31. Liban v. Gordon G.R. No.

175352 July 15, 2009

Facts:
This is a petition to declare Senator Richard J. Gordon (respondent) as having forfeited his seat in the Senate. During respondents
incumbency as a member of the Senate of the Philippines, [1] he was elected Chairman of the PNRC. Petitioners allege that by accepting the
chairmanship of the PNRC Board of Governors, respondent has violated the constitutional prohibition on incompatible offices.
Respondent insists that the PNRC is not a government-owned or controlled corporation and that the prohibition under Section 13, Article
VI of the Constitution does not apply in the present case since volunteer service to the PNRC is neither an office nor an employment.
Issue:
WON the office of the PNRC Chairman is a government office or an office in a government-owned or controlled corporation for purposes of the
prohibition in Section 13, Article VI of the Constitution.
Held:
No. PNRC is a Private Organization Performing Public Functions
The PNRC is a non-profit, donor-funded, voluntary, humanitarian organization, whose mission is to bring timely, effective, and compassionate
humanitarian assistance for the most vulnerable without consideration of nationality, race, religion, gender, social status, or political affiliation.
To ensure and maintain its autonomy, neutrality, and independence, the PNRC cannot be owned or controlled by the government. Indeed,
the Philippine government does not own the PNRC. The PNRC does not have government assets and does not receive any appropriation from
the Philippine Congress.[13] The PNRC is financed primarily by contributions from private individuals and private entities obtained through
solicitation campaigns organized by its Board of Governors. ,
The PNRC Charter is Violative of the Constitutional Proscription against the Creation of Private Corporations by Special Law
The Constitution recognizes two classes of corporations. The first refers to private corporations created under a general law. The second
refers to government-owned or controlled corporations created by special charters.
The Constitution emphatically prohibits the creation of private corporations except by general law applicable to all citizens. The purpose
of this constitutional provision is to ban private corporations created by special charters, which historically gave certain individuals, families or
groups special privileges denied to other citizens.
In short, Congress cannot enact a law creating a private corporation with a special charter. Such legislation would be
unconstitutional. Private corporations may exist only under a general law. If the corporation is private, it must necessarily exist under
a general law. Stated differently, only corporations created under a general law can qualify as private corporations. Under existing laws, the
general law is the Corporation Code, except that the Cooperative Code governs the incorporation of cooperatives.

In sum, we hold that the office of the PNRC Chairman is not a government office or an office in a government-owned or controlled
corporation for purposes of the prohibition in Section 13, Article VI of the 1987 Constitution. However, since the PNRC Charter is void insofar as
it creates the PNRC as a private corporation, the PNRC should incorporate under the Corporation Code and register with the Securities and
Exchange Commission if it wants to be a private corporation.

Liban v. Gordon January 18, 2011

Facts:
Nag-file c Gordon ug Motion for Clarification and/or for Reconsideration. Mao ra. Haha. Katung case above, gi-dismiss tu due to lack of
standing of petitioners pero ng-decide2x pa ang court sa PNRC Charter.
Respondent argues that the validity of R.A. No. 95 was a non-issue; therefore, it was unnecessary for the Court to decide on that question and
that the pronouncement of the Court on the validity of R.A. No. 95 (PNRC Charter) should be considered obiter.
Issue:
WON PNRC is a private corporation and must incorporate under the Corporation Code and register with the SEC
Held:
No. PNRC is a class of its own.
A closer look at the nature of the PNRC would show that there is none like it not just in terms of structure, but also in terms of
history, public service and official status accorded to it by the State and the international community. There is merit in PNRCs contention that its
structure is sui generis.
National Societies such as the PNRC act as auxiliaries to the public authorities of their own countries in the humanitarian field and
provide a range of services including disaster relief and health and social programmes. A National Society partakes of a sui
generis character. National societies are organizations that are directly regulated by international humanitarian law, in contrast to
other ordinary private entities, including NGOs.
The auxiliary status of [a] Red Cross Society means that it is at one and the same time a private institution and a public service
organization because the very nature of its work implies cooperation with the authorities, a link with the State.
By requiring the PNRC to organize under the Corporation Code just like any other private corporation, the Decision of July 15, 2009 lost
sight of the PNRCs special status under international humanitarian law and as an auxiliary of the State, designated to assist it in discharging its
obligations under the Geneva Conventions. Although it is neither a subdivision, agency, or instrumentality of the government, nor a
government-owned or -controlled corporation or a subsidiary thereof, as succinctly explained in the Decision of July 15, 2009, so much so that
respondent, under the Decision, was correctly allowed to hold his position as Chairman thereof concurrently while he served as a Senator, such
a conclusion does not ipso facto imply that the PNRC is a private corporation within the contemplation of the provision of the Constitution, that
must be organized under the Corporation Code. As correctly mentioned by Justice Roberto A. Abad, the sui generis character of PNRC requires
us to approach controversies involving the PNRC on a case-to-case basis.
In sum, the PNRC enjoys a special status as an important ally and auxiliary of the government in the humanitarian field in accordance with
its commitments under international law. This Court cannot all of a sudden refuse to recognize its existence, especially since the issue of the
constitutionality of the PNRC Charter was never raised by the parties.
So, gi-modify and decision earlier. The sections of PNRC that were previously declared void were said to be valid na!

32. Gala vs Ellice Agro Industrial Corp.

Facts:

The spouses Manuel and Alicia Gala and their children Guia Domingo, Ofelia Gala, Raul Gala and Rita Benson, and their encargados
(representatives) Virgilio Galeon and Julian Jader, formed and organized Ellice Agro Industrial Corporation (Ellice). As payment for their
subscriptions the Spouses Gala transferred several parcles of land to Ellice. Subsequently, the children and the encargados formed and
organized another corporation, Margo Management and Development Corporation (Margo). The father, Manuel Gala, sold his shares in Ellice to
Margo. Subsequently, Alicia transferred her shares to Margo.
In 1990, a special stockholders meeting of Margo was held where a new board of directors was elected. Raul Gala was elected as chairman,
president, and general manager. During the meeting, the board approved the commencement of proceeding to annul the dispositions of
Margoss property made by Alicia Gala. Similarity, a special stockholders meeting was held in Ellice. A new board wa s elected and Raul Gala
also became chairman, president and GM of Ellice, Raul Gala along with the respondents filed a case against the petitioners in the SEC for
accounting and restitution for alleged mismanagement of funds of Ellice. In turn the petitioners filed in the SEC a petition for the nullification of
the election of directors of officers of both Margo and Ellice. Essentially, petitioners sought to disregard the separate juridical personalities of two
corporations, namely, Ellice Agro-Industrial Corporation and Margo Management and Development Corporation, for the purpose of treating all
property purportedly owned by said corporations as properly solely owned by the Gala Spouses. Among their arguments were: (1) said
corporations were organized for purpose of exempting the property the property of the Gala Spouses from the coverage of land reform laws, and
(2) the two corporations were meant to be used as mere tools for the avoidance of estate taxes.

Issue: Whether or not respondent corporations were organized for illegal purpose and against public policy.

Held:
No. The best proof of the purpose of a corporation is its articles of incorporation and by-laws. The articles of incorporation must state the primary
and secondary purposes of the corporation, while the by-laws outline the administrative organization of the corporation, which, in turn, is
supposed to insure or facilitate the accomplishment of said purpose.
In the case at bar, a perusal of the Articles of Incorporation of Ellice and Margo shows no sign of the allegedly illegal purposes that petitioners
are complaining of. It is well to note that, if a corporations purpose, as stated in the Articles of Incorporation, is lawful, then the SEC has no
authority to inquire whether the corporation has purposes other than those stated, and mandamus will lie to compel it to issue the certificate of
incorporation. And even assuming that the petitioners allegations were true, the legality of the purposes for which the two corporations were
formed should be first threshed out in an administrative case before the Securities and Exchange Commission. (Doctrine of Primary
Jurisdiction).Moreover, on the contention that Ellice and Margo were meant to be tools for the avoidance of estate taxes, the court said that
the legal right of a taxpayer to reduce the amount of what otherwise could be his taxes or altogether avoid them, by means which the law
permits, cannot be doubted. (citing: Liddel & Co., Inc c. CIR)

Note: Simplified, this case is about a feud between family members who organized two corporation. Petitioners are Alicia Gala (mother),Guia
Domingo (sister), and Rita Benson (Sister), Respondents are Raul Gala (brother), Ellice Inc., and Margo Inc. (the family corporations).

33. Ong Young vs. Tiu

Facts: It started with a construction of a building, particularly a mall. The Masagana Citymall in Pasay City. The construction was threatened with
stoppage. Its owner company FLADC (First Landlink Asia Development Corporation) which was owned by the Tius encountered financial
difficulties. It was heavily indebted to PNB for P190 Million because it mortgaged the 2 lands where the mall was being erected and used the
money to erect the building. However, the building construction was taking so long so the (ROI) return of investments is temporarily put to a
stagnant position, hence putting the mortgage contract with the PNB in a brink of foreclosure. So to stave off a foreclosure end-result of the
mortgaged 2 lands, the Tius invited the Ongs to invest in FLADC. Both families entered a Pre-Subscription Agreement and under this agreement
the Ongs and the Tius contracted to maintain equal shareholdings in FLADC. The Ongs were to subscribe to 1 Million shares at a par value of
P100.00 each while the Tius were to subscribe to an additional approximately half a million shares at P100.00 each in addition to their already
existing subscription of roughly half a million. In addition to the previous said agreement between both families, they agreed that the Tius were
entitled to nominate the Vice President and the Treasurer plus 5 Directors while the Ongs were entitled to nominate the President, the
Secretary and 6 other Directors, including the Chairman of the Board of Directors. Moreover, the Ongs were given the right to manage and
operate the mall. So buying themselves into the company, the Ongs paid P100 Million in cash for 1M shares of stock. The Tius committed to
contribute to the company a 4 storey building and 2 parcels of land respectively valued at P20M for 200T shares and P30M for 300T shares and
P50M for 50T shares to cover the additional stock subscription. But the Ongs chipped in another P70M to FLADC and added P20M handed to
the Tius, over and above the P100M investment, so a total of P190M. The P190M Ong investment was used to settle the P190M mortgage
indebtedness of FLADC to PNB. The business harmony between the Ongs and the Tius in FLADC however was short-lived, because the Tius
RESCINDED the PRE-SUBSCRIPTION AGREEMENT. They accused the Ongs of: 1. refusing to credit FLADC shares covering their real
property contribution. 2. Preventing two of the Tius from assuming positions as VP and Treasurer. So obviously its an INTRA-CORPORATE
CONTROVERSY. Basically we see here a RESCISSION on grounds of BREACH OF CONTRACT.
Issue:
1. Whether the pre-Subscription Agreement executed by the Ongs is actually a subscription contract.
2. Whether the rescission of Pre-Subscription Agreement would result in unauthorized liquidation.

Held:
1. FLADC was originally incorporated with an authorized capital stock of 500,000 shares with the Tius owning 450,200 shares representing the
paid-up capital. When the Tius invited the Ongs to invest in FLADC as stockholders, an increase of the authorized capital stock became
necessary to give each group equal (50-50) shareholdings as agreed upon in the Pre-Subscription Agreement. The authorized capital stock was
thus increased from 500,000 shares to 2,000,000 shares with a par value of P100 each, with the Ongs subscribing to 1,000,000 shares and the
Tius to 549,800 more shares in addition to their 450,200 shares to complete 1,000,000 shares. Thus, the subject matter of the contract was the
1,000,000 unissued shares of FLADC stock allocated to the Ongs. Since these were unissued shares, the parties' Pre-Subscription Agreement
was in fact a subscription contract as defined under Section 60, Title VII of the Corporation Code. A subscription contract necessarily involves
the corporation as one of the contracting parties since the subject matter of the transaction is property owned by the corporation its shares of
stock. Thus, the subscription contract (denominated by the parties as a Pre-Subscription Agreement) whereby the Ongs invested P100 million
for 1,000,000 shares of stock was, from the viewpoint of the law, one between the Ongs and FLADC, not between the Ongs and the Tius.
Otherwise stated, the Tius did not contract in their personal capacities with the Ongs since they were not selling any of their own shares to them.
It was FLADC that did. Considering therefore that the real contracting parties to the subscription agreement were FLADC and the Ongs alone, a
civil case for rescission on the ground of breach of contract filed by the Tius in their personal capacities will not prosper. Assuming it had valid
reasons to do so, only FLADC (and certainly not the Tius) had the legal personality to file suit rescinding the subscription agreement with the
Ongs inasmuch as it was the real party in interest therein. Article 1311 of the Civil Code provides that "contracts take effect only between the
parties, their assigns and heirs. . ." Therefore, a party who has not taken part in the transaction cannot sue or be sued for performance or for
cancellation thereof, unless he shows that he has a real interest affected thereby.

2. The rescission of the Pre-Subscription Agreement will effectively result in the unauthorized distribution of the capital assets and property of
the corporation, thereby violating the Trust Fund Doctrine and the Corporation Code, since rescission of a subscription agreement is not one of
the instances when distribution of capital assets and property of the corporation is allowed. Rescission will, in the final analysis, result in the
premature liquidation of the corporation without the benefit of prior dissolution in accordance with Sections 117, 118, 119 and 120 of the
Corporation Code.

34. JESUS V. LANUZA, MAGADYA REYES, BAYANI REYES and ARIEL REYES, petitioners, vs. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION, DOLORES ONRUBIA, ELENITA NOLASCO, JUAN O. NOLASCO III, ESTATE OF FAUSTINA M. ONRUBIA,
PHILIPPINE MERCHANT MARINE SCHOOL, INC., respondents .

This case involves a petition to nullify the Court of Appeals Decision affirming the SEC order, and the Resolution of the Court of Appeals which
denied petitioners motion for reconsideration.

Facts

-In 1952, the Philippine Merchant Marine School, Inc. (PMMSI) was incorporated, with seven hundred (700) founders shares and seventy-six
(76) common shares as its initial capital stock subscription reflected in the articles of incorporation. However, private respondents and their
predecessors who were in control of PMMSI registered the companys stock and transfer book for the first time in 1978, recording thirty-three
(33) common shares as the only issued and outstanding shares of PMMSI. Sometime in 1979, a special stockholders meeting was called and
held on the basis of what was considered as a quorum of twenty-seven (27) common shares, representing more than two-thirds (2/3) of the
common shares issued and outstanding.

-In 1982, the heirs of one of the original incorporators, Juan Acayan, filed a petition with the Securities and Exchange Commission (SEC) for the
registration of their property rights over one hundred (120) founders shares and twelve (12) common shares owned by their father.

-The SEC hearing officer held that the heirs of Acayan were entitled to the claimed shares and called for a special stockholders meeting to elect
a new set of officers. The SEC En Banc affirmed the decision. As a result, the shares of Acayan were recorded in the stock and transfer book.

-On 06 May 1992, a special stockholders meeting was held to elect a new set of directors. Private respondents thereafter filed a petition with the
SEC questioning the validity of the 06 May 1992 stockholders meeting, alleging that the quorum for the said meeting should not be based on the
165 issued and outstanding shares as per the stock and transfer book, but on the initial subscribed capital stock of seven hundred seventy-six
(776) shares, as reflected in the 1952 Articles of Incorporation. The petition was dismissed.

SEC en banc

-Appeal was made to the SEC En Banc, which granted said appeal, holding that the shares of the deceased incorporators should be duly
represented by their respective administrators or heirs concerned. The SEC directed the parties to call for a stockholders meeting on the basis
of the stockholdings reflected in the articles of incorporation for the purpose of electing a new set of officers for the corporation.

-Petitioners, who are PMMSI stockholders, filed a petition for review with the Court of Appeals.[6] Rebecca Acayan, Jayne O. Abuid, Willie O.
Abuid and Renato Cervantes, stockholders and directors of PMMSI, earlier filed another petition for review of the same SEC En Bancs orders.
The petitions were thereafter consolidated. Issues before CA: WON quorom should be based on the oitstanding capital stocks.

Court of Appeals

The Court of Appeals held that for purposes of transacting business, the quorum should be based on the outstanding capital stock as found in
the articles of incorporation.

In the instant petition, petitioners submit that reliance on the 1952 articles of incorporation for determining the quorum negates the existence and
validity of the stock and transfer book which private respondents themselves prepared.

Issue

What should be the basis of quorum for a stockholders meeting the outstanding capital stock as indicated in the articles of incorporation or that
contained in the companys stock and transfer book?

Supreme Court

The Decision of the Court of Appeals must be upheld.

The crucial issue in this case is whether it is the companys stock and transfer book, or its 1952 Articles of Incorporation, which determines
stockholders shareholdings, and provides the basis for computing the quorum.

The articles of incorporation has been described as one that defines the charter of the corporation and the contractual relationships between the
State and the corporation, the stockholders and the State, and between the corporation and its stockholders.When PMMSI was incorporated,
the prevailing law was Act No. 1459, otherwise known as The Corporation Law. (Please See Section 6)

There is no gainsaying that the contents of the articles of incorporation are binding, not only on the corporation, but also on its shareholders. In
the instant case, the articles of incorporation indicate that at the time of incorporation, the incorporators were bona fide stockholders of seven
hundred (700) founders shares and seventy-six (76) common shares. Hence, at that time, the corporation had 776 issued and outstanding
shares.

On the other hand, a stock and transfer book is the book which records the names and addresses of all stockholders arranged alphabetically,
the installments paid and unpaid on all stock for which subscription has been made, and the date of payment thereof; a statement of every
alienation, sale or transfer of stock made, the date thereof and by and to whom made; and such other entries as may be prescribed by law. A
stock and transfer book is necessary as a measure of precaution, expediency and convenience since it provides the only certain and accurate
method of establishing the various corporate acts and transactions and of showing the ownership of stock and like matters. However, a stock
and transfer book, like other corporate books and records, is not in any sense a public record, and thus is not exclusive evidence of the matters
and things which ordinarily are or should be written therein.
In 1980, Batas Pambansa Blg. 68, otherwise known as The Corporation Code of the Philippines supplanted Act No. 1459. BP Blg. 68 provides:
Sec. 24. Election of directors or trustees.At all elections of directors or trustees, there must be present, either in person or by representative
authorized to act by written proxy, the owners of a majority of the outstanding capital stock, or if there be no capital stock, a majority of the
members entitled to vote. . . .

Sec. 52. Quorum in meetings.- Unless otherwise provided for in this Code or in the by-laws, a quorum shall consist of the stockholders
representing a majority of the outstanding capital stock or majority of the members in the case of non-stock corporation.

Outstanding capital stock, on the other hand, is defined by the Code as:
Sec. 137. Outstanding capital stock defined. The term outstanding capital stock as used in this code, means the total shares of stock issued to
subscribers or stockholders whether or not fully or partially paid (as long as there is binding subscription agreement) except treasury shares.

Thus, quorum is based on the totality of the shares which have been subscribed and issued, whether it be founders shares or common shares.
In the instant case, two figures are being pitted against each other those contained in the articles of incorporation, and those listed in the stock
and transfer book.
To base the computation of quorum solely on the obviously deficient, if not inaccurate stock and transfer book, and completely disregarding the
issued and outstanding shares as indicated in the articles of incorporation would work injustice to the owners and/or successors in interest of the
said shares. This case is one instance where resort to documents other than the stock and transfer books is necessary.

The stock and transfer book of PMMSI cannot be used as the sole basis for determining the quorum as it does not reflect the totality of shares
which have been subscribed, more so when the articles of incorporation show a significantly larger amount of shares issued and outstanding as
compared to that listed in the stock and transfer book. As aptly stated by the SEC in its Order.

It is to be explained, that if at the onset of incorporation a corporation has 771 shares subscribed, the Stock and Transfer Book should likewise
reflect 771 shares. Any sale, disposition or even reacquisition of the company of its own shares, in which it becomes treasury shares, would not
affect the total number of shares in the Stock and Transfer Book. All that will change are the entries as to the owners of the shares but not as to
the amount of shares already subscribed. (This is precisely the reason why the Stock and Transfer Book was not given probative value)

In this case, at the time the corporation was set-up, there were already seven hundred seventy-six (776) issued and outstanding shares as
reflected in the articles of incorporation. No proof was adduced as to any transaction effected on these shares from the time PMMSI was
incorporated up to the time the instant petition was filed, except for the thirty-three (33) shares which were recorded in the stock and transfer
book in 1978, and the additional one hundred thirty-two (132) in 1982. But obviously, the shares so ordered recorded in the stock and transfer
book are among the shares reflected in the articles of incorporation as the shares subscribed to by the incorporators named therein.

One who is actually a stockholder cannot be denied his right to vote by the corporation merely because the corporate officers failed to keep its
records accurately. A corporations records are not the only evidence of the ownership of stock in a corporation. In an American case,persons
claiming shareholders status in a professional corporation were listed as stockholders in the amendment to the articles of incorporation. On that
basis, they were in all respects treated as shareholders. In fact, the acts and conduct of the parties may even constitute sufficient evidence of
ones status as a shareholder or member. In the instant case, no less than the articles of incorporation declare the incorporators to have in their
name the founders and several common shares. Thus, to disregard the contents of the articles of incorporation would be to pretend that the
basic document which legally triggered the creation of the corporation does not exist and accordingly to allow great injustice to be caused to the
incorporators and their heirs.

35. ANG MGA KAANIB SA IGLESIA NG DIOS KAY KRISTO HESUS, H.S.K. SA BANSANG
PILIPINAS, INC vs. IGLESIA NG DIOS KAY CRISTO JESUS, HALIGI AT SUHAY NG
KATOTOHANAN G.R. No. 137592 December 12, 2001
FACTS:
Respondent Iglesia ng Dios Kay Cristo Jesus, Haligi at Suhay ng Katotohanan, is a non-stock religious
society or corporation registered in 1936. Sometime in 1976, one Eliseo Soriano and several other
members of Respondent Corporation disassociated themselves from the latter and succeeded in
registering on March 30, 1977 a new non-stock religious society or corporation, named Iglesia ng Dios
Kay Kristo Hesus, Haligi at Saligan ng Katotohanan. On July 16, 1979, Respondent Corporation filed
with the SEC a petition to compel the petitioner to change its corporate name. On May 4, 1988, the SEC
rendered judgment in favor of respondent, ordering the petitioner to change its corporate name to another
name that is not similar or identical to any name already used by a corporation, partnership or association
registered with the Commission. No appeal was taken from said decision. It appears that during the
pendency of SEC Case, Soriano, et al., caused the registration on April 25, 1980 of Petitioner
Corporation, Ang Mga Kaanib sa Iglesia ng Dios Kay Kristo Hesus, H.S.K, sa Bansang Pilipinas. The
acronym "H.S.K." stands for Haligi at Saligan ng Katotohanan. On March 2, 1994, respondent
corporation filed before the SEC a petition, docketed as SEC Case No. 03-94-4704, praying that petitioner
be compelled to change its corporate name and be barred from using the same or similar name on the
ground that the same causes confusion among their members as well as the public. The SEC rendered a
decision ordering petitioner to change its corporate name. On appeal to the SEC En Banc, it affirmed the
above decision. Petitioner then filed a petition for review with the CA. On October 7, 1997, the CA
rendered the assailed decision affirming the decision of the SEC En Banc. Petitioner's motion for
reconsideration was denied by the CA. Hence, this petition for review.
ISSUE: Whether or not petitioners corporate name is deceptively or confusingly similar to that of
petitioner.
RULING: Petitioner claims that it complied with the aforecited SEC guideline by adding not only two
but eight words to their registered name, to wit: "Ang Mga Kaanib" and "Sa Bansang Pilipinas,
Inc.," which, petitioner argues, effectively distinguished it from respondent corporation.
The additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc." in petitioner's name are, as
correctly observed by the SEC, merely descriptive of and also referring to the members, or kaanib, of
respondent who are likewise residing in the Philippines. These words can hardly serve as an effective
differentiating medium necessary to avoid confusion or difficulty in distinguishing petitioner from
respondent. This is especially so, since both petitioner and respondent corporations are using the same
acronym H.S.K.; not to mention the fact that both are espousing religious beliefs and operating in the
same place. Parenthetically, it is well to mention that the acronym H.S.K. used by petitioner stands for
"Haligi at Saligan ng Katotohanan."
Then, too, the records reveal that in holding out their corporate name to the public, petitioner highlights
the dominant words "IGLESIA NG DIOS KAY KRISTO HESUS, HALIGI AT SALIGAN NG
KATOTOHANAN," which is strikingly similar to respondent's corporate name, thus making it even more
evident that the additional words "Ang Mga Kaanib" and "Sa Bansang Pilipinas, Inc.", are merely
descriptive of and pertaining to the members of respondent corporation.
Significantly, the only difference between the corporate names of petitioner and respondent are the words
SALIGAN and SUHAY. These words are synonymous both mean ground, foundation or support.
Hence, this case is on all fours with Universal Mills Corporation v. Universal Textile Mills, Inc., where
the Court ruled that the corporate names Universal Mills Corporation and Universal Textile Mills, Inc.,
are undisputably so similar that even under the test of "reasonable care and observation" confusion may
arise.
36.ZUELLIG FREIGHT AND CARGO SYSTEMS, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION AND RONALDO V. SAN MIGUEL, respondents. [G.R. No. 157900. July 22,
2013.]
Facts:
San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-payment of salaries
and moral damages against petitioner, formerly known as Zeta Brokerage Corporation (Zeta).
He alleged that he had been a checker/customs representative of Zeta. Later on, he and other
employees of Zeta were informed that Zeta would cease operations, and that all affected employees,
including him, would be separated.
Zeta informed him of his termination effective March 31, 1994; that he reluctantly accepted his
separation pay subject to the standing offer to be hired to his former position by petitioner.
He was summarily terminated, without any valid cause and due process.
San Miguel contended that the amendments of the articles of incorporation of Zeta were for the
purpose of changing the corporate name, broadening the primary functions, and increasing the
capital stock; and that such amendments could not mean that Zeta had been thereby dissolved.
Petitioner countered that San Miguel's termination from Zeta had been for a cause authorized by
the Labor Code; that its non-acceptance of him had not been by any means irregular or
discriminatory; that its predecessor-in-interest had complied with the requirements for termination
due to the cessation of business operations; that it had no obligation to employ San Miguel in the
exercise of its valid management prerogative; that all employees had been given sufficient time to
make their decision whether to accept its offer of employment or not, but he had not responded to
its offer within the time set; that because of his failure to meet the deadline, the offer had expired;
that he had nonetheless been hired on a temporary basis.
Labor Arbiter rendered a decision holding that San Miguel had been illegally dismissed.
Petitioner appealed, but the NLRC issued a resolution on April 4, 2001, affirming the decision of the
Labor Arbiter.
The CA promulgated its assailed decision dismissing the petition for certiorari.
Hence, the petition.
Issue: WON the termination was proper by virtue of the alleged dissolution of Zeta Corporation,
forming a new corporation in the name of Zuellig Freight and Cargo Systems, Inc.

Ruling:
No, the termination was not proper. There being no dissolution of Zeta Corporation.
Verily, the amendments of the articles of incorporation of Zeta to change the corporate name to
Zuellig Freight and Cargo Systems, Inc. did not produce the dissolution of the former as a
corporation. For sure, the Corporation Code defined and delineated the different modes of dissolving
a corporation, and amendment of the articles of incorporation was not one of such modes.
The effect of the change of name was not a change of the corporate being, for, as well stated
in Philippine First Insurance Co., Inc. v. Hartigan: "The changing of the name of a corporation is no
more the creation of a corporation than the changing of the name of a natural person is begetting of
a natural person. The act, in both cases, would seem to be what the language which we use to
designate it imports a change of name, and not a change of being."
The consequences, legal and otherwise, of the change of name were similarly dealt with in P.C. Javier
& Sons, Inc. v. Court of Appeals to wit:
A change in the corporate name does not make a new corporation, whether
effected by a special act or under a general law. It has no effect on the identity of
the corporation, or on its property, rights, or liabilities. The corporation, upon such
change in its name, is in no sense a new corporation, nor the successor of the
original corporation. It is the same corporation with a different name, and its
character is in no respect changed.
In short, Zeta and petitioner remained one and the same corporation. The change of name did not
give petitioner the license to terminate employees of Zeta like San Miguel without just or authorized
cause.
Petitioner, despite its new name, was the mere continuation of Zeta's corporate being, and still held
the obligation to honor all of Zeta's obligations, one of which was to respect San Miguel's security of
tenure. The dismissal of San Miguel from employment on the pretext that petitioner, being a different
corporation, had no obligation to accept him as its employee, was illegal and ineffectual.
Petition is dismissed.

37. INDUSTRIAL REFRACTORIES CORPORATION OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, SECURITIES AND
EXCHANGE COMMISSION and REFRACTORIES CORPORATION OF THE PHILIPPINES, respondents.G.R. No. 122174 October 3,
2002
FACTS:
Respondent Refractories Corporation of the Philippines (RCP) is a corporation duly organized on October 13, 1976 for the purpose of
engaging in the business of manufacturing, producing, selling, exporting and otherwise dealing in any and all refractory bricks, its by-products
and derivatives. On June 22, 1977, it registered its corporate and business name with the Bureau of Domestic Trade. Petitioner IRCP on the
other hand, was incorporated on August 23, 1979 originally under the name "Synclaire Manufacturing Corporation". It amended its Articles of
Incorporation on August 23, 1985 to change its corporate name to "Industrial Refractories Corp. of the Philippines". It is engaged in the business
of manufacturing all kinds of ceramics and other products, except paints and zincs. Both companies are the only local suppliers of monolithic
gunning mix.
Discovering that petitioner was using such corporate name, respondent RCP filed on April 14, 1988 with the Securities and Exchange
Commission (SEC) a petition to compel petitioner to change its corporate name on the ground that its corporate name is confusingly similar with
that of petitioners such that the public may be confused or deceived into believing that they are one and the same corporation. The SEC
decided in favor of respondent RCP. Petitioner appealed to the SEC En Banc, arguing that it does not have any jurisdiction over the case, and
that respondent RCP has no right to the exclusive use of its corporate name as it is composed of generic or common words. The SEC En Banc
modified the appealed decision in that petitioner was ordered to delete or drop from its corporate name only the word "Refractories". Petitioner
IRCP elevated the decision of the SEC En Banc through a petition for review on certiorari to the Court of Appeals which then rendered the
herein assailed decision. The appellate court upheld the jurisdiction of the SEC over the case and ruled that the corporate names of petitioner
IRCP and respondent RCP are confusingly or deceptively similar, and that respondent RCP has established its prior right to use the word
"Refractories" as its corporate name.
Hence the petitioner an appeal to the SC.
ISSUE:
1. Whether or not the SEC has jurisdiction over the case.
2. Whether or not there is no confusing similarity between their corporate names.

RULING:
1. Petitioners argument on the SECs jurisdiction over the case is utterly myopic. The jurisdiction of the SEC is not merely confined to the
adjudicative functions provided in Section 5 of P.D. 902-A, as amended. By express mandate, it has absolute jurisdiction, supervision and
control over all corporations. It also exercises regulatory and administrative powers to implement and enforce the Corporation Code, one of
which is Section 18, which provides:
"SEC. 18. Corporate name. -- No corporate name may be allowed by the Securities and Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or is
patently deceptive, confusing or contrary to existing laws. When a change in the corporate name is approved, the Commission shall
issue an amended certificate of incorporation under the amended name."
It is the SECs duty to prevent confusion in the use of corporate names not only for the protection of the corporations involved but more so for
the protection of the public, and it has authority to de-register at all times and under all circumstances corporate names which in its estimation
are likely to generate confusion.Clearly therefore, the present case falls within the ambit of the SECs regulatory powers.
2. Likewise untenable is petitioners argument that there is no confusing or deceptive similarity between petitioner and respondent RCPs
corporate names. Section 18 of the Corporation Code expressly prohibits the use of a corporate name which is "identical or deceptively or
confusingly similar to that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing or
contrary to existing laws". The policy behind the foregoing prohibition is to avoid fraud upon the public that will have occasion to deal with the
entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration and supervision over corporation.
Pursuant thereto, the Revised Guidelines in the Approval of Corporate and Partnership Names specifically requires that: (1) a corporate name
shall not be identical, misleading or confusingly similar to one already registered by another corporation with the Commission; and (2) if the
proposed name is similar to the name of a registered firm, the proposed name must contain at least one distinctive word different from the name
of the company already registered.
As held in Philips Export B.V. vs. Court of Appeals, to fall within the prohibition of the law, two requisites must be proven, to wit:
(1) that the complainant corporation acquired a prior right over the use of such corporate name; and
(2) the proposed name is either: (a) identical, or (b) deceptively or confusingly similar to that of any existing corporation or to any other name
already protected by law; or (c) patently deceptive, confusing or contrary to existing law.
As regards the first requisite, it has been held that the right to the exclusive use of a corporate name with freedom from infringement by similarity
is determined by priority of adoption. In this case, respondent RCP was incorporated on October 13, 1976 and since then has been using the
corporate name "Refractories Corp. of the Philippines". Meanwhile, petitioner was incorporated on August 23, 1979 originally under the name
"Synclaire Manufacturing Corporation". It only started using the name "Industrial Refractories Corp. of the Philippines" when it amended its
Articles of Incorporation on August 23, 1985, or nine (9) years after respondent RCP started using its name. Thus, being the prior registrant,
respondent RCP has acquired the right to use the word "Refractories" as part of its corporate name.
Anent the second requisite, in determining the existence of confusing similarity in corporate names, the test is whether the similarity is such as
to mislead a person using ordinary care and discrimination and the Court must look to the record as well as the names themselves. Petitioners
corporate name is "Industrial Refractories Corp. of the Phils.", while respondents is "Refractories Corp. of the Phils." Obviously, both names
contain the identical words "Refractories", "Corporation" and "Philippines". The only word that distinguishes petitioner from respondent RCP is
the word "Industrial" which merely identifies a corporations general field of activities or operations. We need not linger on these two corporate
names to conclude that they are patently similar that even with reasonable care and observation, confusion might arise. It must be noted that
both cater to the same clientele, i.e. the steel industry. In fact, the SEC found that there were instances when different steel companies were
actually confused between the two, especially since they also have similar product packaging.

38. SAPPARI K. SAWADJAAN, petitioner, vs. THE HONORABLE COURT OF APPEALS, THE
CIVIL SERVICE COMMISSION and AL-AMANAH INVESTMENT BANK OF THE
PHILIPPINES, respondents. [G.R. No. 141735. June 8, 2005]
DECISION
CHICO-NAZARIO, J.:
This is a petition for certiorari under Rule 65 of the Rules of Court of the Decision[1] of the Court of
Appeals of 30 March 1999 affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service
Commission (CSC) dated 11 August 1994 and 11 April 1995, respectively, which in turn affirmed
Resolution No. 2309 of the Board of Directors of the Al-Amanah Islamic Investment Bank of the
Philippines (AIIBP) dated 13 December 1993, finding petitioner guilty of Dishonesty in the Performance
of Official Duties and/or Conduct Prejudicial to the Best Interest of the Service and dismissing him from
the service, and its Resolution[2] of 15 December 1999 dismissing petitioners Motion for Reconsideration.
The records show that petitioner 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 rose through the ranks, working his way up from his initial designation as security
guard, to settling clerk, bookkeeper, credit investigator, project analyst, appraiser/ inspector, and
eventually, loans analyst.[3]
In February 1988, while still 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). The properties consisted of two parcels
of land covered by Transfer Certificates of Title (TCTs) No. N-130671 and No. C-52576. On the basis of
his Inspection and Appraisal Report,[4] 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.[5]
In the meantime, Sawadjaan was promoted to Loans Analyst I on 01 July 1989.[6]
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,[7] and the existing personnel of the PAB were to continue to discharge their functions unless
discharged.[8] In the ensuing reorganization, Sawadjaan was among the personnel retained by the AIIBP.
 When CAMEC failed to pay despite the given extension, the bank, now referred to as the AIIBP,
discovered that TCT No. N-130671 was spurious, the property described therein non-existent, and that the
property covered by TCT No. C-52576 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 Six Million Pesos (P6,000,000.00) in losses.[9] The
subsequent events, as found and decided upon by the Court of Appeals,[10]are as follows:
On 18 June 1993, petitioner received a memorandum from Islamic Bank [AIIBP] Chairman Roberto F.
De Ocampo charging him with Dishonesty in the Performance of Official Duties and/or Conduct
Prejudicial to the Best Interest of the Service and preventively suspending him.
In his memorandum dated 8 September 1993, petitioner informed the Investigating Committee that he
could not submit himself to the jurisdiction of the Committee because of its alleged partiality. For his
failure to appear before the hearing set on 17 September 1993, after the hearing of 13 September 1993
was postponed due to the Manifestation of even date filed by petitioner, the Investigating Committee
declared petitioner in default and the prosecution was allowed to present its evidence ex parte.
On 08 December 1993, the Investigating Committee rendered a decision, the pertinent portions of which
reads as follows:
In view of respondent SAWADJAANS abject failure to perform his duties and assigned tasks as
appraiser/inspector, which resulted to the prejudice and substantial damage to the Bank, respondent
should be held liable therefore. At this juncture, however, the Investigating Committee is of the
considered opinion that he could not be held liable for the administrative offense of dishonesty
considering the fact that no evidence was adduced to show that he profited or benefited from being remiss
in the performance of his duties. The record is bereft of any evidence which would show that he received
any amount in consideration for his non-performance of his official duties.
This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his
official duties resulted to the prejudice and substantial damage to the Islamic Bank for which he should be
held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST INTEREST OF
THE SERVICE.
Premises considered, the Investigating Committee recommends that respondent SAPPARI SAWADJAAN
be meted the penalty of SIX (6) MONTHS and ONE (1) DAY SUSPENSION from office in accordance
with the Civil Service Commissions Memorandum Circular No. 30, Series of 1989.
On 13 December 1993, the Board of Directors of the Islamic Bank [AIIBP] adopted Resolution No. 2309
finding petitioner guilty of Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial
to the Best Interest of the Service and imposing the penalty of Dismissal from the Service.
On reconsideration, the Board of Directors of the Islamic Bank [AIIBP] adopted the Resolution No. 2332
on 20 February 1994 reducing the penalty imposed on petitioner from dismissal to suspension for a period
of six (6) months and one (1) day.
On 29 March 1994, petitioner filed a notice of appeal to the Merit System Protection Board (MSPB).
On 11 August 1994, the CSC adopted Resolution No. 94-4483 dismissing the appeal for lack of merit and
affirming Resolution No. 2309 dated 13 December 1993 of the Board of Directors of Islamic Bank.
On 11 April 1995, the CSC adopted Resolution No. 95-2574 denying petitioners Motion for
Reconsideration.
On 16 June 1995, the instant petition was filed with the Honorable Supreme Court on the following
assignment of errors:
I. Public respondent Al-Amanah Islamic Investment Bank of the Philippines has committed a grave
abuse of discretion amounting to excess or lack of jurisdiction when it initiated and conducted
administrative investigation without a validly promulgated rules of procedure in the adjudication of
administrative cases at the Islamic Bank.
II. Public respondent Civil Service Commission has committed a grave abuse of discretion
amounting to lack of jurisdiction when it prematurely and falsely assumed jurisdiction of the case not
appealed to it, but to the Merit System Protection Board.
 III. Both the Islamic Bank and the Civil Service Commission erred in finding petitioner Sawadjaan
of having deliberately reporting false information and therefore guilty of Dishonesty and Conduct
Prejudicial to the Best Interest of the Service and penalized with dismissal from the service.
On 04 July 1995, the Honorable Supreme Court En Banc referred this petition to this Honorable Court
pursuant to Revised Administrative Circular No. 1-95, which took effect on 01 June 1995.
We do not find merit [in] the petition.
Anent the first assignment of error, a reading of the records would reveal that petitioner raises for the first
time the alleged failure of the Islamic Bank [AIIBP] to promulgate rules of procedure governing the
adjudication and disposition of administrative cases involving its personnel. It is a rule that issues not
properly brought and ventilated below may not be raised for the first time on appeal, save in exceptional
circumstances (Casolita, Sr. v. Court of Appeals, 275 SCRA 257) none of which, however, obtain in this
case. Granting arguendo that the issue is of such exceptional character that the Court may take cognizance
of the same, still, it must fail. Section 26 of Republic Act No. 6848 (1990) provides:
Section 26. Powers of the Board. The Board of Directors shall have the broadest powers to manage the
Islamic Bank, x x x The Board shall adopt policy guidelines necessary to carry out effectively the
provisions of this Charter as well as internal rules and regulations necessary for the conduct of its Islamic
banking business and all matters related to personnel organization, office functions and salary
administration. (Italics ours)
On the other hand, Item No. 2 of Executive Order No. 26 (1992) entitled Prescribing Procedure and
Sanctions to Ensure Speedy Disposition of Administrative Cases directs, all administrative agencies to
adopt and include in their respective Rules of Procedure provisions designed to abbreviate administrative
proceedings.
The above two (2) provisions relied upon by petitioner does not require the Islamic Bank [AIIBP] to
promulgate rules of procedure before administrative discipline may be imposed upon its employees. The
internal rules of procedures ordained to be adopted by the Board refers to that necessary for the conduct
of its Islamic banking business and all matters related to personnel organization, office functions and
salary administration. On the contrary, Section 26 of RA 6848 gives the Board of Directors of the Islamic
Bank the broadest powers to manage the Islamic Bank. This grant of broad powers would be an idle
ceremony if it would be powerless to discipline its employees.
The second assignment of error must likewise fail. The issue is raised for the first time via this petition
for certiorari. Petitioner submitted himself to the jurisdiction of the CSC. Although he could have raised
the alleged lack of jurisdiction in his Motion for Reconsideration of Resolution No. 94-4483 of the CSC,
he did not do so. By filing the Motion for Reconsideration, he is estopped from denying the CSCs
jurisdiction over him, as it is settled rule that a party who asks for an affirmative relief cannot later on
impugn the action of the tribunal as without jurisdiction after an adverse result was meted to him.
Although jurisdiction over the subject matter of a case may be objected to at any stage of the proceedings
even on appeal, this particular rule, however, means that jurisdictional issues in a case can be raised only
during the proceedings in said case and during the appeal of said case (Aragon v. Court of Appeals, 270
SCRA 603). The case at bar is a petition [for] certiorari and not an appeal.
But even on the merits the argument must falter. Item No. 1 of CSC Resolution No. 93-2387 dated 29
June 1993, provides:
Decisions in administrative cases involving officials and employees of the civil service appealable to the
Commission pursuant to Section 47 of Book V of the Code (i.e., Administrative Code of 1987) including
personnel actions such as contested appointments shall now be appealed directly to the Commission and
not to the MSPB.
In Rubenecia v. Civil Service Commission, 244 SCRA 640, 651, it was categorically held:
. . . The functions of the MSPB relating to the determination of administrative disciplinary cases were, in
other words, re-allocated to the Commission itself.
Be that as it may, (i)t is hornbook doctrine that in order `(t)o ascertain whether a court (in this case,
administrative agency) has jurisdiction or not, the provisions of the law should be inquired into.
Furthermore, `the jurisdiction of the court must appear clearly from the statute law or it will not be held to
exist.(Azarcon v. Sandiganbayan, 268 SCRA 747, 757) From the provision of law abovecited, the Civil
Service Commission clearly has jurisdiction over the Administrative Case against petitioner.
Anent the third assignment of error, we likewise do not find merit in petitioners proposition that he should
not be liable, as in the first place, he was not qualified to perform the functions of appraiser/investigator
because he lacked the necessary training and expertise, and therefore, should not have been found
dishonest by the Board of Directors of Islamic Bank [AIIBP] and the CSC. Petitioner himself admits that
the position of appraiser/inspector is one of the most serious [and] sensitive job in the banking operations.
He should have been aware that accepting such a designation, he is obliged to perform the task at hand by
the exercise of more than ordinary prudence. As appraiser/investigator, he is expected, among others, to
check the authenticity of the documents presented by the borrower by comparing them with the originals
on file with the proper government office. He should have made it sure that the technical descriptions in
the location plan on file with the Bureau of Lands of Marikina, jibe with that indicated in the TCT of the
collateral offered by CAMEC, and that the mortgage in favor of the Islamic Bank was duly annotated at
the back of the copy of the TCT kept by the Register of Deeds of Marikina. This, petitioner failed to do,
for which he must be held liable. That he did not profit from his false report is of no moment. Neither the
fact that it was not deliberate or willful, detracts from the nature of the act as dishonest. What is apparent
is he stated something to be a fact, when he really was not sure that it was so.
WHEREFORE, above premises considered, the instant Petition is DISMISSED, and the assailed
Resolutions of the Civil Service Commission are hereby AFFIRMED.
On 24 March 1999, Sawadjaans counsel notified the court a quo of his change of address,[11] but
apparently neglected to notify his client of this fact. Thus, on 23 July 1999, Sawadjaan, by himself, filed a
Motion for New Trial[12] in the Court of Appeals based on the following grounds: fraud, accident, mistake
or excusable negligence and newly discovered evidence. He claimed that he had recently discovered that
at the time his employment was terminated, the AIIBP had not yet adopted its corporate by-laws. He
attached a Certification[13] by the Securities and Exchange Commission (SEC) that it was only on 27 May
1992 that the AIIBP submitted its draft by-laws to the SEC, and that its registration was being held in
abeyance pending certain corrections being made thereon. Sawadjaan argued that since the AIIBP failed
to file its by-laws within 60 days from the passage of Rep. Act No. 6848, as required by Sec. 51 of the
said law, the bank and its stockholders had already forfeited its franchise or charter, including its license
to exist and operate as a corporation, [14] and thus no longer have the legal standing and personality to
initiate an administrative case.
Sawadjaans counsel subsequently adopted his motion, but requested that it be treated as a motion for
reconsideration.[15] This motion was denied by the court a quo in its Resolution of 15 December 1999.[16]
Still disheartened, Sawadjaan filed the present petition for certiorari under Rule 65 of the Rules of
Court challenging the above Decision and Resolution of the Court of Appeals on the ground that the
court a quo erred: i) in ignoring the facts and evidences that the alleged Islamic Bank has no valid by-
laws; ii) in ignoring the facts and evidences that the Islamic Bank lost its juridical personality as a
corporation on 16 April 1990; iii) in ignoring the facts and evidences that the alleged 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; iv) in not correcting the acts of the Civil Service Commission who erroneously rendered the assailed
Resolutions No. 94-4483 and No. 95-2754 as a result of fraud, falsification and/or misrepresentations
committed by Farouk A. Carpizo and his group, including Roberto F. de Ocampo; v) in affirming an
unconscionably harsh and/or excessive penalty; and vi) in failing to consider newly discovered evidence
and reverse its decision accordingly.
Subsequently, petitioner Sawadjaan filed an Ex-parte Urgent Motion for Additional Extension of
Time to File a Reply (to the Comments of Respondent Al-Amanah Investment Bank of the Philippines),
[17]
Reply (to Respondents Consolidated Comment,) [18] and Reply (to the Alleged Comments of
Respondent Al-Amanah Islamic Bank of the Philippines). [19] On 13 October 2000, he informed this Court
that he had terminated his lawyers services, and, by himself, prepared and filed the following: 1) Motion
for New Trial;[20] 2) Motion to Declare Respondents in Default and/or Having Waived their Rights to
Interpose Objection to Petitioners Motion for New Trial; [21] 3) Ex-Parte Urgent Motions to Punish
Attorneys Amado D. Valdez, Elpidio J. Vega, Alda G. Reyes, Dominador R. Isidoro, Jr., and Odilon A.
Diaz for Being in Contempt of Court & to Inhibit them from Appearing in this Case Until they Can
Present Valid Evidence of Legal Authority; [22] 4) Opposition/Reply (to Respondent AIIBPs Alleged
Comment);[23] 5) Ex-Parte Urgent Motion to Punish Atty. Reynaldo A. Pineda for Contempt of Court and
the Issuance of a Commitment Order/Warrant for His Arrest; [24] 6) Reply/Opposition (To the Formal
Notice of Withdrawal of Undersigned Counsel as Legal Counsel for the Respondent Islamic Bank with
Opposition to Petitioners Motion to Punish Undersigned Counsel for Contempt of Court for the Issuance
of a Warrant of Arrest);[25] 7) Memorandum for Petitioner;[26] 8) Opposition to SolGens Motion for
Clarification with Motion for Default and/or Waiver of Respondents to File their Memorandum; [27] 9)
Motion for Contempt of Court and Inhibition/Disqualification with Opposition to OGCCs Motion for
Extension of Time to File Memorandum; [28] 10) Motion for Enforcement (In Defense of the Rule of Law);
[29]
11) Motion and Opposition (Motion to Punish OGCCs Attorneys Amado D. Valdez, Efren B.
Gonzales, Alda G. Reyes, Odilon A. Diaz and Dominador R. Isidoro, Jr., for Contempt of Court and the
Issuance of a Warrant for their Arrest; and Opposition to their Alleged Manifestation and Motion Dated
February 5, 2002);[30] 12) Motion for Reconsideration of Item (a) of Resolution dated 5 February 2002
with Supplemental Motion for Contempt of Court; [31] 13) Motion for Reconsideration of Portion of
Resolution Dated 12 March 2002;[32] 14) Ex-Parte Urgent Motion for Extension of Time to File Reply
Memorandum (To: CSC and AIIBPs Memorandum); [33] 15) Reply Memorandum (To: CSCs
Memorandum) With Ex-Parte Urgent Motion for Additional Extension of time to File Reply
Memorandum (To: AIIBPs Memorandum);[34] and 16) Reply Memorandum (To: OGCCs Memorandum
for Respondent AIIBP).[35]
Petitioners efforts are unavailing, and we deny his petition for its procedural and substantive flaws.
The general rule is that the remedy to obtain reversal or modification of the judgment on the merits is
appeal. This is true even if the error, or one of the errors, ascribed to the court rendering the judgment is
its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse
of discretion in the findings of fact or of law set out in the decision.[36]
The records show that petitioners counsel received the Resolution of the Court of Appeals denying
his motion for reconsideration on 27 December 1999. The fifteen day reglamentary period to appeal under
Rule 45 of the Rules of Court therefore lapsed on 11 January 2000. On 23 February 2000, over a month
after receipt of the resolution denying his motion for reconsideration, the petitioner filed his petition
for certiorari under Rule 65.
It is settled that a special civil action for certiorari will not lie as a substitute for the lost remedy of
appeal,[37] and though there are instances[38] where the extraordinary remedy of certiorari may be resorted
to despite the availability of an appeal, [39] we find no special reasons for making out an exception in this
case.
Even if we were to overlook this fact in the broader interests of justice and treat this as a special civil
action for certiorari under Rule 65,[40] the petition would nevertheless be dismissed for failure of the
petitioner to show grave abuse of discretion. Petitioners recurrent argument, tenuous at its very best, is
premised on the fact that since respondent AIIBP failed to file its by-laws within the designated 60 days
from the effectivity of Rep. Act No. 6848, all proceedings initiated by AIIBP and all actions resulting
therefrom are a patent nullity. Or, in his words, the AIIBP and its officers and Board of Directors,
. . . [H]ave no legal authority nor jurisdiction to manage much less operate the Islamic Bank, file
administrative charges and investigate petitioner in the manner they did and allegedly passed Board
Resolution No. 2309 on December 13, 1993 which is null and void for lack of an (sic) authorized and
valid by-laws. The CIVIL SERVICE COMMISSION was therefore affirming, erroneously, a null and
void Resolution No. 2309 dated December 13, 1993 of the Board of Directors of Al-Amanah Islamic
Investment Bank of the Philippines in CSC Resolution No. 94-4483 dated August 11, 1994. A motion for
reconsideration thereof was denied by the CSC in its Resolution No. 95-2754 dated April 11, 1995. Both
acts/resolutions of the CSC are erroneous, resulting from fraud, falsifications and misrepresentations of
the alleged Chairman and CEO Roberto F. de Ocampo and the alleged Director Farouk A. Carpizo and his
group at the alleged Islamic Bank.[41]
 Nowhere in petitioners voluminous pleadings is there a showing that the court a quo committed grave
abuse of discretion amounting to lack or excess of jurisdiction reversible by a petition for certiorari.
Petitioner already raised the question of AIIBPs corporate existence and lack of jurisdiction in his Motion
for New Trial/Motion for Reconsideration of 27 May 1997 and was denied by the Court of Appeals.
Despite the volume of pleadings he has submitted thus far, he has added nothing substantial to his
arguments.
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.[42] At the very least, by its failure to submit its by-laws on
time, the AIIBP may be considered a de facto corporation[43] whose right to exercise corporate powers
may not be inquired into collaterally in any private suit to which such corporations may be a party.[44]
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,[45] 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.[46] 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.[47]
And though he has had ample opportunity to do so, the petitioner has not alleged that he is anything
other than an employee of AIIBP. He has neither claimed, nor shown, that he is a stockholder or an officer
of the corporation. Having accepted employment from AIIBP, and rendered his services to the said bank,
received his salary, and accepted the promotion given him, it is now too late in the day for petitioner to
question its existence and its power to terminate his services. 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.[48]
Even if we were to consider the facts behind petitioner Sawadjaans dismissal from service, we would
be hard pressed to find error in the decision of the AIIBP.
As appraiser/investigator, the petitioner was expected to conduct an ocular inspection of the
properties offered by CAMEC as collaterals and check the copies of the certificates of title against those
on file with the Registry of Deeds. Not only did he fail to conduct these routine checks, but he also
deliberately misrepresented in his appraisal report that after reviewing the documents and conducting a
site inspection, he found the CAMEC loan application to be in order. Despite the number of pleadings he
has filed, he has failed to offer an alternative explanation for his actions.
When he was informed of the charges against him and directed to appear and present his side on the
matter, the petitioner sent instead a memorandum questioning the fairness and impartiality of the
members of the investigating committee and refusing to recognize their jurisdiction over him.
Nevertheless, the investigating committee rescheduled the hearing to give the petitioner another chance,
but he still refused to appear before it.
Thereafter, witnesses were presented, and a decision was rendered finding him guilty of dishonesty
and dismissing him from service. He sought a reconsideration of this decision and the same committee
whose impartiality he questioned reduced their recommended penalty to suspension for six months and
one day. The board of directors, however, opted to dismiss him from service.
On appeal to the CSC, the Commission found that Sawadjaans failure to perform his official duties
greatly prejudiced the AIIBP, for which he should be held accountable. It held that:
. . . (I)t is crystal clear that respondent SAPPARI SAWADJAAN was remiss in the performance of his
duties as appraiser/inspector. Had respondent performed his duties as appraiser/inspector, he could have
easily noticed that the property located at Balintawak, Caloocan City covered by TCT No. C-52576 and
which is one of the properties offered as collateral by CAMEC is encumbered to Divina Pablico. Had
respondent reflected such fact in his appraisal/inspection report on said property the ISLAMIC BANK
would not have approved CAMECs loan of P500,000.00 in 1987 and CAMECs P5 Million loan in 1988,
respondent knowing fully well the Banks policy of not accepting encumbered properties as collateral.
Respondent SAWADJAANs reprehensible act is further aggravated when he failed to check and verify
from the Registry of Deeds of Marikina the authenticity of the property located at Mayamot, Antipolo,
Rizal covered by TCT No. N-130671 and which is one of the properties offered as collateral by CAMEC
for its P5 Million loan in 1988. If he only visited and verified with the Register of Deeds of Marikina the
authenticity of TCT No. N-130671 he could have easily discovered that TCT No. N-130671 is fake and
the property described therein non-existent.
...
This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his
official duties resulted to the prejudice and substantial damage to the ISLAMIC BANK for which he
should be held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST
INTEREST OF THE SERVICE.[49]
From the foregoing, we find that the CSC and the court a quo committed no grave abuse of discretion
when they sustained Sawadjaans dismissal from service. Grave abuse of discretion implies such
capricious and whimsical exercise of judgment as equivalent to lack of jurisdiction, or, in other words,
where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility,
and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined or to act at all in contemplation of law.[50] The records show that the
respondents did none of these; they acted in accordance with the law.
WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals of 30 March
1999 affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service Commission, and its
Resolution of 15 December 1999 are hereby AFFIRMED. Costs against the petitioner.
SO ORDERED.
40. Merrill Lynch Futures, Inc. vs. Court of Appeals [GR 97816, 24 July 1992]
FACTS:
Merrill Lynch Futures, Inc. a non-resident foreign corporation, not doing business in the Philippines, duly organized and existing under and by
virtue of the laws of the state of Delaware, U.S.A.;" as well as a "futures commission merchant" duly licensed to act as such in the futures
markets and exchanges in the United States, . . essentially functioning as a broker filed a complaint with the Regional Trial Court at Quezon City
against the Spouses Pedro M. Lara and Elisa G. Lara for the recovery of a debt and interest thereon, damages, and attorney's fees.
In its complaint it alleged the following:
1) that it entered into a Futures Customer Agreement with the defendant spouses in virtue of which it agreed to act as the latter's
broker for the purchase and sale of futures contracts in the U.S.;
2) that pursuant to the contract, orders to buy and sell futures contracts were transmitted to ML FUTURES by the Lara Spouses
"through the facilities of Merrill Lynch Philippines, Inc., a Philippine corporation and a company servicing plaintiffs customers;
3) that from the outset, the Lara Spouses "knew and were duly advised that Merrill Lynch Philippines, Inc. was not a broker in
futures contracts," and that it "did not have a license from the Securities and Exchange Commission to operate as a
commodity trading advisor (i.e., 'an entity which, not being a broker, furnishes advice on commodity futures to persons who trade in
futures contracts');
4) that in line with the above mentioned agreement and through said Merrill Lynch Philippines, Inc., the Lara Spouses actively
traded in futures contracts, made between the spouses and ML FUTURES;
5) that because of a loss amounting to US$160,749.69 incurred in respect of three (3) transactions involving "index futures," and after
setting this off against an amount of US$75,913.42 then owing by ML FUTURES to the Lara Spouses, said spouses became
indebted to ML FUTURES for the ensuing balance of US$84,836.27, which the latter asked them to pay;
6) that the Lara Spouses however refused to pay this balance, "alleging that the transactions were null and void because
Merrill Lynch Philippines, Inc., the Philippine company servicing accounts of plaintiff, . . had no license to operate as a
'commodity and/or financial futures broker.'"
Lara Spouses filed a motion to dismiss dated December 18, 1987 on the grounds that plaintiff ML FUTURES had "no legal capacity to sue" and
its "complaint states no cause of action since it is not the real party in interest."
In that motion to dismiss, the defendant spouses averred that:
a) although not licensed to do so, ML FUTURES had been doing business in the Philippines "at least for the last four (4) years," this
being clear from the very allegations of the complaint; consequently, ML FUTURES is prohibited by law "to maintain or intervene in
any action, suit or proceeding in any court or administrative agency of the Philippines;" and
b) they had never been informed that Merrill Lynch Philippines, Inc. was not licensed to do business in this country; and contrary to
the allegations of the complaint, all their transactions had actually been with MERRILL LYNCH PIERCE FENNER & SMITH, INC.,
and not with ML FUTURES (Merrill Lynch Futures, Inc.), in proof of which they attached to their motion to dismiss copies of eight (8)
agreements, receipts or reminders, etc., executed on standard printed forms of said Merrill Lynch Pierce Fenner & Smith Inc. 4
TC: Order sustaining the motion to dismiss, directing the dismissal of the case and discharging the writ of preliminary attachment.
CA: affirmed the Trial Court's judgment. It declared that the Trial Court had seen "through the charade in the representation of MLPI and the
plaintiff that MLPI is only a trading advisor and in fact it is a conduit in the plaintiff's business transactions in the Philippines as a basis
for invoking the provisions of Section 133 of the Corporation Code,"
Sec. 133. Doing business without a license. No foreign corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any
court or administrative agency in the Philippines; but such corporation may be sued or proceeded against before Philippine
courts or administrative tribunals on any valid cause of action recognized under Philippine laws.
ISSUES:
1. Whether ML FUTURES was doing business in the Philippines without license.
2. Whether in light of the fact that the Laras were fully aware of its lack of license to do business in the Philippines, and in
relation to those transactions had made payments to, and received money from it for several years the Lara Spouses are estopped
to impugn ML FUTURES capacity to sue them in the courts of the forum.
Held:

1. The facts on record adequately establish that ML FUTURES, operating in the United States, had indeed done business with the Lara Spouses
in the Philippines over several years, had done so at all times through Merrill Lynch Philippines, Inc. (MLPI), a corporation organized in this
country, and had executed all these transactions without ML FUTURES being licensed to so transact business here, and without MLPI being
authorized to operate as a commodity futures trading advisor. These are the factual findings to both the Trial Court and the Court of Appeals.
These, too, are the conclusions of the Securities & Exchange Commission which denied MLPI's application to operate as a commodity futures
trading advisor, a denial subsequently affirmed by the Court of Appeals. Prescinding from the proposition that factual findings of the Court of
Appeals are generally conclusive, the Supreme Court has been cited to no circumstance of substance to warrant reversal of said Appellate
Court's findings or conclusions in this case. Further, the Laras did transact business with ML FUTURES through its agent corporation organized
in the Philippines, it being unnecessary to determine whether this domestic firm was MLPI (Merrill Lynch Philippines, Inc.) or Merrill Lynch Pierce
Fenner & Smith (MLPI's alleged predecessor). The fact is that ML FUTURES did deal with futures contracts in exchanges in the United States in
behalf and for the account of the Lara Spouses, and that on several occasions the latter received account documents and money in connection
with those transactions. Given these facts, if indeed the last transaction executed by ML FUTURES in the Laras's behalf had resulted in a loss
amounting to US $160,749.69; that in relation to this loss, ML FUTURES had credited the Laras with the amount of US $ 75,913.42 which it
(ML FUTURES) then admittedly owed the spouses and thereafter sought to collect the balance, US $84,836.27, but the Laras had refused to
pay (for the reasons already above stated).

2. The Laras received benefits generated by their business relations with ML FUTURES. Those business relations, according to the Laras
themselves, spanned a period of 7 years; and they evidently found those relations to be of such profitability as warranted their maintaining them
for that not insignificant period of time; otherwise, it is reasonably certain that they would have terminated their dealings with ML FUTURES
much, much earlier. In fact, even as regards their last transaction, in which the Laras allegedly suffered a loss in the sum of US$160,749.69, the
Laras nonetheless still received some monetary advantage, for ML FUTURES credited them with the amount of US $75,913.42 then due to
them, thus reducing their debt to US $84,836.27. Given these facts, and assuming that the Lara Spouses were aware from the outset that ML
FUTURES had no license to do business in this country and MLPI, no authority to act as broker for it, it would appear quite inequitable for the
Laras to evade payment of an otherwise legitimate indebtedness due and owing to ML FUTURES upon the plea that it should not have done
business in this country in the first place, or that its agent in this country, MLPI, had no license either to operate as a "commodity and/or financial
futures broker." Considerations of equity dictate that, at the very least, the issue of whether the Laras are in truth liable to ML FUTURES and if
so in what amount, and whether they were so far aware of the absence of the requisite licenses on the part of ML FUTURES and its Philippine
correspondent, MLPI, as to be estopped from alleging that fact as a defense to such liability, should be ventilated and adjudicated on the merits
by the proper trial court.

40. PIONEER INSURANCE & SURETY CORPORATION, petitioner, vs. THE HON. COURT OF
APPEALS, BORDER MACHINERY & HEAVY EQUIPMENT, INC., (BORMAHECO), CONSTANCIO
M. MAGLANA and JACOB S. LIM, respondents.

FACTS:
The subject matter of these consolidated petitions is the decision of the CA which modified the
decision of the then CFI. The plaintiff's complaint against all defendants was dismissed but in all
other respects the trial court's decision was affirmed.

Jacob S. Lim was engaged in the airline business as owner-operator of Southern Air Lines (SAL) a
single proprietorship. At Tokyo, Japan, Japan Domestic Airlines (JDA) and Lim entered into and
executed a sales contract for the sale and purchase of two (2) DC-3A Type aircrafts and one (1) set
of necessary spare parts for the total agreed price of US $109,000.00 to be paid in installments.
One DC-3 Aircraft with Registry No. PIC-718, arrived in Manila on June 7, 1965 while the other
aircraft, arrived in Manila on July 18, 1965.

Pioneer Insurance and Surety Corporation as surety executed and issued its Surety Bond in favor of
JDA, in behalf of its principal, Lim, for the balance price of the aircrafts and spare parts.

It appears that Border Machinery and Heavy Equipment Company, Inc. (Bormaheco), Francisco and
Modesto Cervantes (Cervanteses) and Constancio Maglana (respondents in both petitions)
contributed some funds used in the purchase of the above aircrafts and spare parts. The funds
were supposed to be their contributions to a new corporation proposed by Lim to expand his airline
business. They executed two (2) separate indemnity agreements ) in favor of Pioneer, one signed
by Maglana and the other jointly signed by Lim for SAL, Bormaheco and the Cervanteses. The
indemnity agreements stipulated that the indemnitors principally agree and bind themselves jointly
and severally to indemnify and hold and save harmless Pioneer from and against any/all damages,
losses, costs, damages, taxes, penalties, charges and expenses of whatever kind and nature which
Pioneer may incur in consequence of having become surety upon the bond/note and to pay,
reimburse and make good to Pioneer.

Lim doing business under the name and style of SAL executed in favor of Pioneer as deed of chattel
mortgage as security for the latter's suretyship in favor of the former. It was stipulated therein that
Lim transfer and convey to the surety the two aircrafts. The deed was duly registered with the
Office of the Register of Deeds of the City of Manila and with the Civil Aeronautics Administration
pursuant to the Chattel Mortgage Law and the Civil Aeronautics Law respectively.

Lim defaulted on his subsequent installment payments prompting JDA to request payments from
the surety. Pioneer paid a total sum of P298,626.12.

Pioneer then filed a petition for the extrajudicial foreclosure of the said chattel mortgage, The
Cervanteses and Maglana, however, filed a third party claim alleging that they are co-owners of the
aircrafts.

Pioneer filed an action for judicial foreclosure with an application for a writ of preliminary
attachment against Lim and respondents. In their Answers, Maglana, Bormaheco and the
Cervanteses filed cross-claims against Lim alleging that they were not privies to the contracts
signed by Lim and, by way of counterclaim, sought for damages for being exposed to litigation and
for recovery of the sums of money they advanced to Lim for the purchase of the aircrafts in
question.

After trial on the merits, a decision was rendered holding Lim liable to pay Pioneer but dismissed
Pioneer's complaint against all other defendants.

As stated earlier, the appellate court modified the trial court's decision in that the plaintiffs
complaint against all the defendants was dismissed. In all other respects the trial court's decision
was affirmed

ISSUE: Whether or not the failure of the respondents to incorporate resulted to a de facto
partnership. (there are actually other issues raised in the cased but this is the issue connected to
our subject)

RULING: NO.

The issue was premised on the petitioner's theory that as a result of the failure of respondents
Bormaheco, Spouses Cervantes, Constancio Maglana and petitioner Lim to incorporate, a de facto
partnership among them was created, and that as a consequence of such relationship all must
share in the losses and/or gains of the venture in proportion to their contribution

So what is the principle then?

While it has been held that as between themselves the rights of the stockholders in a defectively
incorporated association should be governed by the supposed charter and the laws of the state
relating thereto and not by the rules governing partners, it is ordinarily held that persons who
attempt, but fail, to form a corporation and who carry on business under the corporate name
occupy a position of partners inter se. Thus, where persons associate themselves together under
articles to purchase property to carry on a business, and their organization is so defective as to
come short of creating a corporation within the statute, they become in legal effect partners inter
se, and their rights as members of the company to the property acquired by the company will be
recognized. So, where certain persons associated themselves as a corporation for the development
of land for irrigation purposes, and each conveyed land to the corporation, and two of them
contracted to pay a third the difference in the proportionate value of the land conveyed by him,
and no stock was ever issued in the corporation, it was treated as a trustee for the associates in an
action between them for an accounting, and its capital stock was treated as partnership assets,
sold, and the proceeds distributed among them in proportion to the value of the property
contributed by each.

However, such a relation does not necessarily exist, for ordinarily persons cannot be made to
assume the relation of partners, as between themselves, when their purpose is that no partnership
shall exist, and it should be implied only when necessary to do justice between the parties; thus,
one who takes no part except to subscribe for stock in a proposed corporation which is never
legally formed does not become a partner with other subscribers who engage in business under
the name of the pretended corporation, so as to be liable as such in an action for settlement of the
alleged partnership and contribution. A partnership relation between certain stockholders and
other stockholders, who were also directors, will not be implied in the absence of an agreement, so
as to make the former liable to contribute for payment of debts illegally contracted by the latter.

It is clear that the petitioner never had the intention to form a corporation with the respondents
despite his representations to them. This gives credence to the cross-claims of the respondents to
the effect that they were induced and lured by the petitioner to make contributions to a proposed
corporation which was never formed because the petitioner reneged on their agreement.

Applying therefore the principles of law earlier cited to the facts of the case, necessarily, no de
facto partnership was created among the parties which would entitle the petitioner to a
reimbursement of the supposed losses of the proposed corporation. The record shows that the
petitioner was acting on his own and not in behalf of his other would-be incorporators in
transacting the sale of the airplanes and spare parts
41. International Express Travel And Tour Services Inc. vs Court of Appeals 343 SCRA 674 [GR No. 119002 October 19, 2000]
Facts:
On June 30, 1989, petitioner International Express Travel and Tours Services Inc., through its managing director, wrote a letter to the Philippine
Football Federation through its President Henri Kahn, wherein the former offered its services as a travel agency to the latter.
The offer was accepted. Petitioner secured the airline tickets for the trips of the athletes and officials of the Federation to the South East Asian
Games in Kuala Lumpur as well as various other trips to the Peoples Republic of China and Brisbane.
The total cost of the tickets amounted to Php449,654.83. For the tickets received, the Federation made two partial payments, both in September
of 1989 in the total amount of Php176,467.50. On October 4, 1989, petitioner wrote the Federation, through the private respondent a demand
letter requesting for the amount of Php265,844.33.
On October 30, 1989, the Federation, through the project gintong alay, paid the amount of Php31,603. On December 27, 1989, Henri Kahn
issued a personal check in the amount of Php50,000 as partial payment for the outstanding balance of the Federation.
Thereafter, no further payments were made despite repeated demands. Hence, this petition.

Issue: Whether or not private respondent can be made personally liable for the liabilities of the Philippines Football Federation

Held:
Yes.
A voluntary unincorporated association, like defendant Federation has no power to enter into, or to ratify a contract. The contract entered into by
its officers or agents on behalf of such association is binding or, as enforceable against it. The officers or agents are themselves personally
liable.

In attempting to prove the juridical existence of the Federation, Henri Kahn attached to his motion for reconsideration before the trial court a
copy of the constitution and by-laws of the Philippine Football Federation. Unfortunately, the same does not prove that said Federation has
indeed been recognized and accredited by either the Philippine Amateur Athletic Federation or the Department of Youth and Sports
Development. Accordingly, we rule that the Philippine Football Federation is not a national sports association within the purview of the
aforementioned laws and does not have corporate existence of its own.

Thus being said, it follows that private respondent Henri Kahn should be liable for the unpaid obligations of the unincorporated Philippine
Football Federation. It is a settled principle in corporation law that any person acting or purporting to act on behalf of the corporation which has
no valid existence assumed such privileges and becomes personally liable for contract entered into or for other acts performed as such agent.