Vda. De Salvatierra v. Hon. Garlitos and Refuerzo (1958) Felix, J.

Petitioner: Manuela T. Vda. De Salvatierra

Respondent: Hon. Lorenzo C. Garlitos, in his capacity as Judge of the CFI of Leyte, Branch II, and
Segundino Refuerzo
Concept: Formation and Organization of Corporations
Doctrines: While as a general rule a person who has contracted or dealt with an association in such a
way 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, yet this doctrine may not be held to be applicable where
fraud takes part in the said transaction.
A corporation when registered has a juridical personality separate and distinct from its component
members or stockholders and officers such that a corporation cannot be held liable for the personal
indebtedness of a stockholder even if he should be its president 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 refers merely to registered corporations and cannot be made
applicable to the liability of members of an unincorporated association.
FACTS: Vda. De Salvatierra owned a parcel of land in Leyte. She entered into a contract of lease with
the Philippine Fibers Producers Co., Inc., allegedly a corporation duly organized and represented by
Segundino Refuerzo, the President.Several obligations were provided in the contract, but these
obligations were not complied with because Salvatierra filed with the CFI of Leyte a complaint against
Philippine Fibers and Refuerzo for accounting, rescission and damages. She alleged that the
defendants planted kenaf on 3 hectares of the leased property, and refused to render an accounting of
income derived and to deliver her share. Such were in violation of the terms of their covenant.
The defendants were declared in default for failure to file an answer. The lower Court granted
Salvatierras prayer. The Court, upon motion of Salvatierra, issued a writ of execution. The Provincial
Sheriff caused the attachment of 3 parcels of land in the name of Refuerzo. No property of the
Philippine Fibers was found available for attachment. Refuerzo later filed a motion claiming that the
decision was null and void with respect to him, there being no allegation in the complaint pointing to
his personal liability. He prayed than an order be issued limiting such liability to the corporation. The
lower Court granted it and ordered the sheriff to release all properties belonging to Refuerzo that might
have already been attached. Salvatierras petition for relief was denied. She then instituted this
petition for certiorari asking to nullify the order of the judge.
ISSUES:
1. WON Refuerzo must be exonerated from any liability for the non-fulfillment of obligation
imposed on the corporation. (NO)
2. WON Refuerzos motion was filed within the prescriptive period. (NO)
RATIO:
1. While as a general rule a person who has contracted or dealt with an association in such
a way 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, yet this doctrine may not be held to
be applicable where fraud takes part in the said transaction.
On plaintiffs charge that she was unaware of the fact that Philippine Fibers had no juridical
personality, Refuerzo gave no confirmation or denial and the circumstances surrounding the
execution of the contract lead to the inescapable conclusion that Salvatierra was really made to
believe that such corporation was duly organized in accordance with law.
A corporation when registered has a juridical personality separate and distinct from its component
members or stockholders and officers such that a corporation cannot be held liable for the
personal indebtedness of a stockholder even if he should be its president and conversely, a
stockholder or member cannot be held personally liable for any financial obligation by the
corporation in excess of his unpaid subscription.
o But this rule refers merely to registered corporations and cannot be made applicable to the
liability of members of an unincorporated association.
o Reason: since an organization which before the law is non-existent ahs no personality and
would be incompetent to act and appropriate for itself the powers and attribute of a
corporation as provided by law; it cannot create agents or confer authority on another to
act in its behalf. Thus, those who act or purport to act as its representatives or agents do
so without authority and at their own risk

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.
Thus 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.
Refuerzo, as president of the unregistered corporation 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 shareholders. In acting on behalf of a
corporation which he knew to be unregistered, he assumed the risk of reaping the consequential
damages or resultant rights arising out of such transaction.
o

2. The decision was rendered June 8, 1955 whereas the motion filed by Refuerzo was dated
January 31, 1956, or after the lapse of 7 months and 23 days, which is beyond the
prescriptive period provided by Rule 38.
Rule 38, Sec. 3. When petition filed; contents and verification. A petition provided for in either
of the preceding 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
The provision treats of 2 periods i.e. 60 days after petitioner learns of the judgment, and not more
than 6 months after judgment or order was rendered, both of which must be satisfied.
The nature of the relief and the purpose behind it, the periods fixed by the rule are not-extendible
and never interrupted; nor could it be subjected to any condition or contingency because it is of
itself devised to meet a condition or contingency.
DISPOSITIVE: Order set aside and nullified.