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Gregorio Araneta, Inc vs Tuason de Paterno and Jose Vidal Aug 22, 1952 Facts: This is between a purchasers,

the seller, and the mortgagee of a residential land40,703sqm in Santa Mesa, Manila.Tuason is the owner of said land which was subdivided into city lots and occupied by lessees w/ a conrtact of lease which were to expire on dec 30 1953, w/ stipulation that they have priority in buying if owner decide to sell. Tuason obtained from Jose Vidal loans 90k 1 mortgage on the aforesaid property and additional 30k and 20k laster nd payment was for 2 years and the 2 and last for 4 years. A separate written agreement was not registered and was destroyed(Penalidad del Documento de Novacion de EstaFecha) Tuason decided to sell the entire property for 400k in negotiation with Gregorio Araneta which made a contract called "Promesa de Compra y Venta" and identified as Exhibit "1" (terms were in Spanish) So, letters were given to the lessees on the option to buy which making payments and given their deeds of conveyance. Some tenants there remained unencumbered, except for the mortgage to Jose Vidal, Lots 1, 8-16 and 18 which have an aggregate area of 14,810.20 square meters; and on December 2, 1943, Paz Tuason and Gregorio Araneta, Inc. executed with regard to these lots an absolute deed of sale, the terms of which, except in two respects, were similar to those of the sale to the lessees. This deed, copy of which is attached to the plaintiff's complaint as Exhibit A, provided,lots are being sold by the Vendor to the Vendee separately at the prices mentioned in par (6) of the aforesaid contract "Promesa de Compra y Venta," making a total sum of P139,083.32, 90%, the Vendor acknowledges to have received by virtue of the advance and remaining upon executionof said contract. Checks of BPI. Before the execution of the deed, the day following the signing of the agreement to buy and sell,Tuason had offered to Vidal the check for P143,150 mentioned in Exhibit A, in full settlement of her mortgage obligation, but the mortgagee had refused to receive that check or to cancel the mortgage, contending that by the separate agreement before mentioned payment of the mortgage was not to be effected totally or partially before the end of four years from April, 1943. Which through Atty. Alfonso Ponce Enrile, commenced an action against the mortgagee. But the action never came on for trial the checks were destroyed during the war operations in January or February, 1945; and neither reconstituted afterward. Later gave occasion to the breaking off the schemes outlined in Exhibits 1 and A. The instant action begun by Gregorio Araneta, Inc. to compel Paz Tuason to deliver to the plaintiff a clear title to the lots described in Exhibit A free from all liens and encumbrances, and a deed of cancellation of the mortgage to Vidal. Vidal came by summons. Issue: W the deedof sale (exhibit A) between Gregorio and Tuason was valid? Lower Court: Invalid, because it was at variance with Exbt 1. SC: Yes.trial court in error. That the sale was not contingent on the cancellation of vidal s mortgage. *The trial court admitting the existence of the relation of principal and agent between Paz Tuason and Jose Araneta, pointed out that not Jose Araneta but Gregorio Araneta, Inc. was the purchaser, and the well-known distinction between the corporation and its stockholders. The court opined that the sale to Gregorio Araneta, Inc. was not a sale to Jose Araneta the agent or broker. Gregorio Araneta, Inc. had long been organized and engaged in real estate business. The corporate entity was not used to circumvent the law or perpetrate deception. There is no denying that Gregorio Araneta, Inc. entered into the contract for itself and for its benefit as a corporation. The contract and the roles of the parties who participated therein were exactly as they purported to be and were fully revealed to the seller. There is no pretense, nor is there reason to suppose, that if Paz Tuason had known Jose Araneta to Gregorio Araneta, Inc's president, which she knew, she would not have gone ahead with the deal. From her point of view and from the point of view of public interest, it would have made no difference, except for the brokerage fee, whether Gregorio Araneta, Inc. or Jose Araneta was the purchaser. Under these circumstances the result of the suggested disregard of a technicality would be, not to stop the commission of deceit by the purchaser but to pave the way for the evasion of a legitimate and binding commitment buy the seller. The principle invoked by the defendant is resorted to by the courts as a measure or protection against deceit and not to open the door to deceit. "The courts," it has been said, "will not ignore the corporate entity in order to further the perpetration of a fraud."
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