I. SHORT TITLE: ALBERT V.

UNIVERSITY PUBLISHING

II. FULL TITLE: Mariano A. Albert versus University Publishing Co., Inc.,
- G.R. No. L-19118, January 30, 1965, J. Bengzon

III. TOPIC: Incorporation and Organization of Private Corporation

IV. STATEMENT OF FACTS:

Mariano A. Albert (Albert) and University Publishing Co., Inc. (University Publishing), a
corporation duly organized and existing under the laws of the Philippines, through Jose M. Aruego
(Aruego), its President, entered into a contract to pay Albert the amount of 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. It is agreed upon in the contract that that failure to pay one
installment would render the rest due. University Publishing had undertaken to pay in eight quarterly
installments, however, failed to pay the second installment.

V. STATEMENT OF THE CASE:

Albert sued University Publishing for the breach of contract. University Publishing admitted its
corporate existence and execution and terms of the contract dated July 19, 1948 but alleged that it
was Albert who breached their contract by failing to deliver his manuscript. Albert died before trial
and Justo R. Albert (Justo), his estate's administrator, was substituted for him. CFI Manila rendered
judgment in favor of Albert and a writ of execution was issued against University Publishing. Albert
However, a writ of execution was petitioned by Justo against Aruego, as the real defendant, stating
that there is no such entity as University Publishing Co. Inc. Justo annexed to the petition a
certification from the SEC saying that their records contain no such registered corporation.
University Publishing countered in its manifestation that Aruego is not a party to the case and
therefore, Justo’s petition should be denied. In truth, University Publishing actually did not want
Aruego to be considered a party to the case because there would then be a need to institute a separate
action against Aruego and if done, Justo can set up the defense of prescription under the Statute of
Limitations.

VI. ISSUE:
1. WON Aruego is a party to the case
2. WON University Publishing is a corporation by estoppel

VII. RULING:
1. Yes. Aruego is a party to the case. "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. He had control over the proceedings. Had Aruego
been named as party defendant instead of or together with the corporation, there would be
no room for debate as to his personal liability. Since he was not so named, matters of due
process have arisen. 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.
Acting as representative of a non-existent principal, Jose M. Aruego was the real party to the
contract sued upon, he was the one who reaped the benefits resulting from it, so much so
 that partial payments of the consideration were made by him, 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.

2. No. University Publishing is not a corporation by estoppel. The corporation-by-estoppel

doctrine has not been invoked in this case. At any rate, the same is inapplicable. Aruego
represented a non-existent entity and induced not only to Albert 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. 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.

VIII. DISPOSITIVE PORTION:

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.