc., disclosed its registration papers. For purposes of this case only and according to its particular facts and circumstances, we rule that in view of the late disclosure of said papers by the University Publishing Co., Inc., the same can no longer considered at this stage of the proceedings.

Specifically said original papers are:

1. Original Certificate of Registration of the University Publishing Co., Inc., signed by then Director of Commerce, Cornelio Balmaceda, showing that said company was duly registered as a corporation with the Mercantile Registry of the then Bureau of Commerce (predecessor of the Securities and Exchange Commission) as early as August 7, 1936;

2. Original copy of the Articles of Incorporation of the University Publishing Co., Inc consisting of five (5) pages, showing that said corporation was incorporated as early as August 1, 1936, Manila, Philippines, with an authorized capital stock of TEN THOUSAND PESOS (P10,000), TWO THOUSAND PESOS (P2,000.00) of which was fully subscribed and FIVE HUNDRED PESOS (P500.00), fully paid up; that it had a corporate existence of fifty (50) years and the original incorporators of the same are: Jose M. Aruego, Jose A. Adeva, Delfin T. Bruno Enrique Rimando and Federico Mangahas;

3. The original copy of the By-Laws of the University Publishing Co., Inc. consisting of eleven (11) pages, showing that it exercised its franchise as early as September 4, 1936;

4. A certificate of Reconstitution of Records issued by the Securities and Exchange Commission recognized the corporate existence of the University Publishing, Co., Inc. as early as August 7, 1936.

Defendant-appellee could have presented the foregoing papers before the lower court to counter the evidence of non-registration, but defendant-appellee did not do so. It could have reconstituted its records at that stage of the proceedings, instead of only on April 1, 1965, after decision herein was promulgated.

It follows, therefore, that defendant-appellee may not now be allowed to submit the abovementioned papers to form part of the record. Sec. 7 of Rule 48, Rules of Court (in relation to Sec. 1. Rule 42), invoked by movant, states:

SEC. 7. Original papers may be required. Whenever it is necessary or proper in the opinion of the court that original papers of any kind should be inspected in the court on appeal, it may make such order for the transmission, safekeeping, and return of such original papers as may seem proper, and the court may receive and consider such original papers in connection with the record.

The provision obviously refers to papers the originals of which are of record in the lower court, which the appellate court may require to be transmitted for inspection. The original papers in question not having been presented before the lower court as part of its record, the same cannot be transmitted on appeal under the aforesaid section. In contrast, the certification as to University Publishing Co., Inc.'s non-registration forms part of the record in the lower court.

For original papers not part of the lower court's record, the applicable rule is Sec. 1 of Rule 59 on New Trial. Under said Rule, the papers in question cannot be admitted, because they are not "newly discovered evidence ," for with due diligence movant could have presented them in the lower court, since they were in its possession and control.

As far as this case is concerned, therefore, University Publishing Co., Inc. must be deemed as unregistered, since by defendant-appellee's choice the record shows it to be so. Defendant-appellee apparently sought to delay the execution by remaining unregistered per the certification of the Securities and Exchange Commission. It was only when execution was to be carried out, anyway, against it and/or its president and almost 19 years after the approval of the law authorizing reconstitution that it reconstituted its records to show its registration, thereby once more attempting to delay the payment of plaintiff's claim, long since adjudged meritorious. Deciding, therefore, as we must, this particular case on its record as submitted by the parties, defendant-appellee's proffered evidence of its corporate existence cannot at this stage be considered to alter the decision reached herein. This is not to preclude in future cases the consideration of properly submitted evidence as to defendant-appellee's corporate existence.

WHEREFORE, the motion for reconsideration and for leave to file original papers not in the record, is hereby denied. It is so ordered.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal and Zaldivar, JJ., concur.
Barrera, J., took no part.

Footnotes

*Editor's Note: See main decision in 13 SCRA 84.

1Decision, p. 6.

2Decision of CFI, p. 9, quoted in plaintiff-appellant's brief, p. 10.

3Arnold vs. Willits & Patterson, Ltd., 44 Phil. 634; Koppel (Phil.), Inc. vs. Yatco, 77 Phil. 496; La Campana Coffee Factory, Inc. vs. Kaisahan ng, mga Manggagawa sa La Campana 93 Phil. 160; Marvel Building Corporation vs. David, 94 Phil. 376; Madrigal Shipping Co., Inc. vs. Ogilvie, L-8431, Oct. 30, 1958: Laguna Transportation Co., Inc. vs. S.S.S., L-14606, April 28, 1960; McConnel vs. C.A., L-10510, Mar. 17, 1961; Liddel & Co., Inc. vs. Collector of Internal Revenue, L-9687, June 30, 1961; Palacio vs. Fely Transportation Co., L-15121, August 31, 1962.

4Decision, p. 6.

5Rodriguez vs. Treasurer of the Philippines, 45 O.G. 4457 (Resolution); Arnault vs. Nazareno, L-3820, Resolution of August 9, 1950: Howden vs. Collector of Internal Revenue, L-19392, April 14, 1965.


The Lawphil Project - Arellano Law Foundation