[G.R. No. 129459.September 29, 1998]SAN JUAN STRUCTURAL AND STEEL FABRICATORS, INC.,petitioner, vs.COURT OF APPEALS, MOTORICH SALES CORPORATION, NENITA LEE GRUENBERG, ACL DEVELOPMENT CORP. and JNM REALTY AND DEVELOPMENT CORP.,respondents.D E C I S I O NPANGANIBAN,J.May a corporate treasurer, by herself and without any authorization from the board of directors, validly sell a parcel of land owned by the corporation?May the veil of corporate fiction be pierced on the mere ground that almost all of the shares of stock of the corporation are owned by said treasurer and her husband?The CaseThese questions are answered in the negative by this Court in resolving the Petition for Review on Certiorari before us, assailing the March 18, 1997 Decision[1]of the Court of Appeals[2]in CA GR CV No. 46801 which, in turn, modified the July 18, 1994 Decision of the Regional Trial Court of Makati, Metro Manila, Branch 63[3]in Civil Case No. 89-3511.The RTC dismissed both the Complaint and the Counterclaim filed by the parties.On the other hand, the Court of Appeals ruled:WHEREFORE, premises considered, the appealed decision is AFFIRMED WITH MODIFICATION ordering defendant-appellee Nenita Lee Gruenberg to REFUND or return to plaintiff-appellant the downpayment ofP100,000.00 which she received from plaintiff-appellant.There is no pronouncement as to costs.[4]The petition also challenges the June 10, 1997 CA Resolution denying reconsideration.[5]The FactsThe facts as found by the Court of Appeals are as follows:Plaintiff-appellant San Juan Structural and Steel Fabricators, Inc.s amended complaint alleged that on 14 February 1989, plaintiff-appellant entered into an agreement with defendant-appellee Motorich Sales Corporation for the transfer to it of a parcel of land identified as Lot 30, Block 1 of the Acropolis Greens Subdivision located in the District of Murphy, Quezon City, Metro Manila, containing an area of Four Hundred Fourteen (414) square meters, covered by TCT No. (362909) 2876; that as stipulated in the Agreement of 14 February 1989, plaintiff-appellant paid the down payment in the sum of One Hundred Thousand (P100,000.00) Pesos, the balance to be paid on or before March 2, 1989; that on March 1, 1989, Mr. Andres T. Co, president of plaintiff-appellant corporation, wrote a letter to defendant-appellee Motorich Sales Corporation requesting for a computation of the balance to be paid; that said letter was coursed through defendant-appellees broker, Linda Aduca, who wrote the computation of the balance; that on March 2, 1989, plaintiff-appellant was ready with the amount corresponding to the balance, covered by Metrobank Cashiers Check No. 004223, payable to defendant-appellee Motorich Sales Corporation; that plaintiff-appellant and defendant-appellee Motorich Sales Corporation were supposed to meet in the office of plaintiff-appellant but defendant-appellees treasurer, Nenita Lee Gruenberg, did not appear; that defendant-appellee Motorich Sales Corporation despite repeated demands and in utter disregard of its commitments had refused to execute the Transfer of Rights/Deed of Assignment which is necessary to transfer the certificate of title; that defendant ACL Development Corp. is impleaded as a necessary party since Transfer Certificate of Title No. (362909) 2876 is still in the name of said defendant; while defendant JNM Realty & Development Corp. is likewise impleaded as a necessary party in view of the fact that it is the transferor of right in favor of defendant-appellee Motorich Sales Corporation; that on April 6, 1989, defendant ACL Development Corporation and Motorich Sales Corporation entered into a Deed of Absolute Sale whereby the former transferred to the latter the subject property; that by reason of said transfer, the Registry of Deeds of Quezon City issued a new title in the name of Motorich Sales Corporation, represented by defendant-appellee Nenita Lee Gruenberg and Reynaldo L. Gruenberg, under Transfer Certificate of Title No. 3571; that as a result of defendants-appellees Nenita Lee Gruenberg and Motorich Sales Corporations bad faith in refusing to execute a formal Transfer of Rights/Deed of Assignment, plaintiff-appellant suffered moral and nominal damages which may be assessed against defendants-appellees in the sum of Five Hundred Thousand (500,000.00) Pesos; that as a result of defendants-appellees Nenita Lee Gruenberg and Motorich Sales Corporations unjustified and unwarranted failure to execute the required Transfer of Rights/Deed of Assignment or formal deed of sale in favor of plaintiff-appellant, defendants-appellees should be assessed exemplary damages in the sum of One Hundred Thousand (P100,000.00) Pesos; that by reason of defendants-appellees bad faith in refusing to execute a Transfer of Rights/Deed of Assignment in favor of plaintiff-appellant, the latter lost the opportunity to construct a residential building in the sum of One Hundred Thousand (P100,000.00) Pesos; and that as a consequence of defendants-appellees Nenita Lee Gruenberg and Motorich Sales Corporations bad faith in refusing to execute a deed of sale in favor of plaintiff-appellant, it has been constrained to obtain the services of counsel at an agreed fee of One Hundred Thousand (P100,000.00) Pesos plus appearance fee for every appearance in court hearings.In its answer, defendants-appellees Motorich Sales Corporation and Nenita Lee Gruenberg interposed as affirmative defense that the President and Chairman of Motorich did not sign the agreement adverted to in par. 3 of the amended complaint; that Mrs. Gruenbergs signature on the agreement (ref: par. 3 of Amended Complaint) is inadequate to bind Motorich.The other signature, that of Mr. Reynaldo Gruenberg, President and Chairman of Motorich, is required; that plaintiff knew this from the very beginning as it was presented a copy of the Transfer of Rights (Annex B of amended complaint) at the time the Agreement (Annex B of amended complaint) was signed; that plaintiff-appellant itself drafted the Agreement and insisted that Mrs. Gruenberg accept theP100,000.00 as earnest money; that granting, without admitting, the enforceability of the agreement, plaintiff-appellant nonetheless failed to pay in legal tender within the stipulated period (up to March 2, 1989); that it was the understanding between Mrs. Gruenberg and plaintiff-appellant that the Transfer of Rights/Deed of Assignment will be signed only upon receipt of cash payment; thus they agreed that if the payment be in check, they will meet at a bank designated by plaintiff-appellant where they will encash the check and sign the Transfer of Rights/Deed.However, plaintiff-appellant informed Mrs. Gruenberg of the alleged availability of the check, by phone, only after banking hours.On the basis of the evidence, the courta quorendered the judgment appealed from[,] dismissing plaintiff-appellants complaint, ruling that:'The issue to be resolved is: whether plaintiff had the right to compel defendants to execute a deed of absolute sale in accordance with the agreement of February 14, 1989; and if so, whether plaintiff is entitled to damages.As to the first question, there is no evidence to show that defendant Nenita Lee Gruenberg was indeed authorized by defendant corporation, Motorich Sales, to dispose of that property covered by T.C.T. No. (362909) 2876.Since the property is clearly owned by the corporation, Motorich Sales, then its disposition should be governed by the requirement laid down in Sec. 40, of the Corporation Code of the Philippines, to wit:Sec. 40, Sale or other disposition of assets.Subject to the provisions of existing laws on illegal combination and monopolies, a corporation may by a majority vote of its board of directors xxx sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets, including its goodwill xxx when authorized by the vote of the stockholders representing at least two third (2/3) of the outstanding capital stock x x x.No such vote was obtained by defendant Nenita Lee Gruenberg for that proposed sale[;] neither was there evidence to show that the supposed transaction was ratified by the corporation.Plaintiff should have been on the look out under these circumstances.More so, plaintiff himself [owns] several corporations (tsn dated August 16, 1993, p. 3) which makes him knowledgeable on corporation matters.Regarding the question of damages, the Court likewise, does not find substantial evidence to hold defendant Nenita Lee Gruenberg liable considering that she did not in anyway misrepresent herself to be authorized by the corporation to sell the property to plaintiff (tsn dated September 27, 1991, p. 8).In the light of the foregoing, the Court hereby renders judgment DISMISSING the complaint at instance for lack of merit.Defendants counterclaim is also DISMISSED for lack of basis.(Decision, pp. 7-8;Rollo, pp. 34-35)For clarity, the Agreement dated February 14, 1989 is reproduced hereunder:AGREEMENTKNOW ALL MEN BY THESE PRESENTS:This Agreement, made and entered into by and between:MOTORICH SALES CORPORATION, a corporation duly organized and existing under and by virtue of Philippine Laws, with principal office address at 5510 South Super Hi-way cor. Balderama St., Pio del Pilar, Makati, Metro Manila, represented herein by its Treasurer, NENITA LEE GRUENBERG, hereinafter referred to as the TRANSFEROR;-and--SAN JUAN STRUCTURAL & STEEL FABRICATORS, a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal office address at Sumulong Highway, Barrio Mambungan, Antipolo, Rizal, represented herein by its President, ANDRES T. CO, hereinafter referred to as the TRANSFEREE.WITNESSETH, That:WHEREAS, the TRANSFEROR is the owner of a parcel of land identified as Lot 30 Block 1 of the ACROPOLIS GREENS SUBDIVISION located at the District of Murphy, Quezon City, Metro Manila, containing an area of FOUR HUNDRED FOURTEEN (414) SQUARE METERS, covered by a TRANSFER OF RIGHTS between JNM Realty & Dev. Corp. as the Transferor and Motorich Sales Corp. as the Transferee;NOW, THEREFORE, for and in consideration of the foregoing premises, the parties have agreed as follows:1.That the purchase price shall be at FIVE THOUSAND TWO HUNDRED PESOS (P5,200.00) per square meter; subject to the following terms:a.Earnest money amounting to ONE HUNDRED THOUSAND PESOS (P100,000.00), will be paid upon the execution of this agreement and shall form part of the total purchase price;b.Balance shall be payable on or before March 2, 1989;2.That the monthly amortization for the month of February 1989 shall be for the account of the Transferor; and that the monthly amortization starting March 21, 1989 shall be for the account of the Transferee;The transferor warrants that he [sic] is the lawful owner of the above-described property and that there [are] no existing liens and/or encumbrances of whatsoever nature;In case of failure by the Transferee to pay the balance on the date specified on 1. (b), the earnest money shall be forfeited in favor of the Transferor.That upon full payment of the balance, the TRANSFEROR agrees to execute a TRANSFER OF RIGHTS/DEED OF ASSIGNMENT in favor of the TRANSFEREE.IN WITNESS WHEREOF, the parties have hereunto set their hands this 14th day of February, 1989 at Greenhills, San Juan, Metro Manila, Philippines.MOTORICH SALES CORPORATIONSAN STRUCTURAL &TRANSFERORSTEEL FABRICATORSTRANSFEREE[SGD.][SGD.]By:NENITA LEE GRUENBERGBy:ANDRES T. COTreasurerPresidentSigned in the presence of:[SGD.][SGD.]______________________________________________[6]In its recourse before the Court of Appeals, petitioner insisted:1.Appellant is entitled to compel the appellees to execute a Deed of Absolute Sale in accordance with the Agreement of February 14, 1989,2.Plaintiff is entitled to damages.[7]As stated earlier, the Court of Appeals debunked petitioners arguments and affirmed the Decision of the RTC with the modification that Respondent Nenita Lee Gruenberg was ordered to refundP100,000 to petitioner, the amount remitted as downpayment or earnest money.Hence, this petition before us.[8]The IssuesBefore this Court, petitioner raises the following issues:I.Whether or not the doctrine of piercing the veil of corporate fiction is applicable in the instant caseII.Whether or not the appellate court may consider matters which the parties failed to raise in the lower courtIII.Whether or not there is a valid and enforceable contract between the petitioner and the respondent corporationIV.Whether or not the Court of Appeals erred in holding that there is a valid correction/substitution of answer in the transcript of stenographic note[s]V.Whether or not respondents are liable for damages and attorneys fees[9]The Court synthesized the foregoing and will thus discuss themseriatimas follows:1.Was there a valid contract of sale between petitioner and Motorich?2.May the doctrine of piercing the veil of corporate fiction be applied to Motorich?3. Is the alleged alteration of Gruenbergs testimony as recorded in the transcript of stenographic notes material to the disposition of this case?4.Are respondents liable for damages and attorneys fees?The Courts RulingThe petition is devoid of merit.First Issue:Validity of AgreementPetitioner San Juan Structural and Steel Fabricators, Inc. alleges that on February 14, 1989, it entered through its president, Andres Co, into the disputed Agreement with Respondent Motorich Sales Corporation, which was in turn allegedly represented by its treasurer, Nenita Lee Gruenberg.Petitioner insists that [w]hen Gruenberg and Co affixed their signatures on the contract they both consented to be bound by the terms thereof.Ergo, petitioner contends that the contract is binding on the two corporations.We do not agree.True, Gruenberg and Co signed on February 14, 1989, the Agreement according to which a lot owned by Motorich Sales Corporation was purportedly sold.Such contract, however, cannot bind Motorich, because it never authorized or ratified such sale.A corporation is a juridical person separate and distinct from its stockholders or members.Accordingly, the property of the corporation is not the property of its stockholders or members and may not be sold by the stockholders or members without express authorization from the corporations board of directors.[10]Section 23 of BP 68, otherwise known as the Corporation Code of the Philippines, provides:SEC.23.The Board of Directors or Trustees.--Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified.Indubitably, a corporation may act only through its board of directors, or, when authorized either by its bylaws or by its board resolution, through its officers or agents in the normal course of business.The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, bylaws, or relevant provisions of law.[11]Thus, this Court has held that a corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that the authority to do so has been conferred upon him, and this includes powers which have been intentionally conferred, and also such powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred.[12]Furthermore, the Court has also recognized the rule that persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it (Harry Keeler v. Rodriguez, 4 Phil. 19).[13]Unless duly authorized, a treasurer, whose powers are limited, cannot bind the corporation in a sale of its assets.[14]In the case at bar, Respondent Motorich categorically denies that it ever authorized Nenita Gruenberg, its treasurer, to sell the subject parcel of land.[15]Consequently, petitioner had the burden of proving that Nenita Gruenberg was in fact authorized to represent and bind Motorich in the transaction.Petitioner failed to discharge this burden.Its offer of evidence before the trial court contained no proof of such authority.[16]It has not shown any provision of said respondents articles of incorporation, bylaws or board resolution to prove that Nenita Gruenberg possessed such power.That Nenita Gruenberg is the treasurer of Motorich does not free petitioner from the responsibility of ascertaining the extent of her authority to represent the corporation.Petitioner cannot assume that she, by virtue of her position, was authorized to sell the property of the corporation.Selling is obviously foreign to a corporate treasurers function, which generally has been described asto receive and keep the funds of the corporation, and to disburse them in accordance with the authority given him by the board or the properly authorized officers.[17]Neither was such real estate sale shown to be a normal business activity of Motorich.The primary purpose of Motorich is marketing, distribution, export and import in relation to a general merchandising business.[18]Unmistakably, its treasurer is not cloaked with actual or apparent authority to buy or sell real property, an activity which falls way beyond the scope of her general authority.Articles 1874 and 1878 of the Civil Code of the Philippines provides:ART.1874.When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.ART.1878Special powers of attorney are necessary in the following case:x x xx x xx x x(5)To enter any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;x x xx x xx x x.Petitioner further contends that Respondent Motorich has ratified said contract of sale because of its acceptance of benefits, as evidenced by the receipt issued by Respondent Gruenberg.[19]Petitioner is clutching at straws.As a general rule, the acts of corporate officers within the scope of their authority are binding on the corporation.But when these officers exceed their authority, their actions cannot bind the corporation, unless it has ratified such acts or is estopped from disclaiming them.[20]In this case, there is a clear absence of proof that Motorich ever authorized Nenita Gruenberg, or made it appear to any third person that she had the authority, to sell its land or to receive the earnest money.Neither was there any proof that Motorich ratified, expressly or impliedly, the contract.Petitioner rests its argument on the receipt, which, however, does not prove the fact of ratification.The document is a hand-written one, not a corporate receipt, and it bears only Nenita Gruenbergs signature.Certainly, this document alone does not prove that her acts were authorized or ratified by Motorich.Article 1318 of the Civil Code lists the requisites of a valid and perfected contract:(1) consent of the contracting parties;(2) object certain which is the subject matter of the contract;(3) cause of the obligation which is established.As found by the trial court[21]and affirmed by the Court of Appeals,[22]there is no evidence that Gruenberg was authorized to enter into the contract of sale, or that the said contract was ratified by Motorich.This factual finding of the two courts is binding on this Court.[23]As the consent of the seller was not obtained, no contract to bind the obligor was perfected.Therefore, there can be no valid contract of sale between petitioner and Motorich.Because Motorich had never given a written authorization to Respondent Gruenberg to sell its parcel of land, we hold that the February 14, 1989 Agreement entered into by the latter with petitioner is void under Article 1874 of the Civil Code.Being inexistent and void from the beginning, said contract cannot be ratified.[24]Second Issue:Piercing the Corporate Veil Not JustifiedPetitioner also argues that the veil of corporate fiction of Motorich should be pierced, because the latter is a close corporation.Since Spouses Reynaldo L. Gruenberg and Nenita R. Gruenberg owned all or almost all or 99.866% to be accurate, of the subscribed capital stock[25]of Motorich, petitioner argues that Gruenberg needed no authorization from the board to enter into the subject contract.[26]It adds that, being solely owned by the Spouses Gruenberg, the company can be treated as a close corporation which can be bound by the acts of its principal stockholder who needs no specific authority.The Court is not persuaded.First, petitioner itself concedes having raised the issue belatedly,[27]not having done so during the trial, but only when it filed its sur-rejoinder before the Court of Appeals.[28]Thus, this Court cannot entertain said issue at this late stage of the proceedings.It is well-settled that points of law, theories and arguments not brought to the attention of the trial court need not be, and ordinarily will not be, considered by a reviewing court, as they cannot be raised for the first time on appeal.[29]Allowing petitioner to change horses in midstream, as it were, is to run roughshod over the basic principles of fair play, justice and due process.Second, even if the above-mentioned argument were to be addressed at this time, the Court still finds no reason to uphold it.True, one of the advantages of a corporate form of business organization is the limitation of an investors liability to the amount of the investment.[30]This feature flows from the legal theory that a corporate entity is separate and distinct from its stockholders.However, the statutorily granted privilege of a corporate veil may be used only for legitimate purposes.[31]On equitable considerations, the veil can be disregarded when it is utilized as a shield to commit fraud, illegality or inequity; defeat public convenience; confuse legitimate issues; or serve as a mere alter ego or business conduit of a person or an instrumentality, agency or adjunct of another corporation.[32]Thus, the Court has consistently ruled that [w]hen the fiction is used as a means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals.[33]We stress that the corporate fiction should be set aside when it becomes a shield against liability for fraud, illegality or inequity committed on third persons.The question of piercing the veil of corporate fiction is essentially, then, a matter of proof.In the present case, however, the Court finds no reason to pierce the corporate veil of Respondent Motorich.Petitioner utterly failed to establish that said corporation was formed, or that it is operated, for the purpose of shielding any alleged fraudulent or illegal activities of its officers or stockholders; or that the said veil was used to conceal fraud, illegality or inequity at the expense of third persons, like petitioner.Petitioner claims that Motorich is a close corporation.We rule that it is not. Section 96 of the Corporation Code defines a close corporation as follows:SEC. 96.Definition and Applicability of Title.--A close corporation, within the meaning of this Code, is one whose articles of incorporation provide that:(1)All of the corporations issued stock of all classes, exclusive of treasury shares, shall be held of record by not more than a specified number of persons, not exceeding twenty (20);(2) All of the issued stock of all classes shall be subject to one or more specified restrictions on transfer permitted by this Title; and (3) The corporation shall not list in any stock exchange or make any public offering of any of its stock of any class.Notwithstanding the foregoing, a corporation shall be deemed not a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by another corporation which is not a close corporation within the meaning of this Code. xxx.The articles of incorporation[34]of Motorich Sales Corporation does not contain any provision stating that (1) the number of stockholders shall not exceed 20, or (2) a preemption of shares is restricted in favor of any stockholder or of the corporation, or (3) listing its stocks in any stock exchange or making a public offering of such stocks is prohibited.From its articles, it is clear that Respondent Motorich is not a close corporation.[35]Motorich does not become one either, just because Spouses Reynaldo and Nenita Gruenberg owned 99.866% ofits subscribed capital stock.The [m]ere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personalities.[36]So too, a narrow distribution of ownership does not, by itself, make a close corporation.Petitioner citesManuel R. Dulay Enterprises, Inc. v. Court of Appeals[37]wherein the Court ruled that xxx petitioner corporation is classified as a close corporation and, consequently, a board resolution authorizing the sale or mortgage of the subject property is not necessary to bind the corporation for the action of its president.[38]But the factual milieu inDulayis not on all fours with the present case.InDulay,the sale of real property was contracted by the president of a close corporation with the knowledge and acquiescence of its board of directors.[39]In the present case, Motorich is not a close corporation, as previously discussed, and the agreement was entered into by the corporate treasurer without the knowledge of the board of directors.The Court is not unaware that there are exceptional cases where an action by a director, who singly is the controlling stockholder, may be considered as a binding corporate act and a board action as nothing more than a mere formality.[40]The presentcase, however, is not one of them.As stated by petitioner, Spouses Reynaldo and Nenita Gruenberg own almost 99.866% of Respondent Motorich.[41]Since Nenita is not the sole controlling stockholder of Motorich, the aforementioned exception does not apply.Grantingarguendothat the corporate veil of Motorich is to be disregarded, the subject parcel of land would then be treated as conjugal property of Spouses Gruenberg, because the same was acquired during their marriage.There being no indication that said spouses, who appear to have been married before the effectivity of the Family Code, have agreed to a different property regime, their property relations would be governed by conjugal partnership of gains.[42]As a consequence, Nenita Gruenberg could not have effected a sale of the subject lot because [t]here is no co-ownership between the spouses in the properties of the conjugal partnership of gains.Hence, neither spouse canalienate in favor of another his or her interest in the partnership or in any property belonging to it; neither spouse can ask for a partition of the properties before the partnership has been legally dissolved.[43]Assuming further, for the sake of argument, thatthe spouses property regime is the absolute community of property, the sale would still be invalid.Under this regime, alienation of community property must have the written consent of the other spouse or the authority of the court without which the disposition or encumbrance isvoid.[44]Both requirements are manifestly absent in the instant case.Third Issue:Challenged Portion of TSN ImmaterialPetitioner calls our attention to the following excerpt of the transcript of stenographic notes(TSN):QDid you ever represent to Mr. Co that you were authorized by the corporation to sell the property?AYes, sir.[45]Petitioner claims that the answer Yes was crossed out, and, in its place was written a No with an initial scribbled above it.[46]This, however, is insufficient to prove that Nenita Gruenberg was authorized to represent Respondent Motorich in the sale of its immovable property.Said excerpt should be understood in the context of her whole testimony.During her cross-examination, Respondent Gruenberg testified:QSo, you signed in your capacity as the treasurer?[A]Yes, sir.QEven then you kn[e]w all along that you [were] not authorized?AYes, sir.QYou stated on direct examination that you did not represent that you were authorized to sell the property?AYes, sir.QBut you also did not say that you were not authorized to sell the property, you did not tell that to Mr. Co, is that correct?AThat was not asked of me.QYes, just answer it.AI just told them that I was the treasurer of the corporation and it [was] also the president who [was] also authorized to sign on behalf of the corporation.QYou did not say that you were not authorized nor did you say that you were authorized?AMr. Co was very interested to purchase the property and he offered to put up aP100,000.00 earnest money at that time.That was our first meeting.[47]Clearly then, Nenita Gruenberg did not testify that Motorich had authorized her to sell its property.On the other hand, her testimony demonstrates that the president of Petitioner Corporation, in his great desire to buy the property, threw caution to the wind by offering and paying the earnest money without first verifying Gruenbergs authority to sell the lot.Fourth Issue:Damages and Attorneys FeesFinally, petitioner prays for damages and attorneys fees, alleging that [i]n an utter display of malice and bad faith, [r]espondents attempted and succeeded in impressing on the trial court and [the] Court of Appeals that Gruenberg did not represent herself as authorized by Respondent Motorich despite the receipt issued by the former specifically indicating that she was signing on behalf of Motorich Sales Corporation.Respondent Motorich likewise acted in bad faith when it claimed it did not authorize Respondent Gruenberg and that the contract [was] not binding, [insofar] as it [was] concerned, despite receipt and enjoyment of the proceeds of Gruenbergs act.[48]Assuming that Respondent Motorich was not a party to the alleged fraud, petitioner maintains that Respondent Gruenberg should be held liable because she acted fraudulently and in bad faith [in] representing herself as duly authorized by [R]espondent [C]orporation.[49]As already stated, we sustain the findings of both the trial and the appellate courts that the foregoing allegations lack factual bases.Hence, an award of damages or attorneys fees cannot be justified.The amount paid as earnest money was not proven to have redounded to the benefit of Respondent Motorich.Petitioner claims that said amount was deposited to the account of Respondent Motorich, because it was deposited with the account of Aren Commercial c/o Motorich Sales Corporation.[50]Respondent Gruenberg, however, disputes the allegations of petitioner.She testified as follows:QYou voluntarily accepted theP100,000.00, as a matter of fact, that was encashed, the check was encashed.AYes, sir, the check was paid in my name and I deposit[ed] it . . .QIn your account?AYes, sir.[51]In any event, Gruenberg offered to return the amount to petitionerxxx since the sale did not push through.[52]Moreover, we note that Andres Co is not a neophyte in the world of corporate business.He has been the president of Petitioner Corporation for more than ten years and has also served as chief executive of two other corporate entities.[53]Co cannot feign ignorance of the scope of the authority of a corporate treasurer such as Gruenberg.Neither can he be oblivious to his duty to ascertain the scope of Gruenbergs authorization to enter into a contract to sell a parcel of land belonging to Motorich.Indeed, petitioners claim of fraud and bad faith is unsubstantiated and fails to persuade the Court.Indubitably, petitioner appears to be the victim of its own officers negligence in entering into a contract with and paying an unauthorized officer of another corporation.As correctly ruled by the Court of Appeals, however, Nenita Gruenberg should be ordered to return to petitioner the amount she received as earnest money, as no one shall enrich himself at the expense of another,[54]a principle embodied in Article 2154 of the Civil Code.[55]Although there was no binding relation between them, petitioner paid Gruenberg on the mistaken belief that she had the authority to sell the property of Motorich.[56]Article 2155 of the Civil Code provides that [p]ayment by reason of a mistake in the construction or application of a difficult question of law may come within the scope of the preceding article.WHEREFORE, the petition is herebyDENIEDand the assailed Decision isAFFIRMED.SO ORDERED.G.R. No. L-2598 June 29, 1950C. ARNOLD HALL and BRADLEY P. HALL,petitioners,vs.EDMUNDO S. PICCIO, Judge of the Court of First Instance of Leyte, FRED BROWN, EMMA BROWN, HIPOLITA CAPUCIONG, in his capacity as receiver of the Far Eastern Lumber and Commercial Co., Inc.,respondents.Claro M. Recto for petitioners.Ramon Diokno and Jose W. Diokno for respondents.BENGZON,J.:This is petition to set aside all the proceedings had in civil case No. 381 of the Court of First Instance of Leyte and to enjoin the respondent judge from further acting upon the same.Facts: (1) on May 28, 1947, the petitioners C. Arnold Hall and Bradley P. Hall, and the respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S. Abella, signed and acknowledged in Leyte, the article of incorporation of the Far Eastern Lumber and Commercial Co., Inc., organized to engage in a general lumber business to carry on as general contractors, operators and managers, etc. Attached to the article was an affidavit of the treasurer stating that 23,428 shares of stock had been subscribed and fully paid with certain properties transferred to the corporation described in a list appended thereto.(2) Immediately after the execution of said articles of incorporation, the corporation proceeded to do business with the adoption of by-laws and the election of its officers.(3) On December 2, 1947, the said articles of incorporation were filed in the office of the Securities and Exchange Commissioner, for the issuance of the corresponding certificate of incorporation.(4) On March 22, 1948, pending action on the articles of incorporation by the aforesaid governmental office, the respondents Fred Brown, Emma Brown, Hipolita D. Chapman and Ceferino S. Abella filed before the Court of First Instance of Leyte the civil case numbered 381, entitled "Fred Brown et al.vs. Arnold C. Hall et al.", alleging among other things that the Far Eastern Lumber and Commercial Co. was an unregistered partnership; that they wished to have it dissolved because of bitter dissension among the members, mismanagement and fraud by the managers and heavy financial losses.(5) The defendants in the suit, namely, C. Arnold Hall and Bradley P. Hall, filed a motion to dismiss, contesting the court's jurisdiction and the sufficiently of the cause of action.(6) After hearing the parties, the Hon. Edmund S. Piccio ordered the dissolution of the company; and at the request of plaintiffs, appointed of the properties thereof, upon the filing of a P20,000 bond.(7) The defendants therein (petitioners herein) offered to file a counter-bond for the discharge of the receiver, but the respondent judge refused to accept the offer and to discharge the receiver. Whereupon, the present special civil action was instituted in this court. It is based upon two main propositions, to wit:(a) The court had no jurisdiction in civil case No. 381 to decree the dissolution of the company, because it being ade factocorporation, dissolution thereof may only be ordered in aquo warrantoproceeding instituted in accordance with section 19 of the Corporation Law.(b) Inasmuch as respondents Fred Brown and Emma Brown had signed the article of incorporation but only a partnership.Discussion: The second proposition may at once be dismissed. All the parties are informed that the Securities and Exchange Commission has not, so far, issued the corresponding certificate of incorporation. All of them know, or sought to know, that the personality of a corporation begins to exist only from the moment such certificate is issued not before (sec. 11, Corporation Law). The complaining associates have not represented to the others that they were incorporated any more than the latter had made similar representations to them. And as nobody was led to believe anything to his prejudice and damage, the principle of estoppel does not apply. Obviously this is not an instance requiring the enforcement of contractswith the corporationthrough the rule of estoppel.The first proposition above stated is premised on the theory that, inasmuch as the Far Eastern Lumber and Commercial Co., is ade factocorporation, section 19 of the Corporation Law applies, and therefore the court had not jurisdiction to take cognizance of said civil case number 381. Section 19 reads as follows:. . . The due incorporation of any corporations claiming in good faith to be a corporation under this Act and its right to exercise corporate powers 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 Insular Government on information of the Attorney-General.There are least two reasons why this section does not govern the situation. Not having obtained the certificate of incorporation, the Far Eastern Lumber and Commercial Co. even its stockholders may not probably claim "in good faith" to be a corporation.Under our statue it is to be noted (Corporation Law, sec. 11) that it is the issuance of a certificate of incorporation by the Director of the Bureau of Commerce and Industry which calls a corporation into being. The immunity if collateral attack is granted to corporations "claiming in good faith to be a corporation under this act." Such a claim is compatible with the existence of errors and irregularities; but not with a total or substantial disregard of the law. Unless there has been an evident attempt to comply with the law the claim to be a corporation "under this act" could not be made "in good faith." (Fisher on the Philippine Law of Stock Corporations, p. 75.See alsoHumphreysvs. Drew, 59 Fla., 295; 52 So., 362.)Second, this is not a suit in whichthe corporationis a party. This is a litigation between stockholders of the alleged corporation, for the purpose of obtaining its dissolution. Even the existence of ade jurecorporation may be terminated in a private suit for its dissolution between stockholders, without the intervention of the state.There might be room for argument on the right of minority stockholders to sue for dissolution;1but that question does not affect the court's jurisdiction, and is a matter for decision by the judge, subject to review on appeal. Whkch brings us to one principal reason why this petition may not prosper, namely: the petitioners have their remedy by appealing the order of dissolution at the proper time.There is a secondary issue in connection with the appointment of a receiver. But it must be admitted that receivership is proper in proceedings for dissolution of a company or corporation, and it was no error to reject the counter-bond, the court having declared the dissolution. As to the amount of the bond to be demanded of the receiver, much depends upon the discretion of the trial court, which in this instance we do not believe has been clearly abused.Judgment: The petition will, therefore, be dismissed, with costs. The preliminary injunction heretofore issued will be dissolved.Ozaeta, Pablo, Tuason, Montemayor, and Reyes, JJ.,concur.SAPPARI K. SAWADJAAN,petitioner,vs. THE HONORABLE COURT OF APPEALS, THE CIVIL SERVICE COMMISSION and AL-AMANAH INVESTMENT BANK OF THE PHILIPPINES,respondents.D E C I S I O NCHICO-NAZARIO,J.:This is a petition forcertiorariunder Rule 65 of the Rules of Court of the Decision[1]of the Court of Appeals of 30 March 1999 affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service Commission (CSC) dated 11 August 1994 and 11 April 1995, respectively, which in turn affirmed Resolution No. 2309 of the Board of Directors of the Al-Amanah Islamic Investment Bank of the Philippines (AIIBP) dated 13 December 1993, finding petitioner guilty of Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial to the Best Interest of the Service and dismissing him from the service, and its Resolution[2]of 15 December 1999 dismissing petitioners Motion for Reconsideration.The records show that petitioner Sappari K. Sawadjaan was among the first employees of the Philippine Amanah Bank (PAB) when it was created by virtue of Presidential Decree No. 264 on 02 August 1973. He rose through the ranks, working his way up from his initial designation as security guard, to settling clerk, bookkeeper, credit investigator, project analyst, appraiser/ inspector, and eventually, loans analyst.[3]In February 1988, while still designated as appraiser/investigator, Sawadjaan was assigned to inspect the properties offered as collaterals by Compressed Air Machineries and Equipment Corporation (CAMEC) for a credit line of Five Million Pesos (P5,000,000.00). The properties consisted of two parcels of land covered by Transfer Certificates of Title (TCTs) No. N-130671 and No. C-52576. On the basis of his Inspection and Appraisal Report,[4]the PAB granted the loan application. When the loan matured on 17 May 1989, CAMEC requested an extension of 180 days, but was granted only 120 days to repay the loan.[5]In the meantime, Sawadjaan was promoted to Loans Analyst I on 01 July 1989.[6]In January 1990, Congress passed Republic Act 6848 creating the AIIBP and repealing P.D. No. 264 (which created the PAB). All assets, liabilities and capital accounts of the PAB were transferred to the AIIBP,[7]and the existing personnel of the PAB were to continue to discharge their functions unless discharged.[8]In the ensuing reorganization, Sawadjaan was among the personnel retained by the AIIBP.When CAMEC failed to pay despite the given extension, the bank, now referred to as the AIIBP, discovered that TCT No. N-130671 was spurious, the property described therein non-existent, and that the property covered by TCT No. C-52576 had a prior existing mortgage in favor of one Divina Pablico.On 08 June 1993, the Board of Directors of the AIIBP created an Investigating Committee to look into the CAMEC transaction, which had cost the bank Six Million Pesos (P6,000,000.00) in losses.[9]The subsequent events, as found and decided upon by the Court of Appeals,[10]are as follows:On 18 June 1993, petitioner received a memorandum from Islamic Bank [AIIBP] Chairman Roberto F. De Ocampo charging him with Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial to the Best Interest of the Service and preventively suspending him.In his memorandum dated 8 September 1993, petitioner informed the Investigating Committee that he could not submit himself to the jurisdiction of the Committee because of its alleged partiality. For his failure to appear before the hearing set on 17 September 1993, after the hearing of 13 September 1993 was postponed due to the Manifestation of even date filed by petitioner, the Investigating Committee declared petitioner in default and the prosecution was allowed to present its evidenceex parte.On 08 December 1993, the Investigating Committee rendered a decision, the pertinent portions of which reads as follows:In view of respondent SAWADJAANS abject failure to perform his duties and assigned tasks as appraiser/inspector, which resulted to the prejudice and substantial damage to the Bank, respondent should be held liable therefore. At this juncture, however, the Investigating Committee is of the considered opinion that he could not be held liable for the administrative offense of dishonesty considering the fact that no evidence was adduced to show that he profited or benefited from being remiss in the performance of his duties. The record is bereft of any evidence which would show that he received any amount in consideration for his non-performance of his official duties.This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his official duties resulted to the prejudice and substantial damage to the Islamic Bank for which he should be held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE.Premises considered, the Investigating Committee recommends that respondent SAPPARI SAWADJAAN be meted the penalty of SIX (6) MONTHS and ONE (1) DAY SUSPENSION from office in accordance with the Civil Service Commissions Memorandum Circular No. 30, Series of 1989.On 13 December 1993, the Board of Directors of the Islamic Bank [AIIBP] adopted Resolution No. 2309 finding petitioner guilty of Dishonesty in the Performance of Official Duties and/or Conduct Prejudicial to the Best Interest of the Service and imposing the penalty of Dismissal from the Service.On reconsideration, the Board of Directors of the Islamic Bank [AIIBP] adopted the Resolution No. 2332 on 20 February 1994 reducing the penalty imposed on petitioner from dismissal to suspension for a period of six (6) months and one (1) day.On 29 March 1994, petitioner filed a notice of appeal to the Merit System Protection Board (MSPB).On 11 August 1994, the CSC adopted Resolution No. 94-4483 dismissing the appeal for lack of merit and affirming Resolution No. 2309 dated 13 December 1993 of the Board of Directors of Islamic Bank.On 11 April 1995, the CSC adopted Resolution No. 95-2574 denying petitioners Motion for Reconsideration.On 16 June 1995, the instant petition was filed with the Honorable Supreme Court on the following assignment of errors:I. Public respondent Al-Amanah Islamic Investment Bank of the Philippines has committed a grave abuse of discretion amounting to excess or lack of jurisdiction when it initiated and conducted administrative investigation without a validly promulgated rules of procedure in the adjudication of administrative cases at the Islamic Bank.II. Public respondent Civil Service Commission has committed a grave abuse of discretion amounting to lack of jurisdiction when it prematurely and falsely assumed jurisdiction of the case not appealed to it, but to the Merit System Protection Board.III. Both the Islamic Bank and the Civil Service Commission erred in finding petitioner Sawadjaan of having deliberately reporting false information and therefore guilty of Dishonesty and Conduct Prejudicial to the Best Interest of the Service and penalized with dismissal from the service.On 04 July 1995, the Honorable Supreme CourtEn Bancreferred this petition to this Honorable Court pursuant to Revised Administrative Circular No. 1-95, which took effect on 01 June 1995.We do not find merit [in] the petition.Anent the first assignment of error, a reading of the records would reveal that petitioner raises for the first time the alleged failure of the Islamic Bank [AIIBP] to promulgate rules of procedure governing the adjudication and disposition of administrative cases involving its personnel. It is a rule that issues not properly brought and ventilated below may not be raised for the first time on appeal, save in exceptional circumstances (Casolita, Sr. v. Court of Appeals, 275 SCRA 257) none of which, however, obtain in this case. Grantingarguendothat the issue is of such exceptional character that the Court may take cognizance of the same, still, it must fail. Section 26 of Republic Act No. 6848 (1990) provides:Section 26. Powers of the Board. The Board of Directors shall have thebroadest powers to manage the Islamic Bank, x x x The Board shall adopt policy guidelines necessary to carry out effectively the provisions of this Charter as well asinternal rules and regulationsnecessary for the conduct of its Islamic banking business and all matters related topersonnel organization, office functions and salary administration. (Italics ours)On the other hand, Item No. 2 of Executive Order No. 26 (1992) entitled Prescribing Procedure and Sanctions to Ensure Speedy Disposition of Administrative Cases directs, all administrative agencies to adopt and include in their respective Rules of Procedure provisions designed to abbreviate administrative proceedings.The above two (2) provisions relied upon by petitioner does not require the Islamic Bank [AIIBP] to promulgate rules of procedure before administrative discipline may be imposed upon its employees. The internal rules of procedures ordained to be adopted by the Board refers to that necessary for the conduct of its Islamic banking business and all matters related to personnel organization, office functions and salary administration. On the contrary, Section 26 of RA 6848 gives the Board of Directors of the Islamic Bank the broadest powers to manage the Islamic Bank. This grant of broad powers would be an idle ceremony if it would be powerless to discipline its employees.The second assignment of error must likewise fail. The issue is raised for the first timeviathis petition forcertiorari. Petitioner submitted himself to the jurisdiction of the CSC. Although he could have raised the alleged lack of jurisdiction in his Motion for Reconsideration of Resolution No. 94-4483 of the CSC, he did not do so. By filing the Motion for Reconsideration, he is estopped from denying the CSCs jurisdiction over him, as it is settled rule that a party who asks for an affirmative relief cannot later on impugn the action of the tribunal as without jurisdiction after an adverse result was meted to him. Although jurisdiction over the subject matter of a case may be objected to at any stage of the proceedings even on appeal, this particular rule, however, means that jurisdictional issues in a case can be raised only during the proceedings in said case and during the appeal of said case (Aragon v. Court of Appeals, 270 SCRA 603). The case at bar is a petition [for]certiorariand not an appeal.But even on the merits the argument must falter. Item No. 1 of CSC Resolution No. 93-2387 dated 29 June 1993, provides:Decisions in administrative cases involving officials and employees of the civil service appealable to the Commission pursuant to Section 47 of Book V of the Code (i.e., Administrative Code of 1987) including personnel actions such as contested appointments shall now be appealed directly to the Commission and not to the MSPB.InRubenecia v. Civil Service Commission,244 SCRA 640, 651, it was categorically held:. . . The functions of the MSPB relating to the determination of administrative disciplinary cases were, in other words, re-allocated to the Commission itself.Be that as it may, (i)t is hornbook doctrine that in order `(t)o ascertain whether a court (in this case, administrative agency) has jurisdiction or not, the provisions of the law should be inquired into. Furthermore, `the jurisdiction of the court must appear clearly from the statute law or it will not be held to exist.(Azarcon v. Sandiganbayan, 268 SCRA 747, 757) From the provision of law abovecited, the Civil Service Commission clearly has jurisdiction over the Administrative Case against petitioner.Anent the third assignment of error, we likewise do not find merit in petitioners proposition that he should not be liable, as in the first place, he was not qualified to perform the functions of appraiser/investigator because he lacked the necessary training and expertise, and therefore, should not have been found dishonest by the Board of Directors of Islamic Bank [AIIBP] and the CSC. Petitioner himself admits that the position of appraiser/inspector is one of the most serious [and] sensitive job in the banking operations. He should have been aware that accepting such a designation, he is obliged to perform the task at hand by the exercise of more than ordinary prudence. As appraiser/investigator, he is expected, among others, to check the authenticity of the documents presented by the borrower by comparing them with the originals on file with the proper government office. He should have made it sure that the technical descriptions in the location plan on file with the Bureau of Lands of Marikina, jibe with that indicated in the TCT of the collateral offered by CAMEC, and that the mortgage in favor of the Islamic Bank was duly annotated at the back of the copy of the TCT kept by the Register of Deeds of Marikina. This, petitioner failed to do, for which he must be held liable. That he did not profit from his false report is of no moment. Neither the fact that it was not deliberate or willful, detracts from the nature of the act as dishonest. What is apparent is he stated something to be a fact, when he really was not sure that it was so.WHEREFORE, above premises considered, the instant Petition is DISMISSED, and the assailed Resolutions of the Civil Service Commission are hereby AFFIRMED.On 24 March 1999, Sawadjaans counsel notified the courta quoof his change of address,[11]but apparently neglected to notify his client of this fact. Thus, on 23 July 1999, Sawadjaan, by himself, filed a Motion for New Trial[12]in the Court of Appeals based on the following grounds: fraud, accident, mistake or excusable negligence and newly discovered evidence. He claimed that he had recently discovered that at the time his employment was terminated, the AIIBP had not yet adopted its corporate by-laws. He attached a Certification[13]by the Securities and Exchange Commission (SEC) that it was only on 27 May 1992 that the AIIBP submitted its draft by-laws to the SEC, and that its registration was being held in abeyance pending certain corrections being made thereon. Sawadjaan argued that since the AIIBP failed to file its by-laws within 60 days from the passage of Rep. Act No. 6848, as required by Sec. 51 of the said law, the bank and its stockholders had already forfeited its franchise or charter, including its license to exist and operate as a corporation,[14]and thus no longer have the legal standing and personality to initiate an administrative case.Sawadjaans counsel subsequently adopted his motion, but requested that it be treated as a motion for reconsideration.[15]This motion was denied by the courta quoin its Resolution of 15 December 1999.[16]Still disheartened, Sawadjaan filed the present petition forcertiorariunder Rule 65 of the Rules of Court challenging the above Decision and Resolution of the Court of Appeals on the ground that the courta quoerred: i) in ignoring the facts and evidences that the alleged Islamic Bank has no valid by-laws; ii) in ignoring the facts and evidences that the Islamic Bank lost its juridical personality as a corporation on 16 April 1990; iii) in ignoring the facts and evidences that the alleged Islamic Bank and its alleged Board of Directors have no jurisdiction to act in the manner they did in the absence of a valid by-laws; iv) in not correcting the acts of the Civil Service Commission who erroneously rendered the assailed Resolutions No. 94-4483 and No. 95-2754 as a result of fraud, falsification and/or misrepresentations committed by Farouk A. Carpizo and his group, including Roberto F. de Ocampo; v) in affirming an unconscionably harsh and/or excessive penalty; and vi) in failing to consider newly discovered evidence and reverse its decision accordingly.Subsequently, petitioner Sawadjaan filed anEx-parteUrgent Motion for Additional Extension of Time to File a Reply (to the Comments of Respondent Al-Amanah Investment Bank of the Philippines),[17]Reply (to Respondents Consolidated Comment,)[18]and Reply (to the Alleged Comments of Respondent Al-Amanah Islamic Bank of the Philippines).[19]On 13 October 2000, he informed this Court that he had terminated his lawyers services, and, by himself, prepared and filed the following: 1) Motion for New Trial;[20]2) Motion to Declare Respondents in Default and/or Having Waived their Rights to Interpose Objection to Petitioners Motion for New Trial;[21]3)Ex-ParteUrgent Motions to Punish Attorneys Amado D. Valdez, Elpidio J. Vega, Alda G. Reyes, Dominador R. Isidoro, Jr., and Odilon A. Diaz for Being in Contempt of Court & to Inhibit them from Appearing in this Case Until they Can Present Valid Evidence of Legal Authority;[22]4) Opposition/Reply (to Respondent AIIBPs Alleged Comment);[23]5)Ex-ParteUrgent Motion to Punish Atty. Reynaldo A. Pineda for Contempt of Court and the Issuance of a Commitment Order/Warrant for His Arrest;[24]6) Reply/Opposition (To the Formal Notice of Withdrawal of Undersigned Counsel as Legal Counsel for the Respondent Islamic Bank with Opposition to Petitioners Motion to Punish Undersigned Counsel for Contempt of Court for the Issuance of a Warrant of Arrest);[25]7) Memorandum for Petitioner;[26]8) Opposition to SolGens Motion for Clarification with Motion for Default and/or Waiver of Respondents to File their Memorandum;[27]9) Motion for Contempt of Court and Inhibition/Disqualification with Opposition to OGCCs Motion for Extension of Time to File Memorandum;[28]10) Motion for Enforcement (In Defense of the Rule of Law);[29]11) Motion and Opposition (Motion to Punish OGCCs Attorneys Amado D. Valdez, Efren B. Gonzales, Alda G. Reyes, Odilon A. Diaz and Dominador R. Isidoro, Jr., for Contempt of Court and the Issuance of a Warrant for their Arrest; and Opposition to their Alleged Manifestation and Motion Dated February 5, 2002);[30]12) Motion for Reconsideration of Item (a) of Resolution dated 5 February 2002 with Supplemental Motion for Contempt of Court;[31]13) Motion for Reconsideration of Portion of Resolution Dated 12 March 2002;[32]14) Ex-Parte Urgent Motion for Extension of Time to File Reply Memorandum (To: CSC and AIIBPs Memorandum);[33]15) Reply Memorandum (To: CSCs Memorandum) With Ex-Parte Urgent Motion for Additional Extension of time to File Reply Memorandum (To: AIIBPs Memorandum);[34]and 16) Reply Memorandum (To: OGCCs Memorandum for Respondent AIIBP).[35]Petitioners efforts are unavailing, and we deny his petition for its procedural and substantive flaws.The general rule is that the remedy to obtain reversal or modification of the judgment on the merits is appeal. This is true even if the error, or one of the errors, ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the decision.[36]The records show that petitioners counsel received the Resolution of the Court of Appeals denying his motion for reconsideration on 27 December 1999. The fifteen day reglamentary period to appeal under Rule 45 of the Rules of Court therefore lapsed on 11 January 2000. On 23 February 2000, over a month after receipt of the resolution denying his motion for reconsideration, the petitioner filed his petition forcertiorariunder Rule 65.It is settled that a special civil action forcertiorariwill not lie as a substitute for the lost remedy of appeal,[37]and though there are instances[38]where the extraordinary remedy ofcertiorarimay be resorted to despite the availability of an appeal,[39]we find no special reasons for making out an exception in this case.Even if we were to overlook this fact in the broader interests of justice and treat this as a special civil action forcertiorariunder Rule 65,[40]the petition would nevertheless be dismissed for failure of the petitioner to show grave abuse of discretion. Petitioners recurrent argument, tenuous at its very best, is premised on the fact that since respondent AIIBP failed to file its by-laws within the designated 60 days from the effectivity of Rep. Act No. 6848, all proceedings initiated by AIIBP and all actions resulting therefrom are a patent nullity. Or, in his words, the AIIBP and its officers and Board of Directors,. . . [H]ave no legal authority nor jurisdiction to manage much less operate the Islamic Bank, file administrative charges and investigate petitioner in the manner they did and allegedly passed Board Resolution No. 2309 on December 13, 1993 which isnull and voidforlack of an (sic)authorized and valid by-laws. The CIVIL SERVICE COMMISSION was therefore affirming, erroneously, a null and void Resolution No. 2309 dated December 13, 1993 of the Board of Directors of Al-Amanah Islamic Investment Bank of the Philippines in CSC Resolution No. 94-4483 dated August 11, 1994. A motion for reconsideration thereof was denied by the CSC in its Resolution No. 95-2754 dated April 11, 1995. Both acts/resolutions of the CSC are erroneous, resulting from fraud, falsifications and misrepresentations of the alleged Chairman and CEO Roberto F. de Ocampo and the alleged Director Farouk A. Carpizo and his group at the alleged Islamic Bank.[41]Nowhere in petitioners voluminous pleadings is there a showing that the courta quocommitted grave abuse of discretion amounting to lack or excess of jurisdiction reversible by a petition forcertiorari. Petitioner already raised the question of AIIBPs corporate existence and lack of jurisdiction in his Motion for New Trial/Motion for Reconsideration of 27 May 1997 and was denied by the Court of Appeals. Despite the volume of pleadings he has submitted thus far, he has added nothing substantial to his arguments.The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here represented by the Office of the Government Corporate Counsel, the principal law office of government-owned corporations, one of which is respondent bank.[42]At the very least, by its failure to submit its by-laws on time, the AIIBP may be considered ade factocorporation[43]whose right to exercise corporate powers may not be inquired into collaterally in any private suit to which such corporations may be a party.[44]Moreover, a corporation which has failed to file its by-laws within the prescribed period does notipso factolose its powers as such. The SEC Rules on Suspension/Revocation of the Certificate of Registration of Corporations,[45]details the procedures and remedies that may be availed of before an order of revocation can be issued. There is no showing that such a procedure has been initiated in this case.In any case, petitioners argument is irrelevant because this case is not a corporate controversy, but a labor dispute; and it is an employers basic right to freely select or discharge its employees, if only as a measure of self-protection against acts inimical to its interest.[46]Regardless of whether AIIBP is a corporation, a partnership, a sole proprietorship, or asari-saristore, it is an undisputed fact that AIIBP is the petitioners employer. AIIBP chose to retain his services during its reorganization, controlled the means and methods by which his work was to be performed, paid his wages, and, eventually, terminated his services.[47]And though he has had ample opportunity to do so, the petitioner has not alleged that he is anything other than an employee of AIIBP. He has neither claimed, nor shown, that he is a stockholder or an officer of the corporation. Having accepted employment from AIIBP, and rendered his services to the said bank, received his salary, and accepted the promotion given him, it is now too late in the day for petitioner to question its existence and its power to terminate his services. One who assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on the ground that there was in fact no corporation.[48]Even if we were to consider the facts behind petitioner Sawadjaans dismissal from service, we would be hard pressed to find error in the decision of the AIIBP.As appraiser/investigator, the petitioner was expected to conduct an ocular inspection of the properties offered by CAMEC as collaterals and check the copies of the certificates of title against those on file with the Registry of Deeds. Not only did he fail to conduct these routine checks, but he also deliberately misrepresented in his appraisal report that after reviewing the documents and conducting a site inspection, he found the CAMEC loan application to be in order. Despite the number of pleadings he has filed, he has failed to offer an alternative explanation for his actions.When he was informed of the charges against him and directed to appear and present his side on the matter, the petitioner sent instead a memorandum questioning the fairness and impartiality of the members of the investigating committee and refusing to recognize their jurisdiction over him. Nevertheless, the investigating committee rescheduled the hearing to give the petitioner another chance, but he still refused to appear before it.Thereafter, witnesses were presented, and a decision was rendered finding him guilty of dishonesty and dismissing him from service. He sought a reconsideration of this decision and the same committee whose impartiality he questioned reduced their recommended penalty to suspension for six months and one day. The board of directors, however, opted to dismiss him from service.On appeal to the CSC, the Commission found that Sawadjaans failure to perform his official duties greatly prejudiced the AIIBP, for which he should be held accountable. It held that:. . . (I)t is crystal clear that respondent SAPPARI SAWADJAAN was remiss in the performance of his duties as appraiser/inspector. Had respondent performed his duties as appraiser/inspector, he could have easily noticed that the property located at Balintawak, Caloocan City covered by TCT No. C-52576 and which is one of the properties offered as collateral by CAMEC is encumbered to Divina Pablico. Had respondent reflected such fact in his appraisal/inspection report on said property the ISLAMIC BANK would not have approved CAMECs loan of P500,000.00 in 1987 and CAMECs P5 Million loan in 1988, respondent knowing fully well the Banks policy of not accepting encumbered properties as collateral.Respondent SAWADJAANs reprehensible act is further aggravated when he failed to check and verify from the Registry of Deeds of Marikina the authenticity of the property located at Mayamot, Antipolo, Rizal covered by TCT No. N-130671 and which is one of the properties offered as collateral by CAMEC for its P5 Million loan in 1988. If he only visited and verified with the Register of Deeds of Marikina the authenticity of TCT No. N-130671 he could have easily discovered that TCT No. N-130671 is fake and the property described therein non-existent.. . .This notwithstanding, respondent cannot escape liability. As adverted to earlier, his failure to perform his official duties resulted to the prejudice and substantial damage to the ISLAMIC BANK for which he should be held liable for the administrative offense of CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE.[49]From the foregoing, we find that the CSC and the courta quocommitted no grave abuse of discretion when they sustained Sawadjaans dismissal from service. Grave abuse of discretion implies such capricious and whimsical exercise of judgment as equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[50]The records show that the respondents did none of these; they acted in accordance with the law.WHEREFORE, the petition is DISMISSED. The Decision of the Court of Appeals of 30 March 1999 affirming Resolutions No. 94-4483 and No. 95-2754 of the Civil Service Commission, and its Resolution of 15 December 1999 are herebyAFFIRMED. Costs against the petitioner.SO ORDERED.G.R. No. L-37640December 21, 1933THE GOVERNMENT OF THE PHILIPPINE ISLANDS,Plaintiff-Appellee, vs.EL AHORRO INSULAR,Defendant-Appellant.Ramirez and Ortigas for appellant.Attorney-General Jaranilla for appellee.IMPERIAL,J.:On September 28, 1931, the Government of the Philippine Islands, through the Attorney-General, institutedquo warrantoproceedings against El Ahorro Insular, a mutual building and loan association, organized under Act No. 1459 commonly known as the "Corporation Law", as amended.chanroblesvirtualawlibrarychanrobles virtual law libraryThe action was based on eight alleged causes of action under which the plaintiff sought the following remedies: (1) That the defendant be deprived of all its corporate rights, privileges and franchises; (2) that the defendant corporation be dissolved; and (3) that the plaintiff be granted such other just and equitable relief. The dispositive part of the judgment rendered therein reads as follows:For the foregoing reasons, the defendant corporation is hereby ordered to comply with the orders and instructions of the Bank Commissioner and the Secretary of Finance mentioned in the first, second, third, fourth and seventh causes of action shall become final. If the defendant fails or refuses to comply with this order, the defendant corporation shall be dissolved.chanroblesvirtualawlibrarychanrobles virtual law libraryIt seems to the court that it would work a great hardship on the defendant and be impracticable to require it to carry into effect the orders mentioned in the first and fourth causes of action from the beginning of its operations. Said orders will therefore be given effect from the first of January, 1932.chanroblesvirtualawlibrarychanrobles virtual law libraryThe defendant will pay the costs. It is so ordered.The defendant excepted to the decisionin toto. However, in its brief it assigns as alleged error only that part thereof relative to the first, third and seventh causes of action. Inasmuch as the present decision hinges only on the four alleged errors relied upon, it relieves us of the task of discussing the questions involved in the other causes of action alleged in the complaint. The assignments of error in question, as translated, read as follows:I. The trial court erred in prohibiting to defendant from paying a certain compensation to its incorporators:(a) Because the said incorporators were not parties to the suit.(b) Because the compensation was just and valid.II. The trial court erred in ordering the defendant to demand the payment of certain loans obtained on "fundadores" shares:(a) Because the plaintiff failed to prove the facts as alleged therein.(b) Because a suit involving the same transaction is pending before this Honorable Court.(c) Because the whole transaction was perfectly valid and legal.III. The trial court erred in holding it illegal for the defendant to maintain a certain proportion between its share by means of closing the issuance of certain shares.chanroblesvirtualawlibrarychanrobles virtual law libraryIV. The trial court erred in denying the defendant's motion for a new trial.The facts relative to the first assignment of error are as follows: On February 23, 1930, at the general meeting of the stockholders of the defendant corporation, the resolution Exhibit J granting a compensation of P140,000 to six incorporators was adopted. For one reason or another, or perhaps because they already doubted the legality thereof, the beneficiaries renounced said compensation. At another general meeting of the stockholders held on February 22, 1931, the resolution Exhibit L was unanimously approved, whereby the board of directors was ordered to set aside annually a sum equivalent to between 2 per cent and 8 per cent of the net profits of the corporation, which sum must not exceed P140,000, for the purpose of compensating equally six incorporators. The incorporators likewise renounced such compensation. Notwithstanding said renunciations, at least the last resolution subsists. However, neither the board of directors nor the stockholders would repeal it in spite of the instructions given by the Bank Commissioner to the effect that they were illegal on the ground that they are in conflict with the spirit and purpose of mutual building and loan associations and with the express provisions of the Corporation Law.chanroblesvirtualawlibrarychanrobles virtual law libraryThe defendant contends that the compensation voted by the stockholders to be given to the incorporators is valid and is within the scope of its corporate powers. In the cases ofBarretto vs. La Previsora Filipina(57 Phil., 649), andViuda de Barretto vs. La PrevisoraFilipina(p. 212,post), in which the decisions rendered have been published recently, it was held that compensations and remunerations of similar character are null and void and illegal on the ground that they do not constitute a contract between the beneficiaries and the corporation, and that they are violative of the mutuality and cooperation which are the characteristic purposes that distinguish mutual building and loan associations from other ordinary corporations.chanroblesvirtualawlibrarychanrobles virtual law libraryHowever, the defendant insists that the trial court erred in that respect: (a) Because judgment was rendered against the incorporators-beneficiaries without giving them a chance to be heard, and (b) because in the case ofGovernment of the Philippine Islandsvs.El Hogar Filipino(50 Phil., 399), another clause granting 5 per cent of the net profits of the corporation in favor of the founder thereof was held to be valid.chanroblesvirtualawlibrarychanrobles virtual law libraryIn fact and in conformity with the provisions of the procedural law, no judgment has been rendered in the present case against the incorporators in whose favor the compensation was granted. It should be observed that the action instituted by the Government is in the nature ofquo warrantoproceedings for the sole purpose of testing the validity of certain resolutions adopted by the defendant. It is for this reason that the incorporators were not included as parties defendant. Neither was there any necessity of doing so. Whether the incorporators acquired any enforceable right under such resolutions or not, is a question to be decided between them and the defendant, to the exclusion of the herein plaintiff.chanroblesvirtualawlibrarychanrobles virtual law libraryThe case of El Hogar Filipino invoked by the defendant, was also taken into consideration when similar questions raised in the Barretto cases were decided. It was then held that there was no similarity in the facts involved therein on the ground that in the El Hogar case there had been a contract ratified by it through its board of directors and because some of the considerations of the said contract had been: the important services which the founder thereof was to render; the loan of P6,000 which he granted without interest; his payment of the organization expenses out of his own pocket and his promise to the effect that the capital of the corporation would not be less than P400,000. None of these considerations are found in the case of the incorporators. As we understand, the only consideration of the proposed compensation is the alleged services rendered by them prior and up to the time of the incorporation of the defendant.chanroblesvirtualawlibrarychanrobles virtual law libraryThe second assignment of error has its own origin in a clause in the by-laws, which reads as follows:Paid-up shares denominated "fundadores" shares shall have a par value of two hundred pesos (P200) each, fully paid, and shall be issued from the date the association is incorporated until such time as the Board of Directors deems such issuance closed, provided that shares of this series shall not exceed two thousand five hundred (2,500) in number. Until January 1, 1933, these shares bear interest at the rate of 10 per cent per annum payable on the 31st of December of every calendar year. However, from the aforesaid date forward, they shall bear interest at the rate of 12 per cent annum payable at the expiration of every semester. Holders of this kind of shares shall have no other participation in the profits of the corporation than the right to collect the afore-stated fixed dividend . . . .Several organizers and directors of the defendant corporation, their relatives and business associates subscribed for the "fundadores" shares paying only 20 per cent or less of the par value thereof and issuing promissory notes for the unpaid balance, secured by the pledge of the same shares so issued. The Bank Commissioner objected to this method of operation and ordered that said shares be cancelled or full payment thereof be demanded of the subscribers. The defendant appealed to the Secretary of Finance who granted it a period of ten days within which to demand the payment in cash of all the promissory notes secured by the "fundadores" shares, adding that in case said promissory notes are not paid for within the required period, the validity of the shares already issued shall not thenceforth be questioned, provided however that no loan on said "fundadores" shares would from that time on be granted unless made within six months from the date they are fully paid for and the Bank Commissioner is satisfied that it is abona fidetransaction and permits it. He ruled, further, that in case the promissory notes in question were not paid within ten days, the corresponding "fundadores" shares would be considered null and void and must be cancelled.chanroblesvirtualawlibrarychanrobles virtual law libraryInstead of complying with the above-mentioned resolutions, the defendant instituted civil case No. 37703 of the Court of First Instance of Manila which resulted in a decision sustaining the Bank Commissioner and the Secretary of Finance and holding their disputed resolutions valid. Said case was appealed and registered in this court as G.R. No. 35982.1The said appeal, however, was dismissed upon petition of the herein defendant, the plaintiff-appellant, as evidenced by the resolution of this court dated August 11,1932.chanroblesvirtualawlibrarychanrobles virtual law libraryAs hereinbefore stated, the court sustaining the Bank Commissioner and the Secretary of Finance held that the transaction in question was illegal and the instructions given by the aforesaid administrative authorities should have been complied with. However, the defendant claims in its second assignment of error that the judgment of the trial court is untenable and erroneous: (a) Because the plaintiff has not proven the facts as alleged by it; (b) because a suit involving the transaction in question is pending before this court; and (c) because the whole transaction is valid and legal.chanroblesvirtualawlibrarychanrobles virtual law libraryWith respect to the first point, we are of the opinion that the facts stated therein are beyond question. The defendant itself admits them implicitly in the course of its arguments. The existence of such kind of shares cannot be denied.chanroblesvirtualawlibrarychanrobles virtual law libraryAs to the pending suit, it may be noted that the case instituted by the defendant against Unson and Martin, G. R. No. 35982,supra, has already been decided, having resulted in the dismissal of the appeal taken therein. If the alleged pendency of the said case was a bar to the discussion of the point in controversy in this case, undoubtedly the defendant wished to convey the idea that the final judgment that would be rendered therein should be respected by the parties. If such is the theory, as it undoubtedly is, it is unnecessary to pass upon this point of the present appeal, on the ground that it had already been decided conclusively in the judgment rendered by the trial court in the aforesaid case, which judgment became final upon the dismissal of the appeal taken therefrom. For this reason the Attorney-General abstained from discussing the second assignment of error in detail in his brief. We deem it likewise our duty to abstain from passing upon this same point which had already been decided finally and in which the parties abided by the judgment rendered therein.chanroblesvirtualawlibrarychanrobles virtual law libraryIn our opinion, the third assignment of error involves purely academic and imaginary questions. We have read the decision of the trial court carefully but we have not found anything therein to the effect that it has held illegal the maintenance by the defendant of a certain proportion between its shares by means of closing the issuance of other shares. What the trial court really said in connection with paragraph (c) of the second cause of action was that the tables contained in the defendant's prospectus, whereby it assured that the accumulative shares would mature after a certain number of years and would earn as general average a dividend of 18 per cent, were illegal and misleading to the public on the ground that the defendant and its board of directors could not make any such promises nor give similar assurances to anybody inasmuch as the results thereof were dependent upon circumstances over which it had absolutely no control. It is a far cry from this pronouncement to the proposition submitted by the defendant in its third assignment of error. The Attorney-General has called attention to this same fact in his brief. We conclude that the question raised by the defendant in its aforesaid assignment of error is purely imaginary and anticipatory. Therefore, it merits no discussion nor solution.chanroblesvirtualawlibrarychanrobles virtual law libraryBeing a mere corollary of the former ones, the last assignment of error does not deserve any further consideration.chanroblesvirtualawlibrarychanrobles virtual law libraryWherefore, being convinced that the judgment appealed from is in accordance with the law in so far as it refers to the questions hereinbefore discussed and decided, it is hereby affirmed, with the costs against the defendant-appellant. So ordered.chanroblesvirtualawlibrarychanrobles virtual law libraryStreet, Malcolm, Butte, and Diaz,JJ., concur.chanrobles virtual law libraryG.R. No. L-43350 December 23, 1937CAGAYAN FISHING DEVELOPMENT CO., INC.,plaintiff-appellant,vs.TEODORO SANDIKO,defendant-appellee.Arsenio P. Dizon for appellant.Sumulong, Lavides and Sumulong for appellee.LAUREL,J.:This is an appeal from a judgment of the Court of First Instance of Manila absolving the defendant from the plaintiff's complaint.Manuel Tabora is the registered owner of four parcels of land situated in the barrio of Linao, town of Aparri, Province of Cagayan, as evidenced by transfer certificate of title No. 217 of the land records of Cagayan, a copy of which is in evidence as Exhibit 1. To guarantee the payment of a loan in the sum of P8,000, Manuel Tabora, on August 14, 1929, executed in favor of the Philippine National Bank a first mortgage on the four parcels of land above-mentioned. A second mortgage in favor of the same bank was in April of 1930 executed by Tabora over the same lands to guarantee the payment of another loan amounting to P7,000. A third mortgage on the same lands was executed on April 16, 1930 in favor of Severina Buzon to whom Tabora was indebted in the sum of P2,9000. These mortgages were registered and annotations thereof appear at the back of transfer certificate of title No. 217.On May 31, 1930, Tabora executed a public document entitled "Escritura de Transpaso de Propiedad Inmueble" (Exhibit A) by virtue of which the four parcels of land owned by him was sold to the plaintiff company, said to under process of incorporation, in consideration of one peso (P1) subject to the mortgages in favor of the Philippine National Bank and Severina Buzon and, to the condition that the certificate of title to said lands shall not be transferred to the name of the plaintiff company until the latter has fully and completely paid Tabora's indebtedness to the Philippine National Bank.The plaintiff company filed its article incorporation with the Bureau of Commerce and Industry on October 22, 1930 (Exhibit 2). A year later, on October 28, 1931, the board of directors of said company adopted a resolution (Exhibit G) authorizing its president, Jose Ventura, to sell the four parcels of lands in question to Teodoro Sandiko for P42,000. Exhibits B, C and D were thereafter made and executed. Exhibit B is a deed of sale executed before a notary public by the terms of which the plaintiff sold ceded and transferred to the defendant all its right, titles, and interest in and to the four parcels of land described in transfer certificate in turn obligated himself to shoulder the three mortgages hereinbefore referred to. Exhibit C is a promisory note for P25,300. drawn by the defendant in favor of the plaintiff, payable after one year from the date thereof. Exhibit D is a deed of mortgage executed before a notary public in accordance with which the four parcels of land were given a security for the payment of the promissory note, Exhibit C. All these three instrument were dated February 15, 1932.The defendant having failed to pay the sum stated in the promissory note, plaintiff, on January 25, 1934, brought this action in the Court of First Instance of Manila praying that judgment be rendered against the defendant for the sum of P25,300, with interest at legal rate from the date of the filing of the complaint, and the costs of the suits. After trial, the court below, on December 18, 1934, rendered judgment absolving the defendant, with costs against the plaintiff. Plaintiff presented a motion for new trial on January 14, 1935, which motion was denied by the trial court on January 19 of the same year. After due exception and notice, plaintiff has appealed to this court and makes an assignment of various errors.In dismissing the complaint against the defendant, the court below, reached the conclusion that Exhibit B is invalid because of vice in consent and repugnancy to law. While we do not agree with this conclusion, we have however voted to affirm the judgment appealed from the reasons which we shall presently state.The transfer made by Tabora to the Cagayan fishing Development Co., Inc., plaintiff herein, was affected on May 31, 1930 (Exhibit A) and the actual incorporation of said company was affected later on October 22, 1930 (Exhibit 2). In other words, the transfer was made almost five months before the incorporation of the company. Unquestionably, a duly organized corporation has the power to purchase and hold such real property as the purposes for which such corporation was formed may permit and for this purpose may enter into such contracts as may be necessary (sec. 13, pars. 5 and 9, and sec. 14, Act No. 1459). But before a corporation may be said to be lawfully organized, many things have to be done. Among other things, the law requires the filing of articles of incorporation (secs. 6 et seq., Act. No. 1459). Although there is a presumption that all the requirements of law have been complied with (sec. 334, par. 31 Code of Civil Procedure), in the case before us it can not be denied that the plaintiff was not yet incorporated when it entered into a contract of sale, Exhibit A. The contract itself referred to the plaintiff as "una sociedad en vias de incorporacion." It was not even ade factocorporation at the time. Not being in legal existence then, it did not possess juridical capacity to enter into the contract.Corporations are creatures of the law, and can only come into existence in the manner prescribed by law. As has already been stated, general law authorizing the formation of corporations are general offers to any persons who may bring themselves within their provisions; and if conditions precedent are prescribed in the statute, or certain acts are required to be done, they are terms of the offer, and must be complied with substantially before legal corporate existence can be acquired. (14 C. J., sec. 111, p. 118.)That a corporation should have a full and complete organization and existence as an entity before it can enter into any kind of a contract or transact any business, would seem to be self evident. . . . A corporation, until organized, has no being, franchises or faculties. Nor do those engaged in bringing it into being have any power to bind it by contract, unless so authorized by the charter there is not a corporation nor does it possess franchise or faculties for it or others to exercise, until it acquires a complete existence. (Gent vs. Manufacturers and Merchant's Mutual Insurance Company, 107 Ill., 652, 658.)Boiled down to its naked reality, the contract here (Exhibit A) was entered into not bet