Salvattierra vs. Garlitos (103 Phil 757) EN BANC [G.R. No. L-11442. May 23, 1958.] MANUELA T. VDA. DE SALVATIERRA, Petitioner, v. HON. LORENZO C. GARLITOS, in his capacity as Judge of the Court of First Instance of Leyte, Branch II, and SEGUNDINO REFUERZ

 Doctrine: An unincorporated association has no personality and would be incompetent to act and appropriate for itself the power and attributes 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. And as it is an 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 right and subject to all the liabilities of a principal 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. FACTS: Manuela T. Vda. de Salvatierra appeared to be the owner of a parcel of land located at Maghobas, Poblacion, Burauen, Leyte, He entered into a contract of lease with the Philippine Fibers Producers Co., Inc. on March 7, 1954. The company was represented by Mr. Segundino Q. Refuerzo as the President. It was provided in said contract that the lease would be for 10 years, the land would be planted with other crops and the lessor would be entitled to 30 per cent of the net income accruing from the harvest of any crop without being responsible for the cost of production thereof; After every harvest, the lessee was bound to declare at the earliest possible time the income derived therefrom and to deliver the corresponding share due the lessor. Apparently, the agreement was not complied because defendants refused to render an accounting of the income derived therefrom and to deliver the lessor's share; that the estimated gross income was P4,500, and the deductible expenses amounted to P1,000, Alanuela T. Vda, de Salvatierra filed with the Court of First Instance of Leyte a complaint against the Philippine Fibers Producers Co., Inc. and Segundino Q. Refuerzo for accounting, rescission and damages (Civil Case No. 1912). The defendants failed to file their answer to the complaint. 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 per cent of the net income realized from the last harvest to plaintiff, with legal interest from the date defendants received payment for said crop. No appeal therefrom having been perfected within the reglementary period, the Court, upon motion of plaintiff, issued a writ of execution. The Provincial Sheriff of Leyte caused the attachment of 3 parcels of land registered in the name of Segundino Refuerzo. No property of the Philippine Fibers Producers Co., Inc., was found available for attachment. On January 31, 1956, defendant Segundino Refuerzo filed a motion claiming that the decision rendered in said Civil Case No. 1912 was null and void with respect to him, there being no allegation in the complaint pointing to his personal liability and thus prayed that an order be issued limiting such liability to Defendant Corporation.

ISSUE:
​Whether Refuerzo can be made personally liable.

HELD:
YES. 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 applicable where fraud takes part in the said transaction. In the instant case, on plaintiff’s charge that she was unaware of the fact that the company had no juridical personality, defendant Refuerzo gave no confirmation or denial and the circumstances surrounding the execution of the contract led to the inescapable conclusion that plaintiff Salvatierra was really made to believe that such corporation was duly organized in accordance with law. As a general rule, 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 in indebtedness of a stockholder even if he should be its president and conversely, a stockholder 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 an unincorporated association. The reason behind this doctrine is obvious - an unincorporated association has no personality and would be incompetent to act and appropriate for itself the power and attributes 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. And as it is an 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 right and subject to all the liabilities of a principal, 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.