22.

Albert vs University Publishing

Facts: Mariano Albert entered into a contract with University Publishing Co.,
Inc. through Jose M. Aruego, its President, whereby University would pay
plaintiff for the exclusive right to publish his revised Commentaries on the
Revised Penal Code. The contract stipulated that failure to pay one
installment would render the rest of the payments due. When University
failed to pay the second installment, Albert sued for collection and won.
However, upon execution, it was found that University was not registered
with the SEC. Albert petitioned for a writ of execution against Jose M. Aruego
as the real defendant. University opposed, on the ground that Aruego was not
a party to the case.
The Supreme Court found that Aruego represented a non-existent entity and
induced not only Albert but the court to believe in such representation.
Issue: Whether or not the non registration of University Publishing Co. in the
Securities and exchange Commission is an existing corporation with an
independent juridical personality.
Held: the facts of non-registration of University Publishing Co in the SEC has
not been disputed. the defendant would only raise the point that University
Publishing Co and not jose M. Aruego, is the party defendant thereby
assuming that University Publishing Co. is an existing corporation with an
independent juridical personality. Precisely, however, on account of the nonregistration it cannot be considered a corporation, not even a corporation de
facto. It has therefore no personality separate from Jose M. Aruego. It cannot
be sued independently. In Salvatiera vs. garlitos, 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 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.. 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. 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.
23. Smith vs Natividad
Facts: Smith Bell. is a corporation organized and existing under the laws of
the Philippine but a majority of its stockholders are British subjects. When
Simith Bell applied for a certificate of Philippine registry of the vessel owned
by it, the Collector refused to issue the certificate, giving as his reason that
all the stockholders of Smith Bell were not citizens either of the United States
or of the Philippine Island.
-Act 2671, Sec. 1172. Certificate ofPhilippine Register.upon registration of a
vessel of domestic ownership, and of more than 15 tons gross, a certificate of
Philippine register shall be issued for it. If the vessel is of domestic ownership
and of 15 tons gross or less, the taking of the certificate of Philippine register
shall be optional with the owner.
-domestic ownership, as used in this section, means ownership vested in the
(a) citizens or native inhabitants of the Phil Islands; (b) citizens of the US
residing in the Phil. Islands; (c) any corporation or company composed wholly
of citizen of Phils./US or both
-plaintiffs contention: Act No. 2671 deprives the corp. of its property without
due process of law because by the passage of the law, the company was
automatically deprived of every beneficial attribute of ownership of the Bato
and that they are left with a naked title they could not use
Issue: Whether or not the Government can deny the registry of a vessel to
corporations having alien stockholders
Held: Yes the Government can deny the registry of a vessel to corporations
having alien stockholders since it is within the purview of the police power.
Act No. 2761, in denying to corporations such as Smith, Bell & Co. Ltd., the
right to register vessels in the Phils. Coastwide trade, falls within the
authorized exceptions. Specifically within the purview of the police power.
Literally and absolutely, steamship lines are the arteries of the commerce in
the Phils. If one be severed, the lifeblood of the nation is lost. If these are
protected, security of the country and general welfare is sustained. However,
the SC acknowledge that a corporation having alien stockholders, is still
entitled to the protection afforded by the due-process of law and equal
protection of the laws clause of the constitution.
24. stonehill vs diokno
Facts: Respondent (prosecution) made possible the issuance of 42 search
warrants against the petitioner and the corporation to search persons and
premises of several personal properties due to an alleged violation of Central

Bank Laws, Tariff and Custom Laws, Internal Revenue Code and the Revised
Penal Code of the Philippines. As a results, search and seizures were
conducted in the both the residence of the petitioner and in the corporation's
premises.
The petitioner contended that the search warrants are null and void as their
issuance violated the Constitution and the Rules of Court for being general
warrants. Thus,he filed a petition with the Supreme Court for certiorari,
prohibition, mandamus and injunction to prevent the seized effects from
being introduced as evidence in the deportation cases against the petitioner.
The court issued the writ only for those effects found in the petitioner's
residence.
Issue: Whether or not the petitioner can validly assail the legality of the
search and seizure in both premises
Held: No, he can only assail the search conducted in the residences but not
those done in the corporation's premises. The petitioner has no cause of
action in the second situation since a corporation has a personality separate
and distinct from the personality of its officers or herein petitioner regardless
of the amount of shares of stock or interest of each in the said corporation,
and whatever office they hold therein. Only the party whose rights has been
impaired can validly object the legality of a seizure--a purely personal right
which cannot be exercised by a third party. The right to object belongs to the
corporation ( for the 1st group of documents, papers, and things seized from
the offices and the premises).