TRILLANA, petitioner

vs.
QUEZON COLLEGE, INC., respondent
G.R. No. L-5003
June 27, 1953
FACTS:
Damasa Crisostomo sent a letter to the Board of Trustees of the Quezon College
subscribing to 200 shares of its capital stock at par value of Php100 each. Damasa
Crisostomo died on October 26, 1948. As no payment appears to have been made on
the subscription mentioned in her letter, the Quezon College, Inc. presented a claim
before the Court of First Instance of Bulacan in her testate proceeding, for the
collection of the sum of P20,000, representing the value of the subscription to the
capital stock of the Quezon College, Inc. This claim was opposed by the administrator
of the estate, and the Court of First Instance of Bulacan, after hearing issued an order
dismissing the claim of the Quezon College, Inc. on the ground that the subscription
in question was neither registered in nor authorized by the Securities and Exchange
Commission. From this order the Quezon College, Inc. has appealed.
ISSUE:
Whether or not the subscription applied for by Damasa Crisostomo is an
enforceable contract.
RULING:
NO.
It appears that the application sent by Damasa Crisostomo to the Quezon
College, Inc. was written on a general form indicating that an applicant will enclose an
amount as initial payment and will pay the balance in accordance with law and the
regulations of the College. On the other hand, in the letter actually sent by Damasa
Crisostomo, the latter (who requested that her subscription for 200 shares be entered)
not only did not enclose any initial payment but stated that "babayaran kong lahat
pagkatapos na ako ay makapagpahuli ng isda." There is nothing in the record to show
that the Quezon College, Inc. accepted the term of payment suggested by Damasa
Crisostomo, or that if there was any acceptance the same came to her knowledge
during her lifetime. As the application of Damasa Crisostomo is obviously at variance
with the terms evidenced in the form letter issued by the Quezon College, Inc., there
was absolute necessity on the part of the College to express its agreement to Damasa's
offer in order to bind the latter. Conversely, said acceptance was essential, because it
would be unfair to immediately obligate the Quezon College, Inc. under Damasa's
promise to pay the price of the subscription after she had caused fish to be caught. In
other words, the relation between Damasa Crisostomo and the Quezon College, Inc.
had only thus reached the preliminary stage whereby the latter offered its stock for
subscription on the terms stated in the form letter, and Damasa applied for
subscription fixing her own plan of payment, a relation, in the absence as in the
present case of acceptance by the Quezon College, Inc. of the counter offer of Damasa
Crisostomo, that had not ripened into an enforceable contract.
Indeed, the need for express acceptance on the part of the Quezon College, Inc.
becomes the more imperative, in view of the proposal of Damasa Crisostomo to pay the
value of the subscription after she has harvested fish, a condition obviously dependent
upon her sole will and, therefore, facultative in nature, rendering the obligation void,
under article 1115 of the old Civil Code which provides as follows: "If the fulfillment of
the condition should depend upon the exclusive will of the debtor, the conditional
obligation shall be void. If it should depend upon chance, or upon the will of a third
person, the obligation shall produce all its effects in accordance with the provisions of

this code." It cannot be argued that the condition solely is void, because it would have
served to create the obligation to pay, wherein only the potestative condition was held
void because it referred merely to the fulfillment of an already existing indebtedness.

BAYLA, et al., petitioner

vs.
SILANG TRAFFIC CO., INC., respondent
G.R. Nos. L-48195 and 48196
May 1, 1942
FACTS:
Petitioners in G.R. No. 48195 instituted this action in the Court of First
Instance of Cavite against the respondent Silang Traffic Co., Inc. (cross-petitioner in
G.R. No. 48196), to recover certain sums of money which they had paid severally to
the corporation on account of shares of stock they individually agreed to take and pay
for under certain specified terms and conditions. The agreements signed by the other
petitioners were of the same date (March 30, 1935) and in identical terms as the
foregoing except as to the number of shares and the corresponding purchase price.
The petitioners agreed to purchase a total of 46 shares and, up to April 30, 1937, had
paid the corresponding amount on account thereof.Petitioners' action for the recovery
of the sums above mentioned is based on a resolution by the board of directors of the
respondent corporation on August 1, 1937.
The respondent corporation set up the following defenses: (1) That the abovequoted resolution is not applicable to the petitioners Sofronio T. Bayla, Josefa Naval,
and Paz Toledo because on the date thereof "their subscribed shares of stock had
already automatically reverted to the defendant, and the installments paid by them
had already been forfeited"; and (2) that said resolution of August 1, 1937, was
revoked and cancelled by a subsequent resolution of the board of directors of the
defendant corporation dated August 22, 1937.
ISSUE:
Whether or not the agreement was a contract of subscription to the capital
stock of the respondent corporation.
RULING:
NO.
Whether a particular contract is a subscription or a sale of stock is a matter of
construction and depends upon its terms and the intention of the parties. In the
Unson case just cited, this Court held that a subscription to stock in an existing
corporation is, as between the subscriber and the corporation, simply a contract of
purchase and sale.
It seems clear from the terms of the contracts in question that they are
contracts of sale and not of subscription. The lower courts erred in overlooking the
distinction between subscription and purchase "A subscription, properly speaking, is
the mutual agreement of the subscribers to take and pay for the stock of a
corporation, while a purchase is an independent agreement between the individual
and the corporation to buy shares of stock from it at stipulated price." In some
particulars the rules governing subscriptions and sales of shares are different. For
instance, the provisions of our Corporation Law regarding calls for unpaid

subscription and assessment of stock do not apply to a purchase of stock. Likewise the
rule that corporation has no legal capacity to release an original subscriber to its
capital stock from the obligation to pay for his shares, is inapplicable to a contract of
purchase of shares.

UNIVERSAL MILLS CORPORATION

vs.
UNIVERSAL TEXTILE MILLS, INC.
G.R. No. L-28351, July 28, 1977
FACTS:
Universal Textile Mills, Inc. was organized on December 29, 1953, as a textile
manufacturing firm for which it was issued a certificate of registration on January 8,
1954. The Universal Mills Corporation, on the other hand, was registered with the
Commission on October 27, 1954, under its original name, Universal Hosiery Mills
Corporation, having as its primary purposes the "manufacture and production of
hosieries and wearing apparel of all kinds." On May 24, 1963, it filed an amendment to
its articles of incorporation changing its name to Universal Mills Corporation, its
present name, for which it was issued the certificate of approval on June 10, 1963.
The immediate cause of this complaint was the occurrence of a fire which
gutted petitioners spinning mills in Pasig, Rizal. Universal Textile Mills, Inc. alleged
that as a result of this fire and because of the similarity of petitioner's name to that of
the former, the news items appearing in the various metropolitan newspapers carrying
reports on the fire created uncertainty and confusion among its bankers, friends,
stockholders and customers prompting respondent to make announcements, clarifying
the real Identity of the corporation whose property was burned.
The Commission then issued an order enjoining Universal Mills Corporation
from using its present corporate name because it is confusingly and deceptively
similar with Universal Textile Mills, Inc.
ISSUE:
Whether or not the order of the SEC is proper.
RULING:
YES.
The corporate names in question are not Identical, but they are indisputably so
similar that even under the test of "reasonable care and observation as the public
generally are capable of using and may be expected to exercise" invoked by appellant.
The Supreme Court ruled that confusion will usually arise, considering that under the
second amendment of its articles of incorporation on August 14, 1964, appellant
included among its primary purposes the "manufacturing, dyeing, finishing and
selling of fabrics of all kinds" in which respondent had been engaged for more than a
decade ahead of petitioner.
And since respondent is not claiming damages in this proceeding, it is, of
course, immaterial whether or not appellant has acted in good faith, but the SC
cannot perceive why of all names, petitioner had to choose a name already being used
by another firm engaged in practically the same business for more than a decade
enjoying well-earned patronage and goodwill, when there are so many other
appropriate names it could possibly adopt without arousing any suspicion as to its
motive and, more importantly, any degree of confusion in the mind of the public which
could mislead even its own customers, existing or prospective.

UY SIULIONG, MARIANO LIMJAP, GACU UNG JIENG, EDILBERTO CALIXTO and

UY CHO YEE
vs.
THE DIRECTOR OF COMMERCE AND INDUSTRY
G.R. No.L-15429. December 1, 1919
FACTS:
Prior to the presentation of the petition the petitioners had been associated
together as partners, which partnership was known as "mercantil regular colectiva,
under the style and firm name of "Siuliong y Cia. That the petitioners herein, who had
theretofore been members of said partnership of "Siuliong y Cia.," desired to dissolve
said partnership and to form a corporation composed of the same persons as
incorporators, to be known as "Siulong y Compaia, Incorporada.
While the articles of incorporation of "Siuliong y Cia., Inc." states that its
purpose is to acquire and continue the business, with some of its objects or purposes,
of Siuliong & Co., it will be found upon an examination of the purposes enumerated in
the proposed articles of incorporation of "Siuliong y Cia., Inc.," that some of the
purposes of the original partnership of "Siuliong y Cia." have been omitted.
ISSUE:
Whether or not a corporation can engage in other purposes other than that
stated in the purpose clause of its articles of incorporation.
RULING:
YES.
A corporation may be organized under the laws of the Philippine Islands for
mercantile purposes, and to engage in such incidental business as may be necessary
and advisable to give effect to, and aid in, the successful operation and conduct of the
principal business. All of the power and authority included in the articles of
incorporation of "Siuliong y Cia., Inc.," enumerated above in paragraph 4 of the
Articles of Incorporation are only incidental to the principal purpose of said proposed
incorporation, to wit: "mercantile business." The purchase and sale, importation and
exportation of the products of the country, as well as of foreign countries, might make
it necessary to purchase and discount promissory notes, bills of exchange, bonds,
negotiable instruments, stock, and interest in other mercantile and industrial
associations. It might also become important and advisable for the successful
operation of the corporation to act as agent for insurance companies as well as to buy,
sell and equip boats and to buy and sell other establishments, and industrial and
mercantile businesses. The proposed articles of incorporation do not authorize the
petitioners to engage in a business with more than one purpose, the Court do not
mean to be understood as having decided that corporations under the laws of the
Philippine Islands may not engage in a business with more than one purpose. Such
an interpretation might work a great injustice to corporations organized under the
Philippine laws. Such an interpretation would give foreign corporations, which are

permitted to be registered under the laws here and which may be organized for more
than one purpose, a great advantage over domestic corporations. It was not the
intention of the legislature to give foreign corporations such an advantage over
domestic corporations.

CLAVECILLIA RADIO SYSTEM

vs.
HON. AGUSTIN ANTILLON, as City Judge of the Municipal Court of Cagayan de
Oro Cityand NEW CAGAYAN GROCERY
G.R. No.L-22238.February 18, 1967
FACTS:
On June 22, 1963, the New Cagayan Grocery filed a complaint against the
Clavecilla Radio System alleging, in effect, that on March 12, 1963, the following
message, addressed to the former, was filed at the latter's Bacolod Branch Office for
transmittal thru its branch office at Cagayan de Oro: NECAGRO CAGAYAN DE ORO
(CLAVECILLA): REURTEL WASHED NOT AVAILABLE REFINED TWENTY FIFTY IF
AGREEABLE SHALL SHIP LATER REPLY POHANG. The Cagayan de Oro branch office
having received the said message omitted, in delivering the same to the New Cagayan
Grocery, the word "NOT" between the words "WASHED" and "AVAILABLE," thus
changing entirely the contents and purport of the same and causing the said
addressee to suffer damages. After service of summons, the Clavecilla Radio System
filed a motion to dismiss the complaint on the grounds that it states no cause of action
and that the venue is improperly laid. The New Cagayan Grocery interposed an
opposition to which the Clavecilla Radio System filed its rejoinder. Thereafter, the City
Judge, on September 18, 1963, denied the motion to dismiss for lack of merit and set
the case for hearing.
Hence, the Clavecilla Radio System filed a petition for prohibition with
preliminary injunction with the Court of First Instance praying that the City Judge,
Honorable Agustin Antillon, be enjoined from further proceeding with the case on the
ground of improper venue. The respondents filed a motion to dismiss the petition but
this was opposed by the petitioner. Later, the motion was submitted for resolution on
the pleadings.
ISSUE:
Whether or not the place is the proper venue to sue Clavecilla Radio System?
RULING:
NO.

In this case, the suit for damages filed with the city court is based upon tort
and not upon a written contract. Section 1 of Rule 4 of the New Rules of Court,
governing venue of actions in inferior courts, provides in its paragraph (b)(3) that when
"the action is not upon a written contract, then in the municipality where the
defendant or any of the defendants resides or may be served with summons." Settled is
the principle in corporation law that the residence of a corporation is the place where
its principal office is established. Since it is not disputed that the Clavecilla Radio
System has its principal office in Manila, it follows that the suit against it may
properly be filed in the City of Manila.
The appellee maintain, however, that with the filing of the action in Cagayan de
Oro City, venue was properly laid on the principle that the appellant may also be
served with summons in that city where it maintains a branch office. The term "may
be served with summons" does not apply when the defendant resides in the
Philippines for, in such case, he may be sued only in the municipality of his residence,
regardless of the place where he may be found and served with summons. As any
other corporation, the Clavecilla Radio System maintains a residence which is Manila
in this case, and a person can have only one residence at a time (See Alcantara vs.
Secretary of the Interior, 61 Phil. 459; Evangelists vs. Santos, 86 Phil. 387). The fact
that it maintains branch offices in some parts of the country does not mean that it
can be sued in any of these places. To allow an action to be instituted in any place
where a corporate entity has its branch offices would create confusion and work
untold inconvenience to the corporation.

ALHAMBRA CIGAR & CIGARETTE MANUFACTURING COMPANY, INC.

vs.
SECURITIES & EXCHANGE COMMISSION
G.R. No. L-23606.July 29, 1968
FACTS:
Incorporated under Philippine laws on January 15, 1912, petitioner Alhambra
Cigars Mfg. Co (ACCMI) was to exist for fifty (50) years from incorporation. Its term of
existence expired on January 15, 1962. On that date, it ceased transacting business
and entered into a state of liquidation.
Thereafter, a new corporation Alhambra Industries, Inc. was formed to carry
on the business of Alhambra. On May 1, 1962, Alhambra's stockholders, by
resolution, named Angel S. Gamboa trustee to take charge of its liquidation. On June
20, 1963,within Alhambra's three-year statutory period for liquidation Republic Act
3531 was enacted into law amending Section 18 of the Corporation Law and enabling
domestic private corporations to extend their corporate life beyond the period fixed by
the articles of incorporation for a term not to exceed fifty years in any one instance.
On July 15, 1963 Alhambra's board of directors resolved to amend paragraph
"Fourth" of its articles of incorporation to extend its corporate life for an additional fifty
years, or a total of 100 years from its incorporation. Its stockholders, representing
more than two-thirds of its subscribed capital stock, voted to approve the foregoing
resolution. SEC, however, returned said amended articles of incorporation with the
ruling that RA 3531 which took effect only on June 20, 1963, cannot be availed of by
the said corporation, for the reason that its term of existence had already expired
when the said law took effect; in short, said law has no retroactive effect."

ISSUE:
Whether or not a corporation may extend its life by amendment of its articles of
incorporation effected during the three-year statutory period for liquidation when its
original term of existence had already expired.
RULING:
NO.
Provided by Section 77 of the Corporation Law, the continuance of a "dissolved"
corporation as a body corporate for three years has for its purpose the final closure of
its affairs, and no other; the corporation is specifically enjoined from continuing the
business for which it was established. The liquidation of the corporation's affairs set
forth in Section 77 became necessary precisely because its life had ended. For this
reason alone, the corporate existence and juridical personality of that corporation to
do business may no longer be extended. The provisions of RA 3531 merely empower a
corporation to act in liquidation, and not to extend its corporate existence.