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LYCEUM OF THE PHILIPPINES vs.

CA
219 SCRA 610
Doctrine of secondary meaning can be extended to
corporation name but must comply with the requirement
that it has been used so long and so exclusively by one
and that the said name has come to mean that it is
referred to as that corporation.

AF Realty & Development, Inc. vs Dieselman Freight


Services, Co.
373 SCRA 385, [G.R. No. 111448. January 16, 2002]
Commercial Law Corporation Law Power of the Board
Ultra Vires Acts of Corporate Officers Agency

FACTS:
Petitioner is an educational institution duly
registered with the SEC since Sept 1950. Before the case
at bar, Petitioner commenced a proceeding against
Lyceum of Baguio with the SEC to require it to change its
corporate name and adopt a new one not similar or
identical to the Petitioner. SEC granted noting that there
was substantial because of the dominant word Lyceum.
CA and SC affirmed. Petitioner filed similar complaint
against other schools and obtain a favorable decision from
the hearing officer.
On appeal, SEC En banc reversed the decision
and held that the word Lyceum have not become so
identified with the petitioner and that the use thereof will
cause confusion to the general public.
ISSUE:
1. Whether or not the corporate names of the private
respondents are identical with or deceptively similar to
that of the petitioner.
2. Whether or not the use by the petitioner of Lyceum in
its corporate name has been for such length of time and
with such exclusivity as to have become associated or
identified with the petitioner institution in the mind of the
general public (Doctrine of Secondary meaning).
RULING: NO to both.
True enough, the corporate names of the parties
carry the word Lyceum but confusion and deception are
precluded by the appending of geographic names. Lyceum
generally refers to a school or an institution of learning
and it is natural to use this word to designate an entity
which is organized and operating as an educational
institution.
Doctrine of Secondary meaning is a word of
phrase originally incapable of exclusive appropriation,
might nevertheless have been used so long and so
exclusively by one producer with reference to his article
that, in trade and to that branch of the purchasing public,
the word or phrase has come to mean that the article was
his product.
Lyceum of the Philippines has not gained
exclusive use of Lyceum by long passage of time. The
number alone of the private respondents suggests
strongly that the use of Lyceum has not been attended
with the exclusivity essential for the applicability of the
doctrine. It may be noted that one of the respondents
Western Pangasinan Lyceum used such term 17 years
before the petitioner registered with the SEC. Moreover,
there may be other schools using the name but not
registered with the SEC because they have not adopted
the corporate form of organization.
--

FACTS:
In 1988, Manuel Cruz, Jr., a board member of
Dieselman Freight Services, Co. (DFS) authorized Cristeta
Polintan to sell a 2,094 sq. m. parcel of land owned by
DFS. Polintan in turn authorized Felicisima Noble to sell
the same lot. Noble then offered AF Realty &
Development, Co., represented by Zenaida Ranullo, the
land at the rate of P2,500.00 per sq. m. AF Realty
accepted the offer and issued a P300,000 check as
downpayment.
However, it appeared that DFS did not authorize
Cruz, Jr. to sell the said land. Nevertheless, Manuel Cruz,
Sr. (father) and president of DFS, accepted the check but
modified the offer. He increased the selling price to
P4,000.00 per sq. m. AF Realty, in its response, did not
exactly agree nor disagree with the counter-offer but only
said it is willing to pay the balance (but was not clear at
what rate). Eventually, DFS sold the property to someone
else.
Now AF Realty is suing DFS for specific
performance. It claims that DFS ratified the contract when
it accepted the check and made a counter-offer.

ISSUE: Whether or not the sale made through an agent


was ratified.

HELD: No. There was no valid agency created. The Board


of Directors of DFS never authorized Cruz, Jr. to sell the
land. Hence, the agreement between Cruz, Jr. and
Polintan, as well as the subsequent agreement between
Polintan and Noble, never bound the corporation.
Therefore the sale transacted by Noble purportedly on
behalf of Polintan and ultimately purportedly on behalf of
DFS is void.
Being a void sale, it cannot be ratified even if
Cruz, Sr. accepted the check and made a counter-offer.
(Cruz, Sr. returned the check anyway). Under Article 1409
of the CivilCode, void transactions can never be ratified
because they were void from the very beginning.
--

Benguet Electric Cooperative, Inc. vs NLRC

ISSUE: Whether or not the National Labor Relations


Commission is correct.

209 SCRA 55 Business Organization Corporation Law


Cooperatives are Treated as Corporations Ultra Vires
Acts of the Board Members

FACTS:
In 1982, Peter Cosalan, then general manager of
the Benguet Electric Cooperative(BENECO), received an
audit
report
from
the
National
Electrification
Administration (NEA). The said audit advised Cosalan of
certain irregularities in the management of the funds of
BENECO. Cosalan then sought to address the issue by
introducing reforms recommended by the NEA as well as
by the auditing body, Commission on Audit. However, the
Board Members of BENECO reacted to these reforms by
issuing a series of resolutions which first reduced
Cosalans salary and allowances, then he was excluded
from his work, and eventually, he was suspended
indefinitely.
Cosalan then filed a complaint for illegal dismissal
against the BENECO Board Members, he later impleaded
BENECO itself. The Labor Arbiter (LA) ruled in favor of
Cosalan. The National Labor Relations Commission (NLRC)
affirmed the decision of the LA but modified it so as to
absolve the Board Members from liability as it held that
the Board Members merely acted in their official capacity.
BENECO, being the only party adjudged to be liable, then
appealed said decision.

HELD: No. The act of the Board Members is ultra vires.


There was no legal basis for them to suspend Cosalan
indefinitely for under the Implementing Rules of the
Labor Code the maximum period form preventive
suspension should not go beyond 30 days. Further, it was
found that Cosalan was never informed of the charges
against him nor was he afforded the opportunity to
present his case. He was deprived of due process. Nor
was Cosalans suspension approved by the NEA, which is
also required for due process purposes.
These acts by the Board Members are tainted
with bad faith. A very strong presumption arises that the
Board Members are acting in reprisal against the reforms
sought to be introduced by Cosalan in order to address
the irregularities within BENECO. The Board Members are
therefore liable for damages under Section 31 of the
Corporation Code. And even though BENECO is
a cooperative, it is still covered by the Corporation Code
because under PD 269, cooperatives are considered as
corporations.
The Supreme Court ruled that BENECO and the
BENECO Board Members are liable for the damages
caused against Cosalan. However BENECO can seek
reimbursement from the Board Members so as not to
unduly penalize the innocent members of BENECO.

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