CHRISTIAN CHILDREN’S FUND v. NLRC ET AL AUTHOR: Miguel M.

Consing
[G.R. No. 84502 June 30, 1989] NOTES:
TOPIC: Corporation by Estoppel It’s mainly a labor case, but the focus of this digest will be
PONENTE: Gancayo, J. on the topic.
FACTS:
 Private Respondents Salao, Mamaril, et al worked for the Cristo Regis Center, a charitable organization. Cristo Regis
was in turn supported by Petitioner Christian Children’s Fund.

 Petitioner Christian Children’s Fund was sued by private Respondents for illegal dismissal when the Cristo Regis
Center closed down.

 The NLRC ruled against the Petitioners.

 The Petitioners argue that they are not the true employers of the private respondents. They allege that it was the Cristo
Regis Center that was their true employer.

 The contract between Christian Children’s Fund and the Cristo Regis Center state the following:
“There is no formal legal relationship between petitioner and the Cristo Regis Center (Project);
the Cristo Regis Center is not an agent of the petitioner;
the petitioner and the Cristo Regis Center (Project) are independent of one another;
and the Cristo Regis Center (Project) has no authority to, and cannot and will not enter into any agreement on behalf
of the petitioner or bind it or pledge credit in any way”

 The respondents argued that the Cristo Regis Center, not being a duly organized corporation listed in the SEC, cannot
be liable for contracts entered into by it.
ISSUE(S):
1. Can the Cristo Regis Center be held liable as a corporation for contracts entered by it?

2. Is Petitioner the employee of Private Respondents? [LABOR]

HELD/RATIO:
1. Yes. This organization was created for a specific charitable objective. As an organization lawfully created, the
doctrine of corporation by estoppel will apply. When a third person has entered into a contract with an
association which represented itself to be a corporation, the association will be estopped from denying its
corporate capacity in a suit against it by such third person. It cannot allege lack of capacity to be sued to evade
responsibility on a contract it had entered into and by virtue of which it received advantages and benefits.

2. No. The contract between Petitioner and the Cristo Regis Center is clear; the contract shows that the petitioner
financially supports the charitable program undertaken by the Cristo Regis Center. There is no formal relationship
between them, they are independent of one another, the Cristo Regis Center is not an agent of the petitioner, and
the Cristo Regis Center has no authority to enter into any agreement on behalf of the petitioner or bind it in any
way. Since the petitioner is not the employer of private respondents, it logically follows that the Cristo Regis
Center, the entity that hired them, must be their employer.

CASE LAW/ DOCTRINE:

When a third person has entered into a contract with an association which represented itself to be a corporation, the
association will be estopped from denying its corporate capacity in a suit against it by such third person.
DISSENTING/CONCURRING OPINION(S):