MANUELA T. VDA. DE SALVATIERRA, PETITIONER, VS. HON. LORENZO C. GARLITOS, IN HIS CAPACITY AS JUDGE OF THE COURT OF FIRST INSTANCE OF LEYTE, BRANCH II, AND SEGUNDINO REFUERZO, RE…

FELIX, J.:

This is a petition fro certiorari filed by Manuela
T. Vda. de Salvatierra seeking to nullity the order of the Court of
First Instance of Leyte in Civil Case No. 1912, dated March 21, 1956,
relieving Segundino Refuezo for liability for the contract entered d
into between the former and the Philippine Fibers Producers Co., Inc.,
of which Refuerzo is the president. The facts of the case are as
follows:

Manuela T. Vda. de Salvatierra appeared to be the
owner of the parcel of land located at Manghobas, Poblacion, Burauen,
Leyte. On March 7, 1954, said landowner entered d into a contract of
lease with the Philippine Fibers Producers Co., Inc., allegedly are
corporation “duly organized and existing under the laws of the
Philippines, domiciled at Burauen, Leyte, Philippines, and with
business address therein, represented in the instance by Mr. Seguindino
Q. Refuerzo, the President”.It was provided in said contract, among
other things, that the land would be planted to kenaf, remie or other
crops suitable to the soil; that the lessor would be entitled to 30 %
of the net income accruing from the harvest of any crop without being
responsible for the cost of production thereof; and that after every
harvest, the leasee was bound to declare at the earliest possible time
the income derived therefrom and to deliver the corresponding share due
the lessor.

Apparently, the aforementioned obligations imposed
on the alleged corporation were not complied with because on April 5,
1955, Manuela T. Vda. de Salvatierra filed with the Court of First
Instance of Leyte a complaint against the Philippine Fiber Producers
Co., Inc., and Seguindino Q. Refuerzo, for accounting, rescission and
damages (Civil Case No. 1912). She averred that sometime in April,
1954, defendants planted kenaf on 3 hectares of leased property which
crop was, at the time of the commencement of the action, already
harvested, processed and sold by defendants; that notwithstanding that
the estimated gross income P4,500.00, and the deductible expenses
amounted to P1,000.00; that as defendants’ refusal to undertake such
task was in violation of the terms of the covernant entered into
between the plaintiff and defendant corporation, a rescission was but
proper.

As defendants apparently failed to file their answer
to the complaint, of which they were allegedly notified, the court
declared them in default and proceeded to receive plaintiff’s evidence.
On June 8, 1955, the Lower Court rendered judgment granting plaintiff’s
prayer, and required defendants to render a complete accounting of the
harvest of the land subject of the proceeding within 15 days from
receipt of the decision and to deliver 30% of the net income realized
from the last harvest to plaintiff, with legal interest from the date
defendants received payment for said crop. It was further provided that
upon defendants’ failure to abide by the said requirement, the gross
income would be fixed at P4,200.00 or a net income of P3,200.00 after
deducting the expenses for production, 30% of which or P960.00 was held
to be due the plaintiff pursuant to the aforementioned contrast of
lease, which was declared rescinded.

No appeal therefrom having been perfected within the
reglementary period, the Court, upon motion of plaintiff, issued a
writ of execution, in virtue of which of Provincial Sheriff of Leyte
caused the attachment of 3 parcels of land registered in the name of
the land registered in the name of Segundino Refuerzo. No property of
the Philippine Fibers Producers Co., Inc., was found available for
attachement.

On January 31, 1956, defendant Seguindino Regundino
filed a motion claiming that the decision rendered in said Civil Case
No. 1912 was null and void with respect to him, there being on
allegation in the complaint pointing to his personal liability and thus
prayed that an order be issued limiting such liability to defendant
corporation. Over plaintiff’s opposition, the Court a quo granted the
same and ordered the Provincial Sheriff of Leyte to release all
properties belonging to the movant that might have already been
attached, after finding that the evidence on record made on mention or
referred to any fact which might hold movant personally liable therein.
As plaintiff’s petition for relief from said order was denied, Manuela
T. Vda. de Salvatierra instituted the order complained of, acted with
grace abuse of discretion and prayed that the same be declared a
nullity.

From the foregoing narration of facts, it is clear
that the order sought to be nullified was issued by the respondent
Judge upon motion of defendant Refuerzo, obviously pursuant to Rule 38
of the Rules of Court. Section 3 of said Rule, however, in providing
for the period within such a notion may be filed, prescribed that:

“SEC.3. WHEN PETION FILED; CONTENTS AND
VERIFICATION.—A petition provided for in either of the proceeding
sections of this rule must be verified, filed within sixty days after
the petitioner learns of the judgment, order, or other proceeding to be
set aside, and not more than six months after such judgment or order
was entered, or such proceeding was taken; and must be accompanied with
affidavits showing the fraud, accident, mistake, or excusable
negligence relied upon, and the facts constituting the petitioner’s
good and substantial cause of action or defense, as the case may be,
which he may prove if his petition be granted”. (Rule 38)

The aforequoted provision threats of 2 period, i.e.,
60 days after petitioner learns of the judgment, and not here than 6
months after the judgment or order was rendered, both of which must be
satisfied. as the decision in the case at bar was under date of June 8,
1955, whereas the motion filed by respondent Refuezo was dated January
31, 1956, or after the lapse of 7 months and 23 days, the filling of
the aforementioned motion was clearly made beyond the prescriptive
period provided for by the rules. The remedy allowed by Rule 38 to a
party adversely affected by a decision or order is certainly an act of
grace or benevolence intended to afford said litigant a penultimate
opportunity to protect his interest. Considering the nature of such
relief and the purpose behind it, the periods fixed by said rule are
non-extendible and never interrupted; nor could it be subjected to any
condition or contigency because it is of itself devised to meet a
condition or contigency (Palomares vs. Jimenez, G.R. No. L-4513,
January 31, 1952). On this score alone, therefore, the petition for a
writ of certiorari filed herein maybe granted. However, taking note of
the question presented by the motion for relief involved herein, We
deem it wise to delve in and pass upon the merit of the same.

Refuerzo, in praying for his exoneration from any
liabilities resulting from the non-fulfillment of the obligation
imposed on defendant Philippine Fibers Co., Inc., interposed the
defense that the complaint filed with the lower court contained no
allegation which would hold him liable personally, for while it was
stated therein that he was found by the Court a quo to be supported by
the records. Plaintiff on the other hand tried to refute this averment
by contending that her failure to specify that all the time she was
under the impression that the Philippine Fibers Producers Co., Inc.,
represented by Refuerzo was duly registered corporation as appearing in
the contract, but a subsequent inquiry from the Securities &
Exchange Commission yielded otherwise. While as a general rule a person
who has contracted or dealt with an association in such a was as to
recognize its existence as a corporate body is estopped from denying
the same in an action arising out of such transaction or dealing, (Asia
Banking Corporation vs. Standard Products Co., 46 Phil. 144; Compania Agricola de Ultramar vs. Reyes, 4 Phil 1; Ohta
Development Co. vs. Steamship Pompey, 49 Phil. 117), yet this doctrine
may not be held to be applicable where fraud takes that the plaintiff’s
charge that she was unaware of the fact that the Philippine Fibers
Producers Co., Inc., had no judicial personality, defendant Refuerzo
gave no confirmation or denial and the circumstances surrounding the
execution of the contract load to the inescapable conclusion that the
plaintiff Manuela T. Vda. de Salvatierra was really made to believe
that such corporation was duly in accordance with law.

There can be no question that a corporation when
registered has a juridical personality separate and distinct from its
component numbers or stockholders and officers, such that corporation
cannot be held liable for the personal indebtedness of a stockholder
even if he should be its president (Walter A. Smith Co. vs. Ford, SC-G.
R. No. 42420) and conversely, a stockholder or member cannot be held
personally liable for any financial obligation by the corporation in
excess of his unpaid subscription. But this rule is understood to refer
merely to registered corporations and cannot be made applicable to the
liability of members of unincorporated association. The reason behind
this doctrine is obvious— since an organization which before the law is
non-existent has no personality and would be incompetent to act and
appropriate for itself the powers and attributes of a corporation as
provided by law, it cannot create agents or confer authority on another
to act in its representatives or agents do so without authority and at
their own risk. And as it is and elementary principle of law that a
person who acts as an agent without authority or without a principal is
himself regarded as the principal, possessed of all the rights and
subject to all the liabilities of a principal, a person acting or
purporting to act on behalf of a corporation which has no void
existence assumes such privileges obligations and becomes personally
liable for contracts entered into or for other acts performed as such
agent (Fay vs. Noble, 7 Cushing [Mass.] 188. Cited in IT Tolentino’s
Commercial Laws of the Philippines, Fifth Ed., p. 689-690). Considering
that defendant Refuerzo, as president of the unregistered corporation
Philippine Fibers Producers Co., Inc., was the moving spirit behind the
consummation of the lease agreement by acting as its representative,
his liability cannot be limited or restricted to that imposed upon
corporate shareholder. In acting on behalf of a corporation which he
knew to be unregistered, he assumed the risk or reaping the
consequential damages or resultant rights, if any, arising out of such
transaction.

WHEREFORE, the order of the lower Court of March 21,
1956, amending its previous decision on this matter and ordering the
Provincial Sheridd of Leyte to release any attached in the execution of
such judgment, is hereby set aside and nullified as if it had never
been issued. With costs against respondent Segundino Refuerzo. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,, Endencia, and Felix, JJ., concur.