CORPORATION

LAW CASE DIGESTS

3C & 3S ATTY. CARLO BUSMENTE

INTERNATIONAL TRAVEL EXPRESS & TOURS INC. vs. CA recognized the juridical existence of the Federation. It rationalized that
G.R. No. 119002 October 19, 2000 since petitioner failed to prove that Henri Kahn guaranteed the
obligation of the Federation, he should not be held liable for the same
FACTS: as said entity has a separate and distinct personality from its officers.
On June 30 1989, petitioner International Express Travel and Tour
Services, Inc., through its managing director, wrote a letter to the ISSUE:
Philippine Football Federation (Federation), through its president WON Kahn is personally liable to the obligations of the corporation
private respondent Henri Kahn, wherein the former offered its services
as a travel agency to the latter. The offer was accepted. HELD:
The resolution of the case at bar hinges on the determination of the
Petitioner secured the airline tickets for the trips of the athletes and existence of the Philippine Football Federation as a juridical person. In
officials of the Federation to the South East Asian Games in Kuala the assailed decision, the appellate court recognized the existence of
Lumpur as well as various other trips to the People's Republic of China the Federation. In support of this, the CA cited Republic Act 3135,
and Brisbane. For the tickets received, the Federation made two partial otherwise known as the Revised Charter of the Philippine Amateur
payments. Athletic Federation, and Presidential Decree No. 604 as the laws from
which said Federation derives its existence.
Henri Kahn issued a personal check in the amount of P50,000 as partial
payment for the outstanding balance of the Federation. Thereafter, no As correctly observed by the appellate court, both R.A. 3135 and P.D.
further payments were made despite repeated demands. No. 604 recognized the juridical existence of national sports
associations. This may be gleaned from the powers and functions
This prompted petitioner to file a civil case before the Regional Trial granted to these associations. Section 14 of R.A. 3135 provides:
Court of Manila. Petitioner sued Henri Kahn in his personal capacity
and as President of the Federation and impleaded the Federation as an SEC. 14. Functions, powers and duties of Associations. - The National
alternative defendant Sports' Association shall have the following functions, powers and
duties:
Henri Kahn filed his answer with counterclaim. While not denying the
allegation that the Federation owed, representing the unpaid balance 1. To adopt a constitution and by-laws for their internal organization
for the plane tickets he averred that the petitioner has no cause of and government;
action against him either in his personal capacity or in his official 2. To raise funds by donations, benefits, and other means for their
capacity as president of the Federation. On the other hand, the purposes.
Federation failed to file its answer, hence, was declared in default by 3. To purchase, sell, lease or otherwise encumber property both real
the trial court. and personal, for the accomplishment of their purpose;
4. To affiliate with international or regional sports' Associations after
The trial court rendered judgment and ruled in favor of the petitioner due consultation with the executive committee;
and declared Henri Kahn personally liable for the unpaid obligation of
the Federation. In finding for Henri Kahn, the Court of Appeals
x x x

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13. To perform such other acts as may be necessary for the proper existence of the Federation. We cannot subscribe to the position taken
accomplishment of their purposes and not inconsistent with this Act. by the appellate court that even assuming that the Federation was
defectively incorporated, the petitioner cannot deny the corporate
The above powers and functions granted to national sports associations existence of the Federation because it had contracted and dealt with the
clearly indicate that these entities may acquire a juridical Federation in such a manner as to recognize and in effect admit its
personality. The power to purchase, sell, lease and encumber property existence. The doctrine of corporation by estoppel is mistakenly
are acts which may only be done by persons, whether natural or applied by the respondent court to the petitioner. The application of the
artificial, with juridical capacity. doctrine applies to a third party only when he tries to escape liability
on a contract from which he has benefited on the irrelevant ground of
It is a basic postulate that before a corporation may acquire juridical defective incorporation. In the case at bar, the petitioner is not trying to
personality, the State must give its consent either in the form of a escape liability from the contract but rather is the one claiming from
special law or a general enabling act. We cannot agree with the view of the contract.
the appellate court and the private respondent that the Philippine
Football Federation came into existence upon the passage of these LIM TONG LIM vs. PHILIPPINE FISHING GEARS INCORPORATED
laws. Nowhere can it be found in R.A. 3135 or P.D. 604 any provision G.R. No. 136448 November 3, 1999
creating the Philippine Football Federation.
FACTS:
Clearly the above cited provisions require that before an entity may be
Ocean Quest Fishing Corporation thru Antonio Chua and Peter Yao
considered as a national sports association, such entity must be
entered into a Contract for the purchase of fishing nets of various sizes
recognized by the accrediting organization, the Philippine Amateur
from the Philippine Fishing Gear Industries, Inc. They claimed that they
Athletic Federation under R.A. 3135, and the Department of Youth and
were engaged in a business venture with Petitioner Lim Tong Lim, who
Sports Development under P.D. 604. This fact of recognition, however,
however was not a signatory to the agreement. The total price of the
Henri Kahn failed to substantiate. In attempting to prove the juridical
nets amounted to P532,045. Four hundred pieces of floats worth
existence of the Federation, Henri Kahn attached to his motion for
P68,000 were also sold to the Corporation.
reconsideration before the trial court a copy of the constitution and by-

laws of the Philippine Football Federation. They were not
The buyers, however, failed to pay for the fishing nets and the floats;
accredited. Accordingly, we rule that the Philippine Football Federation
hence, private respondents filed a collection suit against Chua, Yao and
is not a national sports association within the purview of the
Petitioner Lim Tong Lim with a prayer for a writ of preliminary
aforementioned laws and does not have corporate existence of its own.
attachment. The suit was brought against the three in their capacities
Thus being said, it follows that private respondent Henry Kahn should
as general partners, on the allegation that "Ocean Quest Fishing
be held liable for the unpaid obligations of the unincorporated
Corporation" was a nonexistent corporation as shown by a Certification
Philippine Football Federation. It is a settled principal in corporation
from the Securities and Exchange Commission. The lower court issued
law that any person acting or purporting to act on behalf of a
a Writ of Preliminary Attachment, which the sheriff enforced by
corporation which has no valid existence assumes such privileges and
attaching the fishing nets on board F/B Lourdes which was then docked
becomes personally liable for contract entered into or for other acts
at the Fisheries Port, Navotas, Metro Manila.
performed as such agent. As president of the Federation, Henri Kahn is
presumed to have known about the corporate existence or non-

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During the public auction, Philippine Fishing Gear Industries won the authority on another to act in its behalf; thus, those who act or purport
bidding and deposited with the said court the sales proceeds of to act as its representatives or agents do so without authority and at
P900,000. their own risk.

RTC: Ruled that Philippine Fishing Gear Industries was entitled to the The doctrine of corporation by estoppel may apply to the alleged
Writ of Attachment and that Chua, Yao and Lim, as general partners, corporation and to a third party. In the first instance, an
were jointly liable to pay respondent. unincorporated association, which represented itself to be a
corporation, will be estopped from denying its corporate capacity in a
CA: Affirmed RTCs decision. suit against it by a third person who relied in good faith on such
representation. It cannot allege lack of personality to be sued to evade
ISSUE: its responsibility for a contract it entered into and by virtue of which it
WON under the doctrine of corporation by estoppel, liability can be received advantages and benefits. On the other hand, a third party who,
imputed only to Chua and Yao, and not to Lim. knowing an association to be unincorporated, nonetheless treated it as
a corporation and received benefits from it, may be barred from
HELD: denying its corporate existence in a suit brought against the alleged
NO. Sec. 21 of the Corporation Code of the Philippines provides: corporation. In such case, all those who benefited from the transaction
Sec. 21. Corporation by estoppel. All persons who made by the ostensible corporation, despite knowledge of its legal
assume to act as a corporation knowing it to be defects, may be held liable for contracts they impliedly assented to or
without authority to do so shall be liable as general took advantage of.
partners for all debts, liabilities and damages incurred
or arising as a result thereof: Provided however, That Unquestionably, petitioner benefited from the use of the nets found
when any such ostensible corporation is sued on any inside F/B Lourdes, the boat which has earlier been proven to be an
transaction entered by it as a corporation or on any asset of the partnership. He in fact questions the attachment of the nets,
tort committed by it as such, it shall not be allowed to because the Writ has effectively stopped his use of the fishing vessel.
use as a defense its lack of corporate personality. Clearly, under the law on estoppel, those acting on behalf of a
One who assumes an obligation to an ostensible corporation and those benefited by it, knowing it to be without valid
corporation as such, cannot resist performance existence, are held liable as general partners.
thereof on the ground that there was in fact no
corporation. REYNALDO LOZANO vs JUDGE ELEAZAR DELOS SANTOS
G.R. No. 125221 - June 19, 1997
A party may be estopped from denying its corporate existence even if
the ostensible corporate entity is proven to be legally nonexistent. FACTS:
Petitioner alleged that he was the president of the Kapatirang
An unincorporated association has no personality and would be Mabalacat-Angeles Jeepney Drivers' Association, Inc. (KAMAJDA) while
incompetent to act and appropriate for itself the power and attributes respondent Anda was the president of the Samahang Angeles-
of a corporation as provided by law; it cannot create agents or confer Mabalacat Jeepney Operators' and Drivers' Association, Inc.

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(SAMAJODA); Upon the request of the Sangguniang Bayan of Mabalacat,

Pampanga, petitioner and private respondent agreed to consolidate The first element requires that the controversy must arise out of
their respective associations and form the Unified Mabalacat-Angeles intracorporate or partnership relations between and among
Jeepney Operators' and Drivers' Association, Inc. (UMAJODA); stockholders, members, or associates; between any or all of them and
petitioner and private respondent also agreed to elect one set of the corporation, partnership or association of which they are
officers who shall be given the sole authority to collect the daily dues stockholders, members or associates, respectively; and between such
from the members of the consolidated association; elections were held corporation, partnership or association and the State in so far as it
and both petitioner and private respondent ran for president; concerns their individual franchises.
petitioner won; private respondent protested and, alleging fraud,
refused to recognize the results of the election; private respondent also The second element requires that the dispute among the parties be
refused to abide by their agreement and continued collecting the dues intrinsically connected with the regulation of the corporation,
from the members of his association despite several demands to desist. partnership or association or deal with the internal affairs of the
Petitioner was thus constrained to file the complaint to restrain private corporation, partnership or association.
respondent from collecting the dues and to order him to pay damages
in the amount of P25,000.00 and attorney's fees of P500.00. The jurisdiction of the Securities and Exchange Commission (SEC) is set
forth in Section 5 of Presidential Decree No. 902-A.. Section 5 reads as
Private respondent moved to dismiss the complaint for lack of follows:
jurisdiction, claiming that jurisdiction was lodged with the Securities
and Exchange Commission (SEC). The MCTC denied the MTD. It also "Section 5.. . . [T]he Securities and Exchange Commission [has] original
denied the reconsideration. Hence, Private respondent filed a petition and exclusive jurisdiction to hear and decide cases involving:
for certiorari before the Regional Trial Court, Branch 58, Angeles City. (a)Devices or schemes employed by or any acts of the board of
directors, business associates, its officers or partners, amounting to
The trial court found the dispute to be intracorporate, hence, subject to fraud and misrepresentation which may be detrimental to the interest
the jurisdiction of the SEC, and ordered the MCTC to dismiss Civil Case of the public and/or of the stockholders, partners, members of
No. 1214 accordingly. Respondent filed MFR but denied. associations or organizations registered with the Commission.

Hence this petition for certiorari for grave abuse. (b)Controversies arising out of intracorporate or partnership relations,
between and among stockholders, members or associates; between any
ISSUE: or all of them and the corporation, partnership or association of which
WON SEC has jurisdiction over the case. 2. WON there is a consolidation they are stockholders, members, or associates, respectively; and
between such corporation, partnership or association and the state
HELD: insofar as it concerns their individual franchise or right to exist as
The answer to both is No/none. This jurisdiction is determined by a such entity.
concurrence of two elements: (1) the status or relationship of the
parties; and (2) the nature of the question that is the subject of their (c)Controversies in the election or appointment of directors, trustees,
controversy. officers or managers of such corporations, partnerships or associations.

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(d)Petitions of corporations, partnerships or associations to be persons assume to form a corporation and exercise corporate functions
declared in the state of suspension of payments in cases where the and enter into business relations with third persons. Where there is no
corporation, partnership or association possesses sufficient property to third person involved and the conflict arises only among those
cover all its debts but foresees the impossibility of meeting them when assuming the form of a corporation, who therefore know that it has not
they respectively fall due or in cases where the corporation, been registered, there is no corporation by estoppel.
partnership or association has no sufficient assets to cover its liabilities,
but is under the management of a Rehabilitation Receiver or Petition granted.
Management Committee created pursuant to this Decree."
LYCEUM OF THE PHILIPPINES vs. CA
There is no intracorporate nor partnership relation between petitioner G.R. No. 101897 - March 5, 1993
and private respondent. The controversy between them arose out of
their plan to consolidate their respective jeepney drivers' and FACTS:
operators' associations into a single common association. This unified Lyceum of the Philippines (LP) commenced in the SEC a proceeding
association was, however, still a proposal. It had not been approved by against the Lyceum of Baguio, Inc. to require it to change its corporate
the SEC, neither had its officers and members submitted their articles name and to adopt another name not "similar [to] or identical" with
of consolidation in accordance with Sections 78 and 79 of the that of LP. Associate Commissioner Sulit held that the corporate name
Corporation Code. Consolidation becomes effective not upon mere of petitioner and that of the Lyceum of Baguio, Inc. were substantially
agreement of the members but only upon issuance of the certificate of identical because of the presence of a "dominant" word, i.e., "Lyceum,"
consolidation by the SEC. the name of the geographical location of the campus being the only
word which distinguished one from the other corporate name. The SEC
The KAMAJDA and SAMAJODA to which petitioner and private also noted that petitioner had registered as a corporation ahead of the
respondent belong are duly registered with the SEC, but these Lyceum of Baguio, Inc. in point of time, and ordered the latter to change
associations are two separate entities. The dispute between petitioner its name to another name "not similar or identical [with]" the names of
and private respondent is not within the KAMAJDA nor the SAMAJODA. previously registered entities.
It is between members of separate and distinct associations. Petitioner
and private respondent have no intracorporate relation much less do The Lyceum of Baguio, Inc. assailed the Order of the SEC before the
they have an intracorporate dispute. The SEC therefore has no Supreme Court. The Court, however, denied the Petition for Review for
jurisdiction over the complaint. lack of merit. Entry of judgment in that case was made.

The doctrine of corporation by estoppel is advanced by private Armed with the said resolution, LP wrote all the educational
respondent cannot override jurisdictional requirements. Jurisdiction is institutions it could find using the word "Lyceum" as part of their
fixed by law and is not subject to the agreement of the parties. It cannot corporate name, and advised them to discontinue such use of "Lyceum."
be acquired through or waived, enlarged or diminished by, any act or Subsequently, LP instituted before the SEC SEC-Case No. 2579 to
omission of the parties, neither can it be conferred by the acquiescence enforce what petitioner claims as its proprietary right to the word
of the court. Corporation by estoppel is founded on principles of equity "Lyceum." Furthermore, LP claimed that Lyceum" has acquired a
and is designed to prevent injustice and unfairness. It applies when secondary meaning in relation to LP with the result that that word,

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although originally a generic, has become appropriable by LP to the

exclusion of other institutions like private respondents. "Lyceum" is in fact as generic in character as the word "university." In
the name of the petitioner, "Lyceum" appears to be a substitute for
The SEC hearing officer rendered a decision sustaining petitioner's "university;" in other places, however, "Lyceum," or "Liceo" or "Lycee"
claim to an exclusive right to use the word "Lyceum." The hearing frequently denotes a secondary school or a college. It may be (though
officer relied upon the SEC ruling in the Lyceum of Baguio, Inc. case. this is a question of fact which we need not resolve) that the use of the
word "Lyceum" may not yet be as widespread as the use of "university,"
On appeal, however, the decision of the hearing officer was reversed but it is clear that a not inconsiderable number of educational
and set aside by SEC En Banc. It did not consider the word "Lyceum" to institutions have adopted "Lyceum" or "Liceo" as part of their
have become so identified with LP as to render use thereof by other corporate names. Since "Lyceum" or "Liceo" denotes a school or
institutions as productive of confusion about the identity of the schools institution of learning, it is not unnatural to use this word to designate
concerned in the mind of the general public. Unlike its hearing officer, an entity which is organized and operating as an educational
the SEC En Banc held that the attaching of geographical names to the institution.
word "Lyceum" served sufficiently to distinguish the schools from one
another, especially in view of the fact that the campuses of petitioner In addition, under the doctrine of secondary meaning, a word or phrase
and those of the private respondents were physically quite remote from originally incapable of exclusive appropriation with reference to an
each other. article in the market, because geographical or otherwise descriptive
might nevertheless have been used so long and so exclusively by one
Upon appeal, Court of Appeals affirmed the questioned Orders of the producer with reference to this article that, in that trade and to that
SEC En Banc. group of the purchasing public, the word or phrase has come to mean
that the article was his product. This circumstance has been referred to
ISSUE: as the distinctiveness into which the name or phrase has evolved
WON the other educational institutions shall be precluded from using through the substantial and exclusive use of the same for a
Lyceum in their corporate name pursuant to Section 18 of the considerable period of time. Consequently, the same doctrine or
Corporation Code. principle cannot be made to apply where the evidence did not prove
that the business (of the plaintiff) has continued for so long a time that
HELD: it has become of consequence and acquired a good will of considerable
No. We do not consider that the corporate names of private respondent value such that its articles and produce have acquired a well-known
institutions are "identical with, or deceptively or confusingly similar" to reputation, and confusion will result by the use of the disputed name
that of the LP. True enough, the corporate names of private respondent (by the defendant).
entities all carry the word "Lyceum", but confusion and deception are
effectively precluded by the appending of geographic names to the HALL vs. PICCIO
word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri" G.R. No. L-2598 - June 29, 1950
can be mistaken by the general public for the Lyceum of the Philippines,
or that the "Lyceum of Camalaniugan" would be confused with the FACTS:
Lyceum of the Philippines. On May 28, 1947, herein petitioners and the respondents Fred Brown,
Emma Brown, Hipolita D. Chapman and Ceferion S. Abella, signed and

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acknowledged in Leyte, the Article of Incorporation (AOI) of the Far dissolution thereof may only be ordered in a quo warranto proceeding
Eastern Lumber and Commercial Co., Inc., organized to engage in a instituted in accordance with section 19 of the Corporation Law.
general lumber business to carry on as general contractors, operators
and managers, etc. Attached to the article was an affidavit of the (b) Inasmuch as respondents Fred Brown and Emma Brown had signed
treasurer stating that 23,428 shares of stock had been subscribed and the article of incorporation but only a partnership.
fully paid with certain properties transferred to the corporation
described in a list appended thereto. ISSUE:
WON Sec. 19 of the Corporation Code applies on the premise that Far
Immediately after the execution of said articles of incorporation, the Eastern Lumber and Commercial Co. is a de facto corporation
corporation proceeded to do business with the adoption of by-laws and
the election of its officers. On December 2, 1947, the said AOI were filed HELD:
in the office of the Securities and Exchange Commissioner, for the The second proposition may at once be dismissed. All the parties are
issuance of the corresponding certificate of incorporation. informed that the Securities and Exchange Commission has not, so far,
issued the corresponding certificate of incorporation. All of them know,
On March 22, 1948, pending action on the AOI by the SEC, respondents or sought to know, that the personality of a corporation begins to exist
filed before the CFI of Leyte a civil case entitled "Fred Brown et al. vs. only from the moment such certificate is issued not before (sec. 11,
Arnold C. Hall et al.", alleging among other things that the Far Eastern Corporation Law).
Lumber and Commercial Co. was an unregistered partnership; that they
wished to have it dissolved because of bitter dissension among the The first proposition above stated is premised on the theory that,
members, mismanagement and fraud by the managers and heavy inasmuch as the Far Eastern Lumber and Commercial Co., is a de facto
financial losses. corporation, section 19 of the Corporation Law applies, and therefore
the court had no jurisdiction to take cognizance of said civil case
Defendants filed a motion to dismiss contesting the courts jurisdiction number 381. Section 19 reads as follows:
and the sufficiency of the cause of action. After hearing the parties, the
Hon. Edmund S. Piccio ordered the dissolution of the company; and at . . . The due incorporation of any corporations claiming in good faith to be
the request of plaintiffs, appointed the properties thereof, upon the a corporation under this Act and its right to exercise corporate powers
filing of a P20,000 bond. shall not be inquired into collaterally in any private suit to which the
corporation may be a party, but such inquiry may be had at the suit of the
The defendants therein (petitioners herein) offered to file a counter- Insular Government on information of the Attorney-General.
bond for the discharge of the receiver but public respondent refused to
accept. Whereupon, the present special civil action was instituted in There are least two reasons why this section does not govern the
this court. It is based upon two main propositions, to wit: situation. Not having obtained the certificate of incorporation, the Far
Eastern Lumber and Commercial Co. even its stockholders may
(a) The court had no jurisdiction in civil case No. 381 to decree the not probably claim "in good faith" to be a corporation.
dissolution of the company, because it being a de facto corporation,

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Under our statute it is to be noted (Corporation Law, sec. 11) that it is Petitioner INDUSTRIAL REFRACTORIES CORPORATION OF THE
the issuance of a certificate of incorporation by the Director of the PHILIPPINES (IRCP) on the other hand, was incorporated originally
Bureau of Commerce and Industry which calls a corporation into being. under the name "Synclaire Manufacturing Corporation." It amended its
The immunity if collateral attack is granted to corporations "claiming in Articles of Incorporation on August 23, 1985 to change its corporate
good faith to be a corporation under this act." Such a claim is name to"Industrial Refractories Corp. of the Philippines." It is engaged
compatible with the existence of errors and irregularities; but not with in the business of manufacturing all kinds of ceramics and other
a total or substantial disregard of the law. Unless there has been an products, except paints and zincs. Discovering that petitioner was using
evident attempt to comply with the law the claim to be a corporation such corporate name, respondent RCP filed on April 14, 1988 with the
"under this act" could not be made "in good faith." (Fisher on the Securities and Exchange Commission (SEC) a petition to compel
Philippine Law of Stock Corporations, p. 75. See also Humphreys vs. petitioner to change its corporate name on the ground that its
Drew, 59 Fla., 295; 52 So., 362.) corporate name is confusingly similar with that of petitioner's such that
the public may be confused or deceived into believing that they are one
Second, this is not a suit in which the corporation is a party. This is a and the same corporation. The SEC decided in favor of respondent RCP.
litigation between stockholders of the alleged corporation, for the
purpose of obtaining its dissolution. Even the existence of a de jure Petitioner appealed to the SEC En Banc, arguing that it does not have
corporation may be terminated in a private suit for its dissolution any jurisdiction over the case, and that respondent RCP has no right to
between stockholders, without the intervention of the state. the exclusive use of its corporate name as it is composed of generic or
common words. The SEC En Banc modified the appealed decision in
There might be room for argument on the right of minority that petitioner was ordered to delete or drop from its corporate name
stockholders to sue for dissolution; but that question does not affect the only the word "Refractories." Petitioner IRCP appealed the decision and
court's jurisdiction, and is a matter for decision by the judge, subject to the CA upheld the jurisdiction of the SEC over the case and ruled that
review on appeal. Which brings us to one principal reason why this the corporate names of petitioner IRCP and respondent RCP are
petition may not prosper, namely: the petitioners have their remedy by confusingly or deceptively similar, and that respondent RCP has
appealing the order of dissolution at the proper time. established its prior right to use the word "Refractories" as its
corporate name.

INDUSTRIAL REFRACTORIES CORPORATION OF
ISSUE:
THE PHILIPPINES vs. CA
WON the corporate name of petitioner and private respondent are
G.R. No. 122174 - October 3, 2002
confusingly or deceptively similar.


FACTS:
HELD:
Respondent Refractories Corporation of the Philippines (RCP) is a
Yes. Section 18 of the Corporation Code expressly prohibits the use of a
corporation is engaged in the business of manufacturing, producing,
corporate name which is "identical or deceptively or confusingly
selling, exporting and otherwise dealing in any and all refractory bricks,
similar to that of any existing corporation or to any other name already
its by-products and derivatives.
protected by law or is patently deceptive, confusing or contrary to

existing laws." The policy behind the foregoing prohibition is to avoid

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fraud upon the public that will have occasion to deal with the entity Anent the second requisite, in determining the existence of confusing
concerned, the evasion of legal obligations and duties, and the similarity in corporate names, the test is whether the similarity is such
reduction of difficulties of administration and supervision over as to mislead a person using ordinary care and discrimination and the
corporation. Pursuant thereto, the Revised Guidelines in the Approval Court must look to the record as well as the names themselves.
of Corporate and Partnership Names specifically requires that: (1) a Petitioner's corporate name is "Industrial Refractories Corp. of the
corporate name shall not be identical, misleading or confusingly similar Phils.," while respondent's is "Refractories Corp. of the Phils."
to one already registered by another corporation with the Commission; Obviously, both names contain the identical words "Refractories,"
and (2) if the proposed name is similar to the name of a registered firm, "Corporation" and "Philippines." The only word that distinguishes
the proposed name must contain at least one distinctive word different petitioner from respondent RCP is the word "Industrial" which merely
from the name of the company already registered. identifies a corporation's general field of activities or operations. We
need not linger on these two corporate names to conclude that they are
To fall within the prohibition of the law, two requisites must be proven, patently similar that even with reasonable care and observation,
to wit: confusion might arise. It must be noted that both cater to the same
clientele, i.e., the steel industry. In fact, the SEC found that there were
(1)that the complainant corporation acquired a prior right over the use instances when different steel companies were actually confused
of such corporate name; and between the two, especially since they also have similar product
packaging. Such findings are accorded not only great respect but even
(2)the proposed name is either: (a) identical, or (b) deceptively or finality, and are binding upon this Court, unless it is shown that it had
confusingly similar to that of any existing corporation or to any other arbitrarily disregarded or misapprehended evidence before it to such
name already protected by law; or (c) patently deceptive, confusing or an extent as to compel a contrary conclusion had such evidence been
contrary to existing law. properly appreciated. And even without such proof of actual confusion
between the two corporate names, it suffices that confusion is probable
As regards the first requisite, it has been held that the right to the or likely to occur.
exclusive use of a corporate name with freedom from infringement by
similarity is determined by priority of adoption. In this case, Refractory materials are described as follows:
respondent RCP was incorporated on October 13, 1976 and since then
has been using the corporate name "Refractories Corp. of the "Refractories are structural materials used at high temperatures to [sic]
Philippines." Meanwhile, petitioner was incorporated on August 23, industrial furnaces. They are supplied mainly in the form of brick of
1979 originally under the name "Synclaire Manufacturing Corporation." standard sizes and of special shapes. Refractories also include
It only started using the name "Industrial Refractories Corp. of the refractory cements, bonding mortars, plastic firebrick, castables,
Philippines" when it amended its Articles of Incorporation on August ramming mixtures, and other bulk materials such as dead-burned grain
23, 1985, or nine (9) years after respondent RCP started using its name. magneside, chrome or ground ganister and special clay."
Thus, being the prior registrant, respondent RCP has acquired the right
to use the word "Refractories" as part of its corporate name. While the word "refractories" is a generic term, its usage is not
widespread and is limited merely to the industry/trade in which it is

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3C & 3S ATTY. CARLO BUSMENTE

used, and its continuous use by respondent RCP for a considerable

period has made the term so closely identified with it. HELD:
YES. The controversy between petitioners and respondents involves
SEVENTHDAY ADVENTIST vs. NORTHEASTERN MINDANAO two supposed transfers of the lot previously owned by the spouses
G.R. No. 150416 July 21, 2006 Cosio: (1) a donation to petitioners alleged predecessors-in-interest in
1959 and (2) a sale to respondents in 1980. Donation is undeniably one
FACTS: of the modes of acquiring ownership of real property. Likewise,
The case involves a 1,069 sq. m. lot covered by Transfer Certificate of ownership of a property may be transferred by tradition as a
Title (TCT) No. 4468 in Bayugan, Agusan del Sur originally owned by consequence of a sale. Donation is an act of liberality whereby a person
Felix Cosio and his wife, Felisa Cuysona. On April 21, 1959, the spouses disposes gratuitously of a thing or right in favor of another person who
Cosio donated the land to the South Philippine Union Mission of accepts it. The donation could not have been made in favor of an entity
Seventh Day Adventist Church of Bayugan Esperanza, Agusan (SPUM- yet inexistent at the time it was made. Nor could it have been accepted
SDA Bayugan). The donation was allegedly accepted by one Liberato as there was yet no one to accept it.
Rayos, an elder of the Seventh Day Adventist Church, on behalf of the
donee. Twenty-one years later, however, on February 28, 1980, the The deed of donation was not in favor of any informal group of SDA
same parcel of land was sold by the spouses Cosio to the Seventh Day members but a supposed SPUM-SDA Bayugan (the local church) which,
Adventist Church of Northeastern Mindanao Mission (SDA-NEMM). TCT at the time, had neither juridical personality nor capacity to accept such
No. 4468 was thereafter issued in the name of SDA-NEMM. Claiming to gift. Declaring themselves a de facto corporation, petitioners allege that
be the alleged donees successors-in-interest, petitioners asserted they should benefit from the donation. But there are stringent
ownership over the property. This was opposed by respondents who requirements before one can qualify as a de facto corporation:
argued that at the time of the donation, SPUM-SDA Bayugan
could not legally be a done because, not having been incorporated
yet, it had no juridical personality. Neither were petitioners members A. the existence of a valid law under which
of the local church then, hence, the donation could not have been made it may be incorporated;
particularly to them. B. an attempt in good faith to incorporate;
and
On September 28, 1987, petitioners filed a case, (a suit for cancellation C. assumption of corporate powers.
of title, quieting of ownership and possession, declaratory relief and
reconveyance with prayer for preliminary injunction and damages), in While there existed the old Corporation Law (Act 1459), a law under
the RTC of Bayugan, Agusan del Sur. After trial, the trial court rendered which SPUM-SDA Bayugan could have been organized, there is no proof
a decision on November 20, 1992 upholding the sale in favor of that there was an attempt to incorporate at that time. The filing of
respondents. The CA affirmed the decision of RTC. articles of incorporation and the issuance of the certificate of
incorporation are essential for the existence of a de facto corporation.
ISSUE: We have held that an organization not registered with the Securities
Whether or not SDA-NEMMs ownership of the lot covered by TCT No. and Exchange Commission (SEC) cannot be considered a corporation in
4468 be upheld any concept, not even as a corporation de facto. Petitioners themselves

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 CORPORATION LAW CASE DIGESTS
3C & 3S ATTY. CARLO BUSMENTE

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.

Corporate existence begins only from the moment a certificate of
incorporation is issued. No such certificate was ever issued to
petitioners or their supposed predecessor-in-interest at the time of the
donation. Petitioners obviously could not have claimed succession to an
entity that never came to exist. Neither could the principle of separate
juridical personality apply since there was never any corporation to
speak of. And, as already stated, some of the representatives of
petitioner Seventh Day Adventist Conference Church of Southern
Philippines, Inc. were not even members of the local church then, thus,
they could not even claim that the donation was particularly for them.

In view of the foregoing, petitioners arguments anchored on their
supposed de facto status hold no water. There was no donation to
petitioners or their supposed predecessor-in-interest. On the other
hand, there is sufficient basis to affirm the title of SDA-NEMM.
Moreover, According to Art. 1477 of the Civil Code, the ownership of
the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. In the case at bar, the transfer of
ownership from the spouses Cosio to SDA-NEMM was made upon
constructive delivery of the property on February 28, 1980 when the
sale was made through a public instrument TCT No. 4468 was
thereafter issued and it remains in the name of SDA-NEMM.

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