Antonio Vasquez vs Francisco De Borja

G.R. No. L-48931 – 74 Phil. 560 – Civil Law – Torts and Damages – Distinction of Liability of Employers Under Article 2180 and Their Liability for Breach of Contract

In January 1932, Francisco De Borja entered into a contract of sale with the NVSD (Natividad-Vasquez Sabani Development Co., Inc.). The subject of the sale was 4,000 cavans of rice valued at per cavan. On behalf of the company, the contract was executed by Antonio Vasquez as the company’s acting president. NVSD only delivered 2,488 cavans and failed and refused, despite demand, to deliver the rest hence De Borja incurred damages (apparently, NVSD was insolvent). He then sue Vasquez for payment of damages.

ISSUE: Whether or not Vasquez is liable for damages.

HELD: No. Vasquez is not party to the contract as it was NVSD which De Borja contracted with. 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 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 non fulfillment, whether due to negligence or fault or to any other cause, made the corporation and not its agent liable.

JUSTICE PARAS Dissenting :

Vasquez as president of NVSD is liable for damages. Vasquez, as acting president and manager of NVSD, and with full knowledge of the then insolvent status of his company, agreed to sell to De Borja 4,000 cavans of palay. Further, NVSD was soon thereafter dissolved.

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