G.R. No.

L-8576 February 11, 1915

VARGAS and COMPANY, plaintiff-appellee,
vs.
CHAN HANG CHIU, ET AL., defendants-appellants.

MORELAND, J.:

Characters:
1. VARGAS and COMPANY - plaintiff is a merchantile association duly organized under the laws of thePhilippine
Islands and presumably registered as required by law. Manufacturer of plows.
2. Chan Hang Chiu filed claims against plaintiff to recover a sum of money. (no other details as to defendant)
3. Jose Macapinlac managing agent of the Company who received the summons and complaint of the defendant
from the sheriff.
4. Tomas O. Segovia bookkeeper of the company presented as a witness testifying that Macapinlac is not a
managing agent.

Facts: A complaint for the recovery of a sum of money was filedat the justice court of Manila by Chiu against Vargas
and Company. The summons was delivered to one Jose Macapinlac, he being the managing agent of said Vargas & Co.
at the time of such service. A judgment in favor of Chui was rendered for the recovery of P327.28. The Company paid
the amount of judgment and cost under protest. The contention of plaintiff is, and that contention is supported by the
decision of the court below, that Vargas & Co. being a partnership, it is necessary, in bringing an action against it, to
serve the summons on all of the partners, delivering to each one of them personally a copy thereof; and that the
summons in this case having been served on the managing agent of the company only, the service was of no effect as
against the company and the members thereof and the judgment entered by virtue of such a service was void. Plaintiff
also contends, and this contention is likewise supported by the court below, that, even admitting that service on the
managing agent of the plaintiff is sufficient service, as a matter of fact no service was really made on the managing agent
of the company but, rather, on an employee or salesman of the company, who had no powers of management or
supervision and who was not competent to receive service on behalf of the company within the provisions of section 396
of the Code of Civil Procedure.

Issue: 1. Whether or not the service of the summons against the partnership through the managing agent valid. YES

Ruling: We may say that it has been the universal practice in the Philippine Islands since American occupation, and was
the practice prior to that time, to treat companies of the class to which the plaintiff belongs as legal or juridicial entities
and to permit them to sue and be sued in the name of the company, the summons being served solely on the managing
agent or other official of the company specified by the section of the Code of Civil Procedure referred to.
Article 35 of the Civil Code provides:
The following are judicial persons:
1. The corporation, associations, and institutions of public interest recognized by law.
2. The associations of private interest, be they civil, commercial, or industrial, to which the law grants
proper personality, independent of that of each member thereof.
Article 38 provides: "Judicial persons may acquire and possess property of all kinds, as well as contract obligations and
institute civil or criminal actions in accordance with the laws and rules of their establishment."

Article 116 of the Code of Commerce provides in part: "After a commercial association has been established, it shall have
legal representation in all its acts and contracts."

These provisions have been the foundation of the practice followed without interruption for many years that association
of the class to which plaintiff belongs have an independent and separate legal entity sufficient to permit them to sue and
be sued in the company name and to be served with process through the chief officer or managing agent thereof or any
other official of the company specified by law.


G.R. No. 75875 December 15, 1989
WOLRGANG AURBACH, JOHN GRIFFIN, DAVID P. WHITTINGHAM and CHARLES CHAMSAY, petitioners,
vs.
SANITARY WARES MANUFACTURING CORPORATOIN, ERNESTO V. LAGDAMEO, ERNESTO R.
LAGDAMEO, JR., ENRIQUE R. LAGDAMEO, GEORGE F. LEE, RAUL A. BONCAN, BALDWIN YOUNG and
AVELINO V. CRUZ, respondents.

(Consolidated petition) ponente: GUTIERREZ, JR., J.:

Characters:
1. Petitioners w/ LUCIANO E. SALAZAR questions the election of directors for the Sanitary Wares
Manufatucring Corporation.
2. Respondents were the elected directors of the said corporation.
Facts: In 1961, Saniwares, a domestic corporation was incorporated for the primary purpose of manufacturing and
marketing sanitary wares. One of the incorporators, Mr. Baldwin Young went abroad to look for foreign partners,
European or American who could help in its expansion plans. On August 15, 1962, ASI, a foreign corporation domiciled
in Delaware, United States entered into an Agreement with Saniwares and some Filipino investors whereby ASI and the
Filipino investors agreed to participate in the ownership of an enterprise which would engage primarily in the business
of manufacturing in the Philippines and selling here and abroad vitreous china and sanitary wares. The parties agreed
that the business operations in the Philippines shall be carried on by an incorporated enterprise and that the name of the
corporation shall initially be "Sanitary Wares Manufacturing Corporation." In their agreement, the management of the
corporation will be vested in a Board of directors consisting of 9 memebers, ASI is to be given 3 seats in the board of the
directors as long as they maintain 30% equity while the remaining 6 seats will be allotted for the Filipino owners. In
the duration of their operation, ASI increased its holdings from 30% to 40%. In an election held, respondents were
elected as board of directors. The result of the election was questioned by petitioners on the ground that there should
be an additional seat for ASI by reason of their increased equity and sought the election of Chamsay and Salazar. The
case was file in the SEC. SEC dismissed the case and was brought to the IAC for appeal. The IAC overturned the
decision of tge SEC but was overturned upon the motion for reconsideration to CA. Thus this petition.

Issue: Whether or not the Sanitary Wares Manufacturing is a corporation. NO
Was the election valid. YES

Ruling: In the instant cases, our examination of important provisions of the Agreement as well as the testimonial
evidence presented by the Lagdameo and Young Group shows that the parties agreed to establish a joint venture and
not a corporation. The history of the organization of Saniwares and the unusual arrangements which govern its policy
making body are all consistent with a joint venture and not with an ordinary corporation.

Equally important as the consideration of the contractual intent of the parties is the consideration as regards the
possible domination by the foreign investors of the enterprise in violation of the nationalization requirements enshrined
in the Constitution and circumvention of the Anti-Dummy Act. In this regard, petitioner Salazar's position is that the
Anti-Dummy Act allows the ASI group to elect board directors in proportion to their share in the capital of the entity.
It is to be noted, however, that the same law also limits the election of aliens as members of the board of directors in
proportion to their allowance participation of said entity. In the instant case, the foreign Group ASI was limited to
designate three directors. This is the allowable participation of the ASI Group. Hence, in future dealings, this limitation
of six to three board seats should always be maintained as long as the joint venture agreement exists considering that in
limiting 3 board seats in the 9-man board of directors there are provisions already agreed upon and embodied in the
parties' Agreement to protect the interests arising from the minority status of the foreign investors.