corpo case 10feb2016

7/25/2019 Corpo Case 10feb2016

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G.R. No. L-23606 July 29, 1968

ALHAMBRA CIGAR & CIGARETTE MANUFACTURING CM!AN",

INC.,petitioner,

vs.

#ECURITIE# & E$CHANGE CMMI##IN,respondent.

Gamboa and Gamboa for petitioner.

Office of the Solicitor General for respondent.

#ANCHE%, J.:

To the question May a corporation extend its life by amendment of its articles

of incorporation effected during the three-year statutory period for liquidation

when its original term of existence had already expired? the answer of theecurities and !xchange "ommissioner was in the negative. #ffshoot is this

appeal.

That problem emerged out of the following controlling facts$

%etitioner &lhambra "igar and "igarette Manufacturing "ompany, 'nc.

(hereinafter referred to simply asAlhambra) was duly incorporated under

%hilippine laws on *anuary +, ++. /y its corporate articles it was to exist for

fifty (0) years from incorporation. 'ts term of existence expired on *anuary +,+1. #n that date, it ceased transacting business, entered into a state of

liquidation.

Thereafter, a new corporation. &lhambra 'ndustries, 'nc. was formed to

carry on the business of &lhambra.

#n May +, +1, &lhambra2s stoc3holders, by resolution named &ngel .

4amboa trustee to ta3e charge of its liquidation.

#n *une 0, +15 within &lhambra2s three-year statutory period for liquidation

- 6epublic &ct 55+ was enacted into law. 't amended ection +7 of the

"orporation 8aw9 it empowered domestic private corporations to extend their

corporate life beyond the period fixed by the articles of incorporation for a term

not to exceed fifty years in any one instance. %revious to 6epublic &ct 55+, the

maximum non-extendible term of such corporations was fifty years.


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#n *uly +, +15, at a special meeting, &lhambra2s board of directors resolved to

amend paragraph :;ourth: of its articles of incorporation to extend its corporate

life for an additional fifty years, or a total of +00 years from its incorporation.

#n &ugust 1, +15, &lhambra2s stoc3holders, representing more than two-thirds

of its subscribed capital stoc3, voted to approve the foregoing resolution. The

:;ourth: paragraph of &lhambra2s articles of incorporation was thus altered to

read$

;#ority of its board ofdirectors, were filed with respondent ecurities and !xchange "ommission

(!").

#n ovember +7, +15, !", however, returned said amended articles of

incorporation to &lhambra2s counsel with the ruling that 6epublic &ct 55+ :which

too3 effect only on *une 0, +15, cannot be availed of by the said corporation,

for the reason that its term of existence had already expired when the said law

too3 effect in short, said law has no retroactive effect.:

#n @ecember 5, +15, &lhambra2s counsel sought reconsideration of !"2s

ruling aforesaid, refiled the amended articles of incorporation.

#n eptember 7, +1A, !", after a conference hearing, issued an order

denying the reconsideration sought.

&lhambra now invo3es the >urisdiction of this "ourt to overturn the conclusion

below.+

+. &lhambra relies on 6epublic &ct 55+, which amended ection +7 of the

"orporation 8aw. Bell it is to ta3e note of the old and the new statutes as they

are framed. ection +7, prior to and after its modification by 6epublic &ct 55+,

covers the sub>ect of amendment of the articles of incorporation of private

corporations. & provision thereof which remains unaltered is that a corporation

may amend its articles of incorporation :by a ma>ority vote of its board of


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directors or trustees and ... by the vote or written assent of the stoc3holders

representing at least two-thirds of the subscribed capital stoc3 ... :

/ut prior to amendment by 6epublic &ct 55+, an explicit prohibition existed in

ection +7, thus$

... Provided, however, That the life of said corporation shall not be

extended by said amendment beyond the time fixed in the original

articles$ ...

This was displaced by 6epublic &ct 55+ which enfranchises all private

corporations to extend their corporate existence. Thus incorporated into the

structure of ection +7 are the following$

... Provided, however, That should the amendment consist in extending thecorporate life, the extension shall not exceed fifty years in any one

instance$ %rovided, further, That the original articles, and amended articles

together shall contain all provisions required by law to be set out in the

articles of incorporation$ ...

&s we loo3 in retrospect at the facts, we find these$ ;rom *uly + to #ctober 7,

+15, when &lhambra made its attempt to extend its corporate existence, its

original term of fifty years had already expired (*anuary +, +1)9 it was in the

midst of the three-year grace period statutorily fixed in ection CC of the"orporation 8aw, thus$ .

!". CC. !very corporation whose charter expires by its own limitation or

is annulled by forfeiture or otherwise, or whose corporate existence for

other purposes is terminated in any other manner, shall nevertheless be

continued as a body corporate for three years after the time when it would

have been so dissolved, for the prpose of prosectin! and defendin!

sits by or a!ainst it and of enablin! it !radally to settle and close its

affairs, to dispose of and convey its property and to divide its capital stoc",bt not for the prpose of continin! the bsiness for which it was

established.

%lain from the language of the provision is its meaning$ continuance of a

:dissolved: corporation as a body corporate for three years has for its purpose

the final closure of its affairs, and no other#the corporation is specifically en>oined


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from :continuing the business for which it was established:. The liquidation of the

corporation2s affairs set forth in ection CC became necessary precisely because

its life had ended. ;or this reason alone, the corporate existence and >uridical

personality of that corporation to do business may no longer be extended.

Borth bearing in mind, at this >uncture, is the basic development of corporation

law.

The common law rule, at the beginning, was rigid and inflexible in that upon its

dissolution, a corporation became legally dead for all purposes. tatutory

authoriDations had to be provided for its continuance after dissolution :for limited

and specified purposes incident to complete liquidation of its affairs:.5Thus, the

moment a corporation2s right to exist as an :artificial person: ceases, its

corporate powers are terminated :>ust as the powers of a natural person to ta3e

part in mundane affairs cease to exist upon his death:.AThere is nothing left but

to conduct, as it were, the settlement of the estate of a deceased >uridical person.

. 6epublic &ct 55+, amending ection +7 of the "orporation 8aw, is silent, it is

true, as to when such act of extension may be made. /ut even with a superficial

3nowledge of corporate principles, it does not ta3e much effort to reach a correct

conclusion. ;or, implicit in ection CC heretofore quoted is that the privilege given

toprolon!corporate life under the amendment must be exercised before the

expiry of the term fixed in the articles of incorporation.

ilence of the law on the matter is not hard to understand. pecificity is not really

necessary. The authority to prolong corporate life was inserted by 6epublic &ct

55+ into a section of the law that deals with the power of a corporation

to amendits articles of incorporation. (;or, the manner of prolongation is through

an amendment of the articles.) &nd it should be clearly evident that under ection

CC no corporation in a state of liquidation can act in any way, much less amend

its articles, :for the purpose of continuing the business for which it was

established:.

&ll these dilute &lhambra2s position that it could revivify its corporate life simply

because when it attempted to do so, &lhambra was still in the process of

liquidation. 't is surely impermissible for us to stretch the law that merely

empowers a corporation to act in liquidation to in>ect therein the power to

extend its corporate existence.


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5. ot that we are alone in this view. ;letcher has written$ :ince the privilege of

extension is purely statutory, all of the statutory conditions precedent must be

complied with in order that the extension may be effectuated. &nd, generally

these conditions must be complied with, and the steps necessary to effect the

extension must be ta3en,drin! the life of the corporation, and before thee$piration of the term of e$istence as ori!inal fi$ed by its charter or the !eneral

law, since, as a rle, the corporation is ipso facto dissolved as soon as that time

e$pires.o where the extension is by amendment of the articles of

incorporation, the amendment mst be adopted before that time. &nd, similarly,

the filing and recording of a certificate of extension after that time cannot relate

bac3 to the date of the passage of a resolution by the stoc3holders in favor of the

extension so as to save the life of the corporation. The contrary is true, however,

and the doctrine of relation will apply, where the delay is due to the neglect of the

officer with whom the certificate is required to be filed, or to a wrongful refusal onhis part to receive it. &nd statutes in some states specifically provide that a

renewal may be had within a specified time before or after the time fixed for the

termination of the corporate existence:.

The logic of this position is well expressed in a foursquare case decided by the

"ourt of &ppeals of Eentuc3y.1There, pronouncement was made as follows$

... /ut section 1+ (section +AC) provides that, when any corporation

expires by the terms of its articles of incorporation, it may be thereafter

continued to act for the purpose of closing up its business, but for no other

purpose. The corporate life of the =ome /uilding &ssociation expired on

May 5, +0. &fter that date, by the mandate of the statute, it could

continue to act for the purpose of closing up its business, but for no other

purpose. The proposed amendment was not made until *anuary +1, +07,

or nearly three years after the corporation expired by the terms of the

articles of incorporation. %hen the corporate life of the corporation was

ended, there was nothin! to e$tend.=ere it was proposed nearly three

years after the corporate life of the association had expired to revivify thedead body, and to ma3e that relate bac3 some two years and eight

months. 'n other words, the association for two years and eight months

had only existed for the purpose of winding up its business, and, after this

length of time, it was proposed to revivify it and ma3e it a live corporation

for the two years and eight months daring which it had not been such.


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The law gives a certain length of time for the filing of records in this court,

and provides that the time may be extended by the court, but under this

provision it has uniformly been held that when the time was expired, there

is nothing to extend, and that the appeal must be dismissed... o, when

the articles of a corporation have expired, it is too late to adopt anamendment extending the life of a corporation9 for, the corporation having

expired, this is in effect to create a new corporation ...:C

True it is, that the &labama upreme "ourt has stated in one case. 7that a

corporation empowered by statute torenewits corporate existence may do so

even after the expiration of its corporate life, provided renewal is ta3en

advantage of within the extended statutory period for purposes of liquidation.

That ruling, however, is inherently wea3 as persuasive authority for the situation

at bar for at least two reasons$ &irst. That case was a suit for mandamus tocompel a former corporate officer to turn over boo3s and records that came into

his possession and control by virtue of his office. 't was there held that such

officer was obliged to surrender his boo3s and records even if the corporation

had already expired. The holding on the continued existence of the corporation

was a mere dictum. Second. &labama2s law is different. "orporations in that state

were authoriDed not only to extend but also to renewtheir corporate

existence.'hat very casedefined the word :renew: as follows9 :To ma3e new

again9 to restore to freshness9 to ma3e new spiritually9 to regenerate9 to begin

again9 to recommence9 to resume9 to restore to existence, to revive9 to re-establish9 to recreate9 to replace9 to grant or obtain an extension of Bebster2s

ew 'nternational @ict.9 5A "yc. +5509 arter v. roo"lyn *ife +ns. o., ++0 .F.

+, +, , +C .!. 519 A ".*. 5C. ec:.

#n this point, we again draw from ;letcher$ :There is a broad distinction between

the extension of a charter and the grant of a new one. To renew a charter is to

revive a charter which has expired, or, in other words, :to give a new existence to

one which has been forfeited, or which has lost its vitality by lapse of time:. To

:extend: a charter is :to increase the time for the existence of one which wouldotherwise reach its limit at an earlier period:.+0owhere in our statute ection

+7, "orporation 8aw, as amended by 6epublic &ct 55+ do we find the word

:renew: in reference to the authority given to corporations to protract their lives.

#ur law limits itself to e$tensionof corporate existence. &nd, as so understood,

extension may be made onlybefore the term provided in the corporate charter

expires.


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&lhambra draws attention to another case++which declares that until the end of

the extended period for liquidation, a dissolved corporation :does not become an

extinguished entity:. /ut this statement was obviously lifted out of context. That

case dissected the question whether or not suits can be commenced by or

against a corporation within its liquidation period. Bhich was answered in theaffirmative. ;or, the corporation still exists for the settlement of its affairs.

People, e$ rel. vs. Green,+also invo3ed by &lhambra, is as unavailing. There,

although the corporation amended its articles to extend its existence at a time

when it had no legal authority yet, it adopted the amended articles later on when

it had the power to extend its life and drin! its ori!inal term when it cold amend

its articles.

The foregoing notwithstanding, &lhambra falls bac3 on the contention that its

case is arguably within the purview of the law. 't says that before cessation of its

corporate life, it could not have extended the same, for the simple reason that

6epublic &ct 55+ had not then become law. 't must be remembered that

6epublic &ct 55+ too3 effect on *une 0, +15, while the original term of

&lhambra2s existence expired before that date on *anuary +, +1. The

mischief that flows from this theory is at once apparent. 't would certainly open

the gates for all defunct corporations whose charters have expired even long

before 6epublic &ct 55+ came into being to resuscitate their corporate

existence.

A. &lhambra brings into argument 6epublic &ct +5, which amends ection +1

of the 'nsurance &ct, now reading as follows$ -wph./t

!". +1. &ny provision of law to the contrary notwithstanding, every

domestic life insurance corporation, formed for a limited period under the

provisions of its articles of incorporation, may extend its corporate

existence for a period not exceeding fifty years in any one instance by

amendment to its articles of incorporation on or before the expiration of the

term so fixed in said articles ...

To be observed is that the foregoing statute unli3e 6epublic &ct 55+

expressly authoriDes domestic insurance corporations to extend their corporate

existence :on or before the expiration of the term: fixed in their articles of

incorporation. 6epublic &ct +5 was approved on *une , +C, long before


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the passage of 6epublic &ct 55+ in +15. "ongress, &lhambra points out, must

have been aware of 6epublic &ct +5 when it passed 6epublic &ct 55+. ince

the phrase :on or before:, etc., was omitted in 6epublic &ct 55+, which contains

no similar limitation, it follows, according to &lhambra, that it is not necessary to

extend corporate existence on or before the expiration of its original term.

That 6epublic &ct 55+ stands mute as to when extention of corporate existence

may be made, assumes no relevance. Be have already said, in the face of a

familiar precept, that a defunct corporation is bereft of any legal faculty not

otherwise expressly sanctioned by law.

'lluminating here is the explanatory note of =./. +CCA, later 6epublic &ct 55+

now in dispute. 'ts first paragraph states that :6epublic &ct o. +5 allows the

automatic extension of the corporate existence of domestic life insurance

corporations upon amendment of their articles of incorporation on or before the

expiration of the terms fixed by said articles:. The succeeding lines are decisive$

:This is a good law, a sane and sound one.'here appears to be no valid reason

why it shold not be made to apply to other private corporations.+5

The situation here presented is not one where the law under consideration is

ambiguous, where courts have to put in harness extrinsic aids such as a loo3 at

another statute to disentangle doubts. 't is an elementary rule in legal

hermeneutics that where the terms of the law are clear, no statutory construction

may be permitted.


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. &lhambra pleads for munificence in interpretation, one which brushes

technicalities aside. /ases for this posture are that 6epublic &ct 55+ is a

remedial statute, and that extension of corporate life is beneficial to the economy.

&lhambra2s stance does not induce assent. !xpansive construction is

possible only whenthere is something to expand. &t the time of the passage of

6epublic &ct 55+, &lhambra2s corporate life had already expired. 't had

overstepped the limits of its limited existence. o life there is to prolong.

/esides, a new corporation &lhambra 'ndustries, 'nc., with but slight change in

stoc3holdings+ has already been established. 'ts purpose is to carry on, and it

actually does carry on,+1the business of the dissolved entity. The beneficial-

effects argument is off the mar3.

The way the whole case shapes up then, the only possible drawbac3s of&lhambra might be that, instead of the new corporation (&lhambra 'ndustries,

'nc.) being written off, the old one (&lhambra "igar G "igarette Manufacturing

"ompany, 'nc.) has to be wound up9 and that the old corporate name cannot be

retained fully in its exact form.+CBhat is important though is that the

wordAlhambra,the name that counts Hit has goodwillI, remains.

;#6 T=! 6! 4'J!, the ruling of the ecurities and !xchange

"ommission of ovember +7, +15, and its order of eptember 7, +1A, both

here under review, are hereby affirmed.

"osts against petitioner &lhambra "igar G "igarette Manufacturing "ompany,

'nc. o ordered.

oncepcion, .1., 2eyes, 1..*., 3i4on, a"alintal, 6aldivar, astro, An!eles

and &ernando, 11., concr.

G.R. No. 96161 F'(u)(y 21, 1992

!HILI!# E$!RT B.*.,!HILI!# ELECTRICAL LAM!#,INC. )+ !HILI!#

INU#TRIAL E*EL!MENT, INC.,petitioners,

vs.


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CURT F A!!EAL#, #ECURITIE# & E$CHANGE CMMI##IN )+

#TANAR !HILI!# CR!RATIN,respondents.

7meterio 8. Soliven 9 Associates for petitioners.

:arciso A. anantan for private respondent.

MELENCI-HERRERA, J.:

%etitioners challenge the @ecision of the "ourt of &ppeals, dated 5+ *uly +0, in

"&-46 p. o. 001C, upholding the #rder of the ecurities and !xchange

"ommission, dated *anuary +0, in !"-&" o. 0, dismissing petitioners2

prayer for the cancellation or removal of the word :%='8'%: from privaterespondent2s corporate name.

%etitioner %hilips !xport /.J. (%!/J), aforeign corporation organiDed under the

lawsof the etherlands, although not engaged in business here,is theregistered

owner of the trademar3s %='8'% and%='8'% ='!8@ !M/8!M under

"ertificates of 6egistration os. 6-+1A+ and 6-+1CA, respectively issued by the

%hilippine %atents #ffice (presently 3nown as the /ureau of %atents, Trademar3s

and Technology Transfer). %etitioners %hilips !lectrical 8amps, 'nc. (%hilips

!lectrical, for brevity) and %hilips 'ndustrial @evelopments, 'nc. (%hilips 'ndustrial,for short), authoriDed users of the trademar3s %='8'% and %='8'% ='!8@

!M/8!M, were incorporated on &ugust +1 and May +1, respectively.

&ll petitioner corporations belong to the %='8'% 4roup of "ompanies.

6espondent tandard %hilips "orporation (tandard %hilips), on the other hand,

was issued a "ertificate of 6egistration by respondent "ommission on + May

+7.

#n A eptember +7A, %etitioners filed a letter complaint with the ecurities G

!xchange "ommission (!") as3ing for the cancellation of the word :%='8'%:

from %rivate 6espondent2s corporate name in view of the prior registration with

the /ureau of %atents of the trademar3 :%='8'%: and the logo :%='8'%

='!8@ !M/8!M: in the name of %etitioner, %!/J, and the previous registration

of %etitioners %hilips !lectrical and %hilips 'ndustrial with the !".


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&s a result of %rivate 6espondent2s refusal to amend its &rticles of 'ncorporation,

%etitioners filed with the !", on 1 ;ebruary +7, a %etition (!" "ase o.

CA5) praying for the issuance of a Brit of %reliminary 'n>unction, alleging,

among others, that %rivate 6espondent2s use of the word %='8'% amounts to an

infringement and clear violation of %etitioners2 exclusive right to use the sameconsidering that both parties engage in the same business.

'n its &nswer, dated C March +7, %rivate 6espondent countered that %etitioner

%!/J has no legal capacity to sue9 that its use of its corporate name is not at all

similar to %etitioners2 trademar3 %='8'% when considered in its entirety9 and that

its products consisting of chain rollers, belts, bearings and cutting saw are

grossly different from %etitioners2 electrical products.

&fter conducting hearings with respect to the prayer for 'n>unction9 the !"

=earing #fficer, on C eptember +7, ruled against the issuance of such Brit.

#n 50 *anuary +7C, the same =earing #fficer dismissed the %etition for lac3 of

merit. 'n so ruling, the latter declared that inasmuch as the !" found no

sufficient ground for the granting of in>unctive relief on the basis of the testimonial

and documentary evidence presented, it cannot order the removal or cancellation

of the word :%='8'%: from %rivate 6espondent2s corporate name on the basis of

the same evidence adopted in totoduring trial on the merits. /esides, ection +7

of the "orporation "ode (infra) is applicable only when the corporate names in

question are identical. =ere, there is no confusing similarity between %etitioners2

and %rivate 6espondent2s corporate names as those of the %etitioners contain at

least two words different from that of the 6espondent. %etitioners2 Motion for

6econsideration was li3ewise denied on +C *une +7C.

#n appeal, the !" en banc affirmed the dismissal declaring that the corporate

names of %etitioners and %rivate 6espondent hardly breed confusion inasmuch

as each contains at least two different words and, therefore, rules out any

possibility of confusing one for the other.

#n 50 *anuary +0, %etitioners sought an extension of time to file a %etition for

6eview on ertioraribefore this "ourt, which %etition was later referred to the

"ourt of &ppeals in a 6esolution dated + ;ebruary +0.

'n deciding to dismiss the petition on 5+ *uly +0, the "ourt of

&ppeals1swept aside %etitioners2 claim that following the ruling in onverse


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2bber orporation v. ;niversal onverse 2bber Prodcts, +nc., et al,(4. 6.

o. 8-C01, *anuary 7, +7C, +AC "6& +A), the word %='8'% cannot be

used as part of %rivate 6espondent2s corporate name as the same constitutes a

dominant part of %etitioners2 corporate names. 'n so holding, the &ppellate "ourt

observed that the onversecase is not four-square with the present caseinasmuch as the contending parties in onverseare engaged in a similar

business, that is, the manufacture of rubber shoes.


13/79

manner as the name of an individual designates the person ("incinnati

"ooperage "o. vs. /ate. 1 Ey 51, 1 B 579 ewport Mechanics Mfg. "o.

vs. tarbird. +0 = +5)9 and the right to use its corporate name is as much a

part of the corporate franchise as any other privilege granted (;ederal ecur. "o.

vs. ;ederal ecur. "orp., + #r 5C, C1 % ++00, 11 &86 5A9 %aulino vs.%ortuguese /eneficial &ssociation, +7 6' +1, 1 & 51).

& corporation acquires its name by choice and need not select a name identical

with or similar to one already appropriated by a senior corporation while an

individual2s name is thrust upon him (Seetandard #il "o. of ew Mexico, 'nc. v.

tandard #il "o. of "alifornia, 1 ; d C5, CC). & corporation can no more use

a corporate name in violation of the rights of others than an individual can use his

name legally acquired so as to mislead the public and in>ure another (&rmington

vs. %almer, + 6' +0. A & 507).

#ur own "orporation "ode, in its ection +7, expressly provides that$

o corporate name may be allowed by the ecurities and !xchange

"ommission if the proposed name is identical or deceptively or

confsin!ly similar to that of any e$istin! corporation or to any other

name already protected by law or is patently deceptive, confsin! or

contrary to e$istin! law.Bhere a change in a corporate name is

approved, the commission shall issue an amended certificate of

incorporation under the amended name. (!mphasis supplied)

The statutory prohibition cannot be any clearer. To come within its scope, two

requisites must be proven, namely$

(+) that the complainant corporation acquired a prior right over the use of such

corporate name9 and

() the proposed name is either$

(a) identical9 or

(b) deceptively or confusingly similar

to that of any existing corporation or to any other name already protected

by law9 or


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(c) patently deceptive, confusing or contrary to existing law.

The right to the exclusive use of a corporate name with freedom from

infringement by similarity is determined by priority of adoption (+ Thompson, p.

70 citin!Munn v. &mericana "o., 7 . !q. 15, 77 &tl. 509 an ;rancisco #yster

=ouse v. Mihich, C Bash. CA, +5A %ac. +). 'n this regard, there is no doubt

with respect to %etitioners2 prior adoption of2 the name 22%='8'%: as part of its

corporate name. %etitioners %hilips !lectrical and %hilips 'ndustrial were

incorporated on &ugust +1 and May +1, respectively, while

6espondent tandard %hilips was issued a "ertificate of 6egistration on + &pril

+7, twenty-six (1) years later (2ollo, p. +1). %etitioner %!/J has also used

the trademar3 :%='8'%: on electrical lamps of all types and their accessories

since 50 eptember +, as evidenced by "ertificate of 6egistration o. +1+.

The second requisite no less exists in this case. 'n 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. 'n so doing, the

"ourt must loo3 to the record as well as the names themselves (#hio at. 8ife

'ns. "o. v. #hio 8ife 'ns. "o., +0 ! d 7). Bhile the corporate names of

%etitioners and %rivate 6espondent are not identical, a reading of %etitioner2s

corporate names, to wit$ %='8'% !K%#6T /.J., %='8'% !8!"T6'"&8 8&M%,

'". and %='8'% '@


15/79

%!/J, :had shipped to its subsidiaries in the %hilippines equipment, machines

and their parts which fall under international class where :chains, rollers, belts,

bearings and cutting saw,: the goods in connection with which 6espondent is

see3ing to register 2T&@&6@ %='8'%2 . . . also belong: ( 'nter %artes "ase

o. 0+0, *une +C, +77, !" 2ollo).

;urthermore, the records show that among %rivate 6espondent2s primary

purposes in its &rticles of 'ncorporation (&nnex @, %etition p. 5C, 2ollo) are the

following$

To by, sell, barter, trade, manfactre, import, e$port, or otherwise

ac


16/79

intention to ride on the popularity and established goodwill of said petitioner2s

business throughout the world: (2ollo, p. +5C). The subsequent appropriator of

the name or one confusingly similar thereto usually see3s an unfair advantage, a

free ride of another2s goodwill (&merican 4old tar Mothers, 'nc. v. ational 4old

tar Mothers, 'nc., et al, 7 &pp @" 1, ++ ; d A77).

'n allowing %rivate 6espondent the continued use of its corporate name, the !"

maintains that the corporate names of %etitioners %='8'% !8!"T6'"&8

8&M%. '". and %='8'% '@unction upon a principle similar to that upon which persons are protected in

the use of trademar3s and tradenames (+7 ".*.. CA). uch principle proceeds

upon the theory that it is a fraud on the corporation which has acquired a right to

that name and perhaps carried on its business thereunder, that another should

attempt to use the same name, or the same name with a slight variation in such a

way as to induce persons to deal with it in the belief that they are dealing with the

corporation which has given a reputation to the name (1 ;letcher H%erm !dI, pp.

5-A0, citin!/orden 'ce "ream "o. v. /orden2s "ondensed Mil3 "o., +0 ; +0).

otably, too, %rivate 6espondent2s name actually contains only a single word,

that is, :T&@&6@:, different from that of %etitioners inasmuch as the inclusion

of the term :"orporation: or :"orp.: merely serves the %urpose of distinguishing

the corporation from partnerships and other business organiDations.


17/79

The fact that there are other companies engaged in other lines of business using

the word :%='8'%: as part of their corporate names is no defense and does not

warrant the use by %rivate 6espondent of such word which constitutes an

essential feature of %etitioners2 corporate name previously adopted and

registered and-having acquired the status of a well-3nown mar3 in the %hilippinesand internationally as well (/ureau of %atents @ecision o. 77-5 HTMI, *une +C,

+77, !" 6ecords).

'n support of its application for the registration of its &rticles of 'ncorporation with

the !", %rivate 6espondent had submitted an underta3ing :manifesting its

willingness to change its corporate name in the event another person, firm or

entity has acquired a prior right to the use of the said firm name or one

deceptively or confusingly similar to it.: %rivate respondent must now be held to

its underta3ing.

&s a general rule, parties organiDing a corporation must choose a

name at their peril9 and the use of a name similar to one adopted by

another corporation, whether a business or a nonbusiness or non-

profit organiDation if misleading and li3ely to in>ure it in the exercise

in its corporate functions, regardless of intent, may be prevented by

the corporation having the prior right, by a suit for in>unction against

the new corporation to prevent the use of the name (&merican 4old

tar Mothers, 'nc. v. ational 4old tar Mothers, 'nc., 7 &pp @"

1, ++ ; d A77, C &86 d A7).

B=!6!;#6!, the @ecision of the "ourt of &ppeals dated 5+ *uly +0, and its

6esolution dated 0 ovember +0, are !T &'@! and a new one entered

!*#''4 private respondent from using :%='8'%: as a feature of its

corporate name, and #6@!6'4 the ecurities and !xchange "ommission to

amend private respondent2s &rticles of 'ncorporation by deleting the word

%='8'% from the corporate name of private respondent.

o costs.

# #6@!6!@.

G.R. No. 11//6 F'(u)(y 2, 2000


18/79

MENANR B. LAUREAN,petitioner,

vs.

CURT F A!!EAL# AN #INGA!RE AIRLINE# LIMITE,respondents.

UI#UMBING, J.:

This petition for review on certiorariunder 6ule A of the 6ules of "ourt see3s to

reverse the @ecision of the "ourt of &ppeals, dated #ctober , +5, in ".&.

4.6. o. "J 5AAC1, as well as its 6esolution dated ;ebruary 7, +A, which

denied the motion for reconsideration.

The facts of the case as summariDed by the respondent appellate court are as

follows$

ometime in +C7, plaintiff HMenandro /. 8aureano, herein petitionerI, then@irector of ;light #perations and "hief %ilot of &ir Manila, applied for

employment with defendant company Hherein private respondentI through

its &rea Manager in Manila.

#n eptember 50, +C7, after the usual personal interview, defendant

wrote to plaintiff, offering a contract of employment as an expatriate /-C0C

captain for an original period of two () years commencing on *anuary +,

+C7. %laintiff accepted the offer and commenced wor3ing on *anuary 0,

+C. &fter passing the six-month probation period, plaintiffs appointmentwas confirmed effective *uly +, +C. (&nnex :/:, p. 50, 2ollo).

#n *uly +, +C, defendant offered plaintiff an extension of his two-year

contract to five () years effective *anuary +, +C to *anuary 0, +7A

sub>ect to the terms and conditions set forth in the contract of employment,

which the latter accepted (&nnex :": p. 5+, 6ec.).

@uring his service as /-C0C captain, plaintiff on &ugust A, +70, while in

command of a flight, committed a noise violation offense at the Lurich&irport, for which plaintiff apologiDed.(!xh. :5:, p. 50C, 6ec.).

ometime in +70, plaintiff featured in a tail scraping incident wherein the

tail of the aircraft scraped or touched the runway during landing. =e was

suspended for a few days until he was investigated by board headed by

"apt. "hoy. =e was reprimanded.


19/79

#n eptember , +7+, plaintiff was invited to ta3e a course of &-500

conversion training at &eroformacion, Toulouse, ;rance at dependant2s

expense. =aving successfully completed and passed the training course,

plaintiff was cleared on &pril C, +7+, for solo duty as captain of the &irbus

&-500 and subsequently appointed as captain of the &-500 fleetcommanding an &irbus &-500 in flights over outheast &sia. (&nnexes :@:,

:!: and :;:, pp. 5A-57, 6ec.).

ometime in +7, defendant, hit by a recession, initiated cost-cutting

measures. eventeen (+C) expatriate captains in the &irbus fleet were

found in excess of the defendant2s requirement (t.s.n., *uly 1, +77. p. ++).

"onsequently, defendant informed its expatriate pilots including plaintiff of

the situation and advised them to ta3e advance leaves. (!xh. :+:, p. A11,

6ec.)

6ealiDing that the recession would not be for a short time, defendant

decided to terminate its excess personnel (t.s.n., *uly 1, +77, p. +C). 't did

not, however, immediately terminate it2s &-500 pilots. 't reviewed their

qualifications for possible promotion to the /-CAC fleet. &mong the +C

excess &irbus pilots reviewed, twelve were found qualified.


20/79

&gain, defendant on ;ebruary ++, +7C filed a motion to dismiss

alleging inter alia$ (+) that the court has no >urisdiction over the sub>ect

matter of the case, and () that %hilippine courts have no >urisdiction over

the instant case. @efendant contends that the complaint is for illegal

dismissal together with a money claim arising out of and in the course ofplaintiffs employment :thus it is the 8abor &rbiter and the 86" who have

the >urisdiction pursuant to &rticle +C of the 8abor "ode: and that, since

plaintiff was employed in ingapore, all other aspects of his employment

contract andor documents executed in ingapore. Thus, defendant

postulates that ingapore laws should apply and courts thereat shall have

>urisdiction. (pp. 0-1, 6ec.).

'n traversing defendant2s arguments, plaintiff claimed that$ (+) where the

items demanded in a complaint are the natural consequences flowing froma breach of an obligation and not labor benefits, the case is intrinsically a

civil dispute9 () the case involves a question that is beyond the field of

specialiDation of labor arbiters9 and (5) if the complaint is grounded not on

the employee2s dismissalper sebut on the manner of said dismissal and

the consequence thereof, the case falls under the >urisdiction of the civil

courts. (pp. C0-C5, 6ec.)

#n March 5, +7C, the court a udgment is hereby rendered in favor of plaintiff Menandro

8aureano and against defendant ingapore &irlines 8imited, ordering

defendant to pay plaintiff the amounts of


21/79

'N51,+0A.00, or its equivalent in %hilippine currency at the current rate

of exchange at the time of payment, as and for unearned compensation

with legal interest from the filing of the complaint until fully paid9

'N+A,CA.00, or its equivalent in %hilippine currency at the current rate

of exchange at the time of payment9 and the further amounts of

%1C,00.00 as consequential damages with legal interest from the filing of

the complaint until fully paid9

%+,000,000.00 as and for moral damages9 %+,000,000.00 as and for

exemplary damages9 and %+00,000.00 as and for attorney2s fees.

"osts against defendant.

# #6@!6!@.

ingapore &irlines timely appealed before the respondent court and raised the

issues of >urisdiction, validity of termination, estoppel, and damages.

#n #ctober , +5, the appellate court set aside the decision of the trial court,

thus,

. . . 'n the instant case, the action for damages due to illegal termination

was filed by plaintiff-appellee only on *anuary 7, +7C or more than four (A)years after the effectivity date of his dismissal on ovember +, +7.

"learly, plaintiff-appellee2s action has already prescribed.

B=!6!;#6!, the appealed decision is hereby 6!J!6!@ and !T

&'@!. The complaint is hereby dismissed.

# #6@[email protected]

%etitioner2s and ingapore &irlines2 respective motions for reconsideration were

denied.

ow, before the "ourt, petitioner poses the following queries$

+. ' T=! %6!!T &"T'# #! /&!@ # "#T6&"T B='"=

%6!"6'/! ' T! F!&6


22/79

#; T=! %8&'T';; B='"= %6!"6'/! ' ;#urisdiction by the 6egional Trial "ourt of Manila, /ranch . The trial court rightly

ruled on the application of %hilippine law, thus$

either can the "ourt determine whether the termination of the plaintiff islegal under the ingapore 8aws because of the defendant2s failure to show

which specific laws of ingapore 8aws apply to this case. &s substantially

discussed in the preceding paragraphs, the %hilippine "ourts do not ta3e

>udicial notice of the laws of ingapore. The defendant that claims the

applicability of the ingapore 8aws to this case has the burden of proof.

The defendant has failed to do so. Therefore, the %hilippine law should be

applied.A

6espondent "ourt of &ppeals acquired >urisdiction when defendant filed itsappeal before said court.#n this matter, respondent court was correct when it

barred defendant-appellant below from raising further the issue of >urisdiction.1

%etitioner now raises the issue of whether his action is one based on &rticle ++AA

or on &rticle ++A1 of the "ivil "ode. &ccording to him, his termination of

employment effective ovember +, +7, was based on an employment contract

which is under &rticle ++AA, so his action should prescribe in +0 years as

provided for in said article. Thus he claims the ruling of the appellate court based

on &rticle ++A1 where prescription is only four (A) years, is an error. The appellatecourt concluded that the action for illegal dismissal originally filed before the

8abor &rbiter on *une , +75, but which was withdrawn, then filed again in

+7C before the 6egional Trial "ourt, had already prescribed.

'n our view, neither &rticle ++AACnor &rticle ++A17of the "ivil "ode is here

pertinent. Bhat is applicable is &rticle + of the 8abor "ode, vi4$


23/79

&rt. +. oney claims. &ll money claims arising from employee-

employer relations accruing during the effectivity of this "ode shall be filed

within three (5) years from the time the cause of action accrued9 otherwise

they shall be forever barred.

x x x x x x x x x

Bhat rules on prescription should apply in cases li3e this one has long been

decided by this "ourt. 'n illegal dismissal, it is settled, that the ten-year

prescriptive period fixed in &rticle ++AA of the "ivil "ode may not be invo3ed by

petitioners, for the "ivil "ode is a law of general application, while the

prescriptive period fixed in &rticle of the 8abor "ode Hnow &rticle +I is a

%!"'&8 8&B applicable to claims arising from employee-employer relations.

More recently in 3e G4man vs. ort of Appeals,+0where the money claim wasbased on a written contract, the "ollective /argaining &greement, the "ourt held$

. . . The language of &rt. + of the 8abor "ode does not limit its

application only to :money claims specifically recoverable under said

"ode: but covers all money claims arising from an employee-employer

relations: ("iting "adalin v. %#!& &dministrator, 57 "6& C+, C1A

H+AI9 and


24/79

years after the effectivity date of his dismissal on ovember +, +7.

"learly, plaintiff-appellee2s action has already prescribed.

Be base our conclusion not on &rticle ++AA of the "ivil "ode but on which sets

the prescription period at three (5) years and which governs under this

>urisdiction.

%etitioner claims that the running of the prescriptive period was tolled when he

filed his complaint for illegal dismissal before the 8abor &rbiter of the ational

8abor 6elations "ommission. =owever, this claim deserves scant consideration9

it has no legal leg to stand on. 'n Olympia +nternational, +nc., vs., ort of

Appeals, we held that :although the commencement of a civil action stops the

running of the statute of prescription or limitations, its dismissal or voluntary

abandonment by the plaintiff leaves in exactly the same position as though no

action had been commenced at all.:+

ow, as to whether petitioner2s separation from the company due to

retrenchment was valid, the appellate court found that the employment contract

of petitioner allowed for pre-termination of employment. Be agree with the "ourt

of &ppeals when it said,

't is a settled rule that contracts have the force of law between the parties.

;rom the moment the same is perfected, the parties are bound not only to

the fulfillment of what has been expressly stipulated but also to allconsequences which, according to their nature, may be in 3eeping with

good faith, usage and law. Thus, when plaintiff-appellee accepted the offer

of employment, he was bound by the terms and conditions set forth in the

contract, among others, the right of mutual termination by giving three

months written notice or by payment of three months salary. uch

provision is clear and readily understandable, hence, there is no room for

interpretation.

x x x x x x x x x

;urther, plaintiff-appellee2s contention that he is not bound by the

provisions of the &greement, as he is not a signatory thereto, deserves no

merit. 't must be noted that when plaintiff-appellee2s employment was

confirmed, he applied for membership with the ingapore &irlines 8imited

(%ilots) &ssociation, the signatory to the aforementioned &greement. &s


25/79

such, plaintiff-appellee is estopped from questioning the legality of the said

agreement or any proviso contained therein.+5

Moreover, the records of the present case clearly show that respondent court2s

decision is amply supported by evidence and it did not err in its findings,

including the reason for the retrenchment$

Bhen defendant-appellant was faced with the world-wide recession of the

airline industry resulting in a slow down in the company2s growth

particularly in the regional operation (&sian &rea) where the &irbus 500

operates. 't had no choice but to adopt cost cutting measures, such as

cutting down services, number of frequencies of flights, and reduction of

the number of flying points for the &-500 fleet (t.s.n., *uly 1, +77, pp. +C-

+7). &s a result, defendant-appellant had to lay off &-500 pilots, including

plaintiff-appellee, which it found to be in excess of what is reasonably

needed.+A

&ll these considered, we find sufficient factual and legal basis to conclude that

petitioner2s termination from employment was for an authoriDed cause, for which

he was given ample notice and opportunity to be heard, by respondent company.

o error nor grave abuse of discretion, therefore, could be attributed to

respondent appellate court.>wphi.n?t

&""#6@'48F, the instant petition is @'M'!@. The decision of the "ourt of&ppeals in ".&. "J o. 5AAC1 is &;;'6M!@.

# #6@!6!@.

G.R. No. 1/0// No'( 21, 2012

ELLICE AGR-INU#TRIAL CR!RATIN, ((4+5 'y 54 C7)()+

o 57 Bo)( o (5o(4 )+ !(4+5, RAUL E. GALA,%etitioner,

vs.

REL T. "UNG, ELFIN CHAN, JIM :EE, )+ GUIA G.

MING, ;;;6espondents.

@ ! " ' ' #


26/79

MEN%A, J.:

&ssailed in this %etition for 6eview on "ertiorari under 6ule A of the 6ules of

"ourt are the *uly +, 005 @ecision+and the &ugust 7, 001 6esolutionof the

"ourt of &ppeals ("&), in "&-4.6. % o. 1AA+, dismissing the petition and

upholding the ovember ++, + @ecision of the 6egional Trial "ourt of 8ucena

"ity, /ranch 10 (6T"), in "ivil "ase o. 1-+CC, entitled :6odel T. Foung, @elfin

"han and *im Bee v. !llice &gro 'ndustrial "orporation, represented by 4uia 4.

@omingo.:

The ;acts

#n *uly A, +, 6odel T. Foung, @elfin "han and *im Bee (respondents) and

!llice &gro-'ndustrial "orporation (!&'"), represented by its alleged corporate

secretary and attorney-in-fact, 4uia 4. @omingo (@omingo), entered into a"ontract to ell, under certain terms and conditions, wherein !&'" agreed to sell

to the respondents a 50,000 square-meter portion of a parcel of land located in

8utucan, ariaya, OueDon and registered under !&'"Ps name and covered by

Transfer "ertificate of Title (T"T) o. T-+C057 in consideration of #ne Million

and ;ifty Thousand (%+,00,000.00) %esos.

%ursuant to the "ontract to ell,5respondents paid !&'", through @omingo, the

aggregate amount of ;ive =undred ;orty ;ive Thousand (%A,000.00) %esos as

partial payment for the acquisition of the sub>ect property. @espite such payment,!&'" failed to deliver to respondents the ownerPs duplicate certificate of title of

the sub>ect property and the corresponding deed of sale as required under the

"ontract to ell.

#n ovember 7, +1, prompted by the failure of !&'" to comply with its

obligation, respondents had their &ffidavit of &dverse "laim annotated in T"T o.

T-+C057.A

#n ovember +A, +1, respondents filed a "omplaint

for specific performance,doc3eted as "ivil "ase o. 1-+CC, against !&'" and @omingo before the 6T".

"onsequently, on ovember +7, +1, respondents caused the annotation of a

otice of 8is %endens involving "ivil "ase o. 1-+CC in T"T o. T-+C057.1
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27/79

The initial attempt to serve the summons and a copy of the complaint and its

annexes on !&'", through @omingo, on 6iDal treet, ariaya, OueDon, was

unsuccessful as !&'" could not be located in the said address.

&nother attempt was made to serve the alias summons on !&'" at 1 Maligaya

treet, ingalong, Manila, the residence of @omingo. The second attempt to

serve the alias summons to @omingo was, this time, successful.

#n March +, +C, !&'", represented by @omingo, filed its &nswer with

"ounterclaim.C

Meanwhile, respondent *im Bee (Bee) sent 6aul !. 4ala (4ala), !&'"Ps

"hairman and %resident, a letter,7dated *uly , +C, see3ing a conference with

the latter relating to the execution of an absolute deed of sale pursuant to the

"ontract to ell entered into between !&'" and respondents.

'n response, the 6obles 6icafrente &guirre anvicente G "acho 8aw ;irm,

introducing itself to be the counsel of !&'", sent Bee a letter,dated *uly +7,

+C, informing him of @omingoPs lac3 of authority to represent !&'".

#n the scheduled pre-trial conference on *anuary C, +7, neither @omingo nor

her counsel appeared. &s a result of !&'"Ps failure to appear in the pre-trial

conference, respondents were allowed to present their evidence ex parte,

pursuant to ection , 6ule +7+0of the 6ules of "ourt.

;ollowing the presentation of evidence ex parte, the 6T" rendered its ovember

++, + @ecision ordering !&'" to deliver the ownerPs duplicate copy of T"T

o. T-+C057 and to execute a final deed of sale in favor of respondents.

o motion for reconsideration or notice of appeal was filed by !&'", hence, the

said 6T" decision became final and executory on @ecember 7, +.++

#n *uly +0, 000 (roughly seven months after the finality of the 6T" @ecision),

!&'", represented by 4ala, filed its %etition for 6elief from *udgment+under

6ule 57 of the 6ules of "ourt of the ovember ++, + 6T" @ecision before the

same court. The petition for relief from >udgment was premised on the alleged

fraud committed by @omingo in concealing the existence of both the "ontract to

ell and "ivil "ase o. 1-+CC from !&'".
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28/79

'n its *uly +, 000 #rder,+5the 6T" denied the petition for relief from >udgment

for being clearly filed out of time under ection 5, 6ule 57 of the 6ules of "ourt.+A

#n &pril A, 00+, !&'", represented by 4ala, initiated the %etition for &nnulment

of *udgment+under 6ule AC of the 6ules of "ourt of the ovember ++, +

6T" @ecision before the "&. The petition was grounded on the 6T"Ps lac3 of

>urisdiction over !&'" and the extrinsic fraud committed by @omingo. !&'"

discarded any 3nowledge of the said sale and the suit filed by respondents

against it. &ccording to !&'", it could not be bound by the assailed 6T" @ecision

pursuant to ection +5, 6ule +A+1of the +1A 6ules of "ourt which was, the

applicable rule then. @omingo was not its %resident, Manager, ecretary,

"ashier, &gent or @irector, as evidenced by the 4eneral 'nformation heets+C

(4') it filed with the ecurities and !xchange "ommission (!"), at the time

the summons was served upon her and she did not possess the requisiteauthoriDation to represent !&'" in the sub>ect transaction. ;urthermore, her

misrepresentation that she was !&'"Ps corporate secretary who was properly

authoriDed to sell and receive payment for the sub>ect property, defrauded !&'"

of the potential gains it should have realiDed from the proceeds of the sale.

'n their &nswer with "ounterclaim+7filed before the "&, respondents countered

that considering !&'"Ps petition for relief from >udgment under 6ule 57 grounded

on extrinsic fraud, had already been re>ected with finality, !&'" could not be

permitted to invo3e the same ground in a petition for annulment of >udgment

under 6ule AC. ;urther, !&'" could not feign ignorance of "ivil "ase o. 1-+CC

because of the ovember 7, +1 &dverse "laim and the ovember +7, +1

otice of 8is %endens annotated at the bac3 of T"T o. T-+C057. 6espondents

insisted that the mentioned annotations in T"T o. T-+C057 should be deemed

constructive notices to the world of the pending litigation referred to therein and,

therefore, bound !&'" to "ivil "ase o. 1-+CC. Moreover, with the exchange of

letters, dated *uly , +C+and *uly +7, +C,0between Bee and !&'",

through 4ala, !&'" was informed of the pending civil case against it.

'n its 6eply+filed before the "&, !&'" explained that the 6T" did not touch

upon the issue of fraud in the petition for relief from >udgment as it was dismissed

for being filed out of time. 'n addition, !&'" claimed that the exchange of letters

between Bee and !&'" never stated anything whatsoever of any pending suit

between them.
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29/79

'n its *uly +, 005 @ecision, the "& dismissed the petition for annulment of

>udgment. 'n its decision, the "& ratiocinated$

x x x x.

The corporation, at the inception of "ivil "ase o. 1-+CC on ovember +A,

+1, already had constructive notice of the three (5) businessmenPs herein

respondents adverse claim to a 50,000

square-meter portion of the land covered by T"T o. T-+C057 because this

claim was duly registered and annotated on the said title even before this date.

Moreover, four (A) days after the inception of the civil case, room was provided

for on the same title for the annotation of a notice of lis pendens.

These constructive notices ought to have spurred the corporation into action byfiling an answer in "ivil "ase o. 1-+CC through proper or legitimate

representations, for instance. /ut the corporation chose to 3eep quiet, thus,

ma3ing the trial court and everyone else concerned with said civil case believe

that 4uia 4. @omingo is its proper or legitimate representative. 't even appears

that she was, after all, a proper or legitimate representative of the corporation

because in the decision, dated ovember 5, +7, rendered in !" "ases os.

5CAC and A0C, the corporationPs board headed by 6aul !. 4ala since &ugust A,

+0 was held to be illegitimate.

!ven without the constructive notices, the businessmen herein respondents,

through a letter signed by one of them, apprised the corporation, through 6aul !.

4ala, of their contract to sell. This was in *uly, +C. The letter was duly

ac3nowledged and the parties thereafter even tried to settle among themselves

the consideration and conveyance of the 50,000 square-meter portion.

Bhen this failed, there was no reason why the corporation could not have

proceeded with the pre-trial in "ivil "ase o. 1-+CC. 't did not.

The corporationPs reticence in view of the constructive notices and its then

incumbent boardPs personal 3nowledge of the case had, in effect, amounted to a

waiver of its right to actively participate in the proper disposition of "ivil "ase o.

1-+CC, to move for a new trial therein and to appeal from the decision rendered

therein. "ertainly, these remedies no longer are available, but only the

corporation should be faulted for this.


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/e that as it may, the corporation had availed of the remedy of relief from the

>udgment in "ivil "ase o. 1-+CC. The fact that it was not able to prove that it

was entitled thereto does not mean that it can now avail of the instant remedy.

't would serve no useful purpose then to delve into the issues of >urisdiction and

fraud raised in the petition as the petition itself is unavailing under the

circumstances.

x x x x.

!&'"Ps motion for reconsideration was denied by the "& in its 6esolution, dated

&ugust 7, 001.

=ence, this petition for review.

The 'ssues

ot in conformity with the ruling of the "&, !&'" see3s relief from this "ourt

raising the following errors$

T=! "#udgment before the trial court constitutes voluntary
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appearance thereby submitting itself to the >urisdiction of the 6T". 6espondents

stress that the extrinsic fraud claimed by !&'" is not a valid ground for a petition

for annulment of >udgment because the latter had already availed of the said

ground in a petition from relief from >udgment in contravention to ection , 6ule

AC.A

'n her Memorandum,@omingo argues that !&'", in filing its &nswer with

"ounterclaim and %etition for 6elief from *udgment, had invo3ed the >urisdiction

of the same trial court that it now denies. ;urther, she claims that she acted in

utmost good faith in receiving the summons and filing the &nswer in "ivil "ase

o. 1-+CC for !&'" since she truly believed that she was authoriDed to do so.

#n the other hand, !&'", in its Memorandum,1contends that there was no valid

service of summons because @omingo, at the time summons was served, was

not its president, manager, secretary, cashier, agent, or director. The 4' filed

with the !" consistently showed that she never held any position with !&'"

which could have authoriDed her to receive summons in behalf of !&'". The "&

erred in considering the &dverse "laim and otice of 8is %endens annotated in

T"T o. T-+C057 as constructive notice to !&'" of the pendency of "ivil "ase

o. 1-+CC and, therefore, clothed the 6T" with >urisdiction over the person of

!&'". Those annotations in the T"T merely serve to apprise third persons of the

controversy or pending litigation relating to the sub>ect property but do not place

a party under the >urisdiction of the court. Moreover, respondentsP duty to

prosecute their case diligently includes ensuring that the proper parties are

impleaded and properly served with summonses.

The "ourtPs 6uling

The "ourt finds merit in the petition.

't is a settled rule that >urisdiction over the defendant is acquired either upon a

valid service of summons or the defendantPs voluntary appearance in court.

Bhen the defendant does not voluntarily submit to the courtPs >urisdiction or whenthere is no valid service of summons, any >udgment of the court which has no

>urisdiction over the person of the defendant is null and void.CThe purpose of

summons is not only to acquire >urisdiction over the person of the defendant, but

also to give notice to the defendant that an action has been commenced against

it and to afford it an opportunity to be heard on the claim made against it. The
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requirements of the rule on summons must be strictly followed, otherwise, the

trial court will not acquire >urisdiction over the defendant.7

ection +5, 6ule +A of the +1A 6ules of "ivil %rocedure, the applicable rule on

service of summons upon a private domestic corporation then, provides$

ec. +5. ervice upon private domestic corporation or partnership. 'f the

defendant is a corporation organiDed under the laws of the %hilippines or a

partnership duly registered, service may be made on the president, manager,

secretary, cashier, agent, or any of its directors. Hurisdiction over !&'". 'n "esar v. 6icafort-/autista,5+it was held that :x x x

>urisdiction of the court over the person of the defendant or respondent cannot beacquired notwithstanding his 3nowledge of the pendency of a case against him

unless he was validly served with summons. uch is the important role a valid

service of summons plays in court actions.:

The "ourt cannot li3ewise subscribe to respondents argument that by filing its

answer with counterclaim, through @omingo, with the 6T", !&'" is deemed to
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have voluntarily submitted itself to the >urisdiction of the 6T". 'n alenga v. "ourt

of &ppeals,5the "ourt stated$

& corporation can only exercise its powers and transact its business through its

board of directors and through its officers and agents when authoriDed by a

board resolution or its bylaws. The power of a corporation to sue and be sued is

exercised by the board of directors. The physical acts of the corporation, li3e the

signing of documents, can be performed only by natural persons duly authoriDed

for the purpose by corporate bylaws or by a specific act of the board.

'n this case, at the time she filed the &nswer with "ounterclaim, @omingo was

clearly not an officer of !&'", much less duly authoriDed by any board resolution

or secretaryPs certificate from !&'" to file the said &nswer with "ounterclaim in

behalf of !&'". urisdiction over the person of !&'". "onsequently, the proceedings had before

the 6T" and ultimately its ovember ++, + @ecision were null and

void.>wphi

%ursuant to ection C, 6ule AC5Aof the 6ules of "ourt, a >udgment of annulment

shall set aside the questioned >udgment or final order or resolution and render

the same null and void.
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B=!6!;#6!, the petition is 46&T!@. The *uly +, 005 @ecision and &ugust

7, 001 6esolution of the "ourt of &ppeals, in "&-4.6. % o. 1AA+, are

hereby 6!J!6!@. The ovember ++, + @ecision of the 6egional Trial

"ourt of 8ucena "ity, /ranch 10, in "ivil "ase o. 1-+CC, is hereby declared

J&"&T!@ and !T &'@!.

The records of the case is hereby ordered remanded to the 6egional Trial "ourt

of 8ucena "ity, /ranch 10, for the proper service of summons to the petitioner

and other parties, if any, and for other appropriate proceedings.

# #6@!6!@.

G.R. No. 101/< Ju+ 2 AN

GERGE CHING R$A#,respondents.

An!ara, Abello, oncepcion, 2e!ala 9 r4 for petitioners.

Antonio :yles for private respondent.

UIA#N, J.:

%etitioners see3 to set aside the decision of respondent "ourt of &ppeals in "&-

4.6. % o. 5C, which reversed the #rder dated ;ebruary 7, ++ issued by

the 6egional Trial "ourt, /ranch ++, "ebu "ity in "ivil "ase o. "!/ 11C. The

order of the trial court denied the motion to dismiss filed by respondent 4eorge

". 6oxas of the complaint for collection filed by petitioners.

't appears that sometime on #ctober 7, +7C, Foung &uto upply "o. 'nc.

(F&"#) represented by emesio 4arcia, its president, elson 4arcia and

Jicente y, sold all of their shares of stoc3 in "onsolidated Mar3eting G

@evelopment "orporation ("M@") to 6oxas. The purchase price was


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%7,000,000.00 payable as follows$ a downpayment of %A,000,000.00 and the

balance of %A,000,000.00 in four post dated chec3s of %+,000,000.00 each.

'mmediately after the execution of the agreement, 6oxas too3 full control of the

four mar3ets of "M@". =owever, the vendors held on to the stoc3 certificates of

"M@" as security pending full payment of the balance of the purchase price.

The first chec3 of %A,000,000.00, representing the down-payment, was honored

by the drawee ban3 but the four other chec3s representing the balance of

%A,000,000.00 were dishonored. 'n the meantime, 6oxas sold one of the mar3ets

to a third party. #ut of the proceeds of the sale, F&"# received %100,000.00,

leaving a balance of %5,A00,000.00 (2ollo, p. +C1).

ubsequently, elson 4arcia and Jicente y assigned all their rights and title to

the proceeds of the sale of the "M@" shares to emesio 4arcia.

#n *une +0, +77, petitioners filed a complaint against 6oxas in the 6egional

Trial "ourt, /ranch ++, "ebu "ity, praying that 6oxas be ordered to pay

petitioners the sum of %5,A00,00.00 or that full control of the three mar3ets be

turned over to F&"# and 4arcia. The complaint also prayed for the forfeiture of

the partial payment of %A,100,000.00 and the payment of attorney2s fees and

costs (2ollo, p. 0).

6oxas filed two motions for extension of time to submit his answer. /ut despitesaid motion, he failed to do so causing petitioners to file a motion to have him

declared in default. 6oxas then filed, through a new counsel, a third motion for

extension of time to submit a responsive pleading.

#n &ugust +, +77, the trial court declared 6oxas in default. The order of

default was, however, lifted upon motion of 6oxas.

#n &ugust , +77, 6oxas filed a motion to dismiss on the grounds that$

+. The complaint did not state a cause of action due to non->oinder of

indispensable parties9

. The claim or demand set forth in the complaint had been waived,

abandoned or otherwise extinguished9 and


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5. The venue was improperly laid (2ollo, p. ).

&fter a hearing, wherein testimonial and documentary evidence were presented

by both parties, the trial court in an #rder dated ;ebruary 7, ++ denied 6oxas2

motion to dismiss. &fter receiving said order, 6oxas filed another motion for

extension of time to submit his answer. =e also filed a motion for reconsideration,

which the trial court denied in its #rder dated &pril +0, ++ for being pro@

forma (2ollo, p. +C). 6oxas was again declared in default, on the ground that his

motion for reconsideration did not toll the running of the period to file his answer.

#n May 5, ++, 6oxas filed an unverified Motion to 8ift the #rder of @efault

which was not accompanied with the required affidavit or merit. /ut without

waiting for the resolution of the motion, he filed a petition for certiorari with the

"ourt of &ppeals.

The "ourt of &ppeals sustained the findings of the trial court with regard to the

first two grounds raised in the motion to dismiss but ordered the dismissal of the

complaint on the ground of improper venue (2ollo, p. A).

& subsequent motion for reconsideration by petitioner was to no avail.

%etitioners now come before us, alleging that the "ourt of &ppeals

erred in$

+. holding the venue should be in %asay "ity, and not in "ebu "ity

(where both petitionersplaintiffs are residents9

. not finding that 6oxas is estopped from questioning the choice of

venue (2ollo, p. +).

The petition is meritorious.

'n holding that the venue was improperly laid in "ebu "ity, the "ourt of &ppeals

relied on the address of F&"#, as appearing in the @eed of ale dated #ctober

7, +7C, which is :o. +C07 @ominga treet, %asay "ity.: This was the same

address written in F&"#2s letters and several commercial documents in the

possession of 6oxas (@ecision, p. +9 2ollo, p. A7).


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'n the case of 4arcia, the "ourt of &ppeals said that he gave %asay "ity as his

address in three letters which he sent to 6oxas2 brothers and sisters (@ecision, p.

+9 2ollo, p. AC). The appellate court held that 6oxas was led by petitioners to

believe that their residence is in %asay "ity and that he had relied upon those

representations (@ecision, p. +, 2ollo, p. AC).

The "ourt of &ppeals erred in holding that the venue was improperly laid in "ebu

"ity.

'n the 6egional Trial "ourts, all personal actions are commenced and tried in the

province or city where the defendant or any of the defendants resides or may be

found, or where the plaintiff or any of the plaintiffs resides, at the election of the

plaintiff Hec. (b) 6ule A, 6evised 6ules of "ourtI.

There are two plaintiffs in the case at bench$ a natural person and a domesticcorporation. /oth plaintiffs aver in their complaint that they are residents of "ebu

"ity, thus$

+.+. %laintiff Foung &uto upply "o., 'nc., (:F&"#:) is a domestic

corporation duly organiDed and existing under %hilippine laws with

principal place of business at M. *. "uenco &venue, "ebu "ity. 't

also has a branch office at +C07 @ominga treet, %asay "ity, Metro

Manila.

%laintiff emesio 4arcia is of legal age, married, ;ilipino citiDen and

with business address at Foung &uto upply "o., 'nc., M. *. "uenco

&venue, "ebu "ity. . . . ("omplaint, p. +9 2ollo, p. 7+).

The &rticle of 'ncorporation of F&"# (!" 6eg. o. 075) states$

T='6@ That the place where the principal office of the corporation is

to be established or located is at "ebu "ity, %hilippines (as amended

on @ecember 0, +70 and further amended on @ecember 0,+7A) (2ollo, p. C5).

& corporation has no residence in the same sense in which this term is applied to

a natural person. /ut for practical purposes, a corporation is in a metaphysical

sense a resident of the place where its principal office is located as stated in the

articles of incorporation ("ohen v. /enguet "ommercial "o., 8td., 5A %hil. 1


38/79

H++1I "lavecilla 6adio ystem v. &ntillon, + "6& 5C H+1CI). The

"orporation "ode precisely requires each corporation to specify in its articles of

incorporation the :place where the principal office of the corporation is to be

located which must be within the %hilippines: (ec. +A H5I). The purpose of this

requirement is to fix the residence of a corporation in a definite place, instead ofallowing it to be ambulatory.

'n lavencilla 2adio System v. Antillon, + "6& 5C (H+1CI), this "ourt

explained why actions cannot be filed against a corporation in any place where

the corporation maintains its branch offices. The "ourt ruled that to allow an

action to be instituted in any place where the corporation has branch offices,

would create confusion and wor3 untold inconvenience to said entity. /y the

same to3en, a corporation cannot be allowed to file personal actions in a place

other than its principal place of business unless such a place is also theresidence of a co-plaintiff or a defendant.

'f it was 6oxas who sued F&"# in %asay "ity and the latter questioned the

venue on the ground that its principal place of business was in "ebu "ity, 6oxas

could argue that F&"# was in estoppel because it misled 6oxas to believe that

%asay "ity was its principal place of business. /ut this is not the case before us.

Bith the finding that the residence of F&"# for purposes of venue is in "ebu

"ity, where its principal place of business is located, it becomes unnecessary to

decide whether 4arcia is also a resident of "ebu "ity and whether 6oxas was in

estoppel from questioning the choice of "ebu "ity as the venue.

B=!6!;#6!, the petition is 46&T!@. The decision of the "ourt of &ppeals

appealed from is !T &'@! and the #rder dated ;ebruary 7, ++ of the

6egional Trial "ourt is 6!'T&T!@.

# #6@!6!@.

G.R. No. 930/3 '( 21, 1992

RE!UBLIC !LANTER# BAN?, petitioner,

vs.

CURT F A!!EAL# )+ FERMIN CANLA#, respondents.


39/79

CAM!#, JR., J.:

This is an appeal by way of a %etition for 6eview on ertiorari from the

decision ; of the "ourt of &ppeals in "& 4.6. "J o. 0C50, entitled :6epublic

%lanters /an3.%laintiff-&ppellee vs. %inch Manufacturing "orporation, et al.,

@efendants, and ;ermin "anlas, @efendant-&ppellant:, which affirmed the

decision ;; in "ivil "ase o. 7-AA7 except that it completely absolved ;ermin

"anlas from liability under the promissory notes and reduced the award for

damages and attorney2s fees. The 6T" decision, rendered on *une 0, +7, is

quoted hereunder$

B=!6!;#6!, premises considered, >udgment is hereby rendered

in favor of the plaintiff 6epublic %lanters /an3, ordering defendant%inch Manufacturing "orporation (formerly Borldwide 4arment

Manufacturing, 'nc.) and defendants hoDo Famaguchi and ;ermin

"anlas to pay, >ointly and severally, the plaintiff ban3 the following

sums with interest thereon at +1Q per annum from the dates

indicated, to wit$


40/79

ointly and severally, the

plaintiff the sum of %+00,000.00 as and for reasonable attorney2s fee

and the further sum equivalent to 5Q per annum of the respective

principal sums from the dates above stated as penalty charge until

fully paid, plus one percent (+Q) of the principal sums as service

charge.

Bith costs against the defendants.

# #6@!6!@. 1

;rom the above decision only defendant ;ermin "anlas appealed to the then

'ntermediate "ourt (now the "ourt &ppeals). =is contention was that inasmuch

as he signed the promissory notes in his capacity as officer of the defunctBorldwide 4arment Manufacturing, 'nc, he should not be held personally liable

for such authoriDed corporate acts that he performed. 't is now the contention of

the petitioner 6epublic %lanters /an3 that having unconditionally signed the nine

() promissory notes with hoDo Famaguchi, >ointly and severally, defendant

;ermin "anlas is solidarity liable with hoDo Famaguchi on each of the nine

notes.

Be find merit in this appeal.

;rom the records, these facts are established$ @efendant hoDo Famaguchi and

private respondent ;ermin "anlas were %resident"hief #perating #fficer and

Treasurer respectively, of Borldwide 4arment Manufacturing, 'nc.. /y virtue of

/oard 6esolution o.+ dated &ugust +, +C, defendant hoDo Famaguchi and

private respondent ;ermin "anlas were authoriDed to apply for credit facilities

with the petitioner 6epublic %lanters /an3 in the forms of export advances and


41/79

letters of credittrust receipts accommodations. %etitioner ban3 issued nine

promissory notes, mar3ed as !xhibits & to ' inclusive, each of which were

uniformly worded in the following manner$

RRRRRRRRRRR, after date, for value received, 'we, >ointly and

severa'ly promise to pay to the #6@!6 of the 6!%


42/79

he, denied having issued the promissory notes in question since according to

him, he was not an officer of %inch Manufacturing "orporation, but instead of

Borldwide 4arment Manufacturing, 'nc., and that when he issued said

promissory notes in behalf of Borldwide 4arment Manufacturing, 'nc., the same

were in blan3, the typewritten entries not appearing therein prior to the time heaffixed his signature.

'n the mind of this "ourt, the only issue material to the resolution of this appeal is

whether private respondent ;ermin "anlas is solidarily liable with the other

defendants, namely %inch Manufacturing "orporation and hoDo Famaguchi, on

the nine promissory notes.

Be hold that private respondent ;ermin "anlas is solidarily liable on each of the

promissory notes bearing his signature for the following reasons$

The promissory motes are negotiable instruments and must be governed by the

egotiable 'nstruments 8aw. 2

oint and several: as describing the unconditional promise to pay to the

order of 6epublic %lanters /an3. & >oint and several note is one in which the

ma3ers bind themselves both >ointly and individually to the payee so that all may


43/79

be sued together for its enforcement, or the creditor may select one or more as

the ob>ect of the suit. 8& >oint and several obligation in common law corresponds

to a civil law solidary obligation9 that is, one of several debtors bound in such

wise that each is liable for the entire amount, and not merely for his proportionate

share.9

/y ma3ing a >oint and several promise to pay to the order of 6epublic%lanters /an3, private respondent ;ermin "anlas assumed the solidary liability of

a debtor and the payee may choose to enforce the notes against him alone or

>ointly with Famaguchi and %inch Manufacturing "orporation as solidary debtors.

&s to whether the interpolation of the phrase :and (in) his personal capacity:

below the signatures of the ma3ers in the notes will affect the liability of the

ma3ers, Be do not find it necessary to resolve and decide, because it is

immaterial and will not affect to the liability of private respondent ;ermin "anlas

as a >oint and several debtor of the notes. Bith or without the presence of saidphrase, private respondent ;ermin "anlas is primarily liable as a co-ma3er of

each of the notes and his liability is that of a solidary debtor.

;inally, the respondent "ourt made a grave error in holding that an amendment

in a corporation2s &rticles of 'ncorporation effecting a change of corporate name,

in this case from Borldwide 4arment manufacturing 'nc to %inch Manufacturing

"orporation extinguished the personality of the original corporation.

The corporation, upon such change in its name, is in no sense a new

corporation, nor the successor of the original corporation. 't is the same

corporation with a different name, and its character is in no respect changed.10

& change in the corporate name does not ma3e a new corporation, and whether

effected by special act or under a general law, has no affect on the identity of the

corporation, or on its property, rights, or liabilities. 11

The corporation continues, as before, responsible in its new name for all debts or

other liabilities which it had previously contracted or incurred.12

&s a general rule, officers or directors under the old corporate name bear no

personal liability for acts done or contracts entered into by officers of the

corporation, if duly authoriDed. 'nasmuch as such officers acted in their capacity

as agent of the old corporation and the change of name meant only the

continuation of the old >uridical entity, the corporation bearing the same name is

still bound by the acts of its agents if authoriDed by the /oard.


44/79

egotiable 'nstruments 8aw, the liability of a person signing as an agent is

specifically provided for as follows$

ec. 0. *iability of a person si!nin! as a!ent and so forth. Bhere

the instrument contains or a person adds to his signature words

indicating that he signs for or on behalf of a principal , or in a

representative capacity, he is not liable on the instrument if he was

duly authoriDed9 but the mere addition of words describing him as an

agent, or as filling a representative character, without disclosing his

principal, does not exempt him from personal liability.

Bhere the agent signs his name but nowhere in the instrument has he disclosed

the fact that he is acting in a representative capacity or the name of the third

party for whom he might have acted as agent, the agent is personally liable to

ta3e holder of the instrument and cannot be permitted to prove that he was

merely acting as agent of another and parol or extrinsic evidence is not

admissible to avoid the agent2s personal liability. 13

#n the private respondent2s contention that the promissory notes were delivered

to him in blan3 for his signature, we rule otherwise. & careful examination of the

notes in quest

corpo case 10feb2016

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