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Alhambra v.

Philips Export B.V. (PEBV) filed with the SEC for
On January 15, 1912, Alhambra Cigar & the cancellation of the word “Philips” the
Cigarette Manufacturing Company, Inc. was corporate name of Standard Philips Corporation
incorporated. Its lifespan was for 50 years so on in view of its prior registration with the Bureau
January 15, 1962, it expired. Thereafter, its of Patents and the SEC. However, Standard
Board authorized its liquidation. Under the Philips refused to amend its Articles of
prevailing law, Alhambra has 3 years to Incorporation so PEBV filed with the SEC a
liquidate. petition for the issuance of a Writ of Preliminary
In 1963, while Alhambra was liquidating, Injunction, however this was denied ruling that
Republic Act 3531 was enacted. It amended it can only be done when the corporate names
Section 18 of the Corporation Law; it are identical and they have at least 2 words
empowered domestic private corporations to different. This was affirmed by the SEC en banc
extend their corporate life beyond the period and the Court of Appeals thus the case at bar.
fixed by the articles of incorporation for a term
not to exceed fifty years in any one instance. ISSUE:
Previous to Republic Act 3531, the maximum Whether or not Standard Philips can be
non-extendible term of such corporations was enjoined from using Philips in its corporate
fifty years. name
Alhambra now amended its articles of
incorporation to extend its lifespan for another RULING: YES
50 years. The Securities and Exchange A corporation’s right to use its corporate and
Commission (SEC) denied the amended articles trade name is a property right, a right in rem,
of incorporation. which it may assert and protect against the
whole world. According to Sec. 18 of the
ISSUE: Whether or not a corporation under Corporation Code, no corporate name may be
liquidation may still amend its articles of allowed if the proposed name is identical or
incorporation to extend its lifespan. deceptively confusingly similar to that of any
existing corporation or to any other name
HELD: No. Alhambra cannot avail of the new already protected by law or is patently
law because it has already expired at the time deceptive, confusing or contrary to existing law.
of its passage. When a corporation is liquidating
pursuant to the statutory period of three years For the prohibition to apply, 2 requisites must
to liquidate, it is only allowed to continue for be present:
the purpose of final closure of its business and (1) the complainant corporation must have
no other purposes. In fact, within that period, acquired a prior right over the use of such
the corporation is enjoined from “continuing corporate name and
the business for which it was established”. (2) the proposed name is either identical or
Hence, Alhambra’s board cannot validly amend deceptively or confusingly similar to that of any
its articles of incorporation to extend its existing corporation or to any other name
lifespan. already protected by law or patently deceptive,
confusing or contrary to existing law.
Phil Export v. CA
A corporation’s right to use its corporate and With regard to the 1st requisite, PEBV adopted
trade name is a property right, a right in rem, the name “Philips” part of its name 26 years
which it may assert and protect against the before Standard Philips. As regards the 2nd, the
whole world. test for the existence of confusing similarity is
whether the similarity is such as to mislead a
person using ordinary care and discrimination. circumvent land reform laws and to avoid
Standard Philips only contains one word, estate taxes. Specifically, they point out that
“Standard”, different from that of PEBV. The 2 respondents have not shown that the transfers
companies’ products are also the same, or of the land in favor of Ellice were executed in
cover the same line of products. Although PEBV compliance with the requirements of Section 13
primarily deals with electrical products, it has of R.A. 3844. Furthermore, they alleged that
also shipped to its subsidiaries machines and respondent corporations were run without any
parts which fall under the classification of of the conventional corporate formalities.
“chains, rollers, belts, bearings and cutting
saw”, the goods which Standard Philips also ISSUE:
produce. Also, among Standard Philips’ primary Whether or not the purpose of the creation of
purposes are to buy, sell trade x x x electrical the two corporations is illegal and against public
wiring devices, electrical component, electrical policy.
supplies. Given these, there is nothing to
prevent Standard Philips from dealing in the RULING:
same line of business of electrical devices. The NO. Impugning the legality of the purposes for
use of “Philips” by Standard Philips tends to which Ellice and Margo were organized, amount
show its intention to ride on the popularity and to collateral attacks which are prohibited in this
established goodwill of PEBV. jurisdiction. The best proof of the purpose of a
corporation is its articles of incorporation and
Gala v. Ellice by-laws. The articles of incorporation must
FACTS:On March 28, 1979, the Ellice Agro- state the primary and secondary purposes of
Industrial Corporation was formed and the corporation, while the by-laws outline the
organized. The total subscribed capital stock of administrative organization of the corporation,
the corporation was P3.5 Million with 35,000 which, in turn, is supposed to insure or facilitate
shares. Additional shares were acquired and the accomplishment of said purpose. A perusal
subscribed from said corporation. of the Articles of Incorporation of Ellice and
Subsequently, on September 16, 1982, the Margo shows no sign of the allegedly illegal
Margo Management and Development purposes that petitioners are complaining of. If
Corporation (Margo) was incorporated. The a corporation’s purpose, as stated in the
total subscribed capital stock of Margo was Articles of Incorporation, is lawful, then the SEC
20,000 shares at P200, 000.00. Several has no authority to inquire whether the
transfers of shares of Ellice to Margo were corporation has purposes other than those
made by the stockholders and some payments stated, and mandamus will lie to compel it to
of subscription were made by transferring issue the certificate of incorporation.
parcels of land by the Gala Spouses. In essence, With regard to their claim that Ellice and Margo
petitioners want this Court to disregard the were meant to be used as mere tools for the
separate juridical personalities of Ellice and avoidance of estate taxes, suffice it say that the
Margo for the purpose of treating all property legal right of a taxpayer to reduce the amount
purportedly owned by said corporations as of what otherwise could be his taxes or
property solely owned by the Gala spouses. altogether avoid them, by means which the law
The petitioners’ contention in support of this permits, cannot be doubted. Thus, even if Ellice
theory is that the purposes for which Ellice and and Margo were organized for the purpose of
Margo were organized should be declared as exempting the properties of the Gala spouses
illegal and contrary to public policy. They claim from the coverage of land reform legislation
that the respondents never pursued exemption and avoiding estate taxes, the court cannot
from land reform coverage in good faith and disregard their separate juridical personalities.
instead merely used the corporations as tools to
Young Auto Supply v. CA reconsideration, which the trial court denied in
its Order dated 10 April 1991 for being pro-
Facts: On 28 October 1987, Young Auto Supply forma. Roxas was again declared in default, on
Co. Inc. (YASCO) represented by Nemesio the ground that his motion for reconsideration
Garcia, its president, Nelson Garcia and Vicente did not toll the running of the period to file his
Sy, sold all of their shares of stock in answer. On 3 May 1991, Roxas filed an
Consolidated Marketing & Development unverified Motion to Lift the Order of Default
Corporation (CMDC) to George C. Roxas. The which was not accompanied with the required
purchase price was P8,000,000.00 payable as affidavit of merit. But without waiting for the
follows: a down payment of P4,000,000.00 and resolution of the motion, he filed a petition for
the balance of P4,000,000.00 in four postdated certiorari with the Court of Appeals. The Court
checks of P1,000,000.00 each. Immediately of Appeals dismissal of the complaint on the
after the execution of the agreement, Roxas ground of improper venue. A subsequent
took full control of the four markets of CMDC. motion for reconsideration by YASCO was to no
However, the vendors held on to the stock avail. YASCO and Garcia filed the petition.
certificates of CMDC as security pending full
payment of the balance of the purchase price. Issue: Whether the venue for the case against
The first check of P4,000,000.00, representing YASCO and Garcia in Cebu City was improperly
the down payment, was honored by the drawee laid.
bank but the four other checks representing the
balance of P4,000,000.00 were dishonored. In Held: A corporation has no residence in the
the meantime, Roxas sold one of the markets to same sense in which this term is applied to a
a third party. Out of the proceeds of the sale, natural person. But for practical purposes, a
YASCO received P600,000.00, leaving a balance corporation is in a metaphysical sense a
of P3,400,000.00. Subsequently, Nelson Garcia resident of the place where its principal office is
and Vicente Sy assigned all their rights and title located as stated in the articles of
to the proceeds of the sale of the CMDC shares incorporation. The Corporation Code precisely
to Nemesio Garcia. On 10 June 1988, YASCO requires each corporation to specify in its
and Garcia filed a complaint against Roxas in articles of incorporation the "place where the
the Regional Trial Court, Branch 11, Cebu City, principal office of the corporation is to be
praying that Roxas be ordered to pay them the located which must be within the Philippines."
sum of P3,400,000.00 or that full control of the The purpose of this requirement is to fix the
three markets be turned over to YASCO and residence of a corporation in a definite place,
Garcia. The complaint also prayed for the instead of allowing it to be ambulatory. Actions
forfeiture of the partial payment of cannot be filed against a corporation in any
P4,600,000.00 and the payment of attorney's place where the corporation maintains its
fees and costs. Failing to submit his answer, and branch offices. The Court ruled that to allow an
on 19 August 1988, the trial court declared action to be instituted in any place where the
Roxas in default. The order of default was, corporation has branch offices, would create
however, lifted upon motion of Roxas. On 22 confusion and work untold inconvenience to
August 1988, Roxas filed a motion to dismiss. said entity. By the same token, a corporation
After a hearing, wherein testimonial and cannot be allowed to file personal actions in a
documentary evidence were presented by both place other than its principal place of business
parties, the trial court in an Order dated 8 unless such a place is also the residence of a co-
February 1991 denied Roxas' motion to dismiss. plaintiff or a defendant. With the finding that
After receiving said order, Roxas filed another the residence of YASCO for purposes of venue is
motion for extension of time to submit his in Cebu City, where its principal place of
answer. He also filed a motion for business is located, it becomes unnecessary to
decide whether Garcia is also a resident of Cebu the name of the corporation. The policy
City and whether Roxas was in estoppel from underlying the prohibition in Section 18 against
questioning the choice of Cebu City as the the registration of a corporate name which is
venue. The decision of the Court of Appeals was "identical or deceptively or confusingly similar"
set aside to that of any existing corporation or which is
"patently deceptive" or "patently confusing" or
Lyceum of the Phil v. CA "contrary to existing laws," is the avoidance of
fraud upon the public which would have
FACTS: Lyceum of the Philippines is an occasion to deal with the entity concerned, the
educational institution duly registered with the evasion of legal obligations and duties, and the
Securities and Exchange Commission. Petitioner reduction of difficulties of administration and
instituted proceedings before the SEC to supervision over corporations. "Under the
compel the private respondents, which are also doctrine of secondary meaning, a word or
educational institutions, to delete the word phrase originally incapable of exclusive
"Lyceum" from their corporate names and appropriation with reference to an article in the
permanently to enjoin them from using market, because geographical or otherwise
"Lyceum" as part of their respective names. The descriptive might nevertheless have been used
SEC hearing officer rendered a decision so long and so exclusively by one producer with
sustaining petitioner's claim to an exclusive reference to this article that, in that trade and
right to use the word "Lyceum." The hearing to that group of the purchasing public, the word
officer relied upon the SEC ruling in the Lyceum or phrase has come to mean that the article
of Baguio, Inc. case and held that the word was his produce. The appellant failed to satisfy
"Lyceum" was capable of appropriation and the requisites. No evidence was ever presented
that petitioner had acquired an enforceable in the hearing before the Commission which
exclusive right to the use of that word. On sufficiently proved that the word 'Lyceum' has
appeal, however, by private respondents the indeed acquired secondary meaning in favor of
SEC En Banc did not consider the word the appellant.
"Lyceum" to have become so identified with
petitioner as to render use thereof by other Lozano v. De los Santos
institutions as productive of confusion about
the identity of the schools concerned in the FACTS: Reynaldo Lozano was the president of
mind of the general public. Unlike its hearing KAMAJDA (Kapatirang Mabalacat-Angeles
officer, the SEC En Banc held that the attaching Jeepney Drivers’ Association, Inc.). Antonio
of geographical names to the word "Lyceum" Anda was the president of SAMAJODA
served sufficiently to distinguish the schools (Samahang Angeles-Mabalacat Jeepney
from one another, especially in view of the fact Operators’ and Drivers’ Association, Inc.). In
that the campuses of petitioner and those of 1995, the two agreed to consolidate the two
the private respondents were physically quite corporations, thus, UMAJODA (Unified
remote from each other. Mabalacat-Angeles Jeepney Operators’ and
Drivers Association, Inc.). In the same year,
ISSUE: elections for the officers of UMAJODA were
Whether or not the word Lyceum has not held. Lozano and Anda both ran for president.
acquired a secondary meaning. Lozano won but Anda alleged fraud and the
elections and thereafter he refused to
RULING: participate with UMAJODA. Anda continued to
collect fees from members of SAMAJODA and
NO. The Articles of Incorporation of a refused to recognize Lozano as president of
corporation must, among other things, set out UMAJODA. Lozano then filed a complaint for
damages against Anda with the MCTC of themselves as a corporation; that the two acted
Mabalacat (and Magalang), Pampanga. Anda without his knowledge and consent.
moved for the dismissal of the case for lack of
jurisdiction. The MCTC judge denied Anda’s ISSUE: Whether or not Lim Tong Lim is liable.
motion. On certiorari, Judge Eliezer De Los
Santos of RTC Angeles City reversed and HELD: Yes. From the factual findings of both
ordered the dismissal of the case on the ground lower courts, it is clear that Chua, Yao and Lim
that what is involved is an intra-corporate had decided to engage in a fishing business,
dispute which should be under the jurisdiction which they started by buying boats worth P3.35
of the Securities and Exchange Commission million, financed by a loan secured from Jesus
(SEC). Lim. In their Compromise Agreement, they
subsequently revealed their intention to pay
ISSUE: Whether or not the RTC Judge is correct. the loan with the proceeds of the sale of the
boats, and to divide equally among them the
HELD: No. The regular courts have jurisdiction excess or loss. These boats, the purchase and
over the case. The case between Lozano and the repair of which were financed with
Anda is not an intra-corporate dispute. borrowed money, fell under the term “common
UMAJODA is not yet incorporated. It is yet to fund” under Article 1767. The contribution to
submit its articles of incorporation to the SEC. It such fund need not be cash or fixed assets; it
is not even a dispute between KAMAJDA or could be an intangible like credit or industry.
SAMAJODA. The controversy between Lozano That the parties agreed that any loss or profit
and Anda does not arise from intra-corporate from the sale and operation of the boats would
relations but rather from a mere conflict from be divided equally among them also shows that
their plan to merge the two associations. they had indeed formed a partnership.
Lim Tong Lim cannot argue that the principle of
Lim v. Fishing Gear corporation by estoppels can only be imputed
to Yao and Chua. Unquestionably, Lim Tong Lim
FACTS: It was established that Lim Tong Lim benefited from the use of the nets found in his
requested Peter Yao to engage in commercial boats, the boat which has earlier been proven
fishing with him and one Antonio Chua. The to be an asset of the partnership. Lim, Chua and
three agreed to purchase two fishing boats but Yao decided to form a corporation. Although it
since they do not have the money they was never legally formed for unknown reasons,
borrowed from one Jesus Lim (brother of Lim this fact alone does not preclude the liabilities
Tong Lim). They again borrowed money and of the three as contracting parties in
they agreed to purchase fishing nets and other representation of it. Clearly, under the law on
fishing equipments. Now, Yao and Chua estoppel, those acting on behalf of a
represented themselves as acting in behalf of corporation and those benefited by it, knowing
“Ocean Quest Fishing Corporation” (OQFC) they it to be without valid existence, are held liable
contracted with Philippine Fishing Gear as general partners.
Industries (PFGI) for the purchase of fishing nets
amounting to more than P500k. Republic Planters Bank v. CA
They were however unable to pay PFGI and so
they were sued in their own names because FACTS: Shozo Yamaguchi and Fermin Canlas
apparently OQFC is a non-existent corporation. were President/Chief Operating Officer and
Chua admitted liability and asked for some time Treasurer respectively, of Worldwide Garment
to pay. Yao waived his rights. Lim Tong Lim Manufacturing, Inc. By virtue of Board
however argued that he’s not liable because he Resolution No.1 dated August 1, 1979,
was not aware that Chua and Yao represented defendant Shozo Yamaguchi and private
respondent Fermin Canlas were authorized to same corporation with a different name, and its
apply for credit facilities with the petitioner character is in no respect changed. A change in
Republic Planters Bank in the forms of export the corporate name does not make a new
advances and letters of credit/trust receipts corporation, and whether effected by special
accommodations.Petitioner bank issued nine act or under a general law, has no affect on the
promissory notes. In some promissory notes, identity of the corporation, or on its property,
the name Worldwide Garment Manufacturing, rights, or liabilities. The corporation continues,
Inc. was apparently rubber stamped above the as before, responsible in its new name for all
signatures of defendant and private debts or other liabilities which it had previously
respondent. On December 20, 1982, Worldwide contracted or incurred. As a general rule,
Garment Manufacturing, Inc. noted to change officers or directors under the old corporate
its corporate name to Pinch Manufacturing name bear no personal liability for acts done or
Corporation. Subsequently, petitioner bank filed contracts entered into by officers of the
a complaint for the recovery of sums of money corporation, if duly authorized. Inasmuch as
covered among others, by the nine promissory such officers acted in their capacity as agent of
notes with interest thereon, plus attorney's fees the old corporation and the change of name
and penalty charges. The complainant was meant only the continuation of the old juridical
originally brought against Worldwide Garment entity, the corporation bearing the same name
Manufacturing, Inc. inter alia, but it was later is still bound by the acts of its agents if
amended to drop Worldwide Manufacturing, authorized by the Board.
Inc. as defendant and substitute Pinch
Manufacturing Corporation it its place. Albert v. University Publishing
Defendants Pinch Manufacturing Corporation
and Shozo Yamaguchi did not file an Amended FACTS:In the original case, the court had
Answer and failed to appear at the scheduled awarded P P15,000.00 in favor of the petitioner
pre-trial conference despite due notice. Only for damages arising out of a breach of contract.
private respondent Fermin Canlas filed an Such breach of contract arose when the
Amended Answer wherein he denied having publishing company failed to pay the petitioner
issued the promissory notes in question since the agreed amount for latter to have the
according to him, he was not an officer of Pinch exclusive right to publish his revised
Manufacturing Corporation, but instead of Commentaries on the Revised Penal Code and
Worldwide Garment Manufacturing, Inc., and for his share in previous sales of the book's first
that when he issued said promissory notes in edition. The order became final and executory.
behalf of Worldwide Garment Manufacturing, A writ of execution was issued against the
Inc., the same were in blank, the typewritten company, however the petitioner petitioned for
entries not appearing therein prior to the time a writ of execution against Jose M. Aruego, as
he affixed his signature. the real defendant stating, plaintiff's counsel
and the Sheriff of Manila discovered that there
ISSUE: is no such entity as University Publishing Co.,
Whether or not the amendment in a Inc. and no such entity is registered with the
corporation's Articles of Incorporation effecting SEC.
a change of corporate name extinguished the
personality of the original corporation. ISSUE:
Whether or not the judgment may be executed
RULING: against Jose M. Aruego, supposed President of
NO.The corporation, upon such change in its University Publishing Co., Inc., as the real
name, is in no sense a new corporation, nor the defendant.
successor of the original corporation. It is the
RULING: successor of the obligations and liabilities of
NO. The Court ruled that the doctrine of PNCB over subject lots by virtue of a Deed of
corporation by estoppel was not applicable. Sale/Assignment. Transfer Certificate of Title
Although the rule is that a person acting or Nos. 157724 and 157725 over the lots in
purporting to act on behalf of a corporation question were issued on October 12, 1988 in
which has no valid existence assumes such the name of Bormaheco. Five (5) days after
privileges and obligations and becomes securing titles over the said properties,
personally liable for contracts entered into or Petitioner Corporation filed on January 18, 1989
for other acts performed as such agent, in this its Motion for Intervention and to Admit
case, Aruego was not named as a defendant. Attached Complaint in Intervention in said.
Since he was not named, he could not be served Respondent Bormaheco filed its Motion to
and be made liable for the claim because to do Strike out the Complaint in Intervention and all
so would violate his right to due process. He related pleadings filed by LIDECO Corporation.
was not given the chance to defend himself and The motion was granted stating that Intervenor
be heard during trial. Wherefore, the order was LIDECO Corporation and LAUREANO
reversed and set aside and was remanded INVESTMENT AND DEVELOPMENT
lower court to hold supplementary proceedings CORPORATION are two (2) separate and distinct
for the purpose of carrying the judgment into entities, therefore, no way whatsoever that
effect against University Publishing Co., Inc. LIDECO Corporation's interests will be adversely
and/or Jose M. Aruego. affected by the outcome of the instant case.
Thus, intervenor LIDECO lacks personality to
LAUREANO INVESTMENT & DEVELOPMENT intervene in the instant
ISSUES: Whether or not Respondent
FACTS:The Spouses Reynaldo Laureano and Bormaheco, Inc. is estopped from contesting
Florence Laureano are majority stockholders of the legal personality to sue of "Lideco
petitioner Corporation who entered into a Corporation".
series of loan and credit transactions with
Philippine National Cooperative Bank. To secure RULING:
payment of the loans, they executed Deeds of NO. Bad faith implies a conscious and
Real Estate Mortgage dated December 11, intentional design to do a wrongful act for a
1962, January 9, 1963, July 2, 1963 and dishonest purpose or moral obliquity; bad faith
September 5, 1964, for the following amounts: contemplates a state of mind affirmatively
P100,000.00, P20,000.00, P70,000.00 and operating with furtive design or ill will. Other
P13,424.04, respectively. Spouses Laureano than its bare allegations that private
failed to pay their indebtedness, thus PNCB respondent acted in bad faith, petitioner failed
applied for extrajudicial foreclosure of the real to show that the former acted consciously and
estate mortgages. The bank was the purchaser deliberately to achieve a dishonest purpose or
of the properties in question in the foreclosure moral obliquity, or was motivated by ill will.
sale and titles thereof were consolidated in Rather, as discussed above, no false
PNCB's name on February 20, 1984. PNCB did representation was contrived nor concealment
not secure a writ of possession nor did it file made by private respondent. Neither did it
ejectment proceedings against the Laureano deliberately convey facts other than, or
spouses, because there were then pending inconsistent with, what it now asserts and upon
cases involving the titles of ownership of which petitioner had relied or acted upon due
subject two lots, which are situated at Bel-Air to the representations of private respondent.
Subdivision, Makati, Metro Manila. Private
respondent Bormaheco, Inc. became the