G.R. No. L-47217. April 25, 1941.
JOAQUIN J. GONZALES Y OTRO, petitioners, vs. PROCESO SEBASTIAN, Judge of First Instance of Iloilo, and MARIA ARANETA VIUDA DE SEGOVIA Y OTROS, respondents.

FACTS

Petitioners Joaquin J. Gonzales and others, along with Vera Reyes, Jose Cunanan, and Franco Vera Reyes, organized in September 1936 a corporation to be named “National Consolidated Mines Co., Inc.” They had filed the necessary articles of incorporation with the Bureau of Commerce and Industry on September 18, 1936. On January 14, 1937, one of the organizers filed a petition in the Court of First Instance of Manila for the appointment of a receiver for the corporation’s assets so that manager’s checks issued in its favor by subscribers could be collected and returned to them, pursuant to an agreement by the incorporators. Respondents Maria Araneta Vda. de Segovia and Leolani Dumbar de Segovia, residents of Iloilo Province, through the corporation’s organizers/agents Jose Cunanan and Eduardo Zaldariaga, subscribed for shares: the first for 200,000 shares at one centavo per share, paying P500 on account, and the second for 50,000 shares at the same rate, paying P125 on account. The corporation was never legally incorporated and did not obtain the required permit to sell its shares. The organizers returned payments made by several subscribers, but not the amounts paid by Maria Araneta Vda. de Segovia and Leilani Dumbar de Segovia through agents Cunanan and Zaldariaga. Consequently, on November 6, 1935, the respondents filed a complaint in the Court of First Instance of Iloilo against Joaquin J. Gonzales and others to recover said amounts. After legal proceedings, the case was set for hearing on December 14, 1938. The defendants and their counsel failed to appear, so the court postponed the hearing. On January 23, 1939, the case was again called for hearing, but the defendants and their counsel again failed to appear, leading the court to receive the plaintiffs’ evidence. On February 23, 1939, Judge Proceso Sebastian rendered a decision, ordering the defendants (except Jose Cunanan and Eduardo Zaldariaga) to pay, jointly and severally, P500 to Maria Araneta Vda. de Segovia and P125 to Leilani Dumbar de Segovia. No appeal was taken from this judgment. After the decision became final, the plaintiffs moved for its execution. The defendants, through counsel, moved to quash the writ of execution and set aside the judgment, arguing that Civil Case No. 50806 had been filed in the Court of First Instance of Manila, wherein a judicial receiver for the corporation’s assets had been appointed. The court denied this motion in its order dated November 18, 1939. Hence, this petition.

ISSUE

Whether the judgment rendered by the Court of First Instance of Iloilo and its order of execution are null and void, primarily on grounds of lack of proper notice of the hearing and the pendency of the Manila case for receivership.

RULING

The Supreme Court denied the petition and upheld the judgment and order of execution. The Court found that the petitioners admitted the corporation was never legally incorporated and they had no permit to sell shares. The Iloilo case was filed long before the Manila receivership case (No. 50806). The allegation that petitioners were not notified of the hearing in the Iloilo case was without merit. The records, specifically the decision and order of Judge Sebastian, showed that their attorney, Jose Perez Cardenas, was duly notified of the January 23, 1939 hearing, as evidenced by the receipt card for the notice from the court clerk, and that he and the defendants failed to appear. A copy of the February 23, 1939 decision was also sent to and received by Attorney Cardenas on March 6, 1939. Therefore, the hearing was conducted in accordance with legal procedure. The petitioners could not validly claim that the judgment resulted from excusable mistake, inadvertence, surprise, or neglect, or that they were not duly notified. Consequently, the judgment was valid and effective. The mere fact that the petitioners initiated a receivership proceeding in the Court of First Instance of Manila did not constitute a legal ground to annul or suspend the judgment rendered by the Court of First Instance of Iloilo. The Court dissolved a preliminary injunction previously issued and condemned the petitioners to pay the costs.