a private suit for its dissolution between stockholders, without the intervention

of the state.
SECTION 20
Sec. 20. De facto corporations. The due incorporation of any corporation
claiming in good faith to be a corporation under this Code, and its right to
exercise corporate powers, shall not be inquired into collaterally in any private
suit to which such corporation may be a party. Such inquiry may be made by
the Solicitor General in a quo warranto proceeding.
HALL v PICCIO
86 Phil 603, GR No L-2598, June 29, 1950
Facts: On May 28, 1947, petitioners C. Arnold Hall and Bradley P. Hall, and
respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S.
Abella, signed and acknowledged in Leyte, the article 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, .
Attached to the article 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. The said articles of incorporation was filed in the
office of SEC. Pending action of the articles of incorporation by SEC, the
respondents filed a civil case against the petitioners alleging that Far Eastern
Lumber and Commercial Co was an unregistered partnership and that they
wished it dissolved because of bitter dissension among the members,
mismanagement and fraud by the managers and heavy financial losses. The
court (thru Judge Piccio) ordered the dissolution of the company. Halls offered
to file a counter bond for the discharge of the receiver but the judge refused to
accept the offer and discharge the receiver.
Issue: W/N the court had jurisdiction 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.
Held: Yes, the court has jurisdiction to take cognizance of the case!
Section 20 of the Corporation Law does not apply in this situation
First, not having obtained the certificate of incorporation, the Far Eastern
Lumber and Commercial Co. even its stockholders may not probably claim
"in good faith" to be a corporation. (Under our statue it is to be noted
(Corporation Law, sec. 11) 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 if collateral attack is granted to
corporations "claiming in good faith to be a corporation under this act." Such a
claim is compatible with the existence of errors and irregularities; but not with a
total or substantial disregard of the law. Unless there has been an evident
attempt to comply with the law the claim to be a corporation "under this act"
could not be made "in good faith." )
Second, 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

MUNICIPALITY OF MALABANG v BENITO

27 SCRA 433, GR No. L 28113, March 28, 1969
FACTS:
Petitioner, Amer Macaorao Balindong, is the mayor of Malabang, Lanao
del Sur. Respondents are the mayor and councilors of Balabagan, Lanao del
Sur. Balabagan was formerly a part of the municipality of Malabang and was
created on March 15, 1960, by Executive Order 386 of the then President Carlos
P. Garcia, out of barrios and sitios of the latter municipality.
The petitioners filed an action for prohibition to nullify EO 386 and to
restrain the respondents from performing the functions of their respective office
relying on the ruling of this Court in Pelaez v. Auditor General and Municipality
of San Joaquin v. Siva which stated that the power to create barrios in the
provincial board is a statutory denial of the presidential authority to create a
new barrio [and] implies a negation of the bigger power to create
municipalities.
The respondents argued that the ruling 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.
Generally , an inquiry into the legal existence of a municipality is reserved to
the State in a proceeding for quo warranto or other direct proceeding, and that
only in a few exceptions may a private person exercise this function of
government. But the rule disallowing collateral attacks applies only where the
municipal corporation is at least a de facto corporations. For where it is neither
a corporation de jure nor de facto, but a nullity, the rule is that its existence
may be, questioned collaterally or directly in any action or proceeding by any
one whose rights or interests ate affected thereby, including the citizens of the
territory incorporated unless they are estopped by their conduct from doing so.
ISSUE: Whether or not the municipality of Balabagan is a de facto corporation.
RULING: No, the municipality of Balabagan is not a de facto corporation. EO
386 is declared void and the respondents are permanently restrained from
performing the functions of their respective offices.
I. The color of authority requisite to the organization of a de facto municipal
corporation may be:
1. A valid law enacted by the legislature.
2. An unconstitutional law, valid on its face, which has either (a) been
upheld for a time by the courts or (b) not yet been declared void; provided that
a warrant for its creation can be found in some other valid law or in the
recognition of its potential existence by the general laws or constitution of the
state.

II. There can be no de facto municipal corporation unless either directly or

potentially, such a de jure corporation is authorized by some legislative fiat.
III. There can be no color of authority in an unconstitutional statute alone, the
invalidity of which is apparent on its face.
IV. There can be no de facto corporation created to take the place of an existing
de jure corporation, as such organization would clearly be a usurper.10
The mere fact that Balabagan was organized at a time when the statute
had not been invalidated cannot conceivably make it a de facto corporation, as,
independently of the Administrative Code provision in question, there is no
other valid statute to give color of authority to its creation.
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."
SAWADJAAN v CA
459 SCRA 516, GR No 141735, June 8, 2005
FACTS: Sappari K. Sawadjaan was among the first employees of the Philippine
Amanah Bank (PAB) when it was created by virtue of Presidential Decree No.
264 on 02 August 1973. He started as a security guard and was eventually
promoted to a loans analyst.
In February 1988, while designated as appraiser/investigator,
Sawadjaan was assigned to inspect the properties offered as collaterals by
Compressed Air Machineries and Equipment Corporation (CAMEC) for a credit
line of Five Million Pesos (P5,000,000.00). On the basis of his Inspection and
Report, the PAB granted the loan application. When the loan matured on 17
May 1989, CAMEC requested an extension of 180 days, but was granted only
120 days to repay the loan. Sawadjaan was then promoted to Loans Analyst I
on 01 July 1989.
In January 1990, Congress passed Republic Act 6848 creating the AIIBP
and repealing P.D. No. 264 (which created the PAB). All assets, liabilities and
capital accounts of the PAB were transferred to the AIIBP, and the existing
personnel of the PAB were to continue to discharge their functions unless
discharged. In the reorganization, Sawadjaan was among the personnel
retained by the AIIBP.
Upon failure of CAMEC to pay, the bank, now AIIBP, discovered the ff:
the TCT offered by CAMEC was spurious, the property described therein was
inexistent, and that the property covered by another TCT had a prior existing
mortgage in favor of one Divina Pablico.
On 08 June 1993, the Board of Directors of the AIIBP created an
Investigating Committee to look into the CAMEC transaction, which had cost the
bank P6,000,000.00 in losses. The Board eventually held Sawadjaan liable for
the administrative offense of conduct prejudicial to the best interest of the
service and imposed on him the penalty from (originally) dismissal to
suspension for 6 months. Sawadjaan appealed the decision but the court
affirmed the banks finding. Sawadjaan filed a motion for new trial claiming that
he had recently discovered that at the time his employment was terminated,
the AIIBP had not yet adopted its corporate by-laws.
ISSUE: W/N the alleged Islamic Bank has no valid by-laws and has lost its
juridical personality as a corporation on 16 April 1990

W/N Islamic Bank and its alleged Board of Directors have no jurisdiction to act
in the manner they did in the absence of a valid by-laws;
RULING: AIIBP has a juridical personality to act as corporation!
The AIIBP was created by Rep. Act No. 6848. It has a main office where it
conducts business, has shareholders, corporate officers, a board of directors,
assets, and personnel. It is, in fact, here represented by the Office of the
Government Corporate Counsel, "the principal law office of government-owned
corporations, one of which is respondent bank." At the very least, by its failure
to submit its by-laws on time, the AIIBP may be considered a de facto
corporation whose right to exercise corporate powers may not be inquired into
collaterally in any private suit to which such corporations may be a party.
Moreover, a corporation which has failed to file its by-laws within the prescribed
period does not ipso facto lose its powers as such. The SEC Rules on
Suspension/Revocation of the Certificate of Registration of Corporations, details
the procedures and remedies that may be availed of before an order of
revocation can be issued. There is no showing that such a procedure has been
initiated in this case.
In any case, petitioners argument is irrelevant because this case is not a
corporate controversy, but a labor dispute; and it is an employers basic right to
freely select or discharge its employees, if only as a measure of self-protection
against acts inimical to its interest. Regardless of whether AIIBP is a
corporation, a partnership, a sole proprietorship, or a sari-sari store, it is an
undisputed fact that AIIBP is the petitioners employer. AIIBP chose to retain his
services during its reorganization, controlled the means and methods by which
his work was to be performed, paid his wages, and, eventually, terminated his
services.
SECTION 21
Sec. 21. Corporation by Estoppel. All persons who assume to act as a
corporation knowing it to be without authority to do so shall be liable as general
partners for all debts, liabilities and damages incurred or arising as a result
thereof: Provided, however, that when any such ostensible corporation is sued
on any transaction entered by it as a corporation or on any tort committed by it
as such, it shall not be allowed to use as a defense its lack of corporate
personality.
One who assumes an obligation to an ostensible corporation as such, cannot
resist performance thereof on the ground that there was in fact no corporation.
SALVATIERRA v GARLITOS
103 Phil 757, GR No L-11442, May 23, 1958
Facts: Manuela T. Vda. de Salvatierra is the owner of a parcel of land located at
Maghobas, Poblacion, Burauen, Teyte. On March 7, 1954, Salvatierra entered
into a contract of lease with the Philippine Fibers Producers Co., Inc., allegedly a
corporation "duly organized and existing under the laws of the Philippines, with
business address in Burauen, Leyte, and represented by Mr. Segundino Q.
Refuerzo, the President". The contract provided that the lifetime of the lease
would 10 years, that the land will be planted with kenaf, ramie or other crops
suitable to the soil; that the lessor would be entitled to 30% of the net income
from the harvest of any, crop without being responsible for the cost of
production thereof; and that after every harvest, the lessee was bound to

declare at the earliest possible time the income derived and to deliver the
corresponding share due the lessor.
However, the obligations imposed were not complied with by the
alleged corporation. Salvatierra filed for accounting, rescission and damages.
She claimed that the defendant corporation planted the land with kenaf but it
refused to render an accounting of the income it derived and to deliver the
lessor's share (estimated gross income was P4,500 and the deductible
expenses amounted to P1,000).
The court granted plaintiff's prayer and required defendants to render a
complete accounting of the harvest of the land and to deliver 30% of the net
income realized from the last harvest. If the defendants fail to abide by this
rule, the gross income would be fixed at P4,200 or a net income of P3,200 after
deducting the expenses for production, 30% of which or P960 was due the
plaintiff pursuant to the contract of lease, which was declared rescinded.
The court then issued a issued a writ of execution causing the
attachment of 3 parcels of land registered in the name of Segundino Refuerzo
as there was no available property of the Philippine Fibers Producers Co., Inc.,
for attachment. Refuerzo claimed that the decision was null and void with
respect to him, there being no allegation in the complaint pointing to his
personal liability and that the liability be limited to the defendant corporation.
The court then ordered the release of all properties belonging to Refuerzo.

made to believe that such corporation was duly organized in accordance with
law.
A registered corporation has a juridical personality separate and distinct from
its component members such that a corporation cannot be held liable for the
personal indebtedness of a stockholder even if he should be its president and
conversely, a stockholder or member cannot be held personally liable for any
financial obligation of the corporation in excess of his unpaid subscription. But
this rule is understood to refer merely to registered corporations and
cannot be made applicable to the liability of members of an
unincorporated association. 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. And
as it is an elementary principle of law that a person who acts as an agent
without authority or without a principal is himself regarded as the principal,
possessed of all the rights and subject to all the liabilities of a principal, a
person acting or purporting to act on behalf of a corporation which has no valid
existence assumes such privileges and obligations and comes personally liable
for contracts entered into or for other acts performed as such, agent.

Issue: Whether or not Refuerzo should be held liable to Salvatierra?

Ruling: Refuerzo is liable to Salvatierra!
Refuerzo, as president of the unregistered corporation Philippine Fibers
Producers Co., Inc., was the moving spirit behind the consummation of the
lease agreement by acting as its representative. His liability cannot be limited
or restricted that imposed upon 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.
Refuerzos defense is premised on the fact that the complaint contained no
allegation which holds him personally liable, for while he was a signatory to the
contract, he did so in his capacity as president of the corporation. Salvatierra,
on the other hand, contends that her failure to specify Refuerzos personal
liability was because she was under the impression that the Philippine Fibers
Producers Co., Inc., represented by Refuerzo was a duly registered corporation
as appearing in the contract, but a subsequent inquiry from the Securities and
Exchange Commission yielded otherwise.
While as a general rule a person who has contracted or dealt with an
association in such a way as to recognize its existence as a corporate body is
estopped from denying the same in an action arising out of such transaction or
dealing, yet this doctrine may not be held to be applicable where fraud takes a
part in the said transaction. In the instant case, on plaintiff's charge that she
was unaware of the fact that the Philippine Fibers Producers Co., Inc., had no
juridical personality, defendant Refuerzo gave no confirmation or denial and the
circumstances surrounding the execution of the contract lead to the
inescapable conclusion that plaintiff Manuela T. Vda. de Salvatierra was really

ALBERT v UNIVERSITY PUBLISHING

13 SCRA 84, GR No L-19118, January 30, 1965
Facts:
On September 24, 1949, Mariano A. Albert sued University Publishing
Co., Inc. Albert alleged that the defendant was a corporation duly organized and
existing under the laws of the Philippines. On July 19, 1948, defendant, through
Jose M. Aruego, its President, entered into a contract with Albert and that he
agreed to pay plaintiff P30,000.00 for the exclusive right to publish his revised
Commentaries on the Revised Penal Code and for his share in previous sales of
the book's first edition. The defendant promised to pay in 8 quarterly
installments of P3,750.00 starting July 15, 1948 and as per the contract, failure
to pay one installment would render the rest due. The defendant failed to pay
the second installment. He however claimed that it was Albert who breached
their contract by failing to deliver his manuscript. Albert died before trial and
his estate's administrator was substituted for him.
The lower court ordered the defendant corporation to pay Albert the
sum of P 23,000.00.
Albert, however, petitioned for a writ of execution against Jose M.
Aruego, as the real defendant as he discovered that there is no such entity as
University Publishing Co., Inc." The certification from SEC states that there is no
record showing the registration of unveristy Publishing Co, Inc. either as a
corporation or partnership. Aruego countered stating that he is not a party to
the case.
Issue: Whether or not Jose Aruego is a party to the case (liable).
Ruling: Yes, Jose Aruego is the real party to the case!

University Publishing Co., Inc. is indeed unregistered in the Securities

and Exchange Commission. And on account of its non-registration, it cannot be
considered a corporation, not even a corporation de facto. It has therefore no
personality separate from Jose M. Aruego; it cannot be sued independently.
The corporation-by-estoppel doctrine has not been invoked. At any rate,
the same is inapplicable here. Aruego represented a non-existent entity and
induced not only Albert but even the court to believe in such representation. He
signed the contract as "President" of "University Publishing Co., Inc.," stating
that this was "a corporation duly organized and existing under the laws of the
Philippines," and obviously misled Albert into believing the same. One who has
induced another to act upon his wilful misrepresentation that a corporation was
duly organized and existing under the law, cannot thereafter set up against his
victim the principle of corporation by estoppel.
The evidence is patently clear that Jose M. Aruego, acting as
representative of a non-existent principal, was the real party to the contract
sued upon; that he was the one who reaped the benefits resulting from it, so
much so that partial payments of the consideration were made by him; that he
violated its terms, thereby precipitating the suit in question; and that in the
litigation he was the real defendant. Perforce, in line with the ends of justice,
responsibility under the judgment falls on him.
LOZANO v DE LOS SANTOS
274 SCRA 452, GR No 125221, June 19, 1997
Facts:
On December 19, 1995, petitioner Reynaldo M. Lozano filed for
damages against respondent Antonio Anda before the Municipal Circuit Trial
Court in Mabalacat and Magalang, Pampanga. Lozano alleged that he was the
president of the Kapatirang Mabalacat-Angeles Jeepney Drivers' Association,
Inc. (KAMAJDA) while respondent Anda was the president of the Samahang
Angeles-Mabalacat Jeepney Operators' and Drivers' Association, Inc.
(SAMAJODA);
In August 1995, upon the request of the Sangguniang Bayan of
Mabalacat, Pampanga, petitioner and respondent agreed to consolidate their
respective associations and form the Unified Mabalacat-Angeles Jeepney
Operators' and Drivers Association, Inc. (UMAJODA); They also agreed to elect 1
set of who shall be given the sole authority to collect the daily dues from the
members of the consolidated association; Both petitioner and respondent ran
for president. Petitioner won and private respondent protested and refused to
recognize the results of the election. He also refused to abide by their
agreement and continued collecting the dues from the members of his
association despite several demands to desist. Petitioner was thus constrained
to file the complaint to restrain private respondent from collecting the dues
Private respondent moved to dismiss the complaint for lack of
jurisdiction, claiming that jurisdiction was lodged with the SEC. The MCTC
denied both the motion and the reconsideration.
The RTC found the dispute to be intracorporate and subject to the
jurisdiction of the SEC. It ordered the MCTC to dismiss the civil case.
Issue: Whether or not the Securities and Exchange commission has jurisdiction
over a case of damages between heads/presidents of 2 associations who
intended to consolidate/merge their associations but not yet approved and
registered with the SEC.

Ruling: No. SEC has no jurisdiction over the case!

The jurisdiction of the SEC is set forth in Section 5 of PD 902-A.
The grant of jurisdiction to the SEC must be viewed in the light of its nature and
function under the law. This jurisdiction is determined by a concurrence of two
elements: (1) the status or relationship of the parties; and (2) the nature of the
question that is the subject of their controversy.
The first element requires that the controversy must arise out of
intracorporate or partnership relations between and among stockholders,
members, or associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership or
association and the State in so far as it concerns their individual franchises.
The second element requires that the dispute among the parties be
intrinsically connected with the regulation of the corporation, partnership or
association or deal with the internal affairs of the corporation, partnership or
association. After all, the principal function of the SEC is the supervision and
control of corporations, partnership and associations with the end in view that
investments in these entities may be encouraged and protected, and their
entities may be encouraged and protected, and their activities pursued for the
promotion of economic development.
There is no intracorporate nor partnership relation between petitioner
and private respondent. The controversy between them arose out of their plan
to consolidate their respective jeepney drivers' and operators' associations into
a single common association. This unified association was, however, still a
proposal. It had not been approved by the SEC, neither had its officers and
members submitted their articles of consolidation.
The KAMAJDA and SAMAJODA to which petitioner and private
respondent belong are duly registered with the SEC, but these associations are
two separate entities. The dispute between petitioner and private respondent is
not within the KAMAJDA nor the SAMAJODA. It is between members of separate
and distinct associations. Petitioner and private respondent have no
intracorporate relation much less do they have an intracorporate dispute. The
SEC therefore has no jurisdiction over the complaint.
The doctrine of corporation by estoppel advanced by private
respondent cannot override jurisdictional requirements. Jurisdiction is fixed by
law and is not subject to the agreement of the parties. It cannot be acquired
through or waived, enlarged or diminished by, any act or omission of the
parties, neither can it be conferred by the acquiescence of the court.
Corporation by estoppel is founded on principles of equity and is
designed to prevent injustice and unfairness. It applies when persons assume
to form a corporation and exercise corporate functions and enter into business
relations with third person. Where there is no third person involved and the
conflict arises only among those assuming the form of a corporation, who
therefore know that it has not been registered, there is no corporation by
estoppel.

SECTION 23

Sec. 23. The board of directors or trustees. Unless otherwise provided in

this Code, the corporate powers of all corporations formed under this code shall
be exercised, all business conducted and all property of such corporations
controlled and held by the board of directors or trustees to be elected from
among the holders of stocks, or where there is no stock, from among the
members of the corporation, who shall hold office for one 91) year until all their
successors are elected and qualified.
Every director must own at least one (1) share of the capital stock of the
corporation of which he is a director, which share shall stand in his name on the
books of the corporation. Any director who ceases to be the owner of at least
one (1) share of the capital stock of the corporation of which he is a director
shall thereby cease to be a director. Trustees of non-stock corporations must be
members thereof. A majority of the directors or trustees of all corporations
organized under this Code must be residents of the Philippines.
DETECTIVE & PROTECTIVE BUREAU v CLORIBEL
26 SCRA 255, GR No L-23428, November 29, 1968
Facts:
The plaintiff was a corporation duly organized and existing under the
laws of the Philippines and the defendant (Alberto) was managing director of
plaintiff corporation from 1952 until January 14, 1964.
In June, 1963, defendant illegally seized and took control of all the
assets as well as records of the of the corporation from the accountant-cashier
and concealed them illegally and refused to allow any member of the
corporation to see and examine the same. On January 14, 1964, the
stockholders, in a meeting, removed defendant as managing director and
elected Jose de la Rosa in his stead. The defendant refused to vacate his office
and to deliver the assets and books to Jose de la Rosa. The defendant had also
been illegally disposing of corporate funds. The plaintiff determined that it was
necessary to appoint a receiver to take charge of the assets and receive the
income of the corporation. Plaintiff prayed that a preliminary injunction exparte be issued restraining defendant from exercising the functions of
managing director and from disbursing and disposing of its funds; that Jose M.
Barredo be appointed receiver; that, after judgment, the injunction be made
permanent and defendant be ordered to render an accounting.
The lower court, thru Judge Cloribel, granted the writ of preliminary
injunction, conditioned upon plaintiff's filing a bond of P5,000.00. Alberto filed a
motion to admit a counter-bond for the purpose of lifting the order granting the
writ of preliminary injunction. And in spite of the opposition filed by the plaintiff,
the Judge admitted the counterbond, setting aside the writ of preliminary
injunction.
Issue: Whether or not the Judge committed grave abuse of discretion in
admitting and approving the counter bond.
Whether or not public interest requires that the writ be not set aside because
respondent had arrogated unto himself all the powers of petitioning
corporation, to the irreparable damage of the corporation;

Ruling: No. The dissolution of a writ of preliminary injunction issued after

hearing, even if the dissolution is ordered without giving the other party an

opportunity to be heard, does not constitute an abuse of discretion and may be

cured not by certiorari but by appeal!
Petitioner contends that respondent Alberto had arrogated to himself
the power of the Board of Directors of the corporation because he refused to
vacate the office and surrender the same to Jose de la Rosa who had been
elected managing director by the Board to succeed him. This assertion,
however, was disputed by respondent Alberto who stated that Jose de la Rosa
could not be elected managing director because he did not own any stock in the
corporation.
There is in the record no showing that Jose de la Rosa owned a share of
stock in the corporation. If he did not own any share of stock, certainly he could
not be a director pursuant to the mandatory provision of Section 30 of the
Corporation Law, which in part provides:
Sec. 30. Every director must own in his own right at least one share of
the capital stock of the stock corporation of which he is a director,
which stock shall stand in his name on the books of the corporations....
If he could not be a director, he could also not be a managing director of the
corporation, pursuant to Article V, Section 3 of the By-Laws of the Corporation
which provides that:
The manager shall be elected by the Board of Directors from among its
members.... (Record, p. 48)
If the managing director-elect was not qualified to become managing director,
respondent Fausto Alberto could not be compelled to vacate his office and cede
the same to the managing director-elect because the by-laws of the corporation
provides in Article IV, Section 1 that "Directors shall serve until the election and
qualification of their duly qualified successor."
PASCUAL & SANTOS v MEMBERS OF TRAMO LAKAS NEIGHBORHOOD
ASSN
442 SCRA 448, GR No 144880, November 17, 2004
Facts:
The Members of Tramo Wakas Neighborhood Association, represented
by Dominga Magno (respondents), lodged before the Presidential Action Center
a petition praying that ownership over 3 parcels of land situated in Barangay
San Dionisio, Paraaque, Metro Manila with an aggregate area of 35,195 square
meters be awarded to them. Respondents alleged that petitioner claims
ownership of the subject lots which they have openly, peacefully and
continuously occupied since 1957. This was referred to the Land Management
Bureau (LMB). The LMB found for respondents.
The appeal lodged by the petitioner before the Office of DENR Secretary
was dismissed for lack of merit. Both the LMB and the Office of the President
affirmed the decision of DENR.
Petitioner filed its petition for review with the CA and asked that the decision of
the OP and DENR be set aside and to declare that the subject lots as no longer
forming part of the public domain and have been validly acquired by petitioner.
The CA dismissed the appeal due to infirm Verification and Certification of nonforum shopping and belated filing.
For one, the Verification and Certification of non-forum shopping was
signed merely by Estela Lombos and Anita Pascual who allege that they
are the duly authorized representatives of petitioner corporation,
without showing any proof whatsoever of such authority.

The petitioner filed a Motion for Reconsideration arguing that that there
was no showing that the persons acting on its behalf were not authorized to do
so and that its petition was filed within the additional 15-day period granted by
the CA. Attached to the Motion was a Secretary's Certificate showing that
petitioner's Board of Directors approved a Resolution on February 11, 2000
appointing Estela Lombos and Anita Pascual, incumbent directors of the
corporation, as its duly authorized representatives who may sign all papers,
execute all documents, and do such other acts as may be necessary to
prosecute the petition for review that it would file with the CA
The CA again denied petitioners motion for reconsideration stressing
that any person who claims authority to sign, in behalf of another, the
Certificate of Non-Forum Shopping, as required by the rules, must show
sufficient proof thereof. Bare allegations are not proof, and the representation
of one who acts in behalf of another cannot, by itself, serve as proof of his
authority to act as agent or of the extent of his authority as agent.
Issue: Whether or not the persons who executed the verification and
certification of non-forum shopping attached to PSIs manifestation/petition for
review filed with the CA were authorized to do so.
Ruling: Lombos and Pascual were authorized to execute the verification and
certification of non-forum shopping. Case is remanded to the appellate court to
give due course to the appeal.
When the petition for certiorari was filed with the CA, there was no
proof attached thereto that Lombos and Pascual were authorized to sign the
verification and non-forum shopping certification. Subsequent to the CA's
dismissal of the petition, however, petitioner filed a motion for reconsideration
to which it attached a certificate issued by its board secretary stating that on
February 11, 2000 or prior to the filing of the petition, Lombos and Pascual had
been authorized by petitioner's board of directors to file the petition before the
CA. It has been ruled that the subsequent submission of proof of authority to
act on behalf of a petitioner corporation justifies the relaxation of the Rules for
the purpose of allowing its petition to be given due course.
And while the requirement of the certificate of non-forum shopping is
mandatory, nonetheless the requirements must not be interpreted too literally
and thus defeat the objective of preventing the undesirable practice of forum
shopping.
The requirement that the petitioner should sign the certificate of nonforum shopping applies even to corporations, considering that the mandatory
directives of the Rules of Court make no distinction between natural and
juridical persons.
Except for the powers which are expressly conferred on it by the Corporation
Code and those that are implied by or are incidental to its existence, a
corporation has no powers. It exercises its powers through its board of directors
and/or its duly authorized officers and agents. Thus, its power to sue and be
sued in any court is lodged with the board of directors that exercises its
corporate powers. Physical acts, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate
by-laws or by a specific act of the board of directors.