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4 Lipat vs.

Pacific Banking Corporation

DOCTRINE: A corporation knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, it
holds him out of the public as possessing the power to do acts; this, the corporation will, as against anyone who has in good faith
dealt with it through such agent, be estopped from denying the agent’s authority.

Petitioner spouses Lipat owned Bela’s Export Trading (BET) a single proprietorship engaged in the manufacture of garments for
domestic and foreign consumption. The spouses by virtue of an SPA appointed and authorized their daughter to obtain loan from
respondent Pacific Bank. A loan was secured and as security therefore a REM was executed over the property of the spouses.
Sometime after, BET was incorporated into a family corporation named Bela’s Export Corporation (BEC) and the loan was restructured
in its name. Subsequent loans were obtained in behalf of BEC all secured by the previous REM. BEC defaulted in its payments which
led to the foreclosure and sale of the mortgaged property. The spouses moved to annul the sale alleging that BEC is a distinct and
separate personality from them and that the REM was executed only to secure BET’s loan. Both trial court and CA ruled to pierce the
corporate veil to hold petitioner spouses liable for BEC’s obligations. The Court ruled that BEC merely succeded BET as petitioner’s
alter ego; hence, their mortgaged property must be held liable for the subsequent loans and credit lines of BEC.

Principle of estoppel precludes petitioners from denying the validity of transactions with Pacific Bank. While the power and
responsibility to decide whether the corporation should enter a contract that will bind the corporation is lodged in its BOD, subject to
AOI, by-laws, or relevant provisions of law, yet, as natural persons may authorize another to do certain acts and fir and on his behalf,
the BOD may validly delegate some of its functions and powers to officers, committees, or agents. Apparent authority may be
ascertained through: (1) the general manner in which the corporation holds out an officer or agents as havin ght epower to act, or, in
other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature,
with actual or constructive knowledge, whether beyond the scope of ordinary powers. In this case, Teresita Lipat dealt with Pacific
Bank on the mortgage contract by virtue of SPA executed by Estelita. Recall that Teresita Lipat acted as manager of both BEC and
BET and had been deciding business matters in the absence of is a familiar doctrine that if

3 ASSOCIATION OF FLOOD VICTIMS v. COMELEC, G.R. NO. 203775 (August 5, 2014)

DOCTRINE: An unincorporated association, in the absence of an enabling law, has no juridical personality and thus, cannot sue in
the name of the association..

SC affirmed COMELEC Resolution cancelling the certificate of registration of Alliance of Barangay Converns (ABC) Party-list which
won in the party-list elections in the 2010 national elections. The disqualification resulted in the party list allocation in the House of
Representatives and proclamation of Alay Buhay Community Development Foundation Inc. Party-list, through the minute resolution
issued by COMELEC. Petitioner Association of Flood Victims (AFV) and Jaime Hernandez filed a petition for certiorari under Rule 65
asserting that COMELEC committed GADALEJ when it issued the minute resolution. The Court ruled that petitioners do not have
legal capacity to sue. Under sections 1 and 2 of Rule 3, only natural or juridical persons, or entities authorized by law may be parties
in a civil action, which must be prosecuted or defended in the name of the real party-in-interest. Art 44 of Civil code lists juridical
person with capacity to sue, thus: xxx (2) other corporations, institutions and entities for public interest or purpose, created by law;
their personality begins as soon as they be been constituted according to law Party which is still in the process of incorporation, cannot
be considered a juridical person or an entity authorized by law to be a party to a civil action AFV is an unincorporated association not
endowed with a distinct personality of its own. An unincorporated association, in the absence of an enabling law, has no juridical
personality and thus, cannot sue in the name of the association. Neither does such party have locus standi as it is not even a party-
list candidate and could not have been directly affected by the COMELEC Resolution.


DOCTRINE: Since a corporation can act only through its officers and agents, "all acts within the powers of said corporation may be
performed by agents of its selection; and, except so far as limitations or restrictions may be imposed by special charter, by-law, or
statutory provisions, the same general principles of law which govern the relation of agency for a natural person govern the officer or
agent of a corporation, of whatever status or rank, in respect to his power to act for the corporation; and agents when once appointed,
or members acting in their stead, are subject to the same rules, liabilities and incapacities as are agents of individuals and private

Constancio Maglana, president of Prime White Cement Corporation, sent an letter offering 45,000 bags of cement at P24.30/bag to
Yao Ka Sin Trading (YKS). Letter was received by YKS’s manager Henry Yao which was later accepted by him. Pursuant thereto, he
sent a check in the amount of P243,000.00 equivalent to the value of 10,000 bags of cement. However, the BOD of Prime White
rejected the offer letter sent by Maglana but it considered Yao’s acceptance letter as a new contract offer hence the Board sent a
letter to Yao telling him that Prime White is instead willing to sell only 10,000 bags to YKS that he has ten days to reply; that if no reply
is made by Yao then they will consider it as an acceptance and that thereafter Prime White shall deposit the P243k check in its account
and then deliver the cements to YKS. Henry Yao never replied. Later, YKS sued Prime White to compel the latter to comply with what
YKS considered as the true contract, i.e., 45,000 bags at P24.30 per bag. Prime White averred that although Maglana is empowered
to sign contracts in behalf of Prime White, such contracts are subject to approval by Prime White’s Board, and then it still requires
further approval by the National Investment and Development Corporation (NIDC), being a subsidiary. Yao asserts that the letter from
Maglana is a binding contract because it was made under the apparent authority of Maglana. The trial court ruled in favor of Yao Ka
Sin. The Court of Appeals reversed the trial court. The Court ruled that no contracts can be signed by the president without first being
approved by BOD; such approval may only be given after the contract passes through, at least the NIDC representative and the legal

While there can be no question that Mr, Maglana was an officer—the President and Chairman—of private respondent corporation at
the time he signed the offer letter, private respondent's By-Laws do not in any way confer upon the President the authority to enter
into contracts for the corporation independently of the Board of Directors. That power is exclusively lodged in the latter. Nevertheless,
to expedite or facilitate the execution of the contract, only the President—and not all the members of the Board, or so much thereof
as are required for the act—shall sign it for the corporation. This is the import of the words through the president: and the clear intent
of the power of the chairman "to execute and sign for and in behalf of the corporation all contracts and agreements which the
corporation may enter into". Both powers presuppose a prior act of the corporation exercised through the Board of Directors. No
greater power can be implied from such express, but limited, delegated authority. Neither can it be logically claimed that any power
greater than that expressly conferred is inherent in Mr. Maglana's position as president and chairman of the corporation.


G.R. No. 136426, August 6, 1999

DOCTRINE: A strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation. The officer
upon whom service is made must be one who is named in the statute; otherwise the service is insufficient.

EMERGENCY RECIT: E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address in Davao City and with
branch offices in Paranaque and Cagayan de Oro. Petitioner and Imperial Development Corporation executed a Deed of Sale with
Development Agreement wherein the former agreed to develop certain parcels of land in CDO owned by the latter into a housing
subdivision for the construction of low cost housing units. They further agreed that in case of litigation regarding any dispute arising
therefrom, the venue shall be in the proper courts of Makati. Benito filed a complaint against petitioner for breach of contract before
RTC Makati on the ground that other than a few unfinished low cost houses, there were no substantial developments therein.
Summons, together with the complaint, were served upon Villarosa, through its Branch Manager Engr. Wendell Sabulbero at the
stated address at Kolambog, Lapasan, Cagayan de Oro City but the Sheriff's Return of Service stated that the summons was duly
served "upon defendant E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr. WENDELL SALBULBERO on May 5, 1998
at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by the signature on the face of the original copy of
the summons. Petitioner and Villarosa filed a MTD on the ground of improper service of summons and for lack of jurisdiction over the
person of the defendant, as the summons was imporperty served its employee in CDO, who is not one of those persons named in
Sec11, Rule 14 of the 1997 Rules of Civil Procedure upon whom service of summons may be made. The Court ruled that the persons
to whom summons may be served is "restricted, limited and exclusive” and that if the Rules of Court Revision Committee intended to
liberalize the rule on service of summons, it could have easily done so by clear and concise language.

The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is now limited
and more clearly specified in Section11, Rule 14. The rule now states "general manager" instead of only "manager"; "corporate
secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase “agent, or any of its directors" is conspicuously
deleted in the new rule.