PHILIP EXPORT BV (PEBV), PHILIPS ELECTRICAL LAMPS (PHILIPS ELECTRICAL) AND PHILIPS INDUSTRIAL DEVELOPMENT INC (PHILIPS INDUSTRIAL) VS. CA, SEC AND STANDARD PHILIPS CORP (STANDARD PHILIPS)
FACTS:
PEBV:
-foreign corporation organized under laws of Netherlands
-though not engaged in business in RP, is the registered owner of TM Philips and PHILIPS SHIELD EMBLEM under the Cert. of Registration issued by the Philippine Patents Office
-incorporated 1922 pa!
PHILIPS ELECTRICAL & PHILIPS INDUSTRIAL:
-authorized users of TM PHILIPS AND PHILIPS SHIELD EMBLEM
-incorporated 1956 pa!
STANDARD PHILIPS:
-issued Cert of Registration on May 1982
PEBV, PHILIPS ELECTRICAL AND PHILIPS INDUSTRIAL filed a complaint for cancellation of the word Philips from STANDARD PHILIPS' corporate name before SEC
COA: (1) prior registration with Bureau of Patents by PEBV; (2) prior registration of PHILIPS ELECTRICAL and PHILIPS INDUSTRIAL with SEC.
-Standard Philips refused to amend its Articles of incorporation
So PEBV, Philips Electrical and Philips Industrial (Petitioners na from hereon) filed a petition for issuance of writ of PI before SEC
COA: Standard Philips' use of PHILIPS amount to infringement and clear violation of Petitioners' exclusive right to use the same, considering engaged in same business
ANSWER: (1) PEBV had no capacity to sue; (2) no similarity if considered in entirety; (3) its products (chain rollers, belts, bearings, cutting saw) are different from petitioners' (electrical products)
SEC: for Standard Philips (did not issue injunction); subsequently dismissed the petition itself for lack of merit: Sec 18 applicable only when corporate names in question are identical - here no confusing similarity at Standard Philps contain at least 2 words different…
-MR denied
SEC en banc (on appeal): affirmed dismissal of appeal
CA: Converse case (where it was held that when the other corporation's name constitutes a dominant part of the complainant's corporate names, the former cannot be allowed to use it) not for-square (di ba all fours?) with the present case because not involved in same business; unrelated and non-competing businesses - MR Denied
RULING: For Petitioners
ON corporate name = property
-a corporation's right to use its corporate and trade name is a property right, a right in rem, which it may assert and protect against the world in the same manner as it may protect its tangible property, real or personal, against trespass or conversion. It is regarded, to a certain extent, as a property right and one which cannot be impaired or defeated by subsequent appropriation by another corporation in the same field
-A name is peculiarly important as necessary to the very existence of a corporation. Its name is one of its attributes, an element of its existence, and essential to its identity. The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person; and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted.
-A corporation acquires its name by choice and need not select a name identical with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him. A corporation can no more use a corporate name in violation of the rights of others than an individual can use his name legally acquired so as to mislead the public and injure another.
ON CORPO CODE: SECTION 18
"No corporate name may be allowed by the Securities and Exchange Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to existing law. Where a change in a corporate name is approved, the commission shall issue an amended certificate of incorporation under the amended name."
*two requisites:
(1) that the complainant corporation acquired a prior right over the use of such corporate name; and
(2) the proposed name is either:
(a) identical; or
(b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law.
WHICH CORPORATION HAS RIGHT TO USE THE NAME: Priority of Adoption
-so PEBV (issued Cert of Registration 1922) Philips Electrical and Philips industrial (1956) adopted the name "PHILIPS" first vs. Standard Philips (only in 1982, or 26 years after)
HOW TO DETERMINE WON THERE'S CONFUSING SIMILARITY IN CORPORATE NAMES: whether the similarity is such as to mislead a person, using ordinary care and discrimination. In so doing, the Court must look to the record as well as the names themselves
---HERE, Phips is indeed the dominant word in all the companies!
ON PROOF OF CONFUSION OR DECEPTION:
-Director of Patents, in denying Standard Philips' application for registration of the trademark, ruled that PEBV imports to the RP included equipments, machines and other parts falling under same category wherein the products of Standard Phips fall.
-primary purposes of Standard Philips, as indicated in its articles of incorporation, included the buying, selling…of electrical wiring devices, electrical component parts, and/or complement of…electrical supplies…which is also included among the primary purposes of petitioner Philips electrical; SO SAME LINE OF BUSINESS! Making it appear that Standard Philips' intention was to ride on the popularity and established goodwill of said petitioner's business throughout the world
ON THE ARGUMENT THAT 2 WORDS WERE DIFFERENT:
-What is lost sight of, however, is that PHILIPS is a trademark or trade name which was registered as far back as 1922. Petitioners, therefore, have the exclusive right to its use which must be free from any infringement by similarity. A corporation has an exclusive right to the use of its name, which may be protected by injunction upon a principle similar to that upon which persons are protected in the use of trademarks and tradenames (18 C.J.S. 574). Such principle proceeds upon the theory that it is a fraud on the corporation which has acquired a right to that name and perhaps carried on its business thereunder, that another should attempt to use the same name, or the same name with a slight variation in such a way as to induce persons to deal with it in the belief that they are dealing with the corporation which has given a reputation to the name. Notably, too, Private Respondent's name actually contains only a single word, that is, "STANDARD", different from that of Petitioners inasmuch as the inclusion of the term "Corporation" or "Corp." merely serves the Purpose of distinguishing the corporation from partnerships and other business organizations.
ON ARGUMENT THAT OTHER COMPANIES ALSO USES "PHILIPS": So? The fact that there are other companies engaged in other lines of business using the word "PHILIPS" as part of their corporate names is no defense and does not warrant the use by Private Respondent of such word which constitutes an essential feature of Petitioners' corporate name previously adopted and registered and-having acquired the status of a well-known mark in the Philippines and internationally as well
*As a general rule, parties organizing a corporation must choose a name at their peril; and the use of a name similar to one adopted by another corporation, whether a business or a nonbusiness or non-profit organization if misleading and likely to injure it in the exercise in its corporate functions, regardless of intent, may be prevented by the corporation having the prior right, by a suit for injunction against the new corporation to prevent the use of the name
LYCEUM OF THE PHILIPPINES INC, VS. CA, LYCEUM OF APARRI,…ETC (OTHER SCHOOLS WITH "LYCEUM" ATTACHED TO THEIR NAMES)
Facts:
SEC Case # 1: Lyceum of the Philippines vs. Lyceum of Baguio
-Lyceum of the Philippines won with a SC Resolution affirming SEC decision which provided that Lyceum of Baguio should change its corporate name because:
(1) Lyceum dominant word in both schools
(2) Lyceum of the Philippines was registered ahead of Lyceum of Baguio
-with this SC Resolution, Lyceum of the Philippines sent letters to other schools with Lyceum in their names to change their names. Since no one complied, they filed petition vs. SEC to compel them to change their corporate names and enjoin them from using "Lyceum" from their names
SEC hearing officer: for Lyceum Philippines: the word "Lyceum" was capable of appropriation and that petitioner had acquired an enforceable exclusive right to the use of that word.
SEC en banc: Reversed: the attaching of geographical names to "Lyceum" served sufficiently to distinguish the other schools from them
CA: affirm SEC en banc: (1) no secondary meaning (no proof adduced by lyceum of the Philippines); (2) other Lyceums sued were incorporated earlier than Lyceum Philippines…(later, as this would be adopted by SC)
HELD: against Lyceum Philippines (nyehehehe)
No res adjudicata, no stare decisis:
-the SC Resolution is not res adjudicata: no identity of parties
-didn't get the stare decisis part though…
On policy behind Section 18: the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporations.
Why the court did not consider that there was identity or deceptive or confusing similarity:
Deception and confusion are precluded by appending of geographic names to the word Lyceum
Etymology of Lyceum: used to mean enclosure dedicated to Apollo….frequented by the youth for exercises and by the philosopher Aristotle and his followers for teaching. Eventually it referred to schools and institutions which provided public lectures and concerts and public discussions. Today, it generally refers to a school or institution of learning. IT IS A GENERIC WORD SIMILAR TO "UNIVERSITY"
ON claim of secondary meaning: NONE!
Doctrine of secondary meaning: from Trademark law
Philippine nut Industry vs. Standard Brands inc: . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has come to mean that the article was his product.
Does not apply when evidence DID NOT PROVE THAT THE BUSINESS HAS CONTINUED FOR SO LONG A TIME THAT IT HAS BECOME OF CONSEQUENCE AND ACQUIRED A GOOD WILL OF CONSIDERABLE VALUE SUCH THAT ITS ARTICLES AND PRODUCE HAVE ACQUIRED A WELL-KNOWN REPUTATION AND CONFUSION WOULD RESULT BY THE USE OF THE DISPUTED NAME: here no evidence; exclusive use of "Lyceum" never established, there's even one which used the word "Lyceum" 17 years prior to Lyceum of the Philippines
*We conclude and so hold that petitioner institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their own corporate names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.
ON CHANGE OF CORPORATE NAME
PC Javier and sons vs. CA
Facts:
-PC Javier and Sons obtained a P1.5M loan under the Industrial Guarantee loan Fund from First Summa Savings and Mortgage Bank. This loan was released in 2 tranches of P750k each. The second tranche was delayed because allegedly of the shortfall in the collateral to cover PC Javier's loan. REM were also executed as collaterals for the loan, as well as a P250M time deposit.
-before the loan became due, the bank changed its name to PAIC Savings and Mortgage Bank.
-when the Javiers defaulted, and after several demands made by the bank, the bank initiated an EJ foreclosure of REM.
-to forestall the EJ foreclosure, Javiers filed a complaint for Annulment of mortgage and foreclosure w/ PI, prohibition and damages + supplemental complaint.
-2 issues: (1) WON First Summa Savings and Mortgage Bank = PAIC Savings and Mortgage Bank; (2) WON obligations already due and demandable
-RTC: (1) First Summa Savings and Mortgage Bank = PAIC Savings and Mortgage Bank; (2)bank justified in foreclosing REM
-MR Denied
CA: affirm RTC; mr denied
HELD: against Javiers
On allegation that the Javiers are legally justified to withhold their amortized payments because the bank did not notify them of the change in their corporate names:
-NO RULE REQUIRING SUCH!
-several documents already shows that Javiers recognized the change in corporate name such as: (1) letter by the corporation addressed to PAIC; (2) Board Resolution of Javier Corp authorizing Pablo Javier to execute CM over machinery in favor of PAIC; (3) Secretary's Certificate certifying number (2); (4) letter by Pablo Javier to PAIC authorizing Mr. Victor Javier (GM) to secure from PAIC certain documents for his signature
-A change in the corporate name does not make a new corporation, whether effected by a special act or under a general law. It has no effect on the identity of the corporation, or on its property, rights, or liabilities.The corporation, upon such change in its name, is in no sense a new corporation, nor the successor of the original corporation. It is the same corporation with a different name, and its character is in no respect changed.
On WON COLLATERAL PUT UP SUFFICIENT: NO. it was admitted by Javier when it executed a CM
On WON THE COLLECTION OF P250M CONSTITUTES UNJUST ENRICHMENT: NO.
Only aroung P226M was taken from the P250 time deposit which was applied as payment for the petitioner corporation's loan; this set up was approved by the corporation and the balance was withdrawn by the corporation
Questioning the propriety of P250M belatedly made as they did not question it when they were allegedly made to place the P250M on time deposit
WON loan due and demandable: YES
WON there was malice or bad faith on Javier Corp: yes
-they knew that the bank changed their name so their purported ignorance was only claimed to renege on their obligation to pay
-no good faith because if they really believed that they should not pay to PAIC (and pay to First Summa instead) when the loan was due and demandable, they should have consignated the amount due to the Courts!
Chiang Kai Shek vs. CA
Facts:
-Fausta Oh has been teaching in Chiang Kai Shek Sorsogon since 1932.in July 1968, she was merely told that no assignment was assigned to her for the next semester, thus, she was dismissed.
-Fausta sued before RTC for separation pay, social security benefits, etc. Chiang Kai Shek filed MTD: it cannot be sued; Fausta thus impleaded other school officials
-CFI: Dismissed complaint
-CA: school suable and liable
HELD: For Fausta
On WON CHIANG KAI SHEK COULD BE SUED CONSIDERING THAT IT WAS NOT INCORPORATED: YES
-Act no. 2706 required private schools recognized by the government to be incorporated under the Corporation code. Its non-compliance should not prejudice Fausta of her assertion of her claims
-the fact that they had contracted with Fausta for 32 years means they had represented itself as possessed of juridical personality to do so so they are not estopped from claiming otherwise
Won persons joined in association may be sued? No need to resolve this as Chiang Kai shek can be sued itslef
WON BoD liable? No, they were appointed after Fausta's dismissal
WON, as a charitable institution, it could be sued under labor laws? YES. Charitable institutions may be liable for obligations to their employees. While it may be that the petitioner was engaged in charitable works, it would not necessarily follow that those in its employ were as generously motivated. Obviously, most of them would not have the means for such charity.
On WON there was no illegal dismissal because Fausta is a contractual employee (hired yearly basis): after considering the particular circumstance of Oh's employment, that she had become a permanent employee of the school and entitled to security of tenure at the time of her dismissal. Since no cause was shown and established at an appropriate hearing, and the notice then required by law had not been given, such dismissal was invalid.
Basta, Chiang Kai Shek liable pero kinontian benefits received kasi instead of 1 month salary, sa law sabi 1/2 month salary lang...
LBC vs. CA
Facts
-Adolfo Carlota, President-Manager of Rural Bank of Labason, was instructed by CB Regional Office to go to Manila on or before November 21 (he was instructed November 12) to follow-up the Rural Bank's plan of payment of rediscounting obligations with CB's main office. Pursuant thereto, he purchased roundtrip tickets to Manila then asked his sister to send him P1k for pocket money (to invite people for a snack or dinner). November 16 his sister sent the package. The next day the package arrived without the cash pack. Carloto followed up the package until the next day at the LBC Cebu office but no response yet.
-Since his P1k pocket money was not yet there, he went to Dipolog to claim the money from LBC but the money was said to be in LBC Cebu. He finally received the P1k on December 15, and thus was not able to go to Manila to submit their bank's requirements the deadline of which was November 21. The bank was ordered to pay P32k as penalty interest.
So Carloto, in the name of the Rural bank, filed an ACTION FOR DAMAGES from the non-performance of LBC of their obligation
RTC: for the rural bank: awarded MD, ED, attorney's fees, litigation expenses…
CA: modified: deleted atty's fees
HELD: NO MD/ED…Reverse and set aside CA and RTC
No moral damages.
Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. 7 A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. 8 Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life 9 — all of which cannot be suffered by respondent bank as an artificial person.
-Carloto also at fault for the penalty interest: if he went to Manila instead of pursuing the P1k, he could have submitted on time!
-no bad faith or malice on the part of LBC: not established _+ LBC received Cashpack at Nov16, then was sent to Cebu at Nov19
NO ED. No wanton, fraudulent, reckless, oppressive or malevolent manner of action on the part of LBC
Lozano vs. Delos Santos
-KAMAJDA (headed by Reynaldo Lozano) and SAMAJODA (headed by Antonio Anda) agreed to consolidate their respective associations (individually registered to SEC) to form UMAJODA. With this, they agreed to elect one set of officers given the sole authority to collect daily dues from members of the consolidated association.
-Elections was held where Lozano won. Anda protested, refused to recognize the elections, and continued to collect membership fees separately from the agreed UMAJODA.
-Lozano thus filed a complaint to restrain Anda from collecting dues + pay damages before MCTC
-Anda filed MTD: SEC had jurisdiction - denied
-RTC (on appeal): it is intracorporate, thus under SEC - MR denied
WON there was an intracorporate dispute? NONE
-for SEC to have jurisdiction (2 elements):
(1) status or relationship of parties: controversy must arise from 4 (refer to Union Glass)
(1) status or relationship of parties: controversy must arise from 4 (refer to Union Glass)
(2) nature of question subject of controversy: dispute among parties be intrinsically connected with the regulation of the CPA as SEC's principal function is the supervision and control of CPAs w/ end view that investment be encouraged and protected, and activities be pursued for the promotion of economic development
-here: NO INTRACORPORATE RELATION
…still a proposal to consolidate:
(a) Not approved by SEC
(b) no articles of incorporation submitted
*Consolidation becomes effective not upon mere agreement of the members but only upon issuance of the certificate of consolidation by the SEC. When the SEC, upon processing and examining the articles of consolidation, is satisfied that the consolidation of the corporations is not inconsistent with the provisions of the Corporation Code and existing laws, it issues a certificate of consolidation which makes the reorganization official. The new consolidated corporation comes into existence and the constituent corporations dissolve and cease to exist.
On argument that there was corporation by estoppel: IRRELEVANT. Jurisdiction is fixed by law and not subject to agreement of parties.
-Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness. It applies when persons assume to form a corporation and exercise corporate functions and enter into business relations with third person. Where there is no third person involved and the conflict arises only among those assuming the form of a corporation, who therefore know that it has not been registered, there is no corporation by estoppel.
Lim tong Lim vs. CA
Facts:
Facts:
-allegedly on behalf of "Ocean Quest Fishing Company" Antonio Chua and Peter Yao entered into a contract with Philippine Fishing Gear Industries for sale of nets and floats (amount totals aroundP600k). The two allegedly has a business venture with Lim Tong Lim (who did not sign the agreement). The two defaulted, thus, were sued. But since there was a certification from SEC that "Ocean Quest Fishing Company" was nonexistent, Philippine Fishing Gear sued instead Chua, Yao and Lim.
-Chua admitted liability, requested additional time to pay
-Yao filed an answer but failed to appear on subsequent hearings
-Lim filed and answer with counterclaim and crossclaim
TC: the 3 are liable JOINTLY as there was a partnership among the 3 based on:
(1) testimony of witnesses
(2) Compromise agreement executed by Lim and the 2 others (though silent as to their relationship)
CA: Affirmed RTC
-there was a partnership for a specific undertaking (commercial fishing
WON there is a partnership (and WON Lim is liable)
-Lim was alleging: (1) not sufficient to rely on the compromise agreement; (2) he did not negotiate with Philippine Fishing Gear; (3) he was a lessor of the fishing boat F/B Lourdes (and this is not an asset he contributed to the "partnership"
-SC: THERE IS A PARTNERSHIP (both CA and RTC used the ff to establish that there is a partnership (and not just the compromise agreement):
(1) That Petitioner Lim Tong Lim requested Peter Yao who was engaged in commercial fishing to join him, while Antonio Chua was already Yao's partner;
(2) That after convening for a few times, Lim, Chua, and Yao verbally agreed to acquire two fishing boats, the FB Lourdes and the FB Nelson for the sum of P3.35 million;
(3) That they borrowed P3.25 million from Jesus Lim, brother of Petitioner Lim Tong Lim, to finance the venture.
(4) That they bought the boats from CMF Fishing Corporation, which executed a Deed of Sale over these two (2) boats in favor of Petitioner Lim Tong Lim only to serve as security for the loan extended by Jesus Lim;
(5) That Lim, Chua and Yao agreed that the refurbishing, re-equipping, repairing, dry docking and other expenses for the boats would be shouldered by Chua and Yao;
(6) That because of the "unavailability of funds," Jesus Lim again extended a loan to the partnership in the amount of P1 million secured by a check, because of which, Yao and Chua entrusted the ownership papers of two other boats, Chua's FB Lady Anne Mel and Yao's FB Tracy to Lim Tong Lim.
(7) That in pursuance of the business agreement, Peter Yao and Antonio Chua bought nets from Respondent Philippine Fishing Gear, in behalf of "Ocean Quest Fishing Corporation," their purported business name.
(8) That subsequently, Civil Case No. 1492-MN was filed in the Malabon RTC, Branch 72 by Antonio Chua and Peter Yao against Lim Tong Lim for (a) declaration of nullity of commercial documents; (b) reformation of contracts; (c) declaration of ownership of fishing boats; (4) injunction; and (e) damages.
(9) That the case was amicably settled through a Compromise Agreement executed between the parties-litigants the terms of which are already enumerated above.
-Chua, Yao and Lim bought boats under a loan which they all agreed to pay with the proceeds of the sale of the boats, and to divide equally among them the excess or loss - these fall under COMMON FUND.The contribution to such fund need not be cash or fixed assets; it could be an intangible like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the boats would be divided equally among them also shows that they had indeed formed a partnership.
Moreover, it is clear that the partnership extended not only to the purchase of the boat, but also to that of the nets and the floats. The fishing nets and the floats, both essential to fishing, were obviously acquired in furtherance of their business. It would have been inconceivable for Lim to involve himself so much in buying the boat but not in the acquisition of the aforesaid equipment, without which the business could not have proceeded.
Compromise Agreement Not the Sole Basis of Partnership
The CA and the RTC delved into the history of the document and explored all the possible consequential combinations in harmony with law, logic and fairness. Verily, the two lower courts' factual findings mentioned above nullified petitioner's argument that the existence of a partnership was based only on the Compromise Agreement.
Petitioner Was a Partner,Not a Lessor
-his own boat was sold (so if he's just a lessor, why would he allow his lessees to sell his boat?). And the boat was sold to pay a loan for the business. If he was not a partner, why would he want to be liable for something he is not a part of
-It is not uncommon to register the properties acquired from a loan in the name of the person the lender trusts, who in this case is the petitioner himself. After all, he is the brother of the creditor, Jesus Lim.
Corporation by Estoppel (Sec21, Corpo Code)
Sec. 21 of the Corporation Code of the Philippines provides:
Sec. 21. Corporation by estoppel. — All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result thereof: Provided however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.
One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation.
Thus, even if the ostensible corporate entity is proven to be legally nonexistent, a party may be estopped from denying its corporate existence. "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.
The doctrine of corporation by estoppel may apply to the alleged corporation and to a third party. In the first instance, an unincorporated association, which represented itself to be a corporation, will be estopped from denying its corporate capacity in a suit against it by a third person who relied in good faith on such representation. It cannot allege lack of personality to be sued to evade its responsibility for a contract it entered into and by virtue of which it received advantages and benefits.
On the other hand, a third party who, knowing an association to be unincorporated, nonetheless treated it as a corporation and received benefits from it, may be barred from denying its corporate existence in a suit brought against the alleged corporation. In such case, all those who benefited from the transaction made by the ostensible corporation, despite knowledge of its legal defects, may be held liable for contracts they impliedly assented to or took advantage of.
-even though Lim did not sign in any of the contracts of the alleged corporation with Philippine Fishing, it benefitted from the transaction with the fishing nets. So he is liable.
Third Issue: Validity of Attachment
Already moot
International Express vs. CA
Facts
Facts
-International Express offered its services to the Philippine Football Federation through its president Mr. Henri Khan. The latter agreed to secure tickets for its athletes and officials to KL and China for around P450k. Only the partial payments of P176k , P265k,P31k and a personal check of Henri Khan amounting to P50k were paid. Thereafter, none was paid
-International Express demanded payment. But none was made so they filed CIVIL CASE for collection vs. PFF and Kahn as president (allegedly because he guaranteed said obligation)
-Answer w/ counterclaim by Kahn: He did not guarantee payment, only acted as an agent of the Federation which has a separate and distinct juridical personality
-PFF Declared in default
RTC: Kahn personally liable
(1) no evidence of corporate existence of PFF
(2) since unincorporated, no power to enter into contract (as a corporation). SO contract entered by its officers on behalf of the corpo is not binding on, or enforceable against it. Officers (who entered contract) personally liable
CA: Reversed
(1) PFF has a juridical existence
(2) International express failed to prove that Kahn guaranteed the obligation personally, separate and distinct from its offices
MR asking that PFF instead pay denied because RTC already dismissed case vs. PFF and International Express did not appeal from the decision
HELD
(1) PFF may have juridical existence BUT not automatically
-recognized under PD 604 and RA 3135 (Revised Charter of the Philippine Amateur Athletic Federation)
-under the said laws, sports associations may adopt consti and by-laws, purchase, sell… (basta functions which may be attributed to a juridical entity)
BUT…
while we agree with the appellate court that national sports associations may be accorded corporate status, such does not automatically take place by the mere passage of these laws.
It is a basic postulate that before a corporation may acquire juridical personality, the State must give its consent either in the form of a special law or a general enabling act. These laws merely recognized the existence of national sports associations and provided the manner by which these entities may acquire juridical personality. It did not create the PFF.
-before an entity may be considered as a national sports association, such entity must be recognized by the accrediting organization, the Philippine Amateur Athletic Federation under R.A. 3135, and the Department of Youth and Sports Development under P.D. 604.
IN THIS CASE: Kahn failed to substantiate that PFF was recognized by any accrediting agency.
*Accordingly, we rule that the Philippine Football Federation is not a national sports association within the purview of the aforementioned laws and does not have corporate existence of its own.
(2) Kahn liable.
-any person acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges and becomes personally liable for contract entered into or for other acts performed as such agent.
-As president of the Federation, Henri Kahn is presumed to have known about the corporate existence or non-existence of the Federation.
-on corporation by estoppel: mistakenly applied by CA (by dealing with PFF, International Express contracted and dealt with it in a manner recognizing and admitting existence of PFF): The application of the doctrine applies to a third party only when he tries to escape liability on a contract from which he has benefited on the irrelevant ground of defective incorporation. In the case at bar, the petitioner is not trying to escape liability from the contract but rather is the one claiming from the contract.
LGVHA SOUTH vs. CA
Facts
Loyola Grand Villas Homeowners Association (LGVHA) was registered in 1983 as the sole homeowners' organization in LGV. However, it failed to file its corporate by-laws.
-when they did try to file their by-laws, they found out that there are 2 other Homeowners assoc in LGV: LGVHA south and LGVHA north. North Association registered February 1989 but bylaws submitted December 1988.
-In July 1989, Soliven (first president of LGVHA and owner of the developer of LGV) inquired about the status of LGVHA but the head of the legal department of HIGC informed him that LGVHA HAD BEEN AUTOMATICALLY DISSOLVED:
(1) it did not submit its by-laws w/n 1 month from date of incorporation
(2) there was non-user of corporate character because no report of LGVHA activities to HIGC
-as they were automatically dissolved, the south LGVHA was able to register with HIGC on July 1989 and submitted its by laws on the same date.
-LGVHA filed complaint with HIGC:
(1) questioned revocation of certificate of reg w/o due notice and hearing
(2) prayed for cancellation of cert of reg of North and South Assoc
…HIGC Hearing Officer ruled in favor of LGVHA. Cancelled cert of reg of North and South Assn.
-South Assn appealed to Board of HIGC
-HIGC BOARD: dismissed appeal
-CA: affirm HIGC Board's dismissal of appeal
(1) req't to file by-laws w/n 1 month from official notice of issuance of cert of inc presupposes that it is already incorporated, though it may file its by-laws w/ articles of incorp
(2) nothing in the provisions of Corpo code or any other law imply that failure to file by-laws result in an automatic dissolution
WON failure to file its by-laws w/n period prescribed had the effect of automatic dissolution of the corporation (with "must" in the provision and even if without sanctions provided in the code for failure to file by-laws)
NO
-"must" in this case is merely directory
-it was never the intention of the legislature to have an automatic dissolution for failure to file the by-laws on time
-second paragraph of Section 46 provides that by-laws could be filed even prior incorporation (so not really required to file by-laws AFTER incorporation)
-by-laws may be necessary for the “government” of the corporation but these are subordinate to the articles of incorporation as well as to the Corporation Code and related statutes.
-there may be instances where by-laws are not necessary to corporate existence: where the charter provides for the government of the body and where the governing statute in express terms confers upon the corporation the power to adopt by-laws.
-“It has been said that the by-laws of a corporation are the rule of its life, and that until by-laws have been adopted the corporation may not be able to act for the purposes of its creation, and that the first and most important duty of the members is to adopt them. This would seem to follow as a matter of principle from the office and functions of by-laws. Viewed in this light, the adoption of by-laws is a matter of practical, if not one of legal, necessity. Moreover, the peculiar circumstances attending the formation of a corporation may impose the obligation to adopt certain by-laws, as in the case of a close corporation organized for specific purposes. And the statute or general laws from which the corporation derives its corporate existence may expressly require it to make and adopt by-laws and specify to some extent what they shall contain and the manner of their adoption. The mere fact, however, of the existence of power in the corporation to adopt by-laws does not ordinarily and of necessity make the exercise of such power essential to its corporate life, or to the validity of any of its acts.
-PD 902-A now provides that the SEC may suspend or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations (after proper notice and hearing) with the failure to file by-laws w/n the required period - so still no automatic dissolution
-PD 902-A and Corpo code are in pari materia.
-It should be stressed in this connection that substantial compliance with conditions subsequent will suffice to perfect corporate personality. Organization and commencement of transaction of corporate business are but conditions subsequent and not prerequisites for acquisition of corporate personality. The adoption and filing of by-laws is also a condition subsequent. Under Section 19 of the Corporation Code, a corporation commences its corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues certificate of incorporation under its official seal. This may be done even before the filing of the by-laws, which under Section 46 of the Corporation Code, must be adopted ‘within one month after receipt of official notice of the issuance of its certificate of incorporation.’”
That the corporation involved herein is under the supervision of the HIGC does not alter the result of this case. The HIGC has taken over the specialized functions of the former Home Financing Corporation by virtue of Executive Order No. 90 dated December 17, 1986.With respect to homeowners associations, the HIGC shall “exercise all the powers, authorities and responsibilities that are vested on the Securities and Exchange Commission x x x, the provision of Act 1459, as amended by P.D. 902-A, to the contrary notwithstanding.”
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