(With Resolution of June 16, 1965)

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

In Albert vs. University Publishing Co., Inc., G.R. No. 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., G.R. No. 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.

Fifteen years ago, on September 24, 1949, Mariano A. Albert sued University
Publishing Co., Inc. Plaintiff alleged inter alia that defendant was a
corporation duly organized and existing under the laws of the Philippines; that
on July 19, 1948, defendant, through Jose M. Aruego, its President, entered into
a contract with plaintiff; that defendant had thereby agreed to pay plaintiff
P30,000.00 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; that defendant had undertaken to pay in eight quarterly installments of
P3,750.00 starting July 15, 1948; that per contract failure to pay one
installment would render the rest due; and that defendant had failed to pay the
second installment.

Defendant admitted plaintiff’s allegation of defendant’s corporate existence;
admitted the execution and terms of the contract dated July 19, 1948; but
alleged that it was plaintiff who breached their contract by failing to deliver
his manuscript. Furthermore, defendant counterclaimed for damages.

Plaintiff died before trial and Justo R. Albert, his estate’s administrator,
was substituted for him.

The Court of First Instance of Manila, after trial, rendered decision on
April 26, 1954, stating in the dispositive portion-

“In view of all the foregoing, the Court renders judgment in favor of the
plaintiff and against the defendant the University Publishing Co., Inc.,
ordering the defendant to pay the administrator Justo R. Albert, the rum of
P23.000.00 with legal [rate] of interest from the date of the filing of this
complaint until the whole amount shall have been fully paid. The defendant shall
also pay the costs. The counterclaim of the defendant is hereby dismissed for
lack of evidence.”

As aforesaid, we reduced the amount of damages to P15,000.00, to be executed
in full. Thereafter, on July 22, 1961, the court a quo ordered issuance of an
execution writ against University Publishing Co., Inc. Plaintiff however, on
August 10, 1961, petitioned for a writ of execution against Jose M. Aruego, as
the real defendant, stating, “plaintiff’s counsel and the Sheriff of Manila
discovered that there is vo such entity as University Fublishina Co., Inc.”
Plaintiff annexed to his petition a certification from the Security 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.” “University Publishing Co., Inc.” countered 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 that, therefore,
plaintiff’s petition should be denied.

Parenthetically, it is not hard to decipher why “University Publishing’ Co.,
Inc.,” through counsel, would not want Jose M. Aruego to be considered a party
to the present case: should a separate action be now instituted against Jose M.
Aruego, the plaintiff will have to reckon with the statute of limitations.

The court a quo denied the petition by order of September 9, 1961, and from
this, plaintiff has appealed.

The fact of non-registration of University Publishing Co., Inc. in the
Securities and Exchange Commission has not been disputed. Defendant would only
raise the point that “University Publishing Co., Inc.,” and not Jose M. Aruego,
is the party defendant; thereby assuming that “University Publishing Co., Inc.”
is an existing corporation with an independent juridical personality. Precisely,
however, on account of the non-registration it cannot be considered a
corporation, not even a corporation de facto (Hall vs. Piccio, 86 Phil. 603). It
has therefore no personality separate from Jose M, Aruego; it cannot be sued
independently.

The corporation by estoppel doctrine has not been invoked. At any rate, the
same is inapplicable here. Aruego 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 plaintiff (Mariano A. Albert) into believing
the same. 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 Off. Gaz. 3069).

“University Publishing Co., Inc.” purported to come to court, answering the
complaint and litigating upon the merits, But as stated, “University Publishing
Co., Inc.” has no independent personality; it is just a name. Jose M. 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.

Even with regard to corporations duly organized and existing under the law,
we have in many a case pierced the veil of corporate fiction to administer the
ends of justice.^* And in
Salvatiera vs. Garlitos, supra, p. 3073, we ruled: “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”. Had Jose M.
Aruego been named as party defendant instead of, or together with, “University
Publishing Co., Inc.,” there would be no room for debate as to his personal
liability. Since he was not so named, the matters of “day in court” and “due
process” have arisen.

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).” Sicate vs.
Reyes, 100 Phil. 504.) 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. It may now be trite, but none the less apt, to
quote what long ago we said in Alonso vs. Villamor, 16 Phil. 315, 321-322:

“A litigation is not a game of technicalities in which one, more deeply
schooled and skilled in the subtle art of movement and position, entraps and
destroys the other. It is, rather, a contest in which each contending party
fully and fairly lays before the court the facts in issue and then, brushing
aside as wholly trivial and indecisive all imperfections of form and
technicalities of procedure, asks that justice be done upon the merits.
Lawsuits, unlike duels, are not to be won by a rapier’s thrust. Technicality,
when it deserts its proper office as an aid to justice and becomes its great
hindrance and chief enemy, deserves scant consideration from courts. There
should be no vested rights in technicalities.”

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. Perforce, in line with the ends of justice,
Responsibility under the judgment falls on him.

We need hardly state that should there be persons who under the law are
liable to Aruego for reimbursement or contribution with respect to the payment
he makes under the judgment in question, he may, of course, proceed against them
through proper remedial measures.

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. So ordered.

Bengzon, C. J., Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon,
Regala, Makalintal and Zaldivar, JJ., concur.

^* Arnold 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 104,748; Laguna Transportation Co., Inc., vs.
S.S.S. VJG Phil., 833; Nc-Connel vs. C.A., G.R. No. L-10510, Mar. 17, 1961;
Liddell & Co., Inc. vs. Collector of Internal Revenue, G.R. No. L-9687, June
30, 1961; Palacio vs. Fely Transportation Co., G.R. No. L-15121, August 31,
1962.

RESOLUTION

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 P115,000.00 as damages. On October 24, 1960, in G.R. No.
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 G.R. No. 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 sguarely
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 oflicial 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 and in behalf of University
Publishing Co., Inc. He 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 member 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 cannot 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 as
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)”. 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 preposition, followed by the signing of
the contract; considered the benefits received; took into account the partial
payments made, thef 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, 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 of its non-registration per the evidence—so that from the start
Aruego was the real-defendant. Since the purpose of formally impleading a is to
assure him a day in court, once the protective 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.

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. 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 be 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)
us early as August 7, 1936;

2.  Original copy of the Articles of Incorporation of the University
Publishing Co., Inc. consisting of five (6) pages, showing that said corporation
was incorporated as early as August 1, 1936, in Manila, Philippines, with an
authorized capital stock of ten

THOUSAND PESOS (P10,000.00), TWO THOUSAND PESOS (P2,000.00)

of which was fully subscribed and five hundred tesos (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, 193G;

4.  A certificate of Reconstitution of Records issued by the Securities and
Exchange Commission recognizes 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 533 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.

^[1] Decision, p.6