ALCANAR, Bernalyn D.

Case Digests No. 3

Doctrine: By choosing to adopt a corporate entity as the medium to pursue

the joint venture enterprise, the parties to the joint venture are bound by
corporate law principles under which the entity must operate. Among these
principles is the limited liability doctrine. The use of a joint venture
corporation allows the co-venturers to take full advantage of the limited
liability feature of the corporate vehicle which is not present in a formal
partnership arrangement.

Case Title: Mabuhay Holdings Corp. vs. Sembcorp Logistics Limited,

GR. No. 212734, December 5, 2018 (J. Tijam)

Facts: On January 23, 1996, Mabuhay and IDHI incorporated Water Jet
Shipping Corporation (WJSC) in the Philippines to engage in the venture of
carrying passengers on a common carriage by inter-island fast ferry. On
February 5, 1996, they also incorporated Water Jet Netherlands Antilles,
N.Y. (WJNA) in Curasao, Netherlands.

On September 16, 1996, Mabuhay, IDHI, and Sembcorp entered into a

Shareholders' Agreement (Agreement) setting out the terms and conditions
governing their relationship in connection with a planned business expansion
of WJSC and WJNA. Sembcorp decided to invest in the said corporations.
As a result of Sembcorp's acquisition of shares, Mabuhay and IDHI's
shareholding percentage in the said corporations were reduced.

On November 26, 1999, Sembcorp requested for the payment of its

Guaranteed Return from Mabuhay and IDID. Mabuhay admitted its liability
but asserted that since the obligation is joint, it is only liable for fifty percent
(50%) of the claim or US$464,937.75.

Issue: Whether the laws on partnership is applicable to this case.

Held: No, the laws on partnership is not applicable to this case.

Mabuhay contends that it entered into a joint venture, which is akin to a
particular partnership, with Sembcorp. Applying the laws on partnership, the
payment of the Guaranteed Return to Sembcorp is a violation of Article 1799
of the Civil Code, as it shields the latter from sharing in the losses of the
partnership. Ergo, enforcement of the Final Award would be contrary to
public policy as it upholds a void stipulation.

Mabuhay's contention is bereft of merit. The joint venture between Mabuhay,

IDHI, and Sembcorp was pursued under the Joint Venture Corporations,
WJSC and WJNA. By choosing to adopt a corporate entity as the medium to
pursue the joint venture enterprise, the parties to the joint venture are bound
by corporate law principles under which the entity must operate. Among
these principles is the limited liability doctrine. The use of a joint venture
corporation allows the co-venturers to take full advantage of the limited
liability feature of the corporate vehicle which is not present in a formal
partnership arrangement. In fine, Mabuhay's application of Article 1799 is
erroneous.

WHEREFORE, the Petition is hereby DENIED. The November 19, 2013

Decision and the June 3, 2014 Resolution of the Court of Appeals in CA-
G.R. CV No. 92296 are AFFIRMED.
Doctrine: There are stringent requirements before one can qualify as a de
facto corporation:

(a) the existence of a valid law under which it may be incorporated;

(b) an attempt in good faith to incorporate; and
(c) assumption of corporate powers.

Case Title: Seventh Day Adventist Conference Church of Southern

Philippines, Inc. vs. Northeastern Mindanao Mission of Seventh Day
Adventist, Inc., GR. No. 150416, July 21, 2006 (J. Corona)

Facts: On April 21, 1959, the spouses Cosio donated a 1,069 sq. m. land to
the South Philippine Union Mission of Seventh Day Adventist Church of
Bayugan Esperanza, Agusan (SPUM-SDA Bayugan).

The donation was allegedly accepted by one Liberato Rayos, an elder of the
Seventh Day Adventist Church, on behalf of the donee.

Twenty-one years later, however, the same parcel of land was sold by the
spouses Cosio to the Seventh Day Adventist Church of Northeastern
Mindanao Mission (SDA-NEMM). TCT No. 4468 was thereafter issued in the
name of SDA-NEMM.

Claiming to be the alleged donee’s successors-in-interest, petitioners

asserted ownership over the property. This was opposed by respondents
who argued that at the time of the donation, SPUM-SDA Bayugan could not
legally be a donee because, not having been incorporated yet, it had no
juridical personality. Neither were petitioners members of the local church
then, hence, the donation could not have been made particularly to them.

RTC: Upheld the sale in favor of respondents.

CA: Affirmed the RTC decision but deleted the award of moral damages and
attorney’s fees.

Issue: Whether the donation to petitioners is valid.

Held: No, the donation to petitioners is void.

Donation is an act of liberality whereby a person disposes gratuitously of a

thing or right in favor of another person who accepts it. The donation could
not have been made in favor of an entity yet inexistent at the time it was
made. Nor could it have been accepted as there was yet no one to accept it.

The deed of donation was not in favor of any informal group of SDA members
but a supposed SPUM-SDA Bayugan (the local church) which, at the time,
had neither juridical personality nor capacity to accept such gift.

Declaring themselves a de facto corporation, petitioners allege that they

should benefit from the donation.

But there are stringent requirements before one can qualify as a de facto
corporation:

(a) the existence of a valid law under which it may be incorporated;

(b) an attempt in good faith to incorporate; and
(c) assumption of corporate powers.

While there existed the old Corporation Law (Act 1459), a law under which
SPUM-SDA Bayugan could have been organized, there is no proof that there
was an attempt to incorporate at that time.

The filing of articles of incorporation and the issuance of the certificate of

incorporation are essential for the existence of a de facto corporation. The
Court has held that an organization not registered with the Securities and
Exchange Commission (SEC) cannot be considered a corporation in any
concept, not even as a corporation de facto. Petitioners themselves admitted
that at the time of the donation, they were not registered with the SEC, nor
did they even attempt to organize to comply with legal requirements.

WHEREFORE, the petition is hereby DENIED.

Doctrine: The doctrine of corporation by estoppel applies when a non-
existent corporation enters into contracts or dealings with third persons. In
which case, the person who has contracted or otherwise dealt with the non-
existent corporation is estopped to deny the latter's legal existence in any
action leading out of or involving such contract or dealing. While the doctrine
is generally applied to protect the sanctity of dealings with the public, nothing
prevents its application in the reverse, in fact the very wording of the law
which sets forth the doctrine of corporation by estoppel permits such
interpretation. Such that a person who has assumed an obligation in favor of
a non-existent corporation, having transacted with the latter as if it was duly
incorporated, is prevented from denying the existence of the latter to avoid
the enforcement of the contract.

Case Title: Missionary Sisters of Our Lady of Fatima vs. Alzona, GR.
No. 224307, August 6, 2018 (J. Reyes, Jr.)

Facts: In October 1999, Purificacion called Mother Concepcion and handed

her a handwritten letter. Therein, Purificacion stated that she is donating her
house and lot at F. Mercado Street and Riceland at Banlic, both at Calamba,
Laguna, to the petitioner through Mother Concepcion. On the same
occasion, Purificacion introduced Mother Concepcion to her nephew,
Francisco Del Mundo, and niece, Ma. Lourdes Alzona Aguto-Africa.
Purificacion, instructed Francisco to give a share of the harvest to Mother
Concepcion, and informed Lourdes that she had given her house to Mother
Concepcion.

Sometime in August 2001, at the request of Purificacion, Mother Concepcion

went to see Atty. Nonato Arcillas (Atty. Arcillas) in Los Baños, Laguna.
During their meeting, Atty. Arcillas asked Mother Concepcion whether their
group is registered with the SEC, to which the latter replied in the negative.
Acting on the advice given by Atty. Arcillas, Mother Concepcion went to SEC
and filed the corresponding registration application on August 28, 2001.

On August 29, 2001, Purificacion executed a Deed of Donation Inter Vivos

(Deed) in favor of the petitioner, conveying her properties covered by TCT
Nos. T-67820 and T-162375, and her undivided share in the property
covered by TCT No. T-162380. The Deed was notarized by Atty. Arcillas and
witnessed by Purificacion's nephews Francisco and Diosdado Alzona, and
grandnephew, Atty. Fernando M. Alonzo. The donation was accepted on
even date by Mother Concepcion for and in behalf of the petitioner.

On October 30, 2001, Purificacion died without any issue, and survived only
by her brother of full blood, Amando, who filed a Complaint before the RTC,
seeking to annul the Deed executed between Purificacion and the petitioner,
on the ground that at the time the donation was made, the latter was not
registered with the SEC and therefore has no juridical personality and cannot
legally accept the donation.

RTC: Found no merit in the complaint.

CA: The Cout of Appeals partly granted the appeal and declared the deed
of donation as void.

Issue: Whether the petitioner may be considered a de facto corporation.

Held: No, the petitioner may not be considered a de facto corporation.

However, the doctrine of corporation by estoppel is applicable to this case.

Jurisprudence settled that the filing of articles of incorporation and the

issuance of the certificate of incorporation are essential for the existence of
a de facto corporation. In fine, it is the act of registration with SEC through
the issuance of a certificate of incorporation that marks the beginning of an
entity's corporate existence.

Petitioner filed its Articles of Incorporation and by-laws on August 28, 2001.
However, the SEC issued the corresponding Certificate of Incorporation only
on August 31, 2001, two (2) days after Purificacion executed a Deed of
Donation on August 29, 2001. Clearly, at the time the donation was made,
the Petitioner cannot be considered a corporation de facto.

Rather, a review of the attendant circumstances reveals that it calls for the
application of the doctrine of corporation by estoppel as provided for under
Section 21 of the Corporation Code.
The doctrine of corporation by estoppel applies when a non-existent
corporation enters into contracts or dealings with third persons. In which
case, the person who has contracted or otherwise dealt with the non-existent
corporation is estopped to deny the latter's legal existence in any action
leading out of or involving such contract or dealing. While the doctrine is
generally applied to protect the sanctity of dealings with the public, nothing
prevents its application in the reverse, in fact the very wording of the law
which sets forth the doctrine of corporation by estoppel permits such
interpretation. Such that a person who has assumed an obligation in favor of
a non-existent corporation, having transacted with the latter as if it was duly
incorporated, is prevented from denying the existence of the latter to avoid
the enforcement of the contract.

The doctrine of corporation by estoppel rests on the idea that if the Court
were to disregard the existence of an entity which entered into a transaction
with a third party, unjust enrichment would result as some form of benefit
have already accrued on the part of one of the parties. Thus, in that instance,
the Court affords upon the unorganized entity corporate fiction and juridical
personality for the sole purpose of upholding the contract or transaction.

In this case, while the underlying contract which is sought to be enforced is

that of a donation, and thus rooted on liberality, it cannot be said that
Purificacion, as the donor failed to acquire any benefit therefrom so as to
prevent the application of the doctrine of corporation by estoppel. To recall,
the subject properties were given by Purificacion, as a token of appreciation
for the services rendered to her during her illness. In fine, the subject deed
partakes of the nature of a remuneratory or compensatory donation, having
been made "for the purpose of rewarding the donee for past services, which
services do not amount to a demandable debt."

WHEREFORE, in consideration of the foregoing disquisitions, the instant

petition for review on certiorari is GRANTED. Accordingly, the Decision
dated January 7, 2016 and Resolution dated April 19, 2016 of the Court of
Appeals in CA-G.R. CV No. 101944, are hereby REVERSED and SET
ASIDE.
Doctrine: Sec. 6 of the Corporation Code provides for the situations where
non-voting shares like preferred shares are granted voting rights:

Where the articles of incorporation provide for non-voting shares in the cases
allowed by this Code, the holders of such shares shall nevertheless be
entitled to vote on the following matters:

1. Amendment of the articles of incorporation;

2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or
substantially all of the corporation property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or
other corporations;
7. Investment of corporate funds in another corporation or business in
accordance with this Code; and
8. Dissolution of the corporation.

Case Title: Philippine Coconut Producers Federation, Inc. vs. Republic,

GR. No. 177857-58, September 17, 2009 (J. Velasco, Jr.)

Facts:
COCOFED proposes to constitute a trust fund to be known as the "Coconut
Industry Trust Fund (CITF) for the Benefit of the Coconut Farmers," with
respondent Republic, acting through the Philippine Coconut Authority (PCA),
as trustee. As proposed, the constitution of the CITF shall be subject to terms
and conditions which, for the most part, reiterate the features of SMC’s
conversion offer, albeit specific reference is made to the shares of the 14
CIIF companies.

To the basic motion, respondent Republic filed its Comment questioning

COCOFED’s personality to seek the Court’s approval of the desired
conversion. Respondent Republic also disputes COCOFED’s right to impose
and prescribe terms and conditions on the proposed conversion, maintaining
that the CIIF SMC common shares are sequestered assets and are in
custodia legis under Presidential Commission on Good Government’s
(PCGG’s) administration. It postulates that, owing to the sequestrated status
of the said common shares, only PCGG has the authority to approve the
proposed conversion and seek the necessary Court approval. In this
connection, respondent Republic cites Republic v. Sandiganbayan3 where
the coconut levy funds were declared as prima facie public funds, thus
reinforcing its position that only PCGG, a government agency, can ask for
approval of the conversion.

On September 4, 2009, Jovito R. Salonga and four others sought leave to

intervene. Attached to the motion was their Comment/Opposition-in-
Intervention, asserting that "the government bears the burden of showing
that the conversion is indubitably advantageous to the public interest or will
result in clear and material benefit. Failure of the government to carry the
burden means that the current status of the sequestered stocks should be
maintained pending final disposition of G.R. Nos. 177857-58." They further
postulate that "even assuming that the proposal to convert the SMC shares
is beneficial to the government, it cannot pursue the exchange offer because
it is without power to exercise acts of strict dominion over the sequestered
shares." Lastly, they argue that "the proposed conversion x x x is not only
not advantageous to the public interest but is in fact positively
disadvantageous."

Issue: Whether the loss of four (4) board seats would prejudice the rights
and interests of the holders of the preferred shares.

Held: No, the loss of four (4) board seats would not prejudice the rights and
interests of the holders of the preferred shares.

Undoubtedly, the holders of preferred shares will have distinct advantages

over common shareholders.

By relinquishing its voting rights in the SMC Board through the conversion,
the government, it is argued, would be surrendering its final arsenal in
combating the maneuverings to frustrate the recovery of ill-gotten wealth. It
may, as feared, be rendered helpless in preventing an impending peril of a
"lurking dissipation."
This contention has no merit.

The mere presence of four (4) PCGG nominated directors in the SMC Board
does not mean it can prevent board actions that are viewed to fritter away
the company assets. Even under the status quo, PCGG has no controlling
sway in the SMC Board, let alone a veto power at 24% of the stockholdings.
In relinquishing the voting rights, the government, through PCGG, is not in
reality ceding control.

Moreover, PCGG has ample powers to address alleged strategies to thwart

recovery of ill-gotten wealth. Thus, the loss of voting rights has no significant
effect on PCGG’s function to recover ill-gotten wealth or prevent dissipation
of sequestered assets.

It is also not correct to say that the holders of the preferred shares lose all
their voting rights. Sec. 6 of the Corporation Code provides for the situations
where non-voting shares like preferred shares are granted voting rights:

xxxx

Where the articles of incorporation provide for non-voting shares in the

cases allowed by this Code, the holders of such shares shall
nevertheless be entitled to vote on the following matters:

1. Amendment of the articles of incorporation;

2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all
or substantially all of the corporation property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation
or other corporations;
7. Investment of corporate funds in another corporation or business in
accordance with this Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote
necessary to approve a particular corporate act as provided in this Code shall
be deemed to refer only to stocks with voting rights.

In addition, the holders of the preferred shares retain the right to dissent and
demand payment of the fair value of their shares.

Lastly, the preferred shares will be placed under sequestration and

management of PCGG. It has powers to protect and preserve the
sequestered preferred shares even if there are no government-nominated
directors in the SMC Board.

Thus, the loss of four (4) board seats would not in reality prejudice the rights
and interests of the holders of the preferred shares. And such loss is
compensated by the tremendous financial gains and benefits and enormous
protection from loss or deterioration of the value of the CIIF SMC shares.
The advantages accorded to the preferred shares are undeniable, namely:
the significant premium in the price being offered; the preference enjoyed in
the dividends as well as in the liquidation of assets; and the voting rights still
retained by preferred shares in major corporate actions. All things
considered, conversion to preferred shares would best serve the interests
and rights of the government or the eventual owner of the CIIF SMC shares.

It is likewise postulated that the dividends distributed to the common shares

may end up higher than 8% guaranteed to preferred shares. This assumption
is speculative. With the huge investments SMC poured into several big ticket
projects, it is unlikely that there will be much earnings left to be distributed to
common shareholders. And to reiterate, the decision to convert is best left to
the sound business discretion of the government agencies concerned.

WHEREFORE, the Court APPROVES the conversion of the 753,848,312

SMC Common Shares registered in the name of CIIF companies to SMC
SERIES 1 PREFERRED SHARES of 753,848,312, the converted shares to
be registered in the names of CIIF companies in accordance with the terms
and conditions specified in the conversion offer set forth in SMC’s
Information Statement and appended as Annex "A" of COCOFED’s Urgent
Motion to Approve the Conversion of the CIIF SMC Common Shares into
SMC Series 1 Preferred Shares. The preferred shares shall remain in
custodia legis and their ownership shall be subject to the final ownership
determination of the Court. Until the ownership issue has been resolved, the
preferred shares in the name of the CIIF companies shall be placed under
sequestration and PCGG management.
Doctrine: If anyone files a suit and can prove priority of adoption, he can
assert his right to the exclusive use of a corporate name with freedom from
infringement by similarity.

Case Title: Asia Pacific Resources International Holdings, Ltd. vs.

Paperone, Inc. GR. No. 213365-66, December 10, 2018 (J. Gesmundo)

Facts: Petitioner is engaged in the production, marketing, and sale of pulp

and premium wood free paper. It alleged that it is the owner of a well--known
trademark, PAPER ONE, with Certificate of Registration No. 4-1999-01957
issued on September 5, 2003.

Petitioner claimed that the use of PAPERONE in respondent's corporate

name without its prior consent and authority was done in bad faith and
designed to unfairly ride on its good name and to take advantage of its
goodwill.

Respondent, on its part, averred that it had no obligation to secure prior

consent or authority from petitioner to adopt and use its corporate name. The
Department of Trade and Industry (DTI) and the SEC had allowed it to use
Paperone, Inc., thereby negating any violation on petitioner's alleged prior
rights. Respondent was registered with the SEC, having been organized and
existing since March 30, 2001. Its business name was likewise registered
with the DTI.

BLA: The Bureau of Legal Affairs (BLA) Director, Intellectual Property Office,
found respondent liable for unfair competition.

IPO Director General: On appeal, the BLA decision was affirmed with
modification insofar as the increase in the award of attorney's fees to
P300,000.00.

CA: The Court of Appeals reversed and set aside the IPO Director General's
decision. It held that there was no confusing similarity in the general
appearance of the goods of both parties. Petitioner failed to establish through
substantial evidence that respondent intended to deceive the public or to
defraud petitioner.
Issue: Whether respondent is liable for unfair competition.

Held: Yes, respondent is liable for unfair competition.

The essential elements of an action for unfair competition are: (1) confusing
similarity in the general appearance of the goods, and (2) intent to deceive
the public and defraud a competitor. Unfair competition is always a question
of fact. At this point, it bears to stress that findings of fact of the highly
technical agency - the IPO - which has the expertise in this field, should have
been given great weight by the Court of Appeals.

It can easily be observed that both have the same spelling and are
pronounced the same. Although respondent has a different logo, it was
always used together with its trade name.

If anyone files a suit and can prove priority of adoption, he can assert his
right to the exclusive use of a corporate name with freedom from
infringement by similarity.

WHEREFORE, the petition is GRANTED. The November 28, 2013 Decision

and the July 9, 2014 Resolution of the: Court of Appeals in CA G.R. SP Nos.
122288 and 122535 are REVERSED and SET ASIDE. Accordingly, the
November 10, 2011 Decision of the Intellectual Property Office Director
General finding respondent liable for unfair competition is hereby
REINSTATED.
Doctrine: In determining the existence of confusing similarity in corporate
names, the test is whether the similarity is such as to mislead a person using
ordinary care and discrimination.

Case Title: De La Salle Montessori International Malolos, Inc. vs. De La

Salle Brothers, Inc. GR. No. 205548, February 7, 2018 (J. Jardeleza)

Facts: Petitioner reserved with the SEC its corporate name De La Salle
Montessori International Malolos, Inc. from June 4 to August 3, 2007, after
which the SEC indorsed petitioner's articles of incorporation and by-laws to
the Department of Education (DepEd) for comments and recommendation.
The DepEd returned the indorsement without objections. Consequently, the
SEC issued a certificate of incorporation to petitioner.

On January 29, 2010, respondents De La Salle Brothers, Inc., De La Salle

University, Inc., La Salle Academy, Inc., De La Salle-Santiago Zobel School,
Inc. (formerly De La Salle-South, Inc.), and De La Salle Canlubang, Inc.
(formerly De La Salle University-Canlubang, Inc.) filed a petition with the
SEC seeking to compel petitioner to change its corporate name.

SEC OGC: Issued an Order directing petitioner to change or modify its

corporate name.

SEC En Banc: Rendered a Decision affirming the Order of the SEC OGC.

CA: Rendered its Decision affirming the Order of the SEC OGC and the
Decision of the SEC En Banc in toto.

Issue: Whether the CA acted with grave abuse of discretion amounting to

lack or in excess of jurisdiction when it did not apply the doctrine laid down
in the case of Lyceum of the Philippines.

Held: No, the CA did not act with grave abuse of discretion.

A name is peculiarly important as necessary to the very existence of a

corporation. Its name is one of its attributes, an element of its existence, and
essential to its identity. The general rule as to corporations is that each
corporation must 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; and the right to use its corporate name is as much a part of the
corporate franchise as any other privilege granted.

To fall within the prohibition of Section 18, two requisites must be proven, to
wit: (1) that the complainant corporation acquired a prior right over the use
of such corporate name; and (2) the proposed name is either: (a) identical,
or (b) deceptively or confusingly similar to that of any existing corporation or
to any other name already protected by law; or (c) patently deceptive,
confusing or contrary to existing law.

With respect to the first requisite, the Court has held that the right to the
exclusive use of a corporate name with freedom from infringement by
similarity is determined by priority of adoption.

In this case, it id clear that respondents are the prior registrants, they
certainly have acquired the right to use the words "De La Salle" or "La Salle"
as part of their corporate names.

The second requisite is also satisfied since there is a confusing similarity

between petitioner's and respondents' corporate names. While these
corporate names are not identical, it is evident that the phrase "De La Salle"
is the dominant phrase used.

Finally, the Court's ruling in Lyceum of the Philippines does not apply.

In that case, the Court there held that the word "Lyceum" today generally
refers to a school or institution of learning. It is as generic in character as the
word "university."

Here, the phrase "De La Salle" is not generic in relation to respondents. It is

not descriptive of respondent's business as institutes of learning, unlike the
meaning ascribed to "Lyceum." Moreover, respondent De La Salle Brothers,
Inc. was registered in 1961 and the De La Salle group had been using the
name decades before petitioner's corporate registration. In contrast, there
was no evidence of the Lyceum of the Philippines, Inc.'s exclusive use of the
word "Lyceum," as in fact another educational institution had used the word
17 years before the former registered its corporate name with the SEC. Also,
at least nine other educational institutions included the word in their
corporate names. There is thus no similarity between the Lyceum of the
Philippines case and this case that would call for a similar ruling.

WHEREFORE, the Petition is DENIED. The assailed Decision of the CA

dated September 27, 2012 is AFFIRMED.
Doctrine: To fall within the prohibition of Section 18, two requisites must be
proven: (1) that the complainant corporation acquired a prior right over the
use of such corporate name; and (2) the proposed name is either: (a)
identical, or (b) deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law; or (c) patently
deceptive, confusing or contrary to existing law.

Case Title: Indian Chamber of Commerce Phils., Inc. vs. Filipino-Indian

Chamber of Commerce of the Philippines, Inc., GR. No. 184008, August
3, 2016 (J. Jardeleza)

Facts: Filipino-Indian Chamber of Commerce of the Philippines, Inc.

(defunct FICCPI) was originally registered with the SEC as Indian Chamber
of Commerce of Manila, Inc. On October 7, 1959, it amended its corporate
name into Indian Chamber of Commerce of the Philippines, Inc., and further
amended it into Filipino-Indian Chamber of Commerce of the Philippines, Inc.

Pursuant to its Articles of Incorporation, and without applying for an

extension of its corporate term, the defunct FICCPI's term of existence
expired on November 24, 2001.

On January 20, 2005, Mr. Naresh Mansukhani (Mansukhani) reserved the

corporate name "Filipino Indian Chamber of Commerce in the
Philippines, Inc." (FICCPI), for the period from January 20, 2005 to April 20,
2005, with the Company Registration and Monitoring Department (CRMD)
of the SEC. In an opposition letter dated April 1, 2005, Ram Sitaldas,
claiming to be a representative of the defunct FICCPI, alleged that the
corporate name has been used by the defunct FICCPI since 1951, and that
the reservation by another person who is not its member or representative is
illegal.

Issue: Whether there is similarity between the petitioner and the

respondent’s corporate name that would inevitably lead to confusion.

Held: Yes, there is similarity between the petitioner and the respondent’s
corporate name that would inevitably lead to confusion.
To fall within the prohibition of Section 18, two requisites must be proven: (1)
that the complainant corporation acquired a prior right over the use of such
corporate name; and (2) the proposed name is either: (a) identical, or (b)
deceptively or confusingly similar to that of any existing corporation or to any
other name already protected by law; or (c) patently deceptive, confusing or
contrary to existing law.

These two requisites are present in this case.

FICCPI was incorporated on March 14, 2006. On the other hand, ICCPI was
incorporated only on April 5, 2006, or a month after FICCPI registered its
corporate name. Thus, FICCPI, which was incorporated earlier, acquired a
prior right over the use of the corporate name.

When the term of existence of the defunct FICCPI expired on November 24,
2001, its corporate name cannot be used by other corporations within three
years from that date, until November 24, 2004. FICCPI reserved the name
"Filipino Indian Chamber of Commerce in the Philippines, Inc." on January
20, 2005, or beyond the three-year period. Thus, the SEC was correct when
it allowed FICCPI to use the reserved corporate name.

The second requisite in the Philips Export case likewise obtains in two
respects: the proposed name is (a) identical or (b) deceptively or confusingly
similar to that of any existing corporation or to any other name already
protected by law.

On the first point, ICCPI's name is identical to that of FICCPI. ICCPFs and
FICCPFs corporate names both contain the same words "Indian Chamber of
Commerce." ICCPI argues that the word "Filipino" in FICCPFs corporate
name makes it easily distinguishable from ICCPI. It adds that confusion and
deception are effectively precluded by appending the word "Filipino" to the
phrase "Indian Chamber of Commerce." Further, ICCPI claims that the
corporate name of FICCPI uses the words "in the Philippines" while ICCPI
uses only "Phils, Inc."

ICCPFs arguments are without merit. These words do not effectively

distinguish the corporate names. On the one hand, the word "Filipino" is
merely a description, referring to a Filipino citizen or one living in the
Philippines, to describe the corporation's members. On the other, the words
"in the Philippines" and "Phils., Inc." are simply geographical locations of the
corporations which, even if appended to both the corporate names, will not
make one distinct from the other. Under the facts of this case, these words
cannot be separated from each other such that each word can be considered
to add distinction to the corporate names. Taken together, the words in the
phrase "in the Philippines" and in the phrase "Phils. Inc." are synonymous—
they both mean the location of the corporation.

Thus, the CA is correct when it ruled, "[a]s correctly found by the SEC en
bane, the word 'Filipino' in the corporate name of the respondent [FICCPI] is
merely descriptive and can hardly serve as an effective differentiating
medium necessary to avoid confusion. The other two words alluded to by
petitioner [ICCPI] that allegedly distinguishes its corporate name from that of
the respondent are the words 'in' and 'the' in the respondent's corporate
name. To our mind, the presence of the words 'in' and 'the' in respondent's
corporate name does not, in any way, make an effective distinction to that of
petitioner."

Petitioner cannot argue that the combination of words in respondent's

corporate name is merely descriptive and generic, and consequently cannot
be appropriated as a corporate name to the exclusion of the others. Save for
the words "Filipino," "in the," and "Inc.," the corporate names of petitioner
and respondent are identical in all other respects.

Furthermore, the wholesale appropriation by petitioner of respondent's

corporate name cannot find justification under the generic word rule. A
contrary ruling would encourage other corporations to adopt verbatim and
register an existing and protected corporate name, to the detriment of the
public.

On the second point, ICCPI's corporate name is deceptively or confusingly

like that of FICCPI. It is settled that to determine the existence of confusing
similarity in corporate names, the test is whether the similarity is such as to
mislead a person, using ordinary care and discrimination. In so doing, the
court must examine the record as well as the names themselves. Proof of
actual confusion need not be shown. It suffices that confusion is probably or
likely to occur.

In this case, the overriding consideration in determining whether a person,

using ordinary care and discrimination, might be misled is the circumstance
that both ICCPI and FICCPI have a common primary purpose, that is, the
promotion of Filipino-Indian business in the Philippines.

WHEREFORE, the petition is DENIED. The Decision of the CA dated May

15, 2008 in CA-G.R. SP No. 97320 is hereby AFFIRMED.
Doctrine: Personal liability of a corporate director, trustee, or officer along
(although not necessarily) with the corporation may so validly attach, as a
rule, only when —

1. He assents (a) to a patently unlawful act of the corporation, or (b) for

bad faith or gross negligence in directing its affairs, or (c) for conflict of
interest, resulting in damages to the corporation, its stockholders or
other persons;
2. He consents to the issuance of watered stocks or who, having
knowledge thereof, does not forthwith file with the corporate secretary
his written objection thereto;
3. He agrees to hold himself personally and solidarily liable with the
corporation; or
4. He is made, by a specific provision of law, to personally answer for his
corporate action.

Case Title: Pioneer Insurance Surety Corp. vs. Morning Star Travel and
Tours, Inc., GR. No. 198436, July 8, 2015 (J. Leonen)

Facts: Morning Star and International Air Transport Association entered a

Passenger Sales Agency Agreement such that Morning Star must report all
air transport ticket sales to International Air Transport Association and
account all payments received through the centralized system called Billing
and Settlement Plan.

International Air Transport Association obtained a Credit Insurance Policy

from Pioneer to assure itself of payments by accredited travel agents for
ticket sales and monies due to the airline companies under the Billing and
Settlement Plan.

Pursuant to the credit insurance policies, International Air Transport

Association demanded from Pioneer the sums of P109,728,051.00 and
US$457,834.14 representing Morning Star’s overdue account as of April 30,
2003, which were paid by Pioneer.

Consequently, Pioneer demanded these amounts from Morning Star through

a letter dated September 23, 2003. International Air Transport Association
executed in Pioneer’s favor a Release of Claim and Subrogation Receipt on
December 23, 2003.

On November 10, 2005, Pioneer filed a Complaint for Collection of Sum of

Money and Damages against Morning Star and its shareholders and
directors.

RTC: The Regional Trial Court in its Decision ruled in favor of Pioneer and
ordered respondents to jointly and severally pay Pioneer.

CA: The Court of Appeals denied Pioneer’s Motion for Partial

Reconsideration.

Issue: Whether the doctrine of piercing the corporate veil applies to hold
the individual respondents solidarily liable with respondent Morning Star
Travel and Tours, Inc. to pay the award in favor of petitioner Pioneer
Insurance & Surety Corporation.

Held: No, the doctrine of piercing the corporate veil does not apply.

A separate corporate personality shields corporate officers acting in good

faith and within their scope of authority from personal liability except for
situations enumerated by law and jurisprudence.

Personal liability of a corporate director, trustee, or officer along (although

not necessarily) with the corporation may so validly attach, as a rule, only
when —

1. He assents (a) to a patently unlawful act of the corporation, or (b) for

bad faith or gross negligence in directing its affairs, or (c) for conflict of
interest, resulting in damages to the corporation, its stockholders or
other persons;
2. He consents to the issuance of watered stocks or who, having
knowledge thereof, does not forthwith file with the corporate secretary
his written objection thereto;
3. He agrees to hold himself personally and solidarily liable with the
corporation; or
 4. He is made, by a specific provision of law, to personally answer for his
corporate action.

Petitioner imputes gross negligence and bad faith on the part of the individual
respondents for incurring the huge indebtedness to International Air
Transport Association.

This court finds that petitioner was not able to clearly and convincingly
establish bad faith by the individual respondents, nor substantiate the
alleged badges of fraud.

WHEREFORE, the Petition is DENIED. The Court of Appeals Decision is

AFFIRMED with MODIFICATION in that legal interest is 6% per annum from
September 23, 2003 until fully paid.
Doctrine: Service must be made on a representative so integrated with the
corporation sued as to make it a priori supposable that he will realize his
responsibilities and know what he should do with any legal papers served on
him.

Case Title: Lee vs. Court of Appeals, GR. No. 93695, February 4, 1992
(J. Gutierrez Jr.)

Facts: On November 15, 1985, a complaint for a sum of money was filed by
the International Corporate Bank, Inc. against the private respondents who,
in turn, filed a third party complaint against ALFA and the petitioners.

Meanwhile, on July 12, 1988, the trial court issued an order requiring the
issuance of an alias summons upon ALFA through the DBP as a
consequence of the petitioner's letter informing the court that the summons
for ALFA was erroneously served upon them considering that the
management of ALFA had been transferred to the DBP.

In a manifestation, the DBP claimed that it was not authorized to receive

summons on behalf of ALFA since the DBP had not taken over the company
which has a separate and distinct corporate personality and existence.

The trial court issued an order advising the private respondents to take the
appropriate steps to serve the summons to ALFA.

The private respondents filed a Manifestation and Motion for the Declaration
of Proper Service of Summons which the trial court granted on August 17,
1988.

On September 12, 1988, the petitioners filed a motion for reconsideration

submitting that Rule 14, section 13 of the Revised Rules of Court is not
applicable since they were no longer officers of ALFA and that the private
respondents should have availed of another mode of service under Rule 14,
Section 16 of the said Rules, i.e., through publication to effect proper service
upon ALFA.
In their Comment to the Motion for Reconsideration, the private respondents
argued that the voting trust agreement dated March 11, 1981 did not divest
the petitioners of their positions as president and executive vice-president of
ALFA so that service of summons upon ALFA through the petitioners as
corporate officers was proper.

RTC: Upheld the validity of the service of summons on ALFA through the
petitioners, thus, denying the latter's motion for reconsideration and requiring
ALFA to filed its answer through the petitioners as its corporate officers.

Thereafter, the trial court reversed itself by setting aside its previous Order
and declared that service upon the petitioners who were no longer corporate
officers of ALFA cannot be considered as proper service of summons on
ALFA.

CA: Deciding the private respondents' petition for certiorari, the CA rendered
its decision setting aside the orders of the trial court and ordering ALFA to
file its answer within the reglementary period.

Issue: Whether the service of summons on ALFA effected through the

petitioners is valid.

Held: No, the service of summons on ALFA effected through the petitioners
is not valid.

Every director must own at least one (1) share of the capital stock of the
corporation of which he is a director which share shall stand in his name on
the books of the corporation. Any director who ceases to be the owner of at
least one (1) share of the capital stock of the corporation of which he is a
director shall thereby cease to be director.

The facts of this case show that the petitioners, by virtue of the voting trust
agreement executed in 1981 disposed of all their shares through assignment
and delivery in favor of the DBP, as trustee. Consequently, the petitioners
ceased to own at least one share standing in their names on the books of
ALFA as required under Section 23 of the Corporation Code. They also
ceased to have anything to do with the management of the enterprise. The
petitioners ceased to be directors. Hence, the transfer of the petitioners'
shares to the DBP created vacancies in their respective positions as
directors of ALFA.

Service must be made on a representative so integrated with the corporation

sued as to make it a priori supposable that he will realize his responsibilities
and know what he should do with any legal papers served on him.

The petitioners in this case do not fall under any of the enumerated officers.
The service of summons upon ALFA, through the petitioners, therefore, is
not valid. To rule otherwise, as correctly argued by the petitioners, will
contravene the general principle that a corporation can only be bound by
such acts which are within the scope of the officer's or agent's authority.

WHEREFORE, premises considered, the petition is hereby GRANTED. The

appealed decision dated March 19, 1990 and the Court of Appeals'
resolution of May 10, 1990 are SET ASIDE and the Orders dated April 25,
1989 and October 17, 1989 issued by the Regional Trial Court of Makati,
Branch 58 are REINSTATED.
Doctrine: Without the certification of the corporate secretary, it is incumbent
upon the other directors or stockholders as the case may be, to submit proof
that the minutes of the meeting is accurate and reflective of what transpired
during the meeting.

Case Title: Lopez Realty vs. Tanjangco, GR. No. 154291, November 12,
2014 (J. Reyes)

Facts: Lopez Realty, Inc. and Dr. Jose Tanjangco were the registered co-
owners of three parcels of land and the building erected thereon known as
the "Trade Center Building."

Jose’s one-half share in the subject properties were later transferred and
registered in the name of his son Reynaldo Tanjangco and daughter-in-law,
Maria Luisa Arguelles (spouses Tanjangco).

Except for Arturo and Teresita, the rest of the stockholders were members
of the Board of Directors. Asuncion was LRI’s Corporate Secretary.

It was finally agreed by the body that Asuncion F. Lopez will be given the
priority to accept equal the Tanjangco offer and the same to be exercised
within ten (10 accept) days. Failure on her part to act on the offer, the said
offer will be deemed accepted.

Asuncion failed to exercise her option to purchase the subject properties

within the stated period. Thus, on August 17, 1981, while Asuncion was
abroad, the remaining directors: Rosendo, Benjamin and Leo convened in a
special meeting, where, in a resolution, Arturo F. Lopez had been authorized
by the Board to immediately negotiate with the Tanjangcos on the matter of
the latter’s offer to purchase ½ of the Trade Center Building and in
connection there with he is given full power and authority by the Board to
carry out the complete termination of the sale terms and conditions as
embodied in the Resolution of July 27, 1981 and in connection therewith is
likewise authorized to sign for and in behalf of Lopez Realty Incorporated.
Upon learning of the above developments, Asuncion sent cablegrams to
Rosendo and Jose on August 25, 1981, requesting them not to proceed with
the sale.

The sale was ratified through the July 30, 1982 Board Resolution.

RTC: Finding the sale null and void, the trial court ruled that Arturo lacked
the authority to sell LRI’s interest on the subject properties to the spouses
Tanjangco on LRI’s behalf in view of the procedural infirmities which
attended the meeting held on August 17, 1981.

CA: The CA recognized Arturo’s authority to sell LRI’s interest on the subject
properties, holding that this Court had earlier declared the August 17, 1981
Board Resolution as valid in Lopez Realty, Inc. v. Fontecha.

The CA likewise ruled that whatever infirmity attended the August 17, 1981
Board Resolution was cured by ratification of the majority of the directors in
the joint stockholders and directors meeting held on July 30, 1982.

Issue: Whether the sale to the spouses Tanjangco is valid.

Held: Yes, the sale to the spouses Tanjangco is valid.

The general rule is that a corporation, through its board of directors, should
act in the manner and within the formalities, if any, prescribed by its charter
or by the general law. Thus, directors must act as a body in a meeting called
pursuant to the law or the corporation’s bylaws, otherwise, any action taken
therein may be questioned by any objecting director or shareholder.
However, the actions taken in such a meeting by the directors or trustees
may be ratified expressly or impliedly. Implied ratification may take various
forms — like silence or acquiescence, acts showing approval or adoption of
the act, or acceptance and retention of benefits flowing therefrom.

In the present case, the ratification was expressed through the July 30, 1982
Board Resolution.
The proper custodian of the books, minutes and official records of a
corporation is usually the corporate secretary. Being the custodian of
corporate records, the corporate secretary has the duty to record and
prepare the minutes of the meeting. The signature of the corporate secretary
gives the minutes of the meeting probative value and credibility.

Thus, without the certification of the corporate secretary, it is incumbent upon

the other directors or stockholders as the case may be, to submit proof that
the minutes of the meeting is accurate and reflective of what transpired
during the meeting. Conformably to the foregoing, in the absence of
Asuncion’s certification, only Juanito, Benjamin and Rosendo, whose
signatures appeared on the minutes, could be considered as to have ratified
the sale to the spouses Tanjangco.

Yet, notwithstanding the lack of Leo’s signature to prove that he indeed voted
in favor of the ratification, the results are just the same for he owns one share
of stock only. Pitted against the shares of the other stockholders who voted
in favor of ratification, Asuncion and Leo were clearly outvoted.

In sum, whatever defect there was on the sale to the spouses Tanjangco
pursuant to the August 17, 1981 Board Resolution, the same was cured
through its ratification in the July 30, 1982 Board Resolution. It is of no
moment whether Arturo was authorized to merely negotiate or to enter into
a contract of sale on behalf of LRI as all his actions in connection to the sale
were expressly ratified by the stockholders holding 67% of the outstanding
capital stock.

WHEREFORE, the instant petition is DENIED. The Decision dated February

22, 2002 of the Court of Appeals in CA-G.R. CV No. 63519 is hereby
AFFIRMED.
Doctrine: As the board exercises all corporate powers and authority
expressly vested upon it by law and by the corporations' by-laws, there are
minimum requirements set in order to be a director or trustee, one of which
is ownership of a share in one's name or membership in a non-stock
corporation.

Case Title: Lim vs. Moldex Land, Inc. GR. No. 206038, January 25, 2017
(J. Mendoza)

Facts: Lim is a registered unit owner of 1322 Golden Empire Tower, a

condominium project of Moldex Land, Inc., a real estate company engaged
in the construction and development of high-end condominium projects and
in the marketing and sale of the units thereof to the general public. Condocor,
a non-stock, non-profit corporation, is the registered condominium
corporation for the Golden Empire Tower. Lim, as a unit owner of Golden
Empire Tower, is a member of Condocor.

Lim claimed that the individual respondents are non-unit buyers, but all are
members of the Board of Directors of Condocor, having been elected during
its organizational meeting in 2008. They were again elected during the July
21, 2012 general membership meeting.

Moldex became a member of Condocor on the basis of its ownership of the

220 unsold units in the Golden Empire Tower. The individual respondents
acted as its representatives.

Issue: Can the individual respondents be elected as directors of Condocor?

Held: No, the individual respondents cannot be elected as directors of

Condocor.

The governance and management of corporate affairs in a corporation lies

with its board of directors in case of stock corporations, or board of trustees
in case of non-stock corporations. As the board exercises all corporate
powers and authority expressly vested upon it by law and by the
corporations' by-laws, there are minimum requirements set in order to be a
director or trustee, one of which is ownership of a share in one's name or
membership in a non-stock corporation.

While Moldex may rightfully designate proxies or representatives, the latter,

however, cannot be elected as directors or trustees of Condocor. First, the
Corporation Code clearly provides that a director or trustee must be a
member of record of the corporation. Further, the power of the proxy is
merely to vote. If said proxy is not a member in his own right, he cannot be
elected as a director or proxy.

Following Section 25 of the Corporation Code, the election of individual

respondents, as corporate officers, was likewise invalid.

Section 25 of the Corporation Code mandates that the President shall be a

director. As previously discussed, Jaminola could not be elected as a
director. Consequently, Jaminola's election as President was null and void.

The same provision allows the election of such other officers as may be
provided for in the by-laws. Condocor's By-Laws, however, require that the
Vice-President shall be elected by the Board from among its member-
directors in good standing, and the Secretary may be appointed by the Board
under the same circumstance. Like Jaminola, Milanes and Macalintal were
not directors and, thus, could not be elected and appointed as Vice-President
and Secretary, respectively.

Insofar as Roman's election as Treasurer is concerned, the same would

have been valid, as a corporate treasurer may or may not be a director of
the corporation's board. The general membership meeting of Condocor,
however, was null and void. As a consequence, Roman's election had no
legal force and effect.

In fine, the July 21, 2012 annual general membership meeting of Condocor
being null and void, all acts and resolutions emanating therefrom are likewise
null and void.
WHEREFORE, the petition is GRANTED. The March 4, 2013 Decision of the
Regional Trial Court, Branch 24, Manila, in Civil Case No. 12-128478 is
hereby REVERSED and SET ASIDE.