A.

CORPORATE NAME: (SECTION 18)

1. G.R. No. 101897. March 5, 1993.
Lyceum of the Philippines vs. Court of Appeals [GR 101897, 5 March 1993]
Facts: Lyceum of the Philippines Inc. had sometime before commenced in the SEC a proceeding (SEC-
CaseNo. 1241) against the Lyceum of Baguio, Inc. to require it to change its corporate name and to adopt
another name not "similar [to] or identical" with that of petitioner. In an Order dated 20 April 1977, Associate
Commissioner Julio Sulit held that the corporate name of petitioner and that of the Lyceum of Baguio, Inc. were
substantially identical because of the presence of a "dominant" word, i.e., "Lyceum," the name of the
geographical location of the campus being the only word which distinguished one from the other corporate
name. The SEC also noted that Lyceum of the Philippines Inc. had registered as a corporation ahead of the
Lyceum of Baguio, Inc. in point of time, and ordered the latter to change its name to another name "not similar
or identical [with]" the names of previously registered entities. The Lyceum of Baguio, Inc. assailed the Order
of the SEC before the Supreme Court (GR L-46595). In a Minute Resolution dated 14 September 1977, the
Court denied the Petition for Review for lack of merit. Entry of judgment in that case was made on 21 October
1977.
Armed with the Resolution of the Supreme Court, the Lyceum of the Philippines then wrote all the educational
institutions it could find using the word "Lyceum" as part of their corporate name, and advised them to
discontinue such use of "Lyceum." When, with the passage of time, it became clear that this recourse had
failed, and on 24 February 1984, Lyceum of the Philippines instituted before the SEC SEC-Case 2579 to
enforce what Lyceum of the Philippines claims as its proprietary right to the word "Lyceum." The SEC hearing
officer rendered a decision sustaining petitioner's claim to an exclusive right to use the word "Lyceum." The
hearing officer relied upon the SEC ruling in the Lyceum of Baguio, Inc. case (SEC-Case
1241) and held that the word "Lyceum" was capable of appropriation and that petitioner had acquired an
enforceable exclusive right to the use of that word. On appeal, however, by Lyceum Of Aparri, Lyceum Of
Cabagan, Lyceum Of Camalaniugan, Inc., Lyceum Of Lallo, Inc., Lyceum Of Tuao, Inc., Buhi Lyceum, Central
Lyceum Of Catanduanes, Lyceum Of Southern Philippines, Lyceum Of Eastern Mindanao, Inc. and Western
Pangasinan Lyceum, Inc.,, which are also educational institutions, to the SEC En Banc, the decision of the
hearing officer was reversed and set aside. The SEC En Banc did not consider the word "Lyceum" to have
become so identified with Lyceum of the Philippines as to render use thereof by other institutions as productive
of confusion about the identity of the schools concerned in the mind of the general public. Unlike its hearing
officer, the SEC En Banc held that the attaching of geographical names to the word "Lyceum" served
sufficiently to distinguish the schools from one another, especially in view of the fact that the campuses of
Lyceum of the Philippines and those of the other Lyceums were physically quite remote from each other.
Lyceum of the Philippines then went on appeal to the Court of Appeals. In its Decision dated 28
June 1991, however, the Court of Appeals affirmed the questioned Orders of the SEC En Banc. Lyceum of the
Philippines filed a motion for reconsideration, without success. Lyceum of the Philippines filed the petition for
review.
Issue [1]: Whether the names of the contending Lyceum schools are confusingly similar.
Held [1]: The Articles of Incorporation of a corporation must, among other things, set out the name of the
corporation. Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are
concerned. It provides that "No corporate name may be allowed by the Securities an 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." The policy underlying the prohibition in Section 18 against the registration of a
corporate name which is "identical or deceptively or confusingly similar" to that of any existing corporation or
which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is the avoidance of fraud
upon the public which would 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 corporations. Herein, the
Court does not consider that the corporate names of the academic institutions are "identical with, or
deceptively or confusingly similar" to that of Lyceum of the Philippines Inc.. True enough, the corporate names
of the other schools (defendant institutions) entities all carry the word "Lyceum" but confusion and deception
are effectively precluded by the appending of geographic names to the word "Lyceum." Thus, the "Lyceum of
Aparri" cannot be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of
Camalaniugan" would be confused with the Lyceum of the Philippines.
Further, etymologically, the word "Lyceum" is the Latin word for the Greek lykeion which in turn referred to a
locality on the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and adorned with
fountains and buildings erected by Pisistratus, Pericles and Lycurgus frequented by the youth for exercise and
by the philosopher Aristotle and his followers for teaching." In time, the word "Lyceum" became associated with
schools and other institutions providing public lectures and concerts and public discussions.
Thus today, the word "Lyceum" generally refers to a school or an institution of learning. Since "Lyceum" or
"Liceo" denotes a school or institution of learning, it is not unnatural to use this word to designate an entity
which is organized and operating as an educational institution.
To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with another
entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One
must evaluate corporate names in their entirety and when the name of Lyceum of the Philippines is juxtaposed
with the names of private respondents, they are not reasonably regarded as "identical" or "confusingly or
deceptively similar" with each other.
2. phone 3. G.R. No. L-28351 July 28, 1977
UNIVERSAL MILLS CORPORATION, petitioner, vs. UNIVERSAL TEXTILE MILLS, INC.,
FACTS: This is an appeal from the order of the Securities and Exchange Commission granting a petition by the
respondent to have the petitioners corporate name be changed as it is confusingly and deceptively similar to that of the
former.

On January 8, 1954, respondent Universal Textile Mills was issued a certificate of Corporation as a textile manufacturing
firm. On the other hand, petitioner, which deals in the production of hosieries and apparels, acquired its current name by
amending its articles of incorporation, changing its name from Universal Hosiery mills Corporation to Universal Mills
corporation.

ISSUE: Whether or not petioners trade name is confusingly similar with that of respondents.

HELD: Yes. The corporate names in question are not identical, but they are indisputably so similar that even under the
test of reasonable care and observation as the public generally are capable of using and may be expected to exercise
invoked by appellant. We are apprehensive confusion will usually arise, considering that x x x appellant included among
its primary purposes the manufacturing, dyeing, finishing and selling of fabrics of all kinds which respondent had been
engaged for more than a decade ahead of petitioner.
4. [G.R. No. 137592. December 12, 2001] ANG MGA KAANIB SA IGLESIA NG DIOS KAY KRISTO HESUS,
H.S.K. SA BANSANG PILIPINAS, INC. petitioner, vs. IGLESIA NG DIOS KAY CRISTO JESUS, HALIGI AT
SUHAY NG KATOTOHANAN, respondent. (phone)
5. Red Line Transportation Co. vs. Rural Transit Co.
GR No. 41570 | Sept. 6, 1934

Facts:
This is a petition for review of an order of the Public Service Commission granting to the Rural Transit Company, Ltd.,
a certificate of public convenience to operate a transportation service between Ilagan in the Province of Isabela and
Tuguegarao in the Province of Cagayan, and additional trips in its existing express service between Manila Tuguegarao.
On June 4, 1932, Rural Transit filed an application for certification of a new service between Tuguegarao and Ilagan
with the Public Company Service Commission (PSC), since the present service is not sufficient
Rural Transit further stated that it is a holder of a certificate of public convenience to operate a passenger bus service
between Manila and Tuguegarao
Red Line opposed said application, arguing that they already hold a certificate of public convenience for Tuguegarao
and Ilagan, and is rendering adequate service. They also argued that granting Rural Transits application would constitute
a ruinous competition over said route
On Dec. 21, 1932, Public Service Commission approved Rural Transits application, with the condition that "all the
other terms and conditions of the various certificates of public convenience of the herein applicant and herein incorporated
are made a part hereof."
A motion for rehearing and reconsideration was filed by Red Line since Rural Transit has a pending application before
the Court of First Instance for voluntary dissolution of the corporation
A motion for postponement was filed by Rural Transit as verified by M. Olsen who swears "that he was the secretary of
the Rural Transit Company, Ltd
During the hearing before the Public Service Commission, the petition for dissolution and the CFIs decision decreeing
the dissolution of Rural Transit were admitted without objection
At the trial of this case before the Public Service Commission an issue was raised as to who was the real party in
interest making the application, whether the Rural Transit Company, Ltd., as appeared on the face of the application, or
the Bachrach Motor Company, Inc., using name of the Rural Transit Company, Ltd., as a trade name
However, PSC granted Rural Transits application for certificate of public convenience and ordered that a certificate be
issued on its name
PSC relied on a Resolution in case No. 23217, authorizing Bachrach Motor to continue using Rural Transits name as
its tradename in all its applications and petitions to be filed before the PSC. Said resolution was given a retroactive effect
as of the date of filing of the application or April 30, 1930

Issue: Can the Public Service Commission authorize a corporation to assume the name of another corporation as a trade
name?

Ruling: NO
The Rural Transit Company, Ltd., and the Bachrach Motor Co., Inc., are Philippine corporations and the very law of
their creation and continued existence requires each to adopt and certify a distinctive name
The incorporators "constitute a body politic and corporate under the name stated in the certificate."
A corporation has the power "of succession by its corporate name." It is essential to its existence and cannot change its
name except in the manner provided by the statute. By that name alone is it authorized to transact business.
The law gives a corporation no express or implied authority to assume another name that is unappropriated: still less
that of another corporation, which is expressly set apart for it and protected by the law. If any corporation could assume at
pleasure as an unregistered trade name the name of another corporation, this practice would result in confusion and open
the door to frauds and evasions and difficulties of administration and supervision.
In this case, the order of the commission authorizing the Bachrach Motor Co., Incorporated, to assume the name of the
Rural Transit Co., Ltd. likewise incorporated, as its trade name being void. Accepting the order of December 21, 1932, at
its face as granting a certificate of public convenience to the applicant Rural Transit Co., Ltd., the said order last
mentioned is set aside and vacated on the ground that the Rural Transit Company, Ltd., is not the real party in interest and
its application was fictitious
6. G.R. No. L-26370 July 31, 1970
PHILIPPINE FIRST INSURANCE COMPANY, INC., plaintiff-appellant,
vs.
MARIA CARMEN HARTIGAN, CGH, and O. ENGKEE, defendants-appellees.
BARREDO, J .:
Appeal from the decision dated 6 October 1962 of the Court of First Instance of Manila dismissing the action in its
Civil Case No. 48925 brought by the herein plaintiff-appellant Philippine First Insurance Co., Inc. to the Court of
Appeals which could, upon finding that the said appeal raises purely questions of law, declared itself without jurisdiction
to entertain the same and, in its resolution dated 15 July 1966, certified the records thereof to this Court for proper
determination.
The antecedent facts are set forth in the pertinent portions of the resolution of the Court of Appeals referred to as follows:
According to the complaint, plaintiff was originally organized as an insurance corporation under the name
of 'The Yek Tong Lin Fire and Marine Insurance Co., Ltd.' The articles of incorporation originally
presented before the Security and Exchange Commissioner and acknowledged before Notary Public Mr.
E. D. Ignacio on June 1, 1953 state that the name of the corporation was 'The Yek Tong Lin Fire and
Marine Insurance Co., Ltd.' On May 26, 1961 the articles of incorporation were amended pursuant to a
certificate of the Board of Directors dated March 8, 1961 changing the name of the corporation to
'Philippine First Insurance Co., Inc.'.
The complaint alleges that the plaintiff Philippine First Insurance Co., Inc., doing business under the
name of 'The Yek Tong Lin Fire and Marine Insurance Co., Lt.' signed as co-maker together with
defendant Maria Carmen Hartigan, CGH, a promissory note for P5,000.00 in favor of the China Banking
Corporation payable within 30 days after the date of the promissory note with the usual banking interest;
that the plaintiff agreed to act as such co-maker of the promissory note upon the application of the
defendant Maria Carmen Hartigan, CGH, who together with Antonio F. Chua and Chang Ka Fu, signed
an indemnity agreement in favor of the plaintiff, undertaking jointly and severally, to pay the plaintiff
damages, losses or expenses of whatever kind or nature, including attorney's fees and legal costs, which
the plaintiff may sustain as a result of the execution by the plaintiff and co-maker of Maria Carmen
Hartigan, CGH, of the promissory note above-referred to; that as a result of the execution of the
promissory note by the plaintiff and Maria Carmen Hartigan, CGH, the China Banking Corporation
delivered to the defendant Maria Carmen Hartigan, CGH, the sum of P5,000.00 which said defendant
failed to pay in full, such that on August 31, 1961 the same was. renewed and as of November 27, 1961
there was due on account of the promissory note the sum of P4,559.50 including interest. The complaint
ends with a prayer for judgment against the defendants, jointly and severally, for the sum of P4,559.50
with interest at the rate of 12% per annum from November 23, 1961 plus P911.90 by way of attorney's
fees and costs.
Although O. Engkee was made as party defendant in the caption of the complaint, his name is not
mentioned in the body of said complaint. However, his name Appears in the Annex A attached to the
complaint which is the counter indemnity agreement supposed to have been signed according to the
complaint by Maria Carmen Hartigan, CGH, Antonio F. Chua and Chang Ka Fu.
In their answer the defendants deny the allegation that the plaintiff formerly conducted business under the
name and style of 'The Yek Tong Lin Fire and Marine Insurance Co., Ltd.' They admit the execution of
the indemnity agreement but they claim that they signed said agreement in favor of the Yek Tong Lin Fire
and Marine Insurance Co., Ltd.' and not in favor of the plaintiff. They likewise admit that they failed to
pay the promissory note when it fell due but they allege that since their obligation with the China Banking
Corporation based on the promissory note still subsists, the surety who co-signed the promissory note is
not entitled to collect the value thereof from the defendants otherwise they will be liable for double
amount of their obligation, there being no allegation that the surety has paid the obligation to the creditor.
By way of special defense, defendants claim that there is no privity of contract between the plaintiff and
the defendants and consequently, the plaintiff has no cause of action against them, considering that the
complaint does not allege that the plaintiff and the 'Yek Tong Lin Fire and Marine Insurance Co., Ltd.' are
one and the same or that the plaintiff has acquired the rights of the latter. The parties after the admission
of Exhibit A which is the amended articles of incorporation and Exhibit 1 which is a demand letter dated
August 16, 1962 signed by the manager of the loans and discount department of the China Banking
Corporation showing that the promissory note up to said date in the sum of P4,500.00 was still unpaid,
submitted the case for decision based on the pleadings.
Under date of 6 October 1962, the Court of First Instance of Manila rendered the decision appealed. It dismissed the
action with costs against the plaintiff Philippine First Insurance Co., Inc., reasoning as follows:
... With these undisputed facts in mind, the parties correctly concluded that the issues for resolution by
this Court are as follows:
(a) Whether or not the plaintiff is the real party in interest that may validly sue on the indemnity
agreement signed by the defendants and the Yek Tong Lin Fire & Marine Insurance Co., Ltd. (Annex A
to plaintiff's complaint ); and
(b) Whether or not a suit for indemnity or reimbursement may under said indemnity agreement prosper
without plaintiff having yet paid the amount due under said promissory note.
In the first place, the change of name of the Yek Tong Lin Fire & Marine Insurance Co., Ltd. to the
Philippines First Insurance Co., Inc. is of dubious validity. Such change of name in effect dissolved the
original corporation by a process of dissolution not authorized by our corporation law (see Secs. 62 and
67, inclusive, of our Corporation Law). Moreover, said change of name, amounting to a dissolution of the
Yek Tong Lin Fire & Marine Insurance Co., Ltd., does not appear to have been effected with the written
note or assent of stockholders representing at least two-thirds of the subscribed capital stock of the
corporation, a voting proportion required not only for the dissolution of a corporation but also for any
amendment of its articles of incorporation (Secs. 18 and 62, Corporation Law). Furthermore, such change
of corporate name appears to be against public policy and may be effected only by express authority of
law (Red Line Transportation Co. v. Rural Transit Co., Ltd., 60 Phil. 549, 555; Cincinnati Cooperage Co.,
Ltd. vs. Vate, 26 SW 538, 539; Pilsen Brewing Co. vs. Wallace, 125 NE 714), but there is nothing in our
corporation law authorizing the change of corporate name in this jurisdiction.
In the second place, assuming that the change of name of the Yek Tong Lin Fire & Marine Insurance Co.
Ltd., to Philippines pine First Insurance Co., Inc., as accomplished on March 8, 1961, is valid, that would
mean that the original corporation, the Yek Tong Lin Fire & Marine Insurance Co., Ltd., became
dissolved and of no further existence since March 8, 1961, so that on May 15, 1961, the date the
indemnity agreement, Annex A, was executed, said original corporation bad no more power to enter into
any agreement with the defendants, and the agreement entered into by it was ineffective for lack of
capacity of said dissolved corporation to enter into said agreement. At any rate, even if we hold that said
change of name is valid, the fact remains that there is no evidence showing that the new entity, the
Philippine First Insurance Co., Inc. has with the consent of the original parties, assumed the obligations or
was assigned the rights of action in the original corporation, the Yek Tong Lin Fire & Marine Insurance
Co., Ltd. In other words, there is no evidence of conventional subrogation of the Plaintiffs in the rights of
the Yek Tong Lin Fire & Marine Insurance Co., Ltd. under said indemnity agreement (Arts. 1300, 1301,
New Civil Code). without such subrogation assignment of rights, the herein plaintiff has no cause of
action against the defendants, and is, therefore, not the right party in interest as plaintiff.
Last, but not least, assuming that the said change of name was legal and operated to dissolve the original
corporation, the dissolved corporation, must pursuant to Sec. 77 of our corporation law, be deemed as
continuing as a body corporate for three (3) years from March 8, 1961 for the purpose of prosecuting and
defending suits. It is, therefore, the Yek Tong Lin Fire & Marine Insurance Co., Ltd. that is the proper
party to sue the defendants under said indemnity agreement up to March 8, 1964.
Having arrived at the foregoing conclusions, this Court need not squarely pass upon issue (b) formulated
above.
WHEREFORE, plaintiff's action is hereby dismissed, with costs against the plaintiff.
In due time, the Philippine First Insurance Company, Inc. moved for reconsideration of the decision aforesaid, but said
motion was denied on December 3, 1962 in an order worded thus:
The motion for reconsideration, dated November 8, 1962, raises no new issue that we failed to consider in
rendering our decision of October 6, 1962. However, it gives us an opportunity to amplify our decision as
regards the question of change of name of a corporation in this jurisdiction.
We find nothing in our Corporation Law authorizing a change of name of a corporation organized
pursuant to its provisions. Sec. 18 of the Corporation Law authorizes, in our opinion, amendment to the
Articles of Incorporation of a corporation only as to matters other than its corporate name. Once a
corporation is organized in this jurisdiction by the execution and registration of its Articles of
Incorporation, it shall continue to exist under its corporate name for the lifetime of its corporate existence
fixed in its Articles of Incorporation, unless sooner legally dissolved (Sec. 11, Corp. Law). Significantly,
change of name is not one of the methods of dissolution of corporations expressly authorized by our
Corporation Law. Also significant is the fact that the power to change its corporate name is not one of the
general powers conferred on corporations in this jurisdiction (Sec. 13, Corp. Law). The enumeration of
corporate powers made in our Corporation Law implies the exclusion of all others (Thomas v. West
Jersey R. Co., 101 U.S. 71, 25 L. ed. 950). It is obvious, in this connection, that change of name is not one
of the powers necessary to the exercise of the powers conferred on corporations by said Sec. 13 (see Sec.
14, Corp. Law).
To rule that Sec. 18 of our Corporation Law authorizes the change of name of a corporation by
amendment of its Articles of Incorporation is to indulge in judicial legislation. We have examined the
cases cited in Volume 13 of American Jurisprudence in support of the proposition that the general power
to alter or amend the charter of a corporation necessarily includes the power to alter the name of a
corporation, and find no justification for said conclusion arrived at by the editors of American
Jurisprudence. On the contrary, the annotations in favor of plaintiff's view appear to have been based on
decisions in cases where the statute itself expressly authorizes change of corporate name by amendment
of its Articles of Incorporation. The correct rule in harmony with the provisions of our Corporation Law is
well expressed in an English case as follows:
After a company has been completely register without defect or omission, so as to be
incorporated by the name set forth in the deed of settlement, such incorporated company
has not the power to change its name ... Although the King by his prerogative might
incorporate by a new name, and the newly named corporation might retain former rights,
and sometimes its former name also, ... it never appears to be such an act as the
corporation could do by itself, but required the same power as created the corporation.
(Reg. v. Registrar of Joint Stock Cos 10 Q.B. 839, 59 E.C.L. 839).
The contrary view appears to represent the minority doctrine, judging from the annotations on decided
cases on the matter.
The movant invokes as persuasive precedent the action of the Securities Commissioner in tacitly
approving the Amended, Articles of Incorporation on May 26, 1961. We regret that we cannot in good
conscience lend approval to this action of the Securities and Exchange Commissioner. We find no
justification, legal, moral, or practical, for adhering to the view taken by the Securities and Exchange
Commissioner that the name of a corporation in the Philippines may be changed by mere amendment of
its Articles of Incorporation as to its corporate name. A change of corporate name would serve no useful
purpose, but on the contrary would most probably cause confusion. Only a dubious purpose could inspire
a change of a corporate. name which, unlike a natural person's name, was chosen by the incorporators
themselves; and our Courts should not lend their assistance to the accomplishment of dubious purposes.
WHEREFORE, we hereby deny plaintiff's motion for reconsideration, dated November 8, 1962, for lack
of merit.
In this appeal appellant contends that
I
THE TRIAL COURT ERRED IN HOLDING THAT IN THIS JURISDICTION, THERE IS NOTHING
IN OUR CORPORATION LAW AUTHORIZING THE CHANGE OF CORPORATE NAME;
II
THE TRIAL COURT ERRED IN DECLARING THAT A CHANGE OF CORPORATE NAME
APPEARS TO BE AGAINST PUBLIC POLICY;
III
THE TRIAL COURT ERRED IN HOLDING THAT A CHANGE OF CORPORATE NAME HAS THE
LEGAL EFFECT OF DISSOLVING THE ORIGINAL CORPORATION:
IV
THE TRIAL COURT ERRED IN HOLDING THAT THE CHANGE OF NAME OF THE YEK TONG
LIN FIRE & MARINE INSURANCE CO., LTD. IS OF DUBIOUS VALIDITY;
V
THE TRIAL COURT ERRED IN HOLDING THAT THE APPELLANT HEREIN IS NOT THE RIGHT
PARTY INTEREST TO SUE DEFENDANTS-APPELLEES;
IV
THE TRIAL COURT FINALLY ERRED IN DISMISSING THE COMPLAINT.
Appellant's Position is correct; all the above assignments of error are well taken. The whole case, however, revolves
around only one question. May a Philippine corporation change its name and still retain its original personality and
individuality as such?
The answer is not difficult to find. True, under Section 6 of the Corporation Law, the first thing required to be stated in the
Articles of Incorporation of any corn corporation is its name, but it is only one among many matters equally if not more
important, that must be stated therein. Thus, it is also required, for example, to state the number and names of and
residences of the incorporators and the residence or location of the principal office of the corporation, its term of
existence, the amount of its capital stock and the number of shares into which it is divided, etc., etc.
On the other hand, Section 18 explicitly permits the articles of incorporation to be amended thus:
Sec. 18. Any corporation may for legitimate corporate purpose or purposes, amend its articles of
incorporation by a majority vote of its board of directors or trustees and the vote or written assent of two-
thirds of its members, if it be a nonstock corporation or, if it be a stock corporation, by the vote or written
assent of the stockholders representing at least two-thirds of the subscribed capital stock of the
corporation Provided, however, That if such amendment to the articles of incorporation should consist in
extending the corporate existence or in any change in the rights of holders of shares of any class, or would
authorize shares with preferences in any respect superior to those of outstanding shares of any class, or
would restrict the rights of any stockholder, then any stockholder who did not vote for such corporate
action may, within forty days after the date upon which such action was authorized, object thereto in
writing and demand Payment for his shares. If, after such a demand by a stockholder, the corporation and
the stockholder cannot agree upon the value of his share or shares at the time such corporate action was
authorized, such values all be ascertained by three disinterested persons, one of whom shall be named by
the stockholder, another by the corporation, and the third by the two thus chosen. The findings of the
appraisers shall be final, and if their award is not paid by the corporation within thirty days after it is
made, it may be recovered in an action by the stockholder against the corporation. Upon payment by the
corporation to the stockholder of the agreed or awarded price of his share or shares, the stockholder shall
forthwith transfer and assign the share or shares held by him as directed by the corporation: Provided,
however, That their own shares of stock purchased or otherwise acquired by banks, trust companies, and
insurance companies, should be disposed of within six months after acquiring title thereto.
Unless and until such amendment to the articles of incorporation shall have been abandoned or the action
rescinded, the stockholder making such demand in writing shall cease to be a stockholder and shall have
no rights with respect to such shares, except the right to receive payment therefor as aforesaid.
A stockholder shall not be entitled to payment for his shares under the provisions of this section unless
the value of the corporate assets which would remain after such payment would be at least equal to the
aggregate amount of its debts and liabilities and the aggregate par value and/or issued value of the
remaining subscribed capital stock.
A copy of the articles of incorporation as amended, duly certified to be correct by the president and the
secretary of the corporation and a majority of the board of directors or trustees, shall be filed with the
Securities and Exchange Commissioner, who shall attach the same to the original articles of
incorporation, on file in his office. From the time of filing such copy of the amended articles of
incorporation, the corporation shall have the same powers and it and the members and stockholders
thereof shall thereafter be subject to the same liabilities as if such amendment had been embraced in the
original articles of incorporation: Provided, however, That should the amendment consist in extending the
corporate life, the extension shall not exceed 50 years in any one instance. Provided, further, That the
original articles and amended articles together shall contain all provisions required by law to be set out in
the articles of incorporation: And provided, further, That nothing in this section shall be construed to
authorize any corporation to increase or diminish its capital stock or so as to effect any rights or actions
which accrued to others between the time of filing the original articles of incorporation and the filing of
the amended articles.
The Securities and, Exchange Commissioner shall be entitled to collect and receive the sum of ten pesos for filing said
copy of the amended articles of incorporation. Provided, however, That when the amendment consists in extending the
term of corporate existence, the Securities and Exchange Commissioner shall be entitled to collect and receive for the
filing of its amended articles of incorporation the same fees collectible under existing law for the filing of articles of
incorporation. The Securities & Exchange Commissioner shall not hereafter file any amendment to the articles of
incorporation of any bank, banking institution, or building and loan association unless accompanied by a certificate of the
Monetary Board (of the Central Bank) to the effect that such amendment is in accordance with law. (As further amended
by Act No. 3610, Sec. 2 and Sec. 9. R.A. No. 337 and R.A. No. 3531.)
It can be gleaned at once that this section does not only authorize corporations to amend their charter; it also lays down
the procedure for such amendment; and, what is more relevant to the present discussion, it contains provisos restricting
the power to amend when it comes to the term of their existence and the increase or decrease of the capital stock. There is
no prohibition therein against the change of name. The inference is clear that such a change is allowed, for if the
legislature had intended to enjoin corporations from changing names, it would have expressly stated so in this section or
in any other provision of the law.
No doubt, "(the) name (of a corporation) is peculiarly important as necessary to the very existence of a corporation. The
general rule as to corporations is that each corporation shall have a name by which it is to sue and be sued and do all legal
acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual
designates the person."
1
Since an individual has the right to change his name under certain conditions, there is no
compelling reason why a corporation may not enjoy the same right. There is nothing sacrosanct in a name when it comes
to artificial beings. The sentimental considerations which individuals attach to their names are not present in corporations
and partnerships. Of course, as in the case of an individual, such change may not be made exclusively. by the
corporation's own act. It has to follow the procedure prescribed by law for the purpose; and this is what is important and
indispensably prescribed strict adherence to such procedure.
Local well known corporation law commentators are unanimous in the view that a corporation may change its name by
merely amending its charter in the manner prescribed by law.
2
American authorities which have persuasive force here in
this regard because our corporation law is of American origin, the same being a sort of codification of American corporate
law,
3
are of the same opinion.
A general power to alter or amend the charter of a corporation necessarily includes the power to alter the
name of the corporation. Ft. Pitt Bldg., etc., Assoc. v. Model Plan Bldg., etc., Assoc., 159 Pa. St. 308, 28
Atl. 215; In re Fidelity Mut. Aid Assoc., 12 W.N.C. (Pa.) 271; Excelsior Oil Co., 3 Pa. Co. Ct. 184;
Wetherill Steel Casting Co., 5 Pa. Co. Ct. 337.
xxx xxx xxx
Under the General Laws of Rhode Island, c 176, sec. 7, relating to an increase of the capital stock of a
corporation, it is provided that 'such agreement may be amended in any other particular, excepting as
provided in the following section', which relates to a decrease of the capital stock This section has been
held to authorize a change in the name of a corporation. Armington v. Palmer, 21 R.I. 109, 42 Atl. 308,
43, L.R.A. 95, 79 Am. St. Rep. 786. (Vol. 19, American and English Annotated Cases, p. 1239.)
Fletcher, a standard authority on American an corporation law also says:
Statutes are to be found in the various jurisdictions dealing with the matter of change in corporate names.
Such statutes have been subjected to judicial construction and have, in the main, been upheld as
constitutional. In direct terms or by necessary implication, they authorize corporations new names and
prescribe the mode of procedure for that purpose. The same steps must be taken under some statutes to
effect a change in a corporate name, as when any other amendment of the corporate charter is sought ....
When the general law thus deals with the subject, a corporation can change its name only in the manner
provided. (6 Fletcher, Cyclopedia of the Law of Private Corporations, 1968 Revised Volume, pp. 212-
213.) (Emphasis supplied)
The learned trial judge held that the above-quoted proposition are not supported by the weight of authority because they
are based on decisions in cases where the statutes expressly authorize change of corporate name by amendment of the
articles of incorporation. We have carefully examined these authorities and We are satisfied of their relevance. Even Lord
Denman who has been quoted by His Honor from In Reg. v. Registrar of Joint Stock Cos. 10, Q.B., 59 E.C.L. maintains
merely that the change of its name never appears to be such an act as the corporation could do for itself, but required ;the
same Power as created a corporation." What seems to have been overlooked, therefore, is that the procedure prescribes by
Section 18 of our Corporation Law for the amendment of corporate charters is practically identical with that for the
incorporation itself of a corporation.
In the appealed order of dismissal, the trial court, made the observation that, according to this Court in Red Line
Transportation Co. v. Rural Transit Co., Ltd., 60 Phil, 549, 555, change of name of a corporation is against public policy.
We must clarify that such is not the import of Our said decision. What this Court held in that case is simply that:
We know of no law that empowers the Public Service Commission or any court in this jurisdiction to
authorize one corporation to assume the name of another corporation as a trade name. Both the Rural
Transit Company, Ltd., and the Bachrach Motor Co., Inc., are Philippine corporations and the very law of
their creation and continued existence requires each to adopt and certify a distinctive name. The
incorporators 'constitute a body politic and corporate under the name stated in the certificate.' (Section 11,
Act No. 1459, as amended.) A corporation has the power 'of succession by its corporate name.' (Section
13, ibid.) The name of a corporation is therefore essential to its existence. It cannot change its name
except in the manner provided by the statute. By that name alone is it authorized to transact business. The
law gives a corporation no express or implied authority to assume another name that is unappropriated;
still less that of another corporation, which is expressly set apart for it and protected by the law. If any
corporation could assume at pleasure as an unregistered trade name the name of another corporation, this
practice would result in confusion and open the door to frauds and evasions and difficulties of
administration and supervision. The policy of the law as expressed our corporation statute and the Code
of Commerce is clearly against such a practice. (Cf. Scarsdale Pub. Co. Colonial Press vs. Carter, 116
New York Supplement, 731; Svenska Nat. F. i. C. vs. Swedish Nat. Assn., 205 Illinois [Appellate
Courts], 428, 434.)
In other words, what We have held to be contrary to public policy is the use by one corporation of the name of another
corporation as its trade name. We are certain no one will disagree that such an act can only "result in confusion and open
the door to frauds and evasions and difficulties of administration and supervision." Surely, the Red Line case was not one
of change of name.
Neither can We share the posture of His Honor that the change of name of a corporation results in its dissolution. There is
unanimity of authorities to the contrary.
An authorized change in the name of a corporation has no more effect upon its identity as a corporation
than a change of name of a natural person has upon his identity. It does not affect the rights of the
corporation or lessen or add to its obligations. After a corporation has effected a change in its name it
should sue and be sued in its new name .... (13 Am. Jur. 276-277, citing cases.)
A mere change in the name of a corporation, either by the legislature or by the corporators or stockholders
under legislative authority, does not, generally speaking, affect the identity of the corporation, nor in any
way affect the rights, privileges, or obligations previously acquired or incurred by it. Indeed, it has been
said that a change of name by a corporation has no more effect upon the identity of the corporation than a
change of name by a natural person has upon the identity of such person. The corporation, upon such
change in its name, is in no sense a new corporation, nor the successor of the original one, but remains
and continues to be the original corporation. It is the same corporation with a different name, and its
character is in no respect changed. ... (6 Fletcher, Cyclopedia of the Law of Private Corporations, 224-
225, citing cases.)
The change in the name of a corporation has no more effect upon its identity as a corporation than a
change of name of a natural person has upon his identity. It does not affect the rights of the corporation,
or lessen or add to its obligations.
England. Doe v. Norton, 11 M. & W. 913, 7 Jur. 751, 12 L. J. Exch. 418.
United States. Metropolitan Nat. Bank v. Claggett, 141 U.S. 520, 12 S. Ct. 60, 35 U.S. (L. ed.) 841.
Alabama. Lomb v. Pioneer Sav., etc., Co., 106 Ala. 591, 17 So. 670; North Birmingham Lumber Co. v.
Sims, 157 Ala. 595, 48 So. 84.
Connecticut. Trinity Church v. Hall, 22 Com. 125.
Illinois. Mt. Palatine Academy v. Kleinschnitz 28 III, 133; St. Louis etc. R. Co. v. Miller, 43 Ill. 199;
Reading v. Wedder, 66 III. 80.
Indiana. Rosenthal v. Madison etc., Plank Road Co., 10 Ind. 358.
Kentucky. Cahill v. Bigger, 8 B. Mon. 211; Wilhite v. Convent of Good Shepherd, 177 Ky. 251, 78 S.
W. 138.
Maryland. Phinney v. Sheppard & Enoch Pratt Hospital, 88 Md. 633, 42 Atl. 58, writ of error
dismissed, 177 U.S. 170, 20 S. Ct. 573, 44 U.S. (L. ed.) 720.
Missouri. Dean v. La Motte Lead Co., 59 Mo. 523.
Nebraska. Carlon v. City Sav. Bank, 82 Neb. 582, 188 N. W. 334. New York First Soc of M.E. Church
v. Brownell, 5 Hun 464.
Pennsylvania. Com. v. Pittsburgh, 41 Pa. St. 278.
South Carolina. South Carolina Mut Ins. Co. v. Price 67 S.C. 207, 45 S.E. 173.
Virginia. Wilson v. Chesapeake etc., R. Co., 21 Gratt 654; Wright-Caesar Tobacco Co. v. Hoen, 105
Va. 327, 54 S.E. 309.
Washington. King v. Ilwaco R. etc., Co., 1 Wash. 127. 23 Pac. 924.
Wisconsin. Racine Country Bank v. Ayers, 12 Wis. 512.
The fact that the corporation by its old name makes a format transfer of its property to the corporation by
its new name does not of itself show that the change in name has affected a change in the identity of the
corporation. Palfrey v. Association for Relief, etc., 110 La. 452, 34 So. 600. The fact that a corporation
organized as a state bank afterwards becomes a national bank by complying with the provisions of the
National Banking Act, and changes its name accordingly, has no effect on its right to sue upon obligations
or liabilities incurred to it by its former name. Michigan Ins. Bank v. Eldred 143 U.S. 293, 12 S. Ct. 450,
36 U.S. (L. ed.) 162.
A deed of land to a church by a particular name has been held not to be affected by the fact that the
church afterwards took a different name. Cahill v. Bigger, 8 B. Mon (ky) 211.
A change in the name of a corporation is not a divestiture of title or such a change as requires a regular
transfer of title to property, whether real or personal, from the corporation under one name to the same
corporation under another name. McCloskey v. Doherty, 97 Ky. 300, 30 S. W. 649. (19 American and
English Annotated Cases 1242-1243.)
As was very aptly said in Pacific Bank v. De Ro 37 Cal. 538, "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 the 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.
Having arrived at the above conclusion, We have agree with appellant's pose that the lower court also erred in holding that
it is not the right party in interest to sue defendants-appellees.
4
As correctly pointed out by appellant, the approval by the
stockholders of the amendment of its articles of incorporation changing the name "The Yek Tong Lin Fire & Marine
Insurance Co., Ltd." to "Philippine First Insurance Co., Inc." on March 8, 1961, did not automatically change the name of
said corporation on that date. To be effective, Section 18 of the Corporation Law, earlier quoted, requires that "a copy of
the articles of incorporation as amended, duly certified to be correct by the president and the secretary of the corporation
and a majority of the board of directors or trustees, shall be filed with the Securities & Exchange Commissioner", and it is
only from the time of such filing, that "the corporation shall have the same powers and it and the members and
stockholders thereof shall thereafter be subject to the same liabilities as if such amendment had been embraced in the
original articles of incorporation." It goes without saying then that appellant rightly acted in its old name when on May 15,
1961, it entered into the indemnity agreement, Annex A, with the defendant-appellees; for only after the filing of the
amended articles of incorporation with the Securities & Exchange Commission on May 26, 1961, did appellant legally
acquire its new name; and it was perfectly right for it to file the present case In that new name on December 6, 1961. Such
is, but the logical effect of the change of name of the corporation upon its actions.
Actions brought by a corporation after it has changed its name should be brought under the new name
although for the enforcement of rights existing at the time the change was made. Lomb v. Pioneer Sav.,
etc., Co., 106 Ala. 591, 17 So. 670: Newlan v. Lombard University, 62 III. 195; Thomas v. Visitor of
Frederick County School, 7 Gill & J (Md.) 388; Delaware, etc., R. Co. v. Trick, 23 N. J. L. 321;
Northumberland Country Bank v. Eyer, 60 Pa. St. 436; Wilson v. Chesapeake etc., R. Co., 21 Gratt (Va.)
654.
The change in the name of the corporation does not affect its right to bring an action on a note given to
the corporation under its former name. Cumberland College v. Ish, 22. Cal. 641; Northwestern College v.
Schwagler, 37 Ia. 577. (19 American and English Annotated Cases 1243.)
In consequence, We hold that the lower court erred in dismissing appellant's complaint. We take this opportunity,
however, to express the Court's feeling that it is apparent that appellee's position is more technical than otherwise.
Nowhere in the record is it seriously pretended that the indebtedness sued upon has already been paid. If appellees
entertained any fear that they might again be made liable to Yek Tong Lin Fire & Marine Insurance Co. Ltd., or to
someone else in its behalf, a cursory examination of the records of the Securities & Exchange Commission would have
sufficed to clear up the fact that Yek Tong Lin had just changed its name but it had not ceased to be their creditor.
Everyone should realize that when the time of the courts is utilized for cases which do not involve substantial questions
and the claim of one of the parties, therein is based on pure technicality that can at most delay only the ultimate outcome
necessarily adverse to such party because it has no real cause on the merits, grave injustice is committed to numberless
litigants whose meritorious cases cannot be given all the needed time by the courts. We address this appeal once more to
all members of the bar, in particular, since it is their bounden duty to the profession and to our country and people at large
to help ease as fast as possible the clogged dockets of the courts. Let us not wait until the people resort to other means to
secure speedy, just and inexpensive determination of their cases.
WHEREFORE, judgment of the lower court is reversed, and this case is remanded to the trial court for further
proceedings consistent herewith With costs against appellees.
7. [G.R. No. 117890. September 18, 1997]
PISON-ARCEO AGRICULTURAL and DEVELOPMENT CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and NATIONAL FEDERATION OF SUGAR WORKERS-FOOD and GENERAL
TRADE (NFSW-FGT)/ JESUS PASCO, MARTIN BONARES, EVANGELINE PASCO, TERESITA NAVA,
FELIXBERTO NAVA, JOHNNY GARRIDO, EDUARDO NUEZ and DELMA NUEZ, respondents.
D E C I S I O N
PANGANIBAN, J.:
In the proceedings before the labor arbiter, only the unregistered trade name of the employer-corporation and its
administrator/manager were impleaded and subsequently held liable for illegal dismissal, backwages and separation pay.
On appeal, however, the National Labor Relations Commission motu proprio included the corporate name of the
employer as jointly and severally liable for the workers claims. Because of such inclusion, the corporation now raises
issues of due process and jurisdiction before this Court.
The Case
Assailed in this petition for certiorari under Rule 65 of the Rules of Court is the Decisioni[1] of Public Respondent
National Labor Relations Commissionii[2] in NLRC Case No. V-0334-92iii[3] promulgated on September 27, 1993 and
its Resolutioniv[4] promulgated on September 12, 1994 denying reconsideration. Affirming the decisionv[5] dated
September 2, 1992 of Executive Labor Arbiter Oscar S. Uy, the impugned NLRC Decision disposed thus:vi[6]
WHEREFORE, judgment is hereby rendered affirming the decision of Executive Labor Arbiter Oscar S. Uy, dated
September 2, 1992, subject to the amendments and modification stated above and ordering the respondent-appellant, Jose
Edmundo Pison and the respondent Pison-Arceo Agricultural and Development Corporation to pay jointly and severally
the claims for backwages and separation pay of the complainant-appellees in the above-entitled case, except the claims of
Danny Felix and Helen Felix, in the amount specified below:
Name Backwages Separation Pay Total
1. Jesus Pasco P14,729.00 P12,818.06 P27,547.06
2. Evangeline 14,729.00 12,874.81 27,603.81
Pasco
3. Martin Bonares 14,729.00 9,035.06 23,764.06
4. Mariolita Bonares 14,729.00 8,455.00 23,184.00
5. Felixberto Nava 14,729.00 13,505.31 28,234.31
6. Teresita NAva 14,729.00 3,417.31 18,146.31
7. Johnny Garrido 8,489.00 4,463.94 12,952.94
8. Eduardo Nuez 8,489.00 11,399.44 19,888.44
9. Delma Nuez 8,489.00 9,507.94 17,996.94
In addition, the respondent-appellant and the respondent corporation are ordered to pay attorneys fees equivalent to ten
(10%) percent of the total award.
The dispositive portion of the assailed Resolution, on the other hand, reads:vii[7]
WHEREFORE, the decision in question is hereby modified in the sense that the monetary award of Mariolita Bonares be
[sic] deleted. Except for such modification, the rest of the decision stands.
Arguing that the National Labor Relations Commission did not have jurisdiction over it because it was not a party before
the labor arbiter, petitioner elevated this matter before this Court via a petition for certiorari under Rule 65.
Acting on petitioners prayerviii[8], this Court (First Division) issued on January 18, 1995 a temporary restraining order
enjoining the respondents from executing the assailed Decision and Resolution.
The Facts
As gathered from the complaintix[9] and other submissions of the parties filed with Executive Labor Arbiter Oscar S. Uy,
the facts of the case are as follows:
Together with Complainants Danny and Helen Felix, private respondents -- Jesus Pasco, Evangeline Pasco, Martin
Bonares, Teresita Nava, Felixberto Nava, Johnny Garrido, Eduardo Nuez and Delma Nuez, all represented by Private
Respondent National Federation of Sugar Workers-Food and General Trade (NSFW-FGT) -- filed on June 13, 1988 a
complaint for illegal dismissal, reinstatement, payment of backwages and attorneys fees against Hacienda Lanutan/Jose
Edmundo Pison. Complainants alleged that they were previously employed as regular sugar farm workers of Hacienda
Lanutan in Talisay, Negros Occidental. On the other hand, Jose Edmundo Pison claimed that he was merely the
administrator of Hacienda Lanutan which was owned by Pison-Arceo Agricultural and Development Corporation.
As earlier stated, the executive labor arbiter rendered on September 2, 1992 a decision in favor of the workers-
complainants, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Jose Edmundo Pison/Hda.
Lanutan, Talisay, Negros Occidental, to PAY the following complainants their backwages (one year) plus separation pay
in the following amounts, to wit:
BACKWAGES SEPARATION PAY TOTAL
1. J. Pasco -P14,729.00 P12,818.06 P27,547.06
2. E. Pasco - 14,729.00 12,784.81 27,603,81
3. Bonares - 14,729.00 8,404.56 23,133.56
4. F. Nava - 14,729.00 13,505.31 28,234.31
5. T. Nava - 14,729.00 3,427.31 18,146.31
6. J. Garido - 8,489.00 4,463.94 12,952.94
7. E. Nuez - 8,489.00 11,399.44 19,888.44
8. D. Nuez - 8,489.00 9,507.94 17,996.94
plus ten percent (10%) of the total award as attorneys fees in the amount of P17,550.34 or in the total amount of ONE
HUNDRED NINETY THREE THOUSAND FIFTY THREE AND 71/100 (P193,053.71), all these amounts to be
deposited with this Office within ten (10) days from receipt of this decision. The claim of complainants Danny and Helen
Felix are hereby DENIED for lack of merit.
In affirming the decision of the executive labor arbiter, public respondent ordered respondent-appellant, Jose Edmundo
Pison and the respondent Pison-Arceo Agricultural and Development Corporation to pay jointly and severally the claims
for backwages and separation pay of private respondents. The motion for reconsideration dated October 14, 1993 was
apparently filed by Jose Edmundo Pison for and on his own behalf only. However, Pison did not elevate his case before
this Court. The sole petitioner now before us is Pison-Arceo Agricultural and Development Corporation, the owner of
Hacienda Lanutan.
The Issue
Petitioner submits only one issue for our resolution:x[10]
Public Respondent NLRC acted without or in excess of jurisdiction or with grave abuse of discretion when it included
motu proprio petitioner corporation as a party respondent and ordered said corporation liable to pay jointly and severally,
with Jose Edmundo Pison the claims of private respondents.
In essence, petitioner alleges deprivation of due process.
The Courts Ruling
The petition lacks merit.
Petitioner contends that it was never served any summons; hence, public respondent did not acquire jurisdiction over it. It
argues that from the time the complaint was filed before the Regional Arbitration Branch No. VI up to the time the said
case was appealed by Jose Edmundo Pison to the NLRC, Cebu, petitioner Corporation was never impleaded as one of the
parties x x x. It was only in the public respondents assailed Decision of September 27, 1993 that petitioner
Corporation was wrongly included as party respondent without its knowledge. Copies of the assailed Decision and
Resolution were not sent to petitioner but only to Jose Edmundo Pison, on the theory that the two were one and the same.
Petitioner avers that Jose Edmundo Pison is only a minority stockholder of Hacienda Lanutan, which in turn is one of
the businesses of petitioner.xi[11] Petitioner further argues that it did not voluntarily appear before said tribunal and that
it was not given (any) opportunity to be heard;xii[12] thus, the assailed Decision and Resolution in this case are void
for having been issued without jurisdiction.xiii[13]
In its memorandum, petitioner adds that Eden vs. Ministry of Labor and Employment,xiv[14] cited by public respondent,
does not apply to this case. In Eden, petitioners were duly served with notices of hearings, while in the instant case, the
petitioner was never summoned nor was served with notice of hearings as a respondent in the case.xv[15]
At the outset, we must stress that in quasi-judicial proceedings, procedural rules governing service of summons are not
strictly construed. Substantial compliance thereof is sufficient.xvi[16] Also, in labor cases, punctilious adherence to
stringent technical rules may be relaxed in the interest of the working man; it should not defeat the complete and equitable
resolution of the rights and obligations of the parties. This Court is ever mindful of the underlying spirit and intention of
the Labor Code to ascertain the facts of each case speedily and objectively without regard to technical rules of law and
procedure, all in the interest of due process.xvii[17] Furthermore, the Labor Code itself, as amended by RA 6715,xviii[18]
provides for the specific power of the Commission to correct, amend, or waive any error, defect or irregularity whether in
the substance or in the form of the proceedings before itxix[19] under Article 218 (c) as follows:
(c) To conduct investigation for the determination of a question, matter or controversy within its jurisdiction, proceed to
hear and determine the disputes in the absence of any party thereto who has been summoned or served with notice to
appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer
technical matters or accounts to an expert and to accept his report as evidence after hearing of the parties upon due notice,
direct parties to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect or irregularity
whether in substance or in form, give all such directions as it may deem necessary or expedient in the determination of the
dispute before it, and dismiss any matter or refrain from further hearing or from determining the dispute or part thereof,
where it is trivial or where further proceedings by the Commission are not necessary or desirable; xxx (Underscoring
supplied.)
In this case, there are legal and factual reasons to hold petitioner jointly and severally liable with Jose Edmundo Pison.
Jurisdiction Acquired over Petitioner
Consistent with the foregoing principles applicable to labor cases, we find that jurisdiction was acquired over the
petitioner. There is no dispute that Hacienda Lanutan, which was owned SOLELY by petitioner, was impleaded and was
heard. If at all, the non-inclusion of the corporate name of petitioner in the case before the executive labor arbiter was a
mere procedural error which did not at all affect the jurisdiction of the labor tribunals.xx[20] Petitioner was adequately
represented in the proceedings conducted at the regional arbitration branch by no less than Hacienda Lanutans
administrator, Jose Edmundo Pison, who verified and signed his/Hacienda Lanutans position paper and other pleadings
submitted before the labor arbiter. It can thus be said that petitioner, acting through its corporate officer Jose Edmundo
Pison, traversed private respondents complaint and controverted their claims. Further unrebutted by petitioner are the
following findings of public respondent:xxi[21]
It should further be noted that two responsible employees of the said corporation, namely, Teresita Dangcasil, the
secretary of the administrator/manager, and Fernando Gallego, the hacienda overseer, had submitted their affidavits, both
dated July 20, 1988, as part of the evidence for the respondent, and that, as shown by the records, the lawyer who
appeared as the legal counsel of the respondent-appellant, specifically, Atty. Jose Ma. Torres, of the Torres and Valencia
Law Office in Bacolod City, (Rollo, p. 17) was also the legal counsel of the said corporation. (Rollo, p. 23)
Also, it is undisputed that summons and all notices of hearing were duly served upon Jose Edmundo Pison. Since Pison is
the administrator and representative of petitioner in its property (Hacienda Lanutan) and recognized as such by the
workers therein, we deem the service of summons upon him as sufficient and substantial compliance with the
requirements for service of summons and other notices in respect of petitioner corporation. Insofar as the complainants
are concerned, Jose Edmundo Pison was their employer and/or their employers representative. In view of the peculiar
circumstances of this case, we rule that Jose Pisons knowledge of the labor case and effort to resist it can be deemed
knowledge and action of the corporation. Indeed, to apply the normal precepts on corporate fiction and the technical rules
on service of summons would be to overturn the bias of the Constitution and the laws in favor of labor.
Hence, it is fair to state that petitioner, through its administrator and manager, Jose Edmundo Pison, was duly notified of
the labor case against it and was actually afforded an opportunity to be heard. That it refused to take advantage of such
opportunity and opted to hide behind its corporate veil will not shield it from the encompassing application of labor laws.
As we held in Bautista vs. Secretary of Labor and Employment:xxii[22]
Moreover, since the proceeding was not judicial but merely administrative, the rigid requirements of procedural laws
were not strictly enforceable. It is settled that --
While the administrative tribunals exercising quasi-judicial powers are free from the rigidity of certain procedural
requirements they are bound by law and practice to observe the fundamental and essential requirements of due process in
justiciable cases presented before them. However, the standard of due process that must be met in administrative tribunals
allows a certain latitude as long as the element of fairness is not ignored. (fn: Adamson & Adamson, Inc. vs. Amores, 152
SCRA 237).
x x x
It is of course also sound and settled rule that administrative agencies performing quasi-judicial functions are unfettered
by the rigid technicalities of procedure observed in the courts of law, and this is so that disputes brought before such
bodies may be resolved in the most expeditious and inexpensive manner possible. (fn: Rizal Workers Union vs. Ferrer-
Calleja, 186 SCRA 431).
Given all these circumstances, we feel that the lack of summons upon the petitioners is not sufficient justification for
annulling the acts of the public respondents.
Contrary to petitioners contention, the principles laid down in Eden are relevant to this case. In that case, a religious
organization, SCAFI,xxiii[23] denied responsibility for the monetary claims of several employees, as these were filed
against SCAPSxxiv[24] and its officer in charge -- the employees believed that SCAPS was their employer. In rejecting
such defense, this Court ruled:xxv[25]
With regard to the contention that SCAPS and SCAFI are two different entities, this lacks merit. The change from
SCAPS to SCAFI was a mere modification, if not rectification of the caption as to respondent in the MOLE case, when it
was pointed out in the complainants position paper that SCAPS belongs to or is integral with SCAFI as gleaned from the
brochure, Annex A of said position paper, which is already part of the records of the case and incorporated in the
Comment by way of reference. The brochure stated that SCAPS is the implementing and service arm of SCAFI, with
Bishop Gaviola as National Director of SCAPS and Board Chairman of SCAFI, both their address: 2655 F.B. Harrison,
St., Pasay City. Thus, the real party in interest is SCAFI, more so because it has the juridical personality that can sue and
be sued. The change in caption from SCAPS to SCAFI however does not absolve SCAPS from liability, for SCAFI
includes SCAPS, SCAPS -- the arm, SCAFI, -- the organism to which the arm is an integral part of the rise and fall of
SCAPS, and vice-versa. Thus, SCAFI has never been a stranger to the case. Jurisprudence is to the effect that:
An action may be entertained, notwithstanding the failure to include an indispensable party where it appears that the
naming of the party would be a formality. (Baguio vs. Rodriguez, L-11078, May 27, 1959)
Comparable to Eden, Hacienda Lanutan is an arm of petitioner, the organism of which it is an integral part. Ineluctably,
the real party in interest in this case is petitioner, not Hacienda Lanutan which is merely its non-juridical arm. In
dealing with private respondents, petitioner represented itself to be Hacienda Lanutan. Hacienda Lanutan is roughly
equivalent to its trade name or even nickname or alias. The names may have been different, but the IDENTITY of the
petitioner is not in dispute. Thus, it may be sued under the name by which it made itself known to the workers.
Liability of Jose Edmundo Pison
Jose Edmundo Pison did not appeal from the Decision of public respondent. It thus follows that he is bound by the said
judgment. A party who has not appealed an adverse decision cannot obtain from the appellate court any affirmative relief
other than those granted, if there is any, in the decision of the lower court or administrative body.xxvi[26]
WHEREFORE, premises considered, the petition is hereby DISMISSED, for its failure to show grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the National Labor Relations Commission. The assailed
Decision and Resolution are AFFIRMED. The temporary restraining order issued on January 19, 1995 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
8. G.R. No. 100468 May 6, 1997
LAUREANO INVESTMENT & DEVELOPMENT CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and BORMAHECO, INC., respondents.
In 1988, Bormaheco, Inc. (Bormaheco) filed an ex-parte petition with the Registry of Deeds of Makati for the issuance of
a writ of possession over various lots that it bought from a bank. Subsequently, a motion for intervention was filed by
LIDECO Corporation (Lideco) for certain adverse claims. Bormaheco opposed the motion on the ground that Lideco has
no personality to sue because it is not a juridical entity. Apparently, Lideco is not a corporation registered with the
Securities and Exchange Commission. Bormahecos opposition was granted. Lideco assailed the decision on the ground
that LIDECO is an acronym for Laureano Investment & Development Corporation which is a duly organized corporation.
ISSUE: Whether or not Laureano Investment & Development Corporation can sue Bormaheco, Inc. as LIDECO
Corporation.
HELD: No. A corporation cannot sue under a name other than that registered with the SEC. The contention that Laureano
Investment & Development Corporation merely used the abbreviation is not tenable. Lideco Corporation had no
personality to intervene since it had not been duly registered as a corporation. If Laureano Investment & Development
Corporation truly wished to intervene, it should have, it should have used its corporate name as the law requires and not
another name which it had not registered.
9. [G.R. No. 122174. October 3, 2002]
INDUSTRIAL REFRACTORIES CORPORATION OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS,
SECURITIES AND EXCHANGE COMMISSION and REFRACTORIES CORPORATION OF THE PHILIPPINES,
respondents.
Facts:

Respondent Refractories Corporation of the Philippines (RCP) is a corporation duly organized on October 13, 1976. On
June 22, 1977, it registered its corporate and business name with the Bureau of Domestic Trade.

Petitioner IRCP 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".

Both companies are the only local suppliers of monolithic gunning mix.

Respondent RCP then filed a petition with the Securities and Exchange Commission to compel petitioner IRCP to change
its corporate name.

The SEC rendered judgment in favor of respondent RCP.

Petitioner appealed to the SEC En Banc. The SEC En Banc modified the appealed decision and the petitioner was ordered
to delete or drop from its corporate name only the word "Refractories".

Petitioner IRCP filed a petition for review on certiorari to the Court of Appeals and 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.

Petitioner then filed a petition for review on certiorari

Issue:

Are corporate names Refractories Corporation of the Philippines (RCP) and "Industrial Refractories Corp. of the
Philippines" confusingly and deceptively similar?
Ruling:

Yes, the petitioner and respondent RCPs corporate names are confusingly and deceptively similar.
Further, 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 said 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.

The Supreme Court denied the petition for review on certiorari due for lack of merit.
10. [G.R. No. 129552. June 29, 2005]
P.C. JAVIER & SONS, INC., SPS. PABLO C. JAVIER, SR. and ROSALINA F. JAVIER, petitioners, vs. HON. COURT
OF APPEALS, PAIC SAVINGS & MORTGAGE BANK, INC., SHERIFFS GRACE BELVIS, SOFRONIO VILLARIN,
PIO MARTINEZ and NICANOR BLANCO, respondents.
D E C I S I O N
CHICO-NAZARIO, J.:
Before Us is an appeal by certiorari under Rule 45 of the Rules of Court which seeks to set aside the decision[1] of the
Court of Appeals dated 31 January 1997 which affirmed in toto the decision of Branch 62 of the Regional Trial Court
(RTC) of Makati City, dismissing the complaint for Annulment of Mortgage and Foreclosure with Preliminary Injunction,
Prohibition and Damages filed by petitioners, and its Resolution[2] dated 20 June 1997 denying petitioners motion for
reconsideration.
A complaint[3] for Annulment of Mortgage and Foreclosure with Preliminary Injunction, Prohibition and Damages was
filed by petitioners P.C. Javier & Sons, Inc. and spouses Pablo C. Javier, Sr. and Rosalina F. Javier against PAIC Savings
& Mortgage Bank, Inc., Grace S. Belvis, Acting Ex Officio Regional Sheriff of Pasig, Metro Manila and Sofronio M.
Villarin, Deputy Sheriff-in-Charge, before Branch 62 of the RTC of Makati City, on 07 May 1984. The case was
docketed as Civil Case No. 7184.
On 10 May 1984, a Supplemental Complaint[4] was filed to include additional defendants, namely: Pio Martinez, Acting
Ex Officio Regional Sheriff of Antipolo, Rizal, and Nicanor D. Blanco, Deputy Sheriff-in-Charge.
The facts that gave rise to the aforesaid complaint, as found by Branch 62 of the RTC of Makati City, and adopted by the
respondent court, are as follows:
In February, 1981, Plaintiff P.C. Javier and Sons Services, Inc., Plaintiff Corporation, for short, applied with First Summa
Savings and Mortgage Bank, later on renamed as PAIC Savings and Mortgage Bank, Defendant Bank, for short, for a loan
accommodation under the Industrial Guarantee Loan Fund (IGLF) for P1.5 Million. On March 21, 1981, Plaintiff
Corporation through Plaintiff Pablo C. Javier, Plaintiff Javier for short, was advised that its loan application was approved
and that the same shall be forwarded to the Central Bank (CB) for processing and release (Exhibit A also Exhibit 8).
The CB released the loan to Defendant Bank in two (2) tranches of P750,000 each. The first tranche was released to the
Plaintiff Corporation on May 18, 1981 in the amount of P750,000.00 and the second tranche was released to Plaintiff
Corporation on November 21, 1981 in the amount of P750,000.00. From the second tranche release, the amount of
P250,000.00 was deducted and deposited in the name of Plaintiff Corporation under a time deposit.
Plaintiffs claim that the loan releases were delayed; that the amount of P250,000.00 was deducted from the IGLF loan of
P1.5 Million and placed under time deposit; that Plaintiffs were never allowed to withdraw the proceeds of the time
deposit because Defendant Bank intended this time deposit as automatic payments on the accrued principal and interest
due on the loan. Defendant Bank, however, claims that only the final proceeds of the loan in the amount of P750,000.00
was delayed the same having been released to Plaintiff Corporation only on November 20, 1981, but this was because of
the shortfall in the collateral cover of Plaintiffs loan; that this second tranche of the loan was precisely released after a
firm commitment was made by Plaintiff Corporation to cover the collateral deficiency through the opening of a time
deposit using a portion of the loan proceeds in the amount of P250,000.00 for the purpose; that in compliance with their
commitment to submit additional security and open time deposit, Plaintiff Javier in fact opened a time deposit for
P250,000.00 and on February 15, 1983, executed a chattel mortgage over some machineries in favor of Defendant Bank;
that thereafter, Plaintiff Corporation defaulted in the payment of its IGLF loan with Defendant Bank hence Defendant
Bank sent a demand letter dated November 22, 1983, reminding Plaintiff Javier to make payments because their accounts
have been long overdue; that on May 2, 1984, Defendant Bank sent another demand letter to Plaintiff spouses informing
them that since they have defaulted in paying their obligation, their mortgage will now be foreclosed; that when Plaintiffs
still failed to pay, Defendant Bank initiated extrajudicial foreclosure of the real estate mortgage executed by Plaintiff
spouses and accordingly the auction sale of the property covered by TCT No. 473216 was scheduled by the ExOfficio
Sheriff on May 9, 1984.[5]
The instant complaint was filed to forestall the extrajudicial foreclosure sale of a piece of land covered by Transfer
Certificate of Title (TCT) No. 473216[6] mortgaged by petitioner corporation in favor of First Summa Savings and
Mortgage Bank which bank was later renamed as PAIC Savings and Mortgage Bank, Inc.[7] It likewise asked for the
nullification of the Real Estate Mortgages it entered into with First Summa Savings and Mortgage Bank. The
supplemental complaint added several defendants who scheduled for public auction other real estate properties contained
in the same real estate mortgages and covered by TCTs No. N-5510, No. 426872, No. 506346 and Original Certificate of
Title No. 10146.[8]
Several extrajudicial foreclosures of the mortgaged properties were scheduled but were temporarily restrained by the RTC
notwithstanding the denial[9] of petitioners prayer for a writ of preliminary injunction. In an Order[10] dated 10
December 1990, the RTC ordered respondents-sheriffs to maintain the status quo and to desist from further proceeding
with the extrajudicial foreclosure of the mortgaged properties.
Among the issues raised by petitioners at the RTC are whether or not First Summa Savings and Mortgage Bank and PAIC
Savings and Mortgage Bank, Inc. are one and the same entity, and whether or not their obligation is already due and
demandable at the time respondent bank commenced to extrajudicially foreclose petitioners properties in April 1984.
The RTC declared that First Summa Savings and Mortgage Bank and PAIC Savings and Mortgage Bank, Inc. are one and
the same entity and that petitioner corporation is liable to respondent bank for the unpaid balance of its Industrial
Guarantee Loan Fund (IGLF) loans. The RTC further ruled that respondent bank was justified in extrajudicially
foreclosing the real estate mortgages executed by petitioner corporation in its favor because the loans were already due
and demandable when it commenced foreclosure proceedings in April 1984.
In its decision dated 06 July 1993, the RTC disposed of the case as follows:
Premises considered, judgment is hereby rendered dismissing the Complaint against Defendant Bank and ordering
Plaintiffs to pay Defendant Bank jointly and severally, the following:
1. The principal amount of P700,453.45 under P.N. No. 713 plus all the accrued interests, liquidated damages and
other fees due thereon from March 18, 1983 until fully paid as provided in said PN;
2. The principal amount of P749,879.38 under P.N. No. 841 plus all the accrued interests, liquidated damages and
other fees due thereon from September 1, 1982 until fully paid as provided in such PN;
3. The amount of P40,000.00 as actual damages;
4. The amount of P30,000.00 as exemplary damages;
5. The amount of P50,000.00 as attorneys fees; plus
6. Cost of suit.[11]
Petitioners filed a Motion for Reconsideration[12] which was opposed[13] by respondent bank. The motion was denied in
an Order dated 11 May 1994.
Petitioners appealed the decision to the Court of Appeals. The latter affirmed in toto the decision of the lower court. It
also denied petitioners motion for reconsideration.
Hence, this appeal by certiorari.
Petitioners assigned the following as errors:
a. PUBLIC RESPONDENT COURT GRAVELY ERRED WHEN IT SUSTAINED THE DISMISSAL OF
PETITIONERS COMPLAINT AND IN AFFIRMING THE RIGHT OF THE RESPONDENT BANK TO COLLECT
THE IGLF LOANS IN LIEU OF FIRST SUMMA SAVINGS AND MORTGAGE BANK WHICH ORIGINALLY
GRANTED SAID LOANS.
COROLLARY TO THE ABOVE ARGUMENT, THE PUBLIC RESPONDENT COURT ALSO GRAVELY ERRED
WHEN IT RULED THAT THE PETITIONERS CANNOT WITHHOLD THEIR PAYMENT TO THE RESPONDENT
BANK NOTWITHSTANDING THE ADMITTED INABILITY OF THE RESPONDENT BANK TO FURNISH THE
PETITIONERS THE SAID REQUESTED DOCUMENTS.
b. PUBLIC RESPONDENT COURT GRAVELY ERRED WHEN IT SUSTAINED THE COLLECTION OF THE
ENTIRE PROCEEDS OF THE IGLF LOANS OF P1,500,000.00 DESPITE THE FACT THAT THE P250,000.00 OF
THIS LOAN WAS WITHHELD BY THE FIRST SUMMA SAVINGS AND MORTGAGE BANK TO BECOME PART
OF THE COLLATERALS TO THE SAID P1,500,000.00 LOAN.
c. PUBLIC RESPONDENT COURT GRAVELY ERRED WHEN IT SUSTAINED THE DAMAGES AWARDED
TO THE RESPONDENT BANK DESPITE THE ABSENCE OF MALICE OR BAD FAITH ON THE PART OF THE
PETITIONERS IN FILING THIS CASE AGAINST THE RESPONDENT BANK.
On the first assigned error, petitioners argue that they are legally justified to withhold their amortized payments to the
respondent bank until such time they would have been properly notified of the change in the corporate name of First
Summa Savings and Mortgage Bank. They claim that they have never received any formal notice of the alleged change of
corporate name of First Summa Savings and Mortgage Bank to PAIC Savings & Mortgage Bank, Inc. They further claim
that the only and first time they received formal evidence of a change in the corporate name of First Summa Savings and
Mortgage Bank surfaced when respondent bank presented its witness, Michael Caguioa, on 03 April 1990, where he
presented the Securities and Exchange Commission (SEC) Certificate of Filing of the Amended Articles of Incorporation
of First Summa Savings and Mortgage Bank,[14] the Central Bank (CB) Certificate of Authority[15] to change the name
of First Summa Savings and Mortgage Bank to PAIC Savings and Mortgage Bank, Inc., and the CB Circular Letter[16]
dated 27 June 1983.
Their argument does not hold water. Their defense that they should first be formally notified of the change of corporate
name of First Summa Savings and Mortgage Bank to PAIC Savings and Mortgage Bank, Inc., before they will continue
paying their loan obligations to respondent bank presupposes that there exists a requirement under a law or regulation
ordering a bank that changes its corporate name to formally notify all its debtors. After going over the Corporation Code
and Banking Laws, as well as the regulations and circulars of both the SEC and the Bangko Sentral ng Pilipinas (BSP), we
find that there is no such requirement. This being the case, this Court cannot impose on a bank that changes its corporate
name to notify a debtor of such change absent any law, circular or regulation requiring it. Such act would be judicial
legislation. The formal notification is, therefore, discretionary on the bank. Unless there is a law, regulation or circular
from the SEC or BSP requiring the formal notification of all debtors of banks of any change in corporate name, such
notification remains to be a mere internal policy that banks may or may not adopt.
In the case at bar, though there was no evidence showing that petitioners were furnished copies of official documents
showing the First Summa Savings and Mortgage Banks change of corporate name to PAIC Savings and Mortgage Bank,
Inc., evidence abound that they had notice or knowledge thereof. Several documents establish this fact. First, letter[17]
dated 16 July 1983 signed by Raymundo V. Blanco, Accountant of petitioner corporation, addressed to PAIC Savings and
Mortgage Bank, Inc. Part of said letter reads: In connection with your inquiry as to the utilization of funds we obtained
from the former First Summa Savings and Mortgage Bank, . . . Second, Board Resolution[18] of petitioner corporation
signed by Pablo C. Javier, Sr. on 24 August 1983 authorizing him to execute a Chattel Mortgage over certain machinery
in favor of PAIC Savings and Mortgage Bank, Inc. Third, Secretarys Certificate[19] signed by Fortunato E. Gabriel,
Corporate Secretary of petitioner corporation, on 01 September 1983, certifying that a board resolution was passed
authorizing Mr. Pablo C. Javier, Sr. to execute a chattel mortgage on the corporations equipment that will serve as
collateral to cover the IGLF loan with PAIC Savings and Mortgage Bank, Inc. Fourth, undated letter[20] signed by Pablo
C. Javier, Sr. and addressed to PAIC Savings and Mortgage Bank, Inc., authorizing Mr. Victor F. Javier, General
Manager of petitioner corporation, to secure from PAIC Savings and Mortgage Bank, Inc. certain documents for his
signature.
From the foregoing documents, it cannot be denied that petitioner corporation was aware of First Summa Savings and
Mortgage Banks change of corporate name to PAIC Savings and Mortgage Bank, Inc. Knowing fully well of such
change, petitioner corporation has no valid reason not to pay because the IGLF loans were applied with and obtained from
First Summa Savings and Mortgage Bank. First Summa Savings and Mortgage Bank and PAIC Savings and Mortgage
Bank, Inc., are one and the same bank to which petitioner corporation is indebted. 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.[21] 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.[22]
Anent the second assigned error, this Court rules that respondent court did not err when it sustained the collection of the
entire proceeds of the IGLF loans amounting to P1,500,000.00 despite the withholding of P250,000.00 to become part of
the collaterals to the said P1,500,000.00 IGLF loan.
Petitioners contend that the collaterals they submitted were more than sufficient to cover the P1,500,000.00 IGLF
loan. Such contention is untenable. Petitioner corporation was required to place P250,000.00 in a time deposit with
respondent bank for the simple reason that the collateral it put up was insufficient to cover the IGLF loans it has
received. It admitted the shortfall of its collateral when it authorized petitioner Pablo C. Javier, Sr., via a board
resolution,[23] to execute a chattel mortgage over certain machinery in favor of PAIC Savings and Mortgage Bank, Inc.
which was certified by its corporate secretary.[24] If the collateral it put up was sufficient, why then did it execute another
chattel mortgage?
In his order dated 07 September 1984, Hon. Rafael T. Mendoza found that the loanable value of the lands, buildings,
machinery and equipment amounted only to P934,000.00. The order reads in part:
The terms and conditions of the IGLF loan extended to plaintiff corporation are governed by the loan and security
documents evidencing said loan. Although the loan agreement was approved by the defendant bank, the same has to be
processed and be finally approved by the Central Bank of the Philippines, in pursuance to the IGLF program, of which the
defendant bank is an accredited participant. The defendant had to await Central Banks advise (sic) regarding the final
approval of the loan before the release of the proceeds thereof. The proceeds of the loan was released to the plaintiff on 6
April and November 20, 1981, and the final proceeds was released only on November 20, 1981, on account of short fall in
the collateral covered by the lands and buildings as well as the machineries and equipment then subject of the existing
mortgages in favor of the defendant bank, having only a loanable value of P934,000.00, and only after a firm commitment
made by plaintiff corporation to the defendant bank to correct the collateral deficiency thru the execution of a chattel
mortgage on additional machineries, equipment and tools and thru the opening of a time deposit with PAIC Bank using a
portion of the loan proceeds in the amount of P250,000.00 to answer for its obligation to the defendant bank under the
IGLF loan was the final proceeds of the loan released in favor of the plaintiffs. The delay in the release of the final
proceeds of the IGLF loan was due to the aforestated collateral deficiency.[25]
As declared by the respondent court, the finding in said order was not disputed in the appeal before it. It said that what
was contained in petitioners brief was that their loans were overcollateralized, and fail to specify why or in what
manner it was so.[26] Having failed to raise this issue before the respondent court, petitioners thus cannot raise this issue
before this Court. Moreover, since the issue of whether or not the collateral put up by petitioners is sufficient is factual,
the same is not proper for this Courts consideration. The basic rule is that factual questions are beyond the province of
the Supreme Court in a petition for review.[27]
Petitioners maintain that to collect the P250,000.00 from them would be a clear case of unjust enrichment because they
have not availed or used said amount for the same was unlawfully withheld from them.
We do not agree. The fundamental doctrine of unjust enrichment is the transfer of value without just cause or
consideration. The elements of this doctrine are: enrichment on the part of the defendant; impoverishment on the part of
the plaintiff; and lack of cause. The main objective is to prevent one to enrich himself at the expense of another.[28] It is
commonly accepted that this doctrine simply means that a person shall not be allowed to profit or enrich himself
inequitably at another's expense.[29] In the instant case, there is no unjust enrichment to speak of. The amount of
P225,905.79 was applied as payment for petitioner corporations loan which was taken from the P250,000.00, together
with its accrued interest, that was placed in time deposit with First Summa Savings and Mortgage Bank. The use of said
amount as payment was approved by petitioner Pablo C. Javier, Sr. on 17 March 1983.[30] As further found by the RTC
in its decision, the balance of the time deposit was withdrawn by petitioners.[31]
Petitioner corporation faults respondent bank, then known as First Summa Savings and Mortgage Bank, for requiring it to
put up as additional collateral the amount of P250,000.00 inasmuch as the CB never required it to do so. It added that
respondent bank took advantage of its urgent and immediate need at the time for the proceeds of the IGLF loans that it
had no choice but to comply with respondent banks requirement to put in time deposits the said amount as additional
collateral.
We agree with respondent court that the questioning of the propriety of the placing of the P250,000.00 in time
deposits[32] with respondent bank as additional collateral was belatedly made. As above-discussed, the requirement to
give additional collateral was warranted because the collateral petitioner corporation put up failed to cover its IGLF
loans. If petitioner corporation was really bent on questioning the reasonableness of putting up the aforementioned
amount as additional collateral, it should have done immediately after it made the time deposits on 26 November
1981. This, it did not do. It questioned the placing of the time deposits only on 08 February 1984[33] or long after
defendant bank had already demanded full payment of the loans, then amounting to P2,045,401.79 as of 22 November
1983. It is too late in the day for petitioner corporation to question the placing of the P250,000.00 in time deposits after it
failed to pay its loan obligations as scheduled, making them due and demandable, and after a demand for full payment
has been made. We will not allow petitioner corporation to have ones cake and eat it too.
As regards the payments made by petitioner corporation, respondent court has this to say:
The trial court held, based on plaintiffs own exhibits, that plaintiff[s] made the following payments:
On Promissory Note No. 713:
Date
(Per PN Schedule)
Actual Date of
Payment
Amount

July 6, 1981 August 3, 1981 P 28,125.00
October 6, 1981 October 28, 1981 28,836.13
January 6, 1982 January 22, 1982 29,227.38
March 17, 1983 225,905.79
TOTAL P 312,094.30
And on Promissory Note No. 841:
Date
(Per PN Schedule)
Actual Date of
Payment
Amount

February 20, 1982 April 13, 1982 P 28,569.30
May 20, 1982 July 7, 1982 29,254.31
August 20, 1982 August 31, 1982 36,795.44
TOTAL P 94,619.05
Plaintiff-appellant[s] does not dispute the finding, which is obvious from the foregoing summary, that plaintiff[s] stopped
payments on March 17, 1983 on Promissory Note No. 713, and on August 31, 1982 on Promissory Note No. 841.
By simply looking at the amortization schedule attached to the two promissory notes, it is clear that plaintiff[s] already
defaulted on its loan obligations when the defendant Bank gave notice of the foreclosure proceedings on April 28,
1984. On amortization payments alone, plaintiff[s] should have paid a total of P459,339 as of April 6, 1984 on
Promissory [Note] No. 713, and a total of P328,173.00 as of February 20, 1984 on Promissory Note [No.] 841. No
extended computation is necessary to demonstrate that, even without imputing the liquidated damages equivalent to 2% a
month on the delayed payments (see second paragraph of the promissory notes), the plaintiffs were grossly deficient in
amortization payments, and already in default when the foreclosure proceedings were commenced. Further, we note that
under the terms of the promissory note, failure to pay an installment when due shall entitle the bank or its assign to
declare all the obligations as immediately due and payable (second paragraph).[34]
As to the third assigned error, petitioners argue that there being no malice or bad faith on their part when they filed the
instant case, no damages should have been awarded to respondent bank.
We cannot sustain such argument. The presence of malice or bad faith is very evident in the case before us. By the
documents it executed, petitioner corporation was well aware that First Summa Savings and Mortgage Bank changed its
corporate name to PAIC Savings and Mortgage Bank, Inc. Despite knowledge that First Summa Savings and Mortgage
Bank and PAIC Savings and Mortgage Bank, Inc., are one and the same entity, it pretended otherwise. It used this
purported ignorance as an excuse to renege on its obligation to pay its loans after they became due and after demands for
payment were made, claiming that it never obtained the loans from respondent bank.
No good faith was shown by petitioner corporation. If it were in good faith in complying with its loan obligations since it
believed that respondent bank had no right to the payment, it should have made a valid consignation in court. This, it did
not do. If petitioner corporation were at a loss as to who should receive the payment, it could have easily taken steps and
inquired from the SEC, CB of the Philippines or from the bank itself from which it received the loans and to where it
made previous payments. Further, the fact that it was respondent bank that was demanding payment for loans already due
and demandable and not First Summa Savings and Mortgage Bank is sufficient to make petitioner corporation wonder
why this is so. It never took any initiative to clear the matter. Instead, it paid no attention to the valid demands of
respondent bank.
The awarding of actual and compensatory damages, as well as attorneys fees, is justified under the circumstances. We
quote with approval the reasons given by the RTC for the grant of the same:
Considering that Defendant Bank had been prevented at least four (4) times from foreclosing the mortgages (i.e.,
Temporary Restraining Orders of May 9 and 19 and October 22, 1984 and status quo order of December 10, 1990
enjoining the extrajudicial foreclosure sales of May 9 and 16 and October 23, 1984 and December 20, 1990, respectively),
it is proper that Defendant Bank be reimbursed its actual expenses. The amount of P40,000.00 is reasonable
reimbursement for the publication and other expenses incurred in the four (4) extrajudicial foreclosures which were
enjoined by the Court. Considering the wanton and reckless filing of this clearly unfounded and baseless legal action and
the fact that Defendant Bank had to defend itself against such suit, attorneys fees in the amount of P50,000.00 should be
paid by the Plaintiffs to the Defendant Bank. Defendant Bank failed to adduce indubitable proof on the moral and
exemplary damages that it seeks. Nevertheless, since such proof is not absolutely necessary and primarily as an example
for the public good to deter others from filing a similar clearly unfounded legal action, Defendant Bank should be entitled
to an award of exemplary damages.[35]
This Court finds that petitioners failed to comply with what is incumbent upon them to pay their loans when they
became due. The lame excuse they belatedly advanced for their non-payment cannot and should not prevent respondent
bank from exercising its right to foreclose the real estate mortgages executed in its favor.
WHEREFORE, premises considered, the Court of Appeals decision dated 31 January 1997 and its resolution dated 20
June 1997 are hereby AFFIRMED in toto. Costs against petitioners.
SO ORDERED.