Beruflich Dokumente
Kultur Dokumente
“If you have children taking medical course at AMEC- Moreover, where the broadcast is libelous per se, the law
BCCM, advise them to pass all subjects because if they implies damages. In such a case, evidence of an honest
fail in any subject they will repeat their year level, taking mistake or the want of character or reputation of the
up all subjects including those they have passed already.” party libeled goes only in mitigation of damages. Neither
in such a case is the plaintiff required to introduce
“Earlier AMEC students in Physical Therapy had evidence of actual damages as a condition precedent to
complained that the course is not recognized by DECS.” the recovery of some damages. In this case, the
broadcasts are libelous per se. Thus, AMEC is entitled to
moral damages.
“Students are required to take and pay for the subject
COLLECTOR V CLUB FILIPINO DE CEBU
even if the subject does not have an instructor - such
greed for money on the part of AMEC’s administration.” FACTS: The "Club Filipino, Inc. de Cebu," (Club, for short),
is a civic corporation organized under the laws of the
“AMEC is a dumping ground, garbage, not merely of
Philippines with an original authorized capital stock of
moral and physical misfits.”
P22,000.00, which was subsequently increased to
P200,000.00.
The Club owns and operates a club house, a bowling healthful recreation and entertainment of the
alley, a golf course (on a lot leased from the stockholders and members. That a Club makes some
government), and a bar-restaurant where it sells wines profit, does not make it a profit-making Club. As has been
and liquors, soft drinks, meals and short orders to its remarked a club should always strive, whenever
members and their guests. The bar-restaurant was a possible, to have surplus.
necessary incident to the operation of the club and its
The facts that the capital stock of the respondent Club is
golf-course. The club is operated mainly with funds
derived from membership fees and dues. Whatever divided into shares, does not detract from the finding of
the trial court that it is not engaged in the business of
profits it had, were used to defray its overhead expenses
operator of bar and restaurant. What is determinative of
and to improve its golf-course. As a result of a capital
whether or not the Club is engaged in such business is its
surplus, arising from the re-valuation of its real
properties, the value or price of which increased, the object or purpose, as stated in its articles and by-laws. It
is a familiar rule that the actual purpose is not controlled
Club declared stock dividends; but no actual cash
by the corporate form or by the commercial aspect of the
dividends were distributed to the stockholders. A BIR
business prosecuted, but may be shown by extrinsic
agent discovered that the Club has never paid
percentage tax on the gross receipts of its bar and evidence, including the by-laws and the method of
restaurant. The Collector of Internal Revenue assessed operation. From the extrinsic evidence adduced, the Tax
Court concluded that the Club is not engaged in the
against and demanded from the Club sums of money
business as a barkeeper and restaurateur.
allegedly due.
Moreover, for a stock corporation to exist, two requisites
ISSUE: WON Club is a stock corporation
must be complied with, to wit: (1) a capital stock divided
HELD: No. Having found as a fact that the Club was into shares and (2) an authority to distribute to the
organized to develop and cultivate sports of all class and holders of such shares, dividends or allotments of the
denomination, for the healthful recreation and surplus profits on the basis of the shares held (sec. 3, Act
entertainment of its stockholders and members; that No. 1459). In the case at bar, nowhere in its articles of
upon its dissolution, its remaining assets, after paying incorporation or by-laws could be found an authority for
debts, shall be donated to a charitable Philippine the distribution of its dividends or surplus profits. Strictly
Institution in Cebu; that it is operated mainly with funds speaking, it cannot, therefore, be considered a stock
derived from membership fees and dues; that the Club's corporation, within the contemplation of the
bar and restaurant catered only to its members and their corporation law.
guests; that there was in fact no cash dividend
distribution to its stockholders and that whatever was
derived on retail from its bar and restaurant was used to PNOC-ENERGY DEV’T CORP V NLRC
defray its overall overhead expenses and to improve its
golf-course (cost-plus-expenses-basis), it stands to FACTS: Private respondent Danilo Mercado was first
reason that the Club is not engaged in the business of an employed by herein petitioner PNOC-EDC on August 13,
operator of bar and restaurant. 1979. On June 30, 1985, private respondent Mercado
was dismissed because Mercado has allegedly
misappropriated the funds of petitioner.
It is conceded that the Club derived profit from the Mercado filed a complaint for illegal dismissal,
operation of its bar and restaurant, but such fact does retirement benefits, separation pay, unpaid wages, etc.
not necessarily convert it into a profit-making enterprise. against PNOC-EDC, and the latter filed its Position
The bar and restaurant are necessary adjuncts of the Paper/Motion to Dismisspraying for the dismissal of the
Club to foster its purposes and the profits derived case on the ground that the Labor Arbiter and/or the
therefrom are necessarily incidental to the primary
object of developing and cultivating sports for the
NLRC had no jurisdiction over the case. The Labor Arbiter from petitioner TPI and correspondingly reneged on their
ruled in favor of private respondent Mercado. obligations. Petitioner submitted the dispute for
arbitration before the International Centre for Dispute
ISSUE: WON matters of employment affecting the PNOC- Resolution in California, USA and won the case against
EDC, a government-owned and controlled corporation, respondent.
are within the jurisdiction of the Labor Arbiter and the
NLRC. Petitioner TPI now seeks to nullify the order of the trial
court dismissing its Petition for Confirmation,
HELD: This issue has already been laid to rest in the case Recognition, and Enforcement of Foreign Arbitral Award.
of PNOC-EDC vs. Leogardo, involving the same petitioner
and the same issue, where this Court ruled that the ISSUE: Can a foreign corporation not licensed to do
doctrine that employees of government-owned and/or business in the Philippines, but which collects royalties
con controlled corporations, whether created by special from entities in the Philippines, sue here to enforce a
law or formed as subsidiaries under the General foreign arbitral award?
Corporation law are governed by the Civil Service Law
HELD: Sec. 133. Doing business without a license. - No
and not by the Labor Code, has been supplanted by the
foreign corporation transacting business in the
present Constitution. "Thus, under the present state of
Philippines without a license, or its successors or assigns,
the law, the test in determining whether a government-
owned or controlled corporation is subject to the Civil shall be permitted to maintain or intervene in any action,
suit or proceeding in any court or administrative agency
Service Law are the manner of its creation, such that
of the Philippines; but such corporation may be sued or
government corporations created by special charter are
proceeded against before Philippine courts or
subject to its provisions while those incorporated under
the General Corporation Law are not within its administrative tribunals on any valid cause of action
recognized under Philippine laws.
coverage."
There is no doubt, therefore, in the mind of this Court
Specifically, the PNOC-EDC having been incorporated
that TPI has been doing business in the Philippines, but
under the General Corporation Law was held to be a
government owned or controlled corporation whose sans a license to do so issued by the concerned
government agency of the Republic of the Philippines,
employees are subject to the provisions of the Labor
when it collected royalties from the five (5) Philippine
Code.
tuna processors. This being the real situation, TPI cannot
The fact that the case arose at the time when the 1973 be permitted to maintain or intervene in any action, suit
Constitution was still in effect, does not deprive the NLRC or proceedings in any court or administrative agency of
of jurisdiction on the premise that it is the 1987 the Philippines." A priori, the "Petition, etc." extant of the
Constitution that governs because it is the Constitution plaintiff TPI should be dismissed for it does not have the
in place at the time of the decision. legal personality to sue in the Philippines.
In the case at bar, the decision of the NLRC was Now, does a foreign corporation not licensed to do
promulgated on July 3, 1987. Accordingly, this case falls business in the Philippines have legal capacity to sue
squarely under the rulings of the aforementioned cases. under the provisions of the Alternative Dispute
Resolution Act of 2004? We answer in the affirmative.
TUNA PROCESSING V PHIL. KINGFORD
Sec. 45 of the Alternative Dispute Resolution Act of 2004
FACTS: Kanemitsu Yamaoka (hereinafter referred to as provides that the opposing party in an application for
the "licensor"), and five (5) Philippine tuna processors,
recognition and enforcement of the arbitral award may
entered into a Memorandum of Agreement (MOA). raise only those grounds that were enumerated under
Due to a series of events not mentioned in the petition, Article V of the New York Convention.
the licensees, including respondent Kingford, withdrew
Clearly, not one of these exclusive grounds touched on registered under the laws of Belgium. In 1986, the
the capacity to sue of the party seeking the recognition management of ESAC grew concerned about the political
and enforcement of the award. situation in the Philippines and wanted to stop its
operations in the country. The Committee for Asia of
Indeed, it is in the best interest of justice that in the ESAC instructed Michael Adams, a member of EC’s Board
enforecement of a foreign arbitral award, we deny
of Directors, to dispose of the eight parcels of land.
availment by the losing party of the rule that bars foreign Adams engaged the services of realtor/broker Lauro G.
corporations not licensed to do business in the Marquez so that the properties could be offered for sale
Philippines from maintaining a suit in our courts. When a to prospective buyers. Marquez thereafter offered the
party enters into a contract containing a foreign parcels of land and the improvements thereon to
arbitration clause and, as in this case, in fact submits
Eduardo B. Litonjua, Jr. of the Litonjua& Company, Inc.
itself to arbitration, it becomes bound by the contract, by Eduardo Litonjua, Jr. responded to the offer. Marquez
the arbitration and by the result of arbitration, conceding showed the property to Eduardo Litonjua, Jr., and his
thereby the capacity of the other party to enter into the brother Antonio K. Litonjua. The Litonjua siblings offered
contract, participate in the arbitration and cause the to buy the property for P20,000,000.00 cash. Marquez
implementation of the result. furnished Eduardo Litonjua, Jr. with a copy of the telex
Arbitration, as an alternative mode of settlement, is sent by Delsaux. Litonjua, Jr. accepted the
gaining adherents in legal and judicial circles here and counterproposal of Delsaux. Marquez confirmed that the
abroad. If its tested mechanism can simply be ignored by Litonjua siblings had accepted the counter-proposal of
an aggrieved party, one who, it must be stressed, Delsaux. Meanwhile, with the assumption of Corazon C.
voluntarily and actively participated in the arbitration Aquino as President of the Republic of the Philippines,
proceedings from the very beginning, it will destroy the the political situation in the Philippines had improved.
very essence of mutuality inherent in consensual Marquez received a telephone call from Glanville,
contracts. advising that the sale would no longer proceed. Glanville
followed it up with a letter confirming that he had been
Clearly, on the matter of capacity to sue, a foreign instructed by his principal to inform Marquez that "the
arbitral award should be respected not because it is decision has been taken at a Board Meeting not to sell
favored over domestic laws and procedures, but because the properties on which Eternit Corporation is
Republic Act No. 9285 has certainly erased any conflict of situated."The trial court declared that since the authority
law question. of the agents/realtors was not in writing, the sale is void
and not merely unenforceable. CA affirmed in toto.
All considered, petitioner TPI, although a foreign
corporation not licensed to do business in the ISSUE: WON the sale made by a stockholder is valid
Philippines, is not, for that reason alone, precluded from
filing the Petition for Confirmation, Recognition, and HELD: No. The property of a corporation, however, is not
Enforcement of Foreign Arbitral Award before a the property of the stockholders or members, and as
Philippine court. such, may not be sold without express authority from the
board of directors. Physical acts, like the offering of the
properties of the corporation for sale, or the acceptance
of a counter-offer of prospective buyers of such
LITONJUA V ETERNIT CORPORATION
properties and the execution of the deed of sale covering
FACTS: The Eternit Corporation (EC) is a corporation duly such property, can be performed by the corporation only
organized and registered under Philippine laws. Since by officers or agents duly authorized for the purpose by
1950, it had been engaged in the manufacture of roofing corporate by-laws or by specific acts of the board of
materials and pipe products. Ninety (90%) percent of the directors. Absent such valid delegation/authorization,
shares of stocks of EC were owned by Eteroutremer S.A. the rule is that the declarations of an individual director
Corporation (ESAC), a corporation organized and relating to the affairs of the corporation, but not in the
course of, or connected with, the performance of President's power of control and appointment over
authorized duties of such director, are not binding on the government-owned and/or controlled corporations
corporation. (GOCCs).
While a corporation may appoint agents to negotiate for ISSUES: 1.) May SEC determine WON PNCC is a GOCC?;
the sale of its real properties, the final say will have to be 2.) Does SEC Have Jurisdiction over GOCCs?; 3.) What is
with the board of directors through its officers and the Status of PNCC?
agents as authorized by a board resolution or by its by-
laws. An unauthorized act of an officer of the corporation HELD: 1.) YES. It is certainly absurd to say that SEC is
without jurisdiction to determine if PNCC is a GOCC
is not binding on it unless the latter ratifies the same
simply because the latter claims to be one. The President
expressly or impliedly by its board of directors. Any sale
does not "determine" whether a corporation is a GOCC
of real property of a corporation by a person purporting
to be an agent thereof but without written authority or not. It is the law that does. PNCC's status as a GOCC
can be ruled upon by SEC — as well as by other
from the corporation is null and void. The declarations of
competent authorities for that matter — based on law,
the agent alone are generally insufficient to establish the
specifically the Revised Administrative Code of 1987.
fact or extent of his/her authority.
(13) Government-owned or controlled
corporation — refers to any agency organized as
PH NAT’L CONTSTRUCTION CORP. V PABION a stock or non-stock corporation, vested with
functions relating to public needs whether
FACTS: Private respondents Ernesto Pabion and Louella governmental or proprietary in nature, and
Ramiro, claiming to be stockholders of the PNCC, filed owned by the Government directly or through its
with the SEC a verified petition, therein alleging that instrumentalities either wholly, or, where
since 1982 or for a period of twelve (12) years, there has applicable as in the case of stock corporations, to
been no stockholders' meeting of the PNCC to elect the the extent of at least fifty-one (51) per cent of its
corporation's board of directors, thus enabling the capital stock: Provided, That government owned
incumbent directors to hold on to their position beyond or controlled corporations may be further
their 1-year term, in violation of PNCC's By-Laws and the categorized by the Department of Budget, the
Corporation Code. Pabion and Ramiro, therefore, prayed Civil Service Commission, and the Commission
the SEC to issue an order "ordering the officers of PNCC on Audit for purposes of the exercise and
or, in the alternative, authorizing petitioners, to call and discharge of their respective powers, functions
hold a meeting of the stockholders . . . for the purpose of and responsibilities with respect to such
electing new directors . . . ." corporations.
PNCC filed its answer. Therein, PNCC claimed that it is a 2.) YES. GOCCs may either be (1) with original charter or
government-owned corporation whose "organizational created by special law; or (2) incorporated under general
and functional management, administration, and law, via either the Old Corporation Code or the New
supervision" are governed by Administrative Order (AO) Corporation Code.
No. 59, issued by then President Corazon Aquino on
February 16, 1988. PNCC asserts that its board of We concede that SEC has no jurisdiction over
directors does not hold office by virtue of a stockholder's corporations of the first type — GOCCs with original
election but by appointment of the President of the charter or created by special law — primarily because
Philippines. PNCC expressed the fear that if granted, the they are governed by their charters. But even this
prayer in the verified petition would amount to a concession is not absolute, since the Corporation Code
contravention of AO No. 59 and an interference with the
may apply suppletorily, either by operation of law or enunciated policy is required to be disposed of
through express provisions in the charter. to private ownership within a specified period of
time.
On the other hand, we have no doubt that over GOCCs
established or organized under the Corporation Code, which removes an acquired asset corporation from the
SEC can exercise jurisdiction. These GOCCs are regarded category of a GOCC. In the context of the entire
as private corporations despite common administrative order and in relation to presidential
misconceptions. That the government may own the issuances, these provisions clearly indicate that PNCC is
controlling shares in the corporation does not diminish indeed an acquired asset corporation. This is because
the fact that the latter owes its existence to the PNCC is a corporation that is, to quote said AO, "under
Corporation Code. More pointedly, Section 143 of the private ownership, the voting or outstanding shares of
Corporation Code gives SEC the authority and power to which (i) were conveyed to the government" financial
implement its provisions, specifically for the purpose of institutions "in satisfaction of debts . . .."
regulating the entities created pursuant to such
PNCC is a corporation created in accordance with the
provisions. These entities include corporations in which
general corporation statute. It is essentially a private
the controlling shares are owned by the government or
corporation, notwithstanding the government's interest
its agencies.
therein through the debt-to-equity conversion imposed
3.) PNCC is an Acquired Asset Corporation. We agree by PD 1295. Being a private corporation, PNCC is subject
with the respondents that PNCC falls under the to SEC regulation and jurisdiction.
exception carved out from Section 2 (a and b) of AO 59:
In its Answer, Private Respondent countered that (1) that the complainant corporation acquired a
Petitioner PEBV has no legal capacity to sue; that its use prior right over the use of such corporate name; and
of its corporate name is not at all similar to Petitioners'
(2) the proposed name is either:
trademark PHILIPS when considered in its entirety; and
that its products consisting of chain rollers, belts, (a) identical; or
bearings and cutting saw are grossly different from
Petitioners' electrical products. (b) deceptively or confusingly similar to that of any
existing corporation or to any other name already
ISSUE: WON Standard Philips should be directed to protected by law; or
delete the word "PHILIPS" from their corporate name
(c) patently deceptive, confusing or contrary to
HELD: YES. As early as Western Equipment and Supply existing law.
Co. v. Reyes, the Court declared that a corporation's right
to use its corporate and trade name is a property right, a The right to the exclusive use of a corporate name with
right in rem, which it may assert and protect against the freedom from infringement by similarity is determined
world in the same manner as it may protect its tangible by priority of adoption. In this regard, there is no doubt
property, real or personal, against trespass or with respect to Petitioners' prior adoption of' the name
conversion. It is regarded, to a certain extent, as a ''PHILIPS" as part of its corporate name. Petitioners
property right and one which cannot be impaired or Philips Electrical and Philips Industrial were incorporated
defeated by subsequent appropriation by another on 29 August 1956 and 25 May 1956, respectively, while
corporation in the same field. Respondent Standard Philips was issued a Certificate of
Registration on 12 April 1982, 26 years later. Petitioner
PEBV has also used the trademark "PHILIPS" on electrical After service of summons, the Clavecilla Radio System
lamps of all types and their accessories since 30 filed a motion to dismiss the complaint on the grounds
September 1922. that it states no cause of action and that the venue is
improperly laid.
The second requisite no less exists in this case. In
determining the existence of confusing similarity in ISSUE: WON the case filed in CDO will prosper
corporate names, the test is whether the similarity is
HELD: It is clear that the case for damages filed with the
such as to mislead a person, using ordinary care and
discrimination. In so doing, the Court must look to the city court is based upon tort and not upon a written
contract. Section 1 of Rule 4 of the New Rules of Court,
record as well as the names themselves. While the
governing venue of actions in inferior courts, provides in
corporate names of Petitioners and Private Respondent
its paragraph (b) (3) that when "the action is not upon a
are not identical, a reading of Petitioner's corporate
names, to wit: PHILIPS EXPORT B.V., PHILIPS ELECTRICAL written contract, then in the municipality where the
defendant or any of the defendants resides or may be
LAMPS, INC. and PHILIPS INDUSTRIAL DEVELOPMENT,
served with summons."
INC., inevitably leads one to conclude that "PHILIPS" is,
indeed, the dominant word in that all the companies Settled is the principle in corporation law that the
affiliated or associated with the principal corporation, residence of a corporation is the place where its principal
PEBV, are known in the Philippines and abroad as the office is established. Since it is not disputed that the
PHILIPS Group of Companies. Clavecilla Radio System has its principal office in Manila,
it follows that the suit against it may properly be filed in
Respondents maintain, however, that Petitioners did not
the City of Manila.
present an iota of proof of actual confusion or deception
of the public much less a single purchaser of their The appellee maintain, however, that with the filing of
product who has been deceived or confused or showed the action in Cagayan de Oro City, venue was properly
any likelihood of confusion. It is settled, however, that laid on the principle that the appellant may also be
proof of actual confusion need not be shown. It suffices served with summons in that city where it maintains a
that confusion is probably or likely to occur. branch office. This Court has already held in the case of
Cohen vs. Benguet Commercial Co. that the term "may
be served with summons" does not apply when the
CLAVECILLA RADIO SYSTEMS V ANTILLON defendant resides in the Philippines for, in such case, he
may be sued only in the municipality of his residence,
FACTS: New Cagayan Grocery filed a complaint against regardless of the place where he may be found and
the Clavecilla Radio System alleging, in effect, that on served with summons. As any other corporation, the
March 12, 1963, the following message, addressed to the Clavecilla Radio System maintains a residence which is
former, was filed at the latter's Bacolod Branch Office for Manila in this case, and a person can have only one
transmittal thru its branch office at Cagayan de Oro:
residence at a time. The fact that it maintains branch
NECAGRO CAGAYAN DE ORO (CLAVECILLA) offices in some parts of the country does not mean that
it can be sued in any of these places. To allow an action
REURTEL WASHED NOT AVAILABLE REFINED TWENTY to be instituted in any place where a corporate entity has
FIFTY IF AGREEABLE SHALL SHIP LATER REPLY POHANG its branch offices would create confusion and work
untold inconvenience to the corporation.
The Cagayan de Oro branch office having received the
said message omitted, in delivering the same to the New
Cagayan Grocery, the word "NOT" between the words
"WASHED" and "AVAILABLE," thus changing entirely the HEIRS OF GAMBOA V TEVES
contents and purport of the same and causing the said FACTS: Movants Philippine Stock Exchange’s (PSE)
addressee to suffer damages. President, Manuel V. Pangilinan, Napoleon L. Nazareno,
and the Securities and Exchange Commission (SEC) nationals. Therefore, respondents’ interpretation will
contend that the term “capital” in Section 11, Article XII ultimately result in handing over effective control of our
of the Constitution has long been settled and defined to national economy to foreigners in patent violation of the
refer to the total outstanding shares of stock, whether Constitution, making Filipinos second-class citizens in
voting or non-voting. In fact, movants claim that the SEC, their own country.
which is the administrative agency tasked to enforce the
60-40 ownership requirement in favor of Filipino citizens
in the Constitution and various statutes, has consistently NARRA MINING V REDMONT MINING
adopted this particular definition in its numerous
opinions. Movants point out that with the 28 June 2011 ISSUE: whether petitioner’s nationality is Filipino or
Decision, the Court in effect introduced a “new” foreign
definition or “midstream redefinition” of the term
HELD: Concluding from the above-stated facts, it is quite
“capital” in Section 11, Article XII of the Constitution.
safe to say that petitioners McArthur, Tesoro and Narra
ISSUE: Whether the term “capital” includes both voting are not Filipino since MBMI, a 100% Canadian
and non-voting shares. corporation, owns 60% or more of their equity interests.
Such conclusion is derived from grandfathering
petitioners’ corporate owners, namely: MMI, SMMI and
\HELD: The Constitution expressly declares as State PLMDC. Going further and adding to the picture, MBMI’s
Summary of Significant Accounting Policies statement– –
policy the development of an economy "effectively
regarding the "joint venture" agreements that it entered
controlled" by Filipinos. Consistent with such State
into with the "Olympic" and "Alpha" groups––involves
policy, the Constitution explicitly reserves the ownership
and operation of public utilities to Philippine nationals, SMMI, Tesoro, PLMDC and Narra. Noticeably, the
ownership of the "layered" corporations boils down to
who are defined in the Foreign Investments Act of 1991
MBMI, Olympic or corporations under the "Alpha" group
as Filipino citizens, or corporations or associations at
wherein MBMI has joint venture agreements with,
least 60 percent of whose capital with voting rights
belongs to Filipinos. The FIA’s implementing rules explain practically exercising majority control over the
corporations mentioned. In effect, whether looking at
that "[f]or stocks to be deemed owned and held by
the capital structure or the underlying relationships
Philippine citizens or Philippine nationals, mere legal title
between and among the corporations, petitioners are
is not enough to meet the required Filipino equity. Full
beneficial ownership of the stocks, coupled with NOT Filipino nationals and must be considered foreign
since 60% or more of their capital stocks or equity
appropriate voting rights is essential." In effect, the FIA
clarifies, reiterates and confirms the interpretation that interests are owned by MBMI.
the term "capital" in Section 11, Article XII of the 1987 [P]etitioners McArthur, Tesoro and Narra are not Filipino
Constitution refers to shares with voting rights, as well as since MBMI, a 100% Canadian corporation, owns 60% or
with full beneficial ownership. This is precisely because more of their equity interests. Such conclusion is derived
the right to vote in the election of directors, coupled with from grandfathering petitioners’ corporate owners. xxx
full beneficial ownership of stocks, translates to effective Noticeably, the ownership of the “layered” corporations
control of a corporation. boils down to xxx group wherein MBMI has joint venture
agreements with, practically exercising majority control
over the corporations mentioned. In effect, whether
Any other construction of the term "capital" in Section looking at the capital structure or the underlying
11, Article XII of the Constitution contravenes the letter relationships between and among the corporations,
and intent of the Constitution. Any other meaning of the petitioners are NOT Filipino nationals and must be
term "capital" openly invites alien domination of considered foreign since 60% or more of their capital
economic activities reserved exclusively to Philippine stocks or equity interests are owned by MBMI.
before us it can not be denied that the plaintiff was not
yet incorporated when it entered into a contract of sale,
CAGAYAN FISHING V SANDIKO Exhibit A. The contract itself referred to the plaintiff as
FACTS: On May 31, 1930, Tabora executed a public "una sociedad en vias de incorporacion." It was not even
document entitled "Escritura de Transpaso de Propiedad a de facto corporation at the time. Not being in legal
Inmueble" (Exhibit A) by virtue of which the four parcels existence then, it did not possess juridical capacity to
of land owned by him was sold to the plaintiff company, enter into the contract.
said to under process of incorporation, in consideration
of one peso (P1) subject to the mortgages in favor of the
Philippine National Bank and Severina Buzon and, to the Corporations are creatures of the law, and can only come
condition that the certificate of title to said lands shall into existence in the manner prescribed by law. As has
not be transferred to the name of the plaintiff company already been stated, general law authorizing the
until the latter has fully and completely paid Tabora's formation of corporations are general offers to any
indebtedness to the Philippine National Bank. persons who may bring themselves within their
provisions; and if conditions precedent are prescribed in
the statute, or certain acts are required to be done, they
The plaintiff company filed its article incorporation with are terms of the offer, and must be complied with
the Bureau of Commerce and Industry on October 22, substantially before legal corporate existence can be
1930 (Exhibit 2). A year later, on October 28, 1931, the acquired. (14 C. J., sec. 111, p. 118.)
board of directors of said company adopted a resolution
(Exhibit G) authorizing its president, Jose Ventura, to sell
the four parcels of lands in question to Teodoro Sandiko That a corporation should have a full and complete
for P42,000. Exhibits B, C and D were thereafter made organization and existence as an entity before it can
and executed. enter into any kind of a contract or transact any business,
would seem to be self evident. . . . A corporation, until
ISSUE: WON the subsequent sale of the properties to
organized, has no being, franchises or faculties. Nor do
Sandiko is valid those engaged in bringing it into being have any power
HELD: The transfer made by Tabora to the Cagayan to bind it by contract, unless so authorized by the charter
fishing Development Co., Inc., plaintiff herein, was there is not a corporation nor does it possess franchise
affected on May 31, 1930 (Exhibit A) and the actual or faculties for it or others to exercise, until it acquires a
incorporation of said company was affected later on complete existence. (Gent vs. Manufacturers and
October 22, 1930 (Exhibit 2). In other words, the transfer Merchant's Mutual Insurance Company, 107 Ill., 652,
was made almost five months before the incorporation 658.)
of the company. Unquestionably, a duly organized However, having arrived at the conclusion that the
corporation has the power to purchase and hold such transfer by Manuel Tabora to the Cagayan Fishing
real property as the purposes for which such corporation Development Company, Inc. was null because at the time
was formed may permit and for this purpose may enter it was affected the corporation was non-existent, we
into such contracts as may be necessary (sec. 13, pars. 5 deem it unnecessary to discuss this point.lawphil.net
and 9, and sec. 14, Act No. 1459). But before a
corporation may be said to be lawfully organized, many
things have to be done. Among other things, the law
HALL V PICCIO
requires the filing of articles of incorporation (secs. 6 et
seq., Act. No. 1459). Although there is a presumption FACTS: The petitioner Amer Macaorao Balindong is the
that all the requirements of law have been complied with mayor of Malabang, Lanao del Sur, while the respondent
(sec. 334, par. 31 Code of Civil Procedure), in the case Pangandapun Bonito is the mayor, and the rest of the
respondents are the councilors, of the municipality of of this action. It is contended that as a de facto
Balabagan of the same province. Balabagan was formerly corporation, its existence cannot be collaterally
a part of the municipality of Malabang, having been attacked, although it may be inquired into directly in an
created on March 15, 1960, by Executive Order 386 of action for quo warranto at the instance of the State and
the then President Carlos P. Garcia, out of barrios and not of an individual like the petitioner Balindong.
sitios 1 of the latter municipality.
It is indeed true that, generally, an inquiry into the legal
The petitioners brought this action for prohibition to existence of a municipality is reserved to the State in a
nullify Executive Order 386 and to restrain the proceeding for quo warranto or other direct proceeding,
respondent municipal officials from performing the and that only in a few exceptions may a private person
functions of their respective office relying on the ruling exercise this function of government. 4 But the rule
of this Court in Pelaez v. Auditor General 2 and disallowing collateral attacks applies only where the
Municipality of San Joaquin v. Siva. 3 municipal corporation is at least a de facto corporations.
5 For where it is neither a corporation de jure nor de
facto, but a nullity, the rule is that its existence may be,
In Pelaez this Court, through Mr. Justice (now Chief questioned collaterally or directly in any action or
Justice) Concepcion, ruled: (1) that section 23 of Republic proceeding by any one whose rights or interests ate
Act 2370 [Barrio Charter Act, approved January 1, 1960], affected thereby, including the citizens of the territory
by vesting the power to create barrios in the provincial incorporated unless they are estopped by their conduct
board, is a "statutory denial of the presidential authority from doing so.
to create a new barrio [and] implies a negation of the
ISSUE: whether the municipality of Balabagan is a de
bigger power to create municipalities," and (2) that facto corporation
section 68 of the Administrative Code, insofar as it gives
the President the power to create municipalities, is HELD: In the cases where a de facto municipal
unconstitutional (a) because it constitutes an undue corporation was recognized as such despite the fact that
delegation of legislative power and (b) because it offends the statute creating it was later invalidated, the decisions
against section 10 (1) of article VII of the Constitution, could fairly be made to rest on the consideration that
which limits the President's power over local there was some other valid law giving corporate vitality
governments to mere supervision. As this Court summed to the organization. Hence, in the case at bar, the mere
up its discussion: "In short, even if it did not entail an fact that Balabagan was organized at a time when the
undue delegation of legislative powers, as it certainly statute had not been invalidated cannot conceivably
does, said section 68, as part of the Revised make it a de facto corporation, as, independently of the
Administrative Code, approved on March 10, 1917, must Administrative Code provision in question, there is no
be deemed repealed by the subsequent adoption of the other valid statute to give color of authority to its
Constitution, in 1935, which is utterly incompatible and creation. Indeed, in Municipality of San Joaquin v. Siva,
inconsistent with said statutory enactment." 11 this Court granted a similar petition for prohibition
and nullified an executive order creating the municipality
On the other hand, the respondents, while admitting of Lawigan in Iloilo on the basis of the Pelaez ruling,
the facts alleged in the petition, nevertheless argue that despite the fact that the municipality was created in
the rule announced in Pelaez can have no application in 1961, before section 68 of the Administrative Code,
this case because unlike the municipalities involved in under which the President had acted, was invalidated.
Pelaez, the municipality of Balabagan is at least a de facto
'Of course the issue of de facto municipal corporation did
corporation, having been organized under color of a not arise in that case.
statute before this was declared unconstitutional, its
officers having been either elected or appointed, and the In Norton v. Shelby Count, 12 Mr. Justice Field said: "An
municipality itself having discharged its corporate unconstitutional act is not a law; it confers no rights; it
functions for the past five years preceding the institution imposes no duties; it affords no protection; it creates no
office; it is, in legal contemplation, as inoperative as Private respondent filed a petition for certiorari. The trial
though it had never been passed." Accordingly, he held court found the dispute to be intracorporate, hence,
that bonds issued by a board of commissioners created subject to the jurisdiction of the SEC, and ordered the
under an invalid statute were unenforceable. MCTC to dismiss accordingly. 5 It denied reconsideration.
Executive Order 386 "created no office." This is not to ISSUE: WON there is a corporation by estoppel placing
say, however, that the acts done by the municipality of the case within the ambit of SEC jurisdiction being intra-
Balabagan in the exercise of its corporate powers are a corporate in nature
nullity because the executive order "is, in legal
HELD: There is no intracorporate nor partnership relation
contemplation, as inoperative as though it had never
between petitioner and private respondent. The
been passed." For the existence of Executive, Order 386
controversy between them arose out of their plan to
is "an operative fact which cannot justly be ignored."
consolidate their respective jeepney drivers' and
operators' associations into a single common
association. This unified association was, however, still a
LOZANO V DELOS SANTOS proposal. It had not been approved by the SEC, neither
FACTS: petitioner Reynaldo M. Lozano filed Civil Case No. had its officers and members submitted their articles of
1214 for damages against respondent Antonio Anda consolidation is accordance with Sections 78 and 79 of
before the Municipal Circuit Trial Court (MCTC), the Corporation Code. Consolidation becomes effective
Mabalacat and Magalang, Pampanga. Petitioner alleged not upon mere agreement of the members but only upon
that he was the president of the Kapatirang Mabalacat- issuance of the certificate of consolidation by the SEC. 13
Angeles Jeepney Drivers' Association, Inc. (KAMAJDA) When the SEC, upon processing and examining the
while respondent Anda was the president of the articles of consolidation, is satisfied that the
Samahang Angeles-Mabalacat Jeepney Operators' and consolidation of the corporations is not inconsistent with
Drivers' Association, Inc. (SAMAJODA); petitioner and the provisions of the Corporation Code and existing laws,
private respondent agreed to consolidate their it issues a certificate of consolidation which makes the
respective associations and form the Unified Mabalacat- reorganization official. 14 The new consolidated
Angeles Jeepney Operators' and Drivers Association, Inc. corporation comes into existence and the constituent
(UMAJODA); petitioner and private respondent also corporations dissolve and cease to exist. 15
agreed to elect one set of officers who shall be given the The KAMAJDA and SAMAJODA to which petitioner and
sole authority to collect the daily dues from the members private respondent belong are duly registered with the
of the consolidated association; elections were held and SEC, but these associations are two separate entities. The
both petitioner and private respondent ran for dispute between petitioner and private respondent is
president; petitioner won; private respondent protested not within the KAMAJDA nor the SAMAJODA. It is
and, alleging fraud, refused to recognize the results of between members of separate and distinct associations.
the election; private respondent also refused to abide by Petitioner and private respondent have no
their agreement and continued collecting the dues from
intracorporate relation much less do they have an
the members of his association despite several demands intracorporate dispute. The SEC therefore has no
to desist. Petitioner was thus constrained to file the jurisdiction over the complaint.
complaint to restrain private respondent from collecting
the dues and to order him to pay damages. The doctrine of corporation by estoppel 16 advanced by
private respondent cannot override jurisdictional
Private respondent moved to dismiss the complaint for
requirements. Jurisdiction is fixed by law and is not
lack of jurisdiction, claiming that jurisdiction was lodged subject to the agreement of the parties. 17 It cannot be
with the SEC. The MCTC denied the motion and denied acquired through or waived, enlarged or diminished by,
reconsideration. any act or omission of the parties, neither can it be
conferred by the acquiescence of the court. 18
Corporation by estoppel is founded on principles of law firm), a "manifestation" stating that "Aruego is not a
equity and is designed to prevent injustice and party to this case," and that, therefore, plaintiff's petition
unfairness. 19 It applies when persons assume to form a should be denied.
corporation and exercise corporate functions and enter
ISSUE: WON the writ of execution may be effected upon
into business relations with third person. Where there is
Aruego as the supposed president of the university, the
no third person involved and the conflict arises only
real party defendant
among those assuming the form of a corporation, who
therefore know that it has not been registered, there is HELD: The fact of non-registration of University
no corporation by estoppel. 20 Publishing Co., Inc. in the Securities and Exchange
Commission has not been disputed. Defendant would
only raise the point that "University Publishing Co., Inc.,"
ALBERT V UNIVERSITY PUBLISHING and not Jose M. Aruego, is the party defendant; thereby
assuming that "University Publishing Co., Inc." is an
FACTS: Albert sued University Publishing Co., Inc. Plaintiff existing corporation with an independent juridical
alleged inter alia that defendant was a corporation duly personality. Precisely, however, on account of the non-
organized and existing under the laws of the Philippines;
registration it cannot be considered a corporation, not
that defendant, through Aruego, its President, entered even a corporation de facto (Hall vs. Piccio, 86 Phil. 603).
into a contract with plaintifif; that defendant had It has therefore no personality separate from Jose M.
thereby agreed to pay plaintiff P30,000.00 for the Aruego; it cannot be sued independently.
exclusive right to publish his revised Commentaries on
the Revised Penal Code and for his share in previous sales The corporation-by-estoppel doctrine has not been
of the book's first edition; that defendant had invoked. At any rate, the same is inapplicable here.
undertaken to pay in eight quarterly installments of Aruego represented a non-existent entity and induced
P3,750; that per contract failure to pay one installment not only the plaintiff but even the court to believe in such
would render the rest due; and that defendant had failed representation. He signed the contract as "President" of
to pay the second installment. "University Publishing Co., Inc.," stating that this was "a
corporation duly organized and existing under the laws
Defendant admitted plaintiff's allegation of defendant's of the Philippines," and obviously misled plaintiff
corporate existence; admitted the execution and terms (Mariano A. Albert) into believing the same. One who has
of the contract; but alleged that it was plaintiff who induced another to act upon his wilful misrepresentation
breached their contract by failing to deliver his that a corporation was duly organized and existing under
manuscript. Furthermore, defendant counterclaimed for the law, cannot thereafter set up against his victim the
damages. principle of corporation by estoppel (Salvatiera vs.
The Supreme Court reduced the amount of damages to Garlitos, 56 O.G. 3069).
P15,000.00, to be executed in full. Thereafter, the court
"University Publishing Co., Inc." purported to come to
a quo ordered issuance of an execution writ against court, answering the complaint and litigating upon the
University Publishing Co., Inc. Plaintiff, however, merits. But as stated, "University Publishing Co., Inc." has
petitioned for a writ of execution against Aruego, as the no independent personality; it is just a name. Jose M.
real defendant, stating, "plaintiff's counsel and the Aruego was, in reality, the one who answered and
Sheriff of Manila discovered that there is no such entity litigated, through his own law firm as counsel. He was in
as University Publishing Co., Inc." Plaintiff annexed to his fact, if not, in name, the defendant.
petition a certification from the SEC, attesting: "The
records of this Commission do not show the registration Even with regard to corporations duly organized and
of UNIVERSITY PUBLISHING CO., INC., either as a existing under the law, we have in many a case pierced
corporation or partnership." "University Publishing Co., the veil of corporate fiction to administer the ends of
Inc." countered by filing, through counsel (Aruego's own justice. * And in Salvatiera vs. Garlitos, supra, p. 3073, we
ruled: "A person acting or purporting to act on behalf of complaint pointing to his personal liability and thus
a corporation which has no valid existence assumes such prayed that an order be issued limiting such liability to
privileges and obligations and becomes personally liable defendant corporation.
for contracts entered into or for other acts performed as
ISSUE: Whether Refuerzo can be made personally liable
such agent." Had Jose M. Aruego been named as party
defendant instead of, or together with, "University HELD: YES. While as a general rule a person who has
Publishing Co., Inc.," there would be no room for debate contracted or dealt with an association in such a way as
as to his personal liability. Since he was not so named, to recognize its existence as a corporate body is
the matters of "day in court" and "due process" have estopped from denying the same in an action arising out
arisen. 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
SALVATIERRA V GARLITOS that she was unaware of the fact that the Philippine
Fibers Producers Co., Inc., had no juridical personality,
FACTS: Manuela T. Vda. de Salvatierra appeared to be Refuerzo gave no confirmation or denial and the
the owner of a parcel of land located at Maghobas,
circumstances surrounding the execution of the contract
Poblacion, Burauen, Teyte. Said landholder entered into lead to the inescapable conclusion that Salvatierra was
a contract of lease with the Philippine Fibers Producers really made to believe that such corporation was duly
Co., Inc., (PFPC) allegedly a corporation "duly organized organized in accordance with law.
and existing under the laws of the Philippines, domiciled
at Burauen, Leyte, Philippines, and with business address There can be no question that a corporation with
therein, represented in this instance by Mr. Segundino Q. registered has a juridical personality separate and
Refuerzo, the President". It was provided in said contract distinct from its component members or stockholders
that the lifetime of the lease would be for a period of 10 and officers such that a corporation cannot be held liable
years; that the land would be planted to kenaf, ramie or for the personal indebtedness of a stockholder even if he
other crops suitable to the soil; that the lessor would be should be its president and conversely, a stockholder or
entitled to 30 per cent of the net income accruing from member cannot be held personally liable for any financial
the harvest of any, crop without being responsible for obligation be, the corporation in excess of his unpaid
the cost of production thereof; and that after every subscription. But this rule is understood to refer merely
harvest, the lessee was bound to declare at the earliest to registered corporations and cannot be made
possible time the income derived therefrom and to applicable to the liability of members of an
deliver the corresponding share due the lessor. unincorporated association. The reason behind this
doctrine is obvious-since an organization which before
Apparently, the aforementioned obligations imposed on the law is non-existent has no personality and would be
the alleged corporation were not complied with because incompetent to act and appropriate for itself the powers
Salvatierra filed with the Court of First Instance of Leyte and attribute of a corporation as provided by law; it
a complaint against PFPC and Refuerzo, for accounting,
cannot create agents or confer authority on another to
rescission and damages. act in its behalf; thus, those who act or purport to act as
As defendants apparently failed to file their answer to its representatives or agents do so without authority and
the complaint, of which they were allegedly notified, the at their own risk. And as it is an elementary principle of
Court declared them in default and proceeded to receive law that a person who acts as an agent without authority
plaintiff's evidence. or without a principal is himself regarded as the principal,
possessed of all the rights and subject to all the liabilities
Refuerzo filed a motion claiming that the decision of a principal, a person acting or purporting to act on
rendered in said Civil Case No. 1912 was null and void behalf of a corporation which has no valid existence
with respect to him, there being no allegation in the assumes such privileges and obligations and comes
personally liable for contracts entered into or for other 2. Whether or not a complaint filed against persons
acts performed as such, agent (Fay vs. Noble, 7 Cushing associated under a common name will justify a judgment
[Mass.] 188. Cited in II Tolentino's Commercial Laws of against the association itself and not its individual
the Philippines, Fifth Ed., P. 689-690). Considering that members.
defendant Refuerzo, as president of the unregistered
HELD: We hold against the petitioner on the first
corporation Philippine Fibers Producers Co., Inc., was the
question. It is true that Rule 3, Section 1, of the Rules of
moving spirit behind the consummation of the lease
agreement by acting as its representative, his liability Court clearly provides that "only natural or juridical
persons may be parties in a civil action." It is also not
cannot be limited or restricted that imposed upon
denied that the school has not been incorporated.
corporate shareholders. In acting on behalf of a
However, this omission should not prejudice the private
corporation which he knew to be unregistered, he
assumed the risk of reaping the consequential damages respondent in the assertion of her claims against the
school.
or resultant rights, if any, arising out of such transaction.
As a school, the petitioner was governed by Act No. 2706
as amended by C.A. No. 180, which provided as follows:
CHIANG KAI SHEK V CA
Unless exempted for special reasons by the
FACTS: An unpleasant surprise awaited Fausta F. Oh Secretary of Public Instruction, any private
when she reported for work at the Chiang Kai Shek school or college recognized by the government
School in Sorsogon on the first week of July, 1968. She shall be incorporated under the provisions of Act
was told she had no assignment for the next semester. No. 1459 known as the Corporation Law, within
Oh was shocked. She had been teaching in the school 90 days after the date of recognition, and shall
since 1932 for a continuous period of almost 33 years. file with the Secretary of Public Instruction a
And now, out of the blue, and for no apparent or given copy of its incorporation papers and by-laws.
reason, this abrupt dismissal.
Having been recognized by the government, it was under
Oh sued. She demanded separation pay, social security obligation to incorporate under the Corporation Law
benefits, salary differentials, maternity benefits and within 90 days from such recognition. It appears that it
moral and exemplary damages. 1 The original defendant had not done so at the time the complaint was filed
was the Chiang Kai Shek School but when it filed a motion notwithstanding that it had been in existence even
to dismiss on the ground that it could not be sued, the earlier than 1932. The petitioner cannot now invoke its
complaint was amended. 2 Certain officials of the school own non-compliance with the law to immunize it from
were also impleaded to make them solidarily liable with the private respondent's complaint.
the school.
There should also be no question that having contracted
The Court of First Instance of Sorsogon dismissed the with the private respondent every year for thirty two
complaint. 3 On appeal, its decision was set aside by the years and thus represented itself as possessed of juridical
respondent court, which held the school suable and personality to do so, the petitioner is now estopped from
liable while absolving the other defendants. 4 The denying such personality to defeat her claim against it.
motion for reconsideration having been denied, 5 the According to Article 1431 of the Civil Code, "through
school then came to this Court in this petition for review estoppel an admission or representation is rendered
on certiorari. conclusive upon the person making it and cannot be
denied or disproved as against the person relying on it."
ISSUE: 1. Whether or not a school that has not been
incorporated may be sued by reason alone of its long As the school itself may be sued in its own name, there is
continued existence and recognition by the government, no need to apply Rule 3, Section 15, under which the
persons joined in an association without any juridical
personality may be sued with such association. Besides, its favor and making partial payments on the same is
it has been shown that the individual members of the therefore estopped to deny said plaintiff's corporate
board of trustees are not liable, having been appointed existence. It is, of course, also estopped from denying its
only after the private respondent's dismissal. 6 own corporate existence. Under these circumstances it
was unnecessary for the plaintiff to present other
evidence of the corporate existence of either of the
ASIA BANKING V STANDARD PRODUCTS parties. It may be noted that there is no evidence
showing circumstances taking the case out of the rules
This action is brought to recover the sum of stated.
P24,736.47, the balance due on the following
promissory note:
HELD: There is no merit whatever in the appellant's On 27 December 1989, Henri Kahn issued a personal
contention. The general rule is that in the absence of check in the amount of P50,000 as partial payment for
fraud a person who has contracted or otherwise dealt the outstanding balance of the Federation. 5 Thereafter,
with an association in such a way as to recognize and in no further payments were made despite repeated
effect admit its legal existence as a corporate body is demands.chanrob1es virtua1 1aw 1ibrary
thereby estopped to deny its corporate existence in any
Petitioner sued Henri Kahn in his personal capacity and
action leading out of or involving such contract or
as President of the Federation and impleaded the
dealing, unless its existence is attacked for cause which
Federation as an alternative defendant and sought to
have arisen since making the contract or other dealing
hold Henri Kahn liable for the unpaid balance for the
relied on as an estoppel and this applies to foreign as well
tickets purchased by the Federation on the ground that
as to domestic corporations.
Henri Kahn allegedly guaranteed the said obligation.
The defendant having recognized the corporate
existence of the plaintiff by making a promissory note in
Henri Kahn filed his answer with counterclaim. While not within the purview of the aforementioned laws and does
denying the allegation that the Federation owed the not have corporate existence of its own.chanrob1es
unpaid balance for the plane tickets, he averred that the virtua1 1aw 1ibrary
petitioner has no cause of action against him either in his
personal capacity or in his official capacity as president
of the Federation. He maintained that he; did not Thus being said, it follows that private respondent Henry
guarantee payment but merely acted as an agent of the Kahn should be held liable for the unpaid obligations of
Federation which has a separate and distinct juridical the unincorporated Philippine Football Federation. It is a
personality. settled principal in corporation law that any person
acting or purporting to act on behalf of a corporation
ISSUE: WON Philippine Football Federation is a juridical
which has no valid existence assumes such privileges and
person
becomes personally liable for contract entered into or for
HELD: The above powers and functions granted to other acts performed as such agent. 14 As president of
national sports associations clearly indicate that these the Federation, Henri Kahn is presumed to have known
entities may acquire a juridical personality. The power to about the corporate existence or non-existence of the
purchase, sell, lease and encumber property are acts Federation. We cannot subscribe to the position taken by
which may only be done by persons, whether natural or the appellate court that even assuming that the
artificial, with juridical capacity. However, while we Federation was defectively incorporated, the petitioner
agree with the appellate court that national sports cannot deny the corporate existence of the Federation
associations may be accorded corporate status, such because it had contracted and dealt with the Federation
does not automatically take place by the mere passage in such a manner as to recognize and in effect admit its
of these laws. existence. 15 The doctrine of corporation by estoppel is
mistakenly applied by the respondent court to the
It is a basic postulate that before a corporation may petitioner. The application of the doctrine applies to a
acquire juridical personality, the State must give its third party only when he tries to escape liabilities on a
consent either in the form of a special law or a general contract from which he has benefited on the irrelevant
enabling act. We cannot agree with the view of the ground of defective incorporation. 16 In the case at bar,
appellate court; and the private respondent that the the petitioner is not trying to escape liability from the
Philippine Football Federation came into existence upon contract but rather is the one claiming from the contract.
the passage of these laws. Nowhere can it be found in
R.A. 3135 or P.D. 604 any provision creating the
Philippine Football Federation. These laws merely
recognized the existence of national sports associations GROTJAHN V ISNANI
and provided the manner by which these entities may FACTS: petitioner is a multinational company organized
acquire juridical personality. and existing under the laws of the Federal Republic of
This fact of recognition, however, Henri Kahn failed to Germany. Petitioner filed an application with the SEC for
the establishment of a regional or area headquarters in
substantiate. In attempting to prove the juridical
the Philippines, pursuant to Presidential Decree No. 218.
existence of the Federation, Henri Kahn attached to his
The application was approved by the BOI. Consequently,
motion for reconsideration before the trial court a copy
of the constitution and by-laws of the Philippine, Football the SEC issued a Certificate of Registration and License to
petitioner.
Federation. Unfortunately, the same does not prove that
said Federation has indeed been recognized and Respondent Romana was a sales representative of
accredited by either the Philippine Amateur Athletic petitioner from 1983 to mid-1992. On March 12, 1992,
Federation or the Department of Youth and Sports she secured a loan of twenty-five thousand pesos
Development. Accordingly, we rule that the Philippine (P25,000.00) from petitioner. On March 26 and June 10,
Football Federation is not a national sports association
1992, she made additional cash advances in the sum of nationals like private respondent Romana Lanchinebre.
ten thousand pesos (P10,000.00). Of the total amount, From this uninterrupted performance by petitioner of
twelve thousand one hundred seventy pesos and thirty- acts pursuant to its primary purposes and functions as a
seven centavos (P12,170.37) remained unpaid. Despite regional/area headquarters for its home office, it is clear
demand, private respondent Romana failed to settle her that petitioner is doing business in the country.
obligation with petitioner. Moreover, private respondents are estopped from
assailing the personality of petitioner.
petitioner filed another Complaint for collection of sum
of money against private respondents spouses Romana
and Teofilo Lanchinebre.