ANTONIO VAZQUEZ, petitioner,

vs.
FRANCISCO DE BORJA, respondent.

This action was commenced in the Court of First Instance of Manila by Francisco de Borja against Antonio Vazquez and
Fernando Busuego to recover from them jointly and severally the total sum of P4,702.70 for the sale of 4,000
cavans of palay.
The defendants delivered to the plaintiff during the months of February, March, and April, 1932, only 2,488
cavans of palay of the value of P5,224.80 and refused to deliver
The balance of 1,512 cavans of the value of P3,175.20 notwithstanding repeated demands.
The defendant Antonio Vazquez answered the complaint, denying having entered into the contract mentioned in the
first cause of action in his own individual and personal capacity, either solely or together with his codefendant
Fernando Busuego, and alleging that the agreement for the purchase of 4,000 cavans of palay and the
payment of the price of P8,400 were made by the plaintiff with and to the NatividadbVasquez Sabani
Development Co., Inc., a corporation organized and existing under the laws of the Philippines, of which the
defendant Antonio Vazquez was the acting manager at the time the transaction took place.
The trial court rendered judgment ordering the defendant Antonio Vazquez to pay to the plaintiff the sum of
P3,175.20 plus the sum of P377.50, with legal interest on both sums, and absolving the defendant Fernando
Busuego (treasurer of the corporation) from the complaint

The Court of Appeals found that according to the preponderance of the evidence "the sale made by Antonio
Vazquez in favor of Francisco de Borja of 4,000 cavans of palay was in his capacity as acting president and
manager of the corporation NatividadbVazquez Sabani Development Co., Inc." That finding of fact is final and, it
resolving the only issue involved, should be determinative of the result.

ISSUE: Whether the plaintiff entered into the contract with the defendant Antonio Vazquez in his personal
capacity or as manager of the Natividad- Vazquez Sabani Development Co., Inc.

RULING:

The action being on a contract, and it appearing from the preponderance of the evidence that the party liable
on the contract is the NatividadbVazquez Sabani Development Co., Inc. which is not a party herein, the
complaint should have been dismissed.

It is well known that a corporation is an artificial being invested by law with a personality of its own, separate and
distinct from that of its stockholders and from that of its officers who manage and run its affairs. The mere fact that
its personality is owing to a legal fiction and that it necessarily has to act thru its agents, does not make the latter
personally liable on a contract duly entered into, or for an act lawfully performed, by them for an in its behalf. The
legal fiction by which the personality of a corporation is created is a practical reality and necessity. Without it no
corporate entities may exists and no corporate business may be transacted. Such legal fiction may be disregarded only
when an attempt is made to use it as a cloak to hide an unlawful Or fraudulent purpose.

No such thing has been alleged or proven in this case. It has not been alleged nor even intimated that
Vazquez personally benefited by the contract of sale in question and that he is merely invoking the legal fiction
to avoid personal liability. Neither is it contended that he entered into said contract for the corporation in bad
faith and with intent to defraud the plaintiff. We find no legal and factual basis upon which to hold him liable
on the contract either principally or subsidiarily.

The fact that the corporation, acting thru Vazquez as its manager, was guilty of negligence in the fulfillment of the
contract, did not make Vazquez principally or even subsidiarily liable for such negligence. Since it was the
corporation's contract, its nonfulfillment, whether due to negligence or fault or to any other cause, made the
corporation and not its agent liable.

On the other hand if independently of the contract Vazquez by his fault or negligence cause damaged to the plaintiff, he
would be liable to the latter under article 1902 of the Civil Code. But then the plaintiff's cause of action should be
based on culpa aquiliana and not on the contract

Vazquez' liability would be principal and not merely subsidiary, as the Court of Appeals has erroneously held. No
such cause of action was alleged in the complaint or tried by express or implied consent of the parties by virtue of
section 4 of Rule 17. Hence the trial court had no jurisdiction over the issue and could not adjudicate upon it