Philips Export BV. vs. CA
CA
206 SCRA 457
Doctrine: 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 whole world.
FACTS:
Philips Export B.V. (PEBV) filed with the SEC for the cancellation of the word “Philips” the
corporate name of Standard Philips Corporation in view of its prior registration with the Bureau of
Patents and the SEC. However, Standard Philips refused to amend its Articles of Incorporation
so PEBV filed with the SEC a petition for the issuance of a Writ of Preliminary Injunction,
however this was denied ruling that it can only be done when the corporate names are identical
and they have at least 2 words different. This was affirmed by the SEC en banc and the Court of
Appeals thus the case at bar.
ISSUE: Whether or not Standard Philips can be enjoined from using Philips in its corporate
name
RULING: YES
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 whole world. According to Sec. 18 of the Corporation Code,
no corporate name may be allowed if the proposed name is identical or deceptively 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.
For the prohibition to apply, 2 requisites must be present:
(1) the complainant corporation must have acquired a prior right over the use of such corporate
name and
(2) the proposed name is either identical or deceptively or confusingly similar to that of any
existing corporation or to any other name already protected by law or patently deceptive,
confusing or contrary to existing law.
With regard to the 1st requisite, PEBV adopted the name “Philips” part of its name 26 years
before Standard Philips. As regards the 2nd, the test for the existence of confusing similarity is
whether the similarity is such as to mislead a person using ordinary care and discrimination.
Standard Philips only contains one word, “Standard”, different from that of PEBV. The 2
companies’ products are also the same, or cover the same line of products. Although PEBV
primarily deals with electrical products, it has also shipped to its subsidiaries machines and parts
which fall under the classification of “chains, rollers, belts, bearings and cutting saw”, the goods
which Standard Philips also produce. Also, among Standard Philips’ primary purposes are to
buy, sell trade x x x electrical wiring devices, electrical component, electrical supplies. Given
these, there is nothing to prevent Standard Philips from dealing in the same line of business of
electrical devices. The use of “Philips” by Standard Philips tends to show its intention to ride on
the popularity and established goodwill of PEBV.
Lyceum of the Phils. vs.
219 SCRA 610
Facts: Petitioner had sometime commenced before in the SEC a complaint against Lyceum of
Baguio, to require it to change its corporate name and to adopt another name not similar or
identical with that of petitioner. SEC decided in favor of petitioner. Lyceum of Baguio filed
petition for certiorari but was denied for lack of merit.
Armed with the resolution of the Court, petitioner instituted before the SEC to compel private
respondents, which are also educational institutions, to delete word “Lyceum” from their
corporate names and permanently to enjoin them from using such as part of their respective
names.
Hearing officer sustained the claim of petitioner and held that the word “Lyceum” was capable of
appropriation and that petitioner had acquired an enforceable right to the use of that word.
In an appeal, the decision was reversed by the SEC En Banc. They held that the word “Lyceum”
to have become identified with petitioner as to render use thereof of other institutions as
productive of confusion about the identity of the schools concerned in the mind of the general
public.
5. Petitioner went to appeal with the CA but the latter just affirmed the decision of the SEC En
Banc.
Held: Under the corporation code, no corporate name may be allowed by the SEC 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 laws. The policy behind this provision is to avoid fraud upon the public, which
would have the 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.
The corporate names of private respondents are not identical or deceptively or confusingly
similar to that of petitioner’s. Confusion and deception has been precluded by the appending of
geographic names to the word “Lyceum”. Furthermore, the word “Lyceum” has become
associated in time with schools and other institutions providing public lectures, concerts, and
public discussions. Thus, it generally refers to a school or an institution of learning.
Petitioner claims that the word has acquired a secondary meaning in relation to petitioner with
the result that the word, although originally generic, has become appropriable by petitioner to the
exclusion of other institutions. The doctrine of secondary meaning is a principle used in
trademark law but has been extended to corporate names since the right to use a corporate
name to the exclusion of others is based upon the same principle, which underlies the right to
use a particular trademark or trade name.
Under this doctrine, a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market, because geographical or otherwise descriptive might
nevertheless have been used for so long and so exclusively by one producer with reference to
this article that, in that trade and to that group of purchasing public, the word or phrase has
come to mean that the article was his produce. The doctrine cannot be made to apply where the
evidence didn't prove that the business has continued for so long a time that it has become of
consequence and acquired good will of considerable value such that its articles and produce
have acquired a well-known reputation, and confusion will result by the use of the disputed
name.
P.C. Javier & Sons, Inc., et. at.,vs. CA, et. at.
462 SCRA 36
Facts:
On May 1984, PC Javier and Sons and Spouses Javier filed a complaint for annulment of
mortgage and foreclosure with preliminary injunction against PAIC Savings and Mortgage Bank
plus supplemental complaint to include defendants.
On February 1981, PC Javier and Sons applied with First Summa Savings and Mortgage Bank
later renamed PAIC Savings a loan accommodation under Industrial Guarantee Loan Fund
worth P1,500,000.
On March 1981, Javier was advised that the loan application was approved and the same was to
be forwarded to the Central Bank for processing and release.
Central Bank released the loan to PAIC in two tranches of 750,000 each, released to Javier
Corporation but from second tranche release, 250,000 was deducted and deposited in name of
Javier Corporation under time deposit.
Javier Corporation claims loan releases were delayed. The 250,000 was deducted from IGLF
Loan and placed it under time deposit. They were never allowed to withdraw the proceeds of the
time deposit because PAIC intended this time deposit as automatic payments on accrued
principal and interest due on the loan.
PAIC claims only final proceeds of the loan was delayed, because of shortfall in collateral cover
of Javier Corp’s loan. The Second tranche was then released after firm commitment by Javier
Corporation to cover collateral deficiency through opening of a time deposit using portion of the
loan proceeds and in compliance with their commitment to submit additional security and open a
time deposit. Javier executed a chattel mortgage over some machineries in favor of PAIC.
When Javier defaulted in payment of its loan, PAIC sent a demand letter, and then sent a
second informing forceosure. An extrajudicial foreclosure of real estate mortgage was initiated
and an auction sale was executed by the sheriffs.
The RTC declared First Summa and PAIC as one and the same. Javier Corporation is liable to
the bank for the unpaid balance of loans and the extrajudicial foreclosure is justified because
loans were due and demandable.
Issue:
Whether or not First Summa Savings and Mortgage Bank and PAIC Savings are one and the
same entity
Ruling:
Yes. 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.
Philippine first Insurance Company, Inc. vs. Hartigan, et. al.
74 SCRA 252
Philippine first Insurance Company, Inc. vs. Hartigan, et. al., 74 SCRA 252
Facts: On June 1, 1953, plaintiff was originally named as 'The Yek Tong Lin Fire and Marine
Insurance Co., Ltd’ an insurance corp. duly presented with the Security and Exchange
Commissioner and before a Notary Public as provided in their articles of incorporation. Later
amended its articles of incorporation and changed its name on May 26, 1961 as ‘Philippine First
Insurance Co., Inc.’ pursuant to a certificate of the Board of Directors.
The complaint alleges that: Philippine First Insurance Co., Inc., doing business under the name
of 'The Yek Tong Lin Fire and Marine Insurance Co., Lt.' signed as co-maker together with
defendant Maria Carmen Hartigan, CGH, to which a promissory note was made in favour of
China Banking. Said defendant failed to pay in full despite renewal of such note. The complaint
ends with a prayer for judgment against the defendants, jointly and severally, for the sum of
P4,559.50 with interest at the rate of 12% per annum from November 23, 1961 plus P911.90 by
way of attorney's fees and costs.
Defendants admitted the execution of the indemnity agreement but they claim that they signed
said agreement in favor of the Yek Tong Lin Fire and Marine Insurance Co., Ltd.' and not in
favor of the plaintiff Philippine Insurance. They likewise admit that they failed to pay the
promissory note when it fell due but they allege that since their obligation with the China Banking
Corporation based on the promissory note still subsists, the surety who co-signed the
promissory note is not entitled to collect the value thereof from the defendants otherwise they
will be liable for double amount of their obligation, there being no allegation that the surety has
paid the obligation to the creditor. In their special defense, defendants claim that there is no
privity of contract between the plaintiff and the defendants and consequently, the plaintiff has no
cause of action against them, considering that the complaint does not allege that the plaintiff and
the 'Yek Tong Lin Fire and Marine Insurance Co., Ltd.' are one and the same or that the plaintiff
has acquired the rights of the latter.
Issue:
May a Philippine corporation change its name and still retain its original personality and
individuality as such?
Ruling
YES. As can be gleaned under Sections 6 and 18 of the Corporation Law, the name of a
corporation is peculiarly important as necessary to the very existence of a corporation. The
general rule as to corporations is that each corporation shall 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." Since an
individual has the right to change his name under certain conditions, there is no compelling
reason why a corporation may not enjoy the same right. There is nothing sacrosanct in a name
when it comes to artificial beings. The sentimental considerations which individuals attach to
their names are not present in corporations and partnerships. Of course, as in the case of an
individual, such change may not be made exclusively. by the corporation's own act. It has to
follow the procedure prescribed by law for the purpose; and this is what is important and
indispensably prescribed — strict adherence to such procedure.

Zuellig Freight vs. NLCR
G.R. No. 157900
July 22, 2013
TOPIC: The mere change in the corporate name is not considered under the law as the creation
of a new corporation; hence, the renamed corporation remains liable for the illegal dismissal of
its employee separated under that guise.
FACTS: San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-payment
of salaries and moral damages against formerly Zeta Brokerage Corporation (Zeta) now Zuelig
Freight and Cargo Systems (Zuellig), alleging that he had been a checker/customs rep of Zeta
since Dec 1985 + in Jan 9194, he and other EEs of Zeta were informed of ceasing operations
that affected all EEs who would be separated _ was informed of termination effective March
1994 _ reluctantly accepted separation pay subject standing offer to be hired to former position +
April 1994, summarily terminated w/o valid cause and due process. San Miguel contends that
amendments of articles of incorporation of Zeta were for purpose of changing corporate name,
broadening primary functions, and increasing capital stock, but NOT that Zeta had been
dissolved.
Zeta argues that San Miguel’s termination had been for cause authorized by Labor Code + non-
acceptance was not irregular + had complied with requirements or termination due to cessation
of business operations + no obligation to employ San Miguel in exercise of valid management
prerogative + all EEs had been given sufficient time to make their decision whether to accept its
offer of employment or not, but he had not responded + due to failure to meet deadline, offer had
expired + had been hired on temporary basis + picking other EE over San Miguel was not
arbitrary but due to seniority considerations
LA: San Miguel had been illegally dismissed. Mere change of business name and primary
purpose and upgrade of stocks of corp. Zuellig and Zeta are legally the same person and entity
(as admitted by Zuellig’s counsel in letter to VAT Dept. of BIR). Termination of San Miguel’s
services due to alleged cessation of business operations is deemed illegal. Ordered Zuellig to
pay San Miguel back wages
dissolving a corporation, and amendment of articles of incorporation was not one of such modes.
Effect of change of name (Ph First Insurance Inc v Hartigan): no more the creation of a
corporation than the change of the name of a natural person is begetting of a natural person –
change of NAME is NOT a change of BEING
Consequences of change of name (PC Javier and Sons v CA): 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 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.
DOCTRINE: the mere change in the corporate name is not considered under the law as the
creation of a new corporation; hence, the renamed corporation remains liable for the illegal
dismissal of its employee separated under that guise.
AS APPLIED:
 Zeta and Zuelling remained the same corp.
 Change of name did not give Zuellig license to terminate
EEs of Zeta
 NOT similar to situation where buying business of another
company means purchasing company has no obligation to
rehire terminated EEs
 Zuellig despite new name was mere continuation of Zeta’s
corporate being + still held obligation to honor all of Zeta’s
obligations, one of which was to respect San Miguel’s
security of tenure
CA also rightfully upheld NLRC”s affirmance of grant of attorney’s fees – San Miguel was
compelled to litigate to protect his interest.
HENCE, decision appealed from AFFIRMED.

NLRC affirmed LA
CA: affirmed NLRC
Closure of business ops not validly made
Certificate of filing of amended articles of incorporation show zuellig is former zeta
Certificate of filing of amended by-laws = show the same
Amendment of articles of incorporation merely changed corporate name, broadened primary
purpose, increased authorized capital stocks
Requirements in Art 283, Labor Code, were not satisfied = good faith not established by
mere registration with SEC of amended articles of incorporation
Fact of verbally informing EEs of the termination and requirement to sign employment
contract to ensure smooth operations of new company is irrelevant – no valid closure of
business operations means San Miguel’s dismissal on alleged authorized cause of cessation of
business pursuant to Art 283 was utterly illegal

Issue: WON cessation of business by Zeta was a bona fide closure to be regarded as valid
ground for termination of employment of San Miguel under Art 283.

RULING: NO.

Art 283: Valid grounds for termination: installation of labor-saving devices, redundancy, and
retrenchment to prevent losses, or closing or cessation of operation of establishment or
undertaking unless closing is for purpose of circumventing provisions of title. Amendments of the
articles of incorporation of Zeta to change corporate name to Zuellig Freight did not produce the
dissolution of Zeta as a corporation. Corporation Code defined and delineated the diff modes of
Malabang vs. Benito
27 SCRA 533
Facts:The petitioner Amer Macaorao Balindong is the mayor of Malabang, Lanao del Sur, while
the respondent Pangandapun Bonito is the mayor, and the rest of the respondents are the
councilors, of the municipality of Balabagan of the same province. Balabagan was formerly a
part of the municipality of Malabang, having been created on March 15, 1960, by Executive
Order 386 of the then President Carlos P. Garcia, out of barrios and sitios 1 of the latter
municipality.
The petitioners brought this action for prohibition to nullify Executive Order 386 and to restrain
the respondent municipal officials from performing the functions of their respective office relying
on the ruling of this Court in Pelaez v. Auditor General 2 and Municipality of San Joaquin v. Siva.
On the other hand, the respondents, while admitting the facts alleged in the petition,
nevertheless argue that the rule announced in Pelaez can have no application in this case
because unlike the municipalities involved in Pelaez, the municipality of Balabagan is at least
a de facto corporation, having been organized under color of a statute before this was declared
unconstitutional, its officers having been either elected or appointed, and the municipality itself
having discharged its corporate functions for the past five years preceding the institution of this
action. It is contended that as a de facto corporation, its existence cannot be collaterally
attacked, although it may be inquired into directly in an action for quo warranto at the instance of
the State and not of an individual like the petitioner Balindong.
Issue: Whether or not the Municipality of Balabagan is a De Facto Corporation.
Ruling: No.
Executive Order 386, creating Municipality of Balabagan is declared void, and the respondents
are hereby permanently restrained from performing the duties and functions of their respective
offices.
In Norton v. Shelby Count, 12 Mr. Justice Field said: "An unconstitutional act is not a law; it
confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal
contemplation, as inoperative as though it had never been passed." Accordingly, he held that
bonds issued by a board of commissioners created under an invalid statute were unenforceable.
Executive Order 386 "created no office." This is not to say, however, that the acts done by the
municipality of Balabagan in the exercise of its corporate powers are a nullity because the
executive order "is, in legal contemplation, as inoperative as though it had never been passed."
For the existence of Executive, Order 386 is "an operative fact which cannot justly be ignored."
As Chief Justice Hughes explained in Chicot County Drainage District v. Baxter State Bank: 13
The courts below have proceeded on the theory that the Act of Congress, having
been found to be unconstitutional, was not a law; that it was inoperative, conferring no
rights and imposing no duties, and hence affording no basis for the challenged decree.
Norton v. Shelby County, 118 U.S. 425, 442; Chicago, I. & L. Ry. Co. v. Hackett, 228
U.S. 559, 566. It is quite clear, however, that such broad statements as to the effect of
a determination of unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity may have
to be considered in various aspects — with respect to particular relations, individual
and corporate, and particular conduct, private and official. Questions of rights claimed
to have become vested, of status of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the statute
and of its previous application, demand examination. These questions are among the
most difficult of those which have engaged the attention of courts, state and federal,
and it is manifest from numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.
Harril vs. Davis,
168 F. 187
DOCTRINE: REGISTRATION AND ISSUANCE OF CERTIFICATE OF INCORPORATION
The general rule is that parties who associate themselves together and actively engage in
business for profit under any name are liable as partners for the debts they incur under that
name. It is an exception to this rule that such associates may escape individual liability for
such debts by a compliance with incorporation laws or by a real attempt to comply with them
which gives the color of a legal corporation, and by the user of the franchise of such a
corporation in the honest belief that it is duly incorporated.
When the fact appears, by indisputable evidence that parties associated and knowingly
incurred liabilities under a given name, the legal presumption is that they are governed by the
general rule, and the burden is upon them to prove that they fall under some exception to it.
For the exception to apply, the filing of articles of incorporation with the clerk of the Court of
Appeals was a sine qua non of any color of a legal corporation. Without that there was not, and
there could not be, an apparent corporation or the color of a corporation, Agreements to form
one, statements that there was one, signed articles of association to make one, acts as one,
created no color of incorporation, because there could be no incorporation or color of it under
the law until the articles were filed.
FACTS:
The four defendants(Walter B. Mann, Frank Davis, Robert S. Davis, and James G. Knight)
agreed in April or June, 1902, to take specified shares in a $10,000 enterprise for the
purpose of building a cotton gin and carrying on the business of buying, ginning, and selling
cotton, and to organize a corporation for this purpose. They transacted a business with the
plaintiff consisting of the purchase of lumber, materials, and labor for their buildings and of
dealing in cotton with it which amounted to several tens of thousands of dollars, and they
remained indebted to it over $5,000, of which $4,700.
On September 3, 1902, three of the defendants met and signed articles of incorporation as the
"Coweta Cotton & Milling Company" and a declaration of the purpose of the incorporation,
which the statutes required to be verified by the signers and to be filed with the clerk of the
Court of Appeals and with the clerk of the judicial district in which the contemplated
corporation was to do business.
This declaration was verified by Mann on November 10, 1902, and by Frank M. Davis on
December 10, 1902, and it was filed with the clerk of the Court of Appeals on December 22,
1902, and was never filed elsewhere. Frank M. Davis, as general manager of the investment
company, treated the milling company as a corporation all the time during which this
indebtedness was contracted, and never charged any of it to himself or his associates.
The Western Investment Company brought this action for a balance due It upon an account
for lumber and materials sold, cotton handled, and services rendered to Walter B. Mann, Frank
Davis, Robert S. Davis, and James G. Knight, as partners doing business under the firm name
the "Coweta Cotton & Milling Company. The defendants denied the partnership and their
liability, and averred that the indebtedness in question was that of the milling company and
that that company was a corporation.
ISSUE: W-O-N there was a ‘colorable’ compliance enough to give the supposed corporation
at least the status of a ‘de facto’ corporation?
RULING: No. The defendants cannot escape individual liability on the ground that the Coweta
Cotton & Milling Company was a corporation de facto when that portion of the plaintiff's claim
was incurred, because it then had no color of incorporation, and they knew it and yet, actively
used
its name to incur the obligation.
The general rule is that parties who associate themselves together and actively
engage in business for profit under any name are liable as partners for the debts they incur
under that name. It is an exception to this rule that such associates may escape individual
liability for such debts by a compliance with incorporation laws or by a real attempt to comply
with them which gives the color of a legal corporation, and by the user of the franchise of
such a corporation in the honest belief that it is duly incorporated.
When the fact appears, as it does in the case at bar, by indisputable evidence that
parties associated and knowingly incurred liabilities under a given name, the legal presumption
is that they are governed by the general rule, and the burden is upon them to prove that they
fall under some exception to it.
For the exception to apply, under the general law of Arkansas in force in the
Indian Territory, the filing of articles of incorporation with the clerk of the Court of Appeals was
a sine qua non of any color of a legal corporation. Without that there was not, and there could
not be, an apparent corporation or the color of a corporation, Agreements to form one,
statements that there was one, signed articles of association to make one, acts as one, created
no color of incorporation, because there could be no incorporation or color of it under the law
until the articles were filed.
The defendants never became a corporation de facto prior to December 22, 1902,
that they never became a corporation de jure, that the indebtedness here in question was not
incurred under any promise or assurance of the defendants as promoters that it should become
the obligation of a corporation to be formed, that a large part of it was incurred in the conduct of
a general commercial business, and not to prepare for the commencement of such a business or
for the organization of a corporation.
ARNOLD HALL vs. EDMUNDO PICCIO
G.R. No. L-2598 / June 29, 1950
FACTS:
On May 28, 1947, the petitioners C. Arnold Hall and Bradley P. Hall, and the respondents Fred
Brown, Emma Brown, Hipolita D. Chapman and Ceferino S. Abella, signed and acknowledged in
Leyte, the articles of incorporation of the Far Eastern Lumber and Commercial Co., Inc.,
organized to engage in a general lumber business to carry on as general contractors, operators
and managers, etc. Attached to the articles was an affidavit of the treasurer stating that 23,428
shares of stock had been subscribed and fully paid with certain properties transferred to the
corporation described in a list appended thereto.
Immediately after the execution of said articles of incorporation, the corporation proceeded to do
business with the adoption of by-laws and the election of its officers. On December 2, 1947, the
said articles of incorporation were filed in the office of the Securities and Exchange
Commission for the issuance of the corresponding certificate of incorporation.
On March 22, 1948, pending action on the articles of incorporation by the SEC, respondents
Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S. Abella filed a suit against
petitioners before the Court of First Instance of Leyte alleging among other things that the Far
Eastern Lumber and Commercial Co. was an unregistered partnership; that they wished to have
it dissolved because of bitter dissension among the members, mismanagement and fraud by the
managers and heavy financial losses.
The defendants in the suit, namely, C. Arnold Hall and Bradley P. Hall, filed a motion to dismiss,
contesting the court’s jurisdiction and the sufficiency of the cause of action.
After hearing the parties, the Hon. Edmundo S. Piccio ordered the dissolution of the company;
and at the request of plaintiffs, appointed the respondent Pedro A. Capuciong as receiver of the
properties thereof, upon the filing of a P20,000 bond.
The defendants therein (petitioners herein) offered to file a counter-bond for the discharge of the
receiver, but the respondent judge refused to accept the offer and to discharge the receiver.
Hence, this petition.
ISSUE: Whether or not the trial court has jurisdiction over the case?
HELD:
No. The court had no jurisdiction in civil case No. 381 to decree the dissolution of the company,
because it being a de facto corporation, dissolution thereof may only be ordered in a quo
warranto proceeding instituted in accordance with section 19 of the Corporation Law.
Under our statute it is to be noted that it is the issuance of a certificate of incorporation by the
Director of the Bureau of Commerce and Industry which calls a corporation into being. The
immunity of collateral attack is granted to corporations ‘claiming in good faith to be a corporation
under this act.’
Further, this is not a suit in which the corporation is a party. This is a litigation between
stockholders of the alleged corporation, for the purpose of obtaining its dissolution. Even the
existence of a de jure corporation may be terminated in a private suit for its dissolution between
stockholders, without the intervention of the state.
WHEREFORE, the petition is dismissed.
Asia Banking Corporation vs. Standard Products Co., Cranson vs. International Business Machines Corporation
46 Phil 145 200 A. 2d 33

This action is brought to recover the sum of P24,736.47, the balance due on the following Facts: Cranson hired an attorney to incorporate a business. Cranson acted as president of the
promissory note: corporation, and exercised corporate business observing all formalities. Cranson contracted
with IBM, on behalf of the corporation, to purchase 8 typewriters. It was later discovered that the
P37,757.22 corporation was not formally incorporated at the time of the making of the typewriter purchase
contracts due to an oversight on the part of the incorporating attorney.
MANILA, P. I., Nov. 28, 1921.
Procedural Posture: IBM sued Cranson personally for the balance due on the typewriters. The
lower court granted summary judgment against Cranson holding that the constituents of a
MANILA, P. I., Nov. 28, 1921. business that fails to file articles of incorporation are personally liable, as a matter of law, for the
On demand, after date we promise to pay to the Asia Banking Corporation, or order, debts of the business.
the sum of thirty-seven thousand seven hundred fifty-seven and 22/100 pesos at their
office in Manila, for value received, together with interest at the rate of ten per cent per Issue: Whether an officer of a defectively incorporated association may be subjected to personal
annum. liability for the debts of the association under these facts.

No. ________ Due __________ Holding: No.

Reasoning: A de-facto corporation may be formed if there is a good faith effort to incorporate,
THE STANDARD PRODUCTS CO., INC.
and actual exercise of corporate powers. Furthermore, under the doctrine of estoppel, a person
By (Sgd.) GEORGE H. SEAVER
seeking to hold a corporate officer personally liable may not do so if he has dealt with the
association as if it were a legally-existing corporation. IBM dealt with the business as if it were a
legitimate corporation, and relied on its credit rather than that of Cranson. Thus, it is estopped to
By President assert that the business was not incorporated.

The court below rendered judgment in favor of the plaintiff for the sum demanded in the
complaint, with interest on the sum of P24,147.34 from November 1, 1923, at the rate of 10 per
cent per annum, and the costs. From this judgment the defendant appeals to this court.
At the trial of the case the plaintiff failed to prove affirmatively the corporate existence of the
parties and the appellant insists that under these circumstances the court erred in finding that
the parties were corporations with juridical personality and assigns same as reversible error.
There is no merit whatever in the appellant's contention. The general rule is that in the absence
of fraud a person who has contracted or otherwise dealt with an association in such a way as to
recognize and in effect admit its legal existence as a corporate body is thereby estopped to deny
its corporate existence in any action leading out of or involving such contract or dealing, unless
its existence is attacked for cause which have arisen since making the contract or other dealing
relied on as an estoppel and this applies to foreign as well as to domestic corporations. (14 C. J.,
227; Chinese Chamber of Commerce vs. Pua Te Ching, 14 Phil., 222.)
The defendant having recognized the corporate existence of the plaintiff by making a promissory
note in its favor and making partial payments on the same is therefore estopped to deny said
plaintiff's corporate existence. It is, of course, also estopped from denying its own corporate
existence. Under these circumstances it was unnecessary for the plaintiff to present other
evidence of the corporate existence of either of the parties. It may be noted that there is no
evidence showing circumstances taking the case out of the rules stated.
The judgment appealed from is affirmed, with the costs against the appellant. So ordered.
Salvattiera vs. Garlitos, et al.
103 Phil 757
TOPIC: SEPARATE AND DISTINCT PERSONALITY – WHEN NOT APPLICABLE
FACTS:
In 1954, Manuela Vda. De Salvatierra entered into a lease contract with Philippine Fibers
Producers Co., Inc. (PFPC). PFPC was represented by its president Segundino Refuerzo. It was
agreed that Manuela shall lease her land to PFPC in exchange of rental payments plus shares
from the sales of crops. However, PFPC failed to comply with its obligations and so in 1955,
Manuela sued PFPC and she won. An order was issued by Judge Lorenzo Garlitos of CFI Leyte
ordering the execution of the judgment against Refuerzo’s property (there being no property
under PFPC). Refuerzo moved for reconsideration on the ground that he should not be held
personally liable because he merely signed the lease contract in his official capacity as president
of PFPC. Garlitos granted Refuerzo’s motion.
Manuela assailed the decision of the judge on the ground that she sued PFPC without
impleading Refuerzo because she initially believed that PFPC was a legitimate corporation.
However, during trial, she found out that PFPC was not actually registered with the Securities
and Exchange Commission (SEC) hence Refuerzo should be personally liable.
ISSUE: Whether or not Manuela is correct.
HELD:
Yes. It is true that as a general rule, the corporation has a personality separate and distinct from
its incorporators and as such the incorporators cannot be held personally liable for the
obligations of the corporation. However, this doctrine is not applicable to unincorporated
associations. The reason behind this doctrine is obvious-since an organization which before the
law is non-existent has no personality and would be incompetent to act and appropriate for itself
the powers and attribute 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. In this case, Refuerzo
was the moving spirit behind PFPC. As such, his liability cannot be limited or restricted that
imposed upon [would-be] corporate shareholders. In acting on behalf of a corporation which he
knew to be unregistered, he assumed the risk of reaping the consequential damages or resultant
rights, if any, arising out of such transaction.
Chiang Kai Shek School vs. CA
172 SCRA 389
Facts:
An unpleasant surprise awaited Fausta F. Oh when she reported for work at the Chiang Kai
Shek School in Sorsogon on the first week of July, 1968. She was told she had no assignment
for the next semester. Oh was shocked. She had been teaching in the school since 1932 for a
continuous period of almost 33 years. And now, out of the blue, and for no apparent or given
reason, this abrupt dismissal.
Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity
benefits and moral and exemplary damages. The original defendant was the Chiang Kai Shek
School but when it filed a motion to dismiss on the ground that it could not be sued, the
complaint was amended. Certain officials of the school were also impleaded to make them
solidarily liable with the school.
The Court of First Instance of Sorsogon dismissed the complaint. On appeal, its decision was
set aside by the respondent court, which held the school suable and liable while absolving the
other defendants. The motion for reconsideration having been denied, the school then came to
this Court in this petition for review on certiorari.
Issue:
1. Whether or not a school that has not been incorporated may be sued by reason alone of its
long continued existence and recognition by the government,
2. Whether or not a complaint filed against persons associated under a common name will justify
a judgment against the association itself and not its individual members.
Ruling:
1. Yes, the school may be sued.
As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which
provided as follows:
Unless exempted for special reasons by the Secretary of Public Instruction,
any private school or college recognized by the government shall be
incorporated under the provisions of Act No. 1459 known as the Corporation
Law, within 90 days after the date of recognition, and shall file with the
Secretary of Public Instruction a copy of its incorporation papers and by-
laws.
Having been recognized by the government, it was under obligation to incorporate under the
Corporation Law within 90 days from such recognition. It appears that it had not done so at the
time the complaint was filed notwithstanding that it had been in existence even earlier than 1932.
The petitioner cannot now invoke its own non-compliance with the law to immunize it from the
private respondent's complaint.
There should also be no question that having contracted with the private respondent every year
for thirty two years and thus represented itself as possessed of juridical personality to do so, the
petitioner is now estopped from denying such personality to defeat her claim against it.
According to Article 1431 of the Civil Code, "through estoppel an admission or representation is
rendered conclusive upon the person making it and cannot be denied or disproved as against
the person relying on it."

2. No, it will not justify a judgment against the association itself since under which the
Lozano vs. delos Santos
persons joined in an association without any juridical personality may be sued with
274 SCRA 452
such association. Besides, it has been shown that the individual members of the board
of trustees are not liable, having been appointed only after the private respondent's
dismissal. 274 SCRA 452 – Business Organization – Corporation Law – Jurisdiction of the SEC
Reynaldo Lozano was the president of KAMAJDA (Kapatirang Mabalacat-Angeles Jeepney
Drivers’ Association, Inc.). Antonio Anda was the president of SAMAJODA (Samahang Angeles-
Mabalacat Jeepney Operators’ and Drivers’ Association, Inc.). In 1995, the two agreed to
consolidate the two corporations, thus, UMAJODA (Unified Mabalacat-Angeles Jeepney
Operators’ and Drivers Association, Inc.). In the same year, elections for the officers of
UMAJODA were held. Lozano and Anda both ran for president. Lozano won but Anda alleged
fraud and the elections and thereafter he refused to participate with UMAJODA. Anda continued
to collect fees from members of SAMAJODA and refused to recognize Lozano as president of
UMAJODA. Lozano then filed a complaint for damages against Anda with the MCTC of
Mabalacat (and Magalang), Pampanga. Anda moved for the dismissal of the case for lack of
jurisdiction. The MCTC judge denied Anda’s motion. On certiorari, Judge Eliezer De Los Santos
of RTC Angeles City reversed and ordered the dismissal of the case on the ground that what is
involved is an intra-corporate dispute which should be under the jurisdiction of the Securities and
Exchange Commission (SEC).
ISSUE: Whether or not the RTC Judge is correct.
HELD: No. The regular courts have jurisdiction over the case. The case between Lozano and
Anda is not an intra-corporate dispute. UMAJODA is not yet incorporated. It is yet to submit its
articles of incorporation to the SEC. It is not even a dispute between KAMAJDA or SAMAJODA.
The controversy between Lozano and Anda does not arise from intra-corporate relations but
rather from a mere conflict from their plan to merge the two associations.