Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 119002

October 19, 2000

INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., petitioner,

vs.
HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL FEDERATION, respondents.
DECISION
KAPUNAN, J.:
On June 30 1989, petitioner International Express Travel and Tour Services, Inc., through its managing director,
wrote a letter to the Philippine Football Federation (Federation), through its president private respondent Henri
Kahn, wherein the former offered its services as a travel agency to the latter.1 The offer was accepted.
Petitioner secured the airline tickets for the trips of the athletes and officials of the Federation to the South East
Asian Games in Kuala Lumpur as well as various other trips to the People's Republic of China and Brisbane.
The total cost of the tickets amounted to P449,654.83. For the tickets received, the Federation made two partial
payments, both in September of 1989, in the total amount of P176,467.50. 2
On 4 October 1989, petitioner wrote the Federation, through the private respondent a demand letter requesting
for the amount of P265,894.33. 3 On 30 October 1989, the Federation, through the Project Gintong Alay, paid the
amount of P31,603.00.4
On 27 December 1989, Henri Kahn issued a personal check in the amount of P50,000 as partial payment for the
outstanding balance of the Federation.5 Thereafter, no further payments were made despite repeated demands.
This prompted petitioner to file a civil case before the Regional Trial Court of Manila. Petitioner sued Henri Kahn
in his personal capacity and as President of the Federation and impleaded the Federation as an alternative
defendant. Petitioner sought to hold Henri Kahn liable for the unpaid balance for the tickets purchased by the
Federation on the ground that Henri Kahn allegedly guaranteed the said obligation. 6
Henri Kahn filed his answer with counterclaim. While not denying the allegation that the Federation owed the
amount P207,524.20, representing the unpaid balance for the plane tickets, he averred that the petitioner has no
cause of action against him either in his personal capacity or in his official capacity as president of the
Federation. He maintained that he did not guarantee payment but merely acted as an agent of the Federation
which has a separate and distinct juridical personality.7
On the other hand, the Federation failed to file its answer, hence, was declared in default by the trial court. 8
In due course, the trial court rendered judgment and ruled in favor of the petitioner and declared Henri Kahn
personally liable for the unpaid obligation of the Federation. In arriving at the said ruling, the trial court
rationalized:
Defendant Henri Kahn would have been correct in his contentions had it been duly established that defendant
Federation is a corporation. The trouble, however, is that neither the plaintiff nor the defendant Henri Kahn has
adduced any evidence proving the corporate existence of the defendant Federation. In paragraph 2 of its
complaint, plaintiff asserted that "Defendant Philippine Football Federation is a sports association xxx." This has
not been denied by defendant Henri Kahn in his Answer. Being the President of defendant Federation, its
corporate existence is within the personal knowledge of defendant Henri Kahn. He could have easily denied
specifically the assertion of the plaintiff that it is a mere sports association, if it were a domestic corporation. But
he did not.
xxx
A voluntary unincorporated association, like defendant Federation has no power to enter into, or to ratify, a
contract. The contract entered into by its officers or agents on behalf of such association is not binding on, or
enforceable against it. The officers or agents are themselves personally liable.

x x x9
The dispositive portion of the trial court's decision reads:
WHEREFORE, judgment is rendered ordering defendant Henri Kahn to pay the plaintiff the principal sum of
P207,524.20, plus the interest thereon at the legal rate computed from July 5, 1990, the date the complaint was
filed, until the principal obligation is fully liquidated; and another sum of P15,000.00 for attorney's fees.
The complaint of the plaintiff against the Philippine Football Federation and the counterclaims of the defendant
Henri Kahn are hereby dismissed.
With the costs against defendant Henri Kahn.10
Only Henri Kahn elevated the above decision to the Court of Appeals. On 21 December 1994, the respondent
court rendered a decision reversing the trial court, the decretal portion of said decision reads:
WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED and SET ASIDE and
another one is rendered dismissing the complaint against defendant Henri S. Kahn. 11
In finding for Henri Kahn, the Court of Appeals recognized the juridical existence of the Federation. It rationalized
that since petitioner failed to prove that Henri Kahn guaranteed the obligation of the Federation, he should not be
held liable for the same as said entity has a separate and distinct personality from its officers.
Petitioner filed a motion for reconsideration and as an alternative prayer pleaded that the Federation be held
liable for the unpaid obligation. The same was denied by the appellate court in its resolution of 8 February 1995,
where it stated that:
As to the alternative prayer for the Modification of the Decision by expressly declaring in the dispositive portion
thereof the Philippine Football Federation (PFF) as liable for the unpaid obligation, it should be remembered that
the trial court dismissed the complaint against the Philippine Football Federation, and the plaintiff did not appeal
from this decision. Hence, the Philippine Football Federation is not a party to this appeal and consequently, no
judgment may be pronounced by this Court against the PFF without violating the due process clause, let alone
the fact that the judgment dismissing the complaint against it, had already become final by virtue of the plaintiff's
failure to appeal therefrom. The alternative prayer is therefore similarly DENIED. 12
Petitioner now seeks recourse to this Court and alleges that the respondent court committed the following
assigned errors:13
A. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER HAD DEALT
WITH THE PHILIPPINE FOOTBALL FEDERATION (PFF) AS A CORPORATE ENTITY AND IN NOT
HOLDING THAT PRIVATE RESPONDENT HENRI KAHN WAS THE ONE WHO REPRESENTED THE
PFF AS HAVING A CORPORATE PERSONALITY.
B. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING PRIVATE RESPONDENT
HENRI KAHN PERSONALLY LIABLE FOR THE OBLIGATION OF THE UNINCORPORATED PFF,
HAVING NEGOTIATED WITH PETITIONER AND CONTRACTED THE OBLIGATION IN BEHALF OF
THE PFF, MADE A PARTIAL PAYMENT AND ASSURED PETITIONER OF FULLY SETTLING THE
OBLIGATION.
C. ASSUMING ARGUENDO THAT PRIVATE RESPONDENT KAHN IS NOT PERSONALLY LIABLE,
THE HONORABLE COURT OF APPEALS ERRED IN NOT EXPRESSLY DECLARING IN ITS
DECISION THAT THE PFF IS SOLELY LIABLE FOR THE OBLIGATION.
The resolution of the case at bar hinges on the determination of the existence of the Philippine Football
Federation as a juridical person. In the assailed decision, the appellate court recognized the existence of the
Federation. In support of this, the CA cited Republic Act 3135, otherwise known as the Revised Charter of the
Philippine Amateur Athletic Federation, and Presidential Decree No. 604 as the laws from which said Federation
derives its existence.
As correctly observed by the appellate court, both R.A. 3135 and P.D. No. 604 recognized the juridical existence
of national sports associations. This may be gleaned from the powers and functions granted to these
associations. Section 14 of R.A. 3135 provides:
SEC. 14. Functions, powers and duties of Associations. - The National Sports' Association shall have the
following functions, powers and duties:

1. To adopt a constitution and by-laws for their internal organization and government;
2. To raise funds by donations, benefits, and other means for their purposes.
3. To purchase, sell, lease or otherwise encumber property both real and personal, for the
accomplishment of their purpose;
4. To affiliate with international or regional sports' Associations after due consultation with the executive
committee;
xxx
13. To perform such other acts as may be necessary for the proper accomplishment of their purposes
and not inconsistent with this Act.
Section 8 of P.D. 604, grants similar functions to these sports associations:
SEC. 8. Functions, Powers, and Duties of National Sports Association. - The National sports associations shall
have the following functions, powers, and duties:
1. Adopt a Constitution and By-Laws for their internal organization and government which shall be
submitted to the Department and any amendment thereto shall take effect upon approval by the
Department: Provided, however, That no team, school, club, organization, or entity shall be admitted as
a voting member of an association unless 60 per cent of the athletes composing said team, school, club,
organization, or entity are Filipino citizens;
2. Raise funds by donations, benefits, and other means for their purpose subject to the approval of the
Department;
3. Purchase, sell, lease, or otherwise encumber property, both real and personal, for the accomplishment
of their purpose;
4. Conduct local, interport, and international competitions, other than the Olympic and Asian Games, for
the promotion of their sport;
5. Affiliate with international or regional sports associations after due consultation with the Department;
xxx
13. Perform such other functions as may be provided by law.
The above powers and functions granted to national sports associations clearly indicate that these entities may
acquire a juridical personality. The power to purchase, sell, lease and encumber property are acts which may
only be done by persons, whether natural or artificial, with juridical capacity. However, while we agree with the
appellate court that national sports associations may be accorded corporate status, such does not automatically
take place by the mere passage of these laws.
It is a basic postulate that before a corporation may acquire juridical personality, the State must give its consent
either in the form of a special law or a general enabling act. We cannot agree with the view of the appellate court
and the private respondent that the Philippine Football Federation came into existence upon the passage of
these laws. Nowhere can it be found in R.A. 3135 or P.D. 604 any provision creating the Philippine Football
Federation. These laws merely recognized the existence of national sports associations and provided the
manner by which these entities may acquire juridical personality. Section 11 of R.A. 3135 provides:
SEC. 11. National Sports' Association; organization and recognition. - A National Association shall be organized
for each individual sports in the Philippines in the manner hereinafter provided to constitute the Philippine
Amateur Athletic Federation. Applications for recognition as a National Sports' Association shall be filed with the
executive committee together with, among others, a copy of the constitution and by-laws and a list of the
members of the proposed association, and a filing fee of ten pesos.
The Executive Committee shall give the recognition applied for if it is satisfied that said association will promote
the purposes of this Act and particularly section three thereof. No application shall be held pending for more than
three months after the filing thereof without any action having been taken thereon by the executive committee.
Should the application be rejected, the reasons for such rejection shall be clearly stated in a written
communication to the applicant. Failure to specify the reasons for the rejection shall not affect the application
which shall be considered as unacted upon: Provided, however, That until the executive committee herein
provided shall have been formed, applications for recognition shall be passed upon by the duly elected members

of the present executive committee of the Philippine Amateur Athletic Federation. The said executive committee
shall be dissolved upon the organization of the executive committee herein provided: Provided, further, That the
functioning executive committee is charged with the responsibility of seeing to it that the National Sports'
Associations are formed and organized within six months from and after the passage of this Act.
Section 7 of P.D. 604, similarly provides:
SEC. 7. National Sports Associations. - Application for accreditation or recognition as a national sports
association for each individual sport in the Philippines shall be filed with the Department together with, among
others, a copy of the Constitution and By-Laws and a list of the members of the proposed association.
The Department shall give the recognition applied for if it is satisfied that the national sports association to be
organized will promote the objectives of this Decree and has substantially complied with the rules and
regulations of the Department: Provided, That the Department may withdraw accreditation or recognition for
violation of this Decree and such rules and regulations formulated by it.
The Department shall supervise the national sports association: Provided, That the latter shall have exclusive
technical control over the development and promotion of the particular sport for which they are organized.
Clearly the above cited provisions require that before an entity may be considered as a national sports
association, such entity must be recognized by the accrediting organization, the Philippine Amateur Athletic
Federation under R.A. 3135, and the Department of Youth and Sports Development under P.D. 604. This fact of
recognition, however, Henri Kahn failed to substantiate. In attempting to prove the juridical existence of the
Federation, Henri Kahn attached to his motion for reconsideration before the trial court a copy of the constitution
and by-laws of the Philippine Football Federation. Unfortunately, the same does not prove that said Federation
has indeed been recognized and accredited by either the Philippine Amateur Athletic Federation or the
Department of Youth and Sports Development. Accordingly, we rule that the Philippine Football Federation is not
a national sports association within the purview of the aforementioned laws and does not have corporate
existence of its own.
Thus being said, it follows that private respondent Henry Kahn should be held liable for the unpaid obligations of
the unincorporated Philippine Football Federation. It is a settled principal in corporation law that any person
acting or purporting to act on behalf of a corporation which has no valid existence assumes such privileges and
becomes personally liable for contract entered into or for other acts performed as such agent. 14 As president of
the Federation, Henri Kahn is presumed to have known about the corporate existence or non-existence of the
Federation. We cannot subscribe to the position taken by the appellate court that even assuming that the
Federation was defectively incorporated, the petitioner cannot deny the corporate existence of the Federation
because it had contracted and dealt with the Federation in such a manner as to recognize and in effect admit its
existence.15 The doctrine of corporation by estoppel is mistakenly applied by the respondent court to the
petitioner. The application of the doctrine applies to a third party only when he tries to escape liability on a
contract from which he has benefited on the irrelevant ground of defective incorporation. 16 In the case at bar,
the petitioner is not trying to escape liability from the contract but rather is the one claiming from the contract.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. The decision of the Regional Trial
Court of Manila, Branch 35, in Civil Case No. 90-53595 is hereby REINSTATED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 136448 November 3, 1999
LIM TONG LIM, petitioner,
vs.

PHILIPPINE FISHING GEAR INDUSTRIES, INC., respondent.

PANGANIBAN, J.:
A partnership may be deemed to exist among parties who agree to borrow money to pursue a business and to
divide the profits or losses that may arise therefrom, even if it is shown that they have not contributed any capital
of their own to a "common fund." Their contribution may be in the form of credit or industry, not necessarily cash
or fixed assets. Being partner, they are all liable for debts incurred by or on behalf of the partnership. The liability
for a contract entered into on behalf of an unincorporated association or ostensible corporation may lie in a
person who may not have directly transacted on its behalf, but reaped benefits from that contract.
The Case
In the Petition for Review on Certiorari before us, Lim Tong Lim assails the November 26, 1998 Decision of the
Court
of
Appeals
in
CA-GR
CV
1
41477, which disposed as follows:
WHEREFORE, [there being] no reversible error in the appealed decision, the same is hereby
affirmed. 2
The decretal portion of the Quezon City Regional Trial Court (RTC) ruling, which was affirmed by the CA, reads
as follows:
WHEREFORE, the Court rules:
1. That plaintiff is entitled to the writ of preliminary attachment issued by this Court on September
20, 1990;
2. That defendants are jointly liable to plaintiff for the following amounts, subject to the
modifications as hereinafter made by reason of the special and unique facts and circumstances
and the proceedings that transpired during the trial of this case;
a. P532,045.00 representing [the] unpaid purchase price of the fishing nets
covered by the Agreement plus P68,000.00 representing the unpaid price of the
floats not covered by said Agreement;
b. 12% interest per annum counted from date of plaintiff's invoices and
computed on their respective amounts as follows:
i. Accrued interest of P73,221.00 on Invoice No. 14407 for
P385,377.80 dated February 9, 1990;
ii. Accrued interest for P27,904.02 on Invoice No. 14413 for
P146,868.00 dated February 13, 1990;
iii. Accrued interest of P12,920.00 on Invoice No. 14426 for
P68,000.00 dated February 19, 1990;
c. P50,000.00 as and for attorney's fees, plus P8,500.00 representing P500.00
per appearance in court;
d. P65,000.00 representing P5,000.00 monthly rental for storage charges on the
nets counted from September 20, 1990 (date of attachment) to September 12,
1991 (date of auction sale);
e. Cost of suit.
With respect to the joint liability of defendants for the principal obligation or for the
unpaid price of nets and floats in the amount of P532,045.00 and P68,000.00,
respectively, or for the total amount P600,045.00, this Court noted that these items were
attached to guarantee any judgment that may be rendered in favor of the plaintiff but,
upon agreement of the parties, and, to avoid further deterioration of the nets during the
pendency of this case, it was ordered sold at public auction for not less than
P900,000.00 for which the plaintiff was the sole and winning bidder. The proceeds of the
sale paid for by plaintiff was deposited in court. In effect, the amount of P900,000.00

replaced the attached property as a guaranty for any judgment that plaintiff may be able
to secure in this case with the ownership and possession of the nets and floats awarded
and delivered by the sheriff to plaintiff as the highest bidder in the public auction sale. It
has also been noted that ownership of the nets [was] retained by the plaintiff until full
payment [was] made as stipulated in the invoices; hence, in effect, the plaintiff attached
its own properties. It [was] for this reason also that this Court earlier ordered the
attachment bond filed by plaintiff to guaranty damages to defendants to be cancelled
and for the P900,000.00 cash bidded and paid for by plaintiff to serve as its bond in favor
of defendants.
From the foregoing, it would appear therefore that whatever judgment the plaintiff may
be entitled to in this case will have to be satisfied from the amount of P900,000.00 as
this amount replaced the attached nets and floats. Considering, however, that the total
judgment obligation as computed above would amount to only P840,216.92, it would be
inequitable, unfair and unjust to award the excess to the defendants who are not entitled
to damages and who did not put up a single centavo to raise the amount of P900,000.00
aside from the fact that they are not the owners of the nets and floats. For this reason,
the defendants are hereby relieved from any and all liabilities arising from the monetary
judgment obligation enumerated above and for plaintiff to retain possession and
ownership of the nets and floats and for the reimbursement of the P900,000.00
deposited by it with the Clerk of Court.
SO ORDERED. 3
The Facts
On behalf of "Ocean Quest Fishing Corporation," Antonio Chua and Peter Yao entered into a Contract dated
February 7, 1990, for the purchase of fishing nets of various sizes from the Philippine Fishing Gear Industries,
Inc. (herein respondent). They claimed that they were engaged in a business venture with Petitioner Lim Tong
Lim, who however was not a signatory to the agreement. The total price of the nets amounted to P532,045. Four
hundred pieces of floats worth P68,000 were also sold to the Corporation. 4
The buyers, however, failed to pay for the fishing nets and the floats; hence, private respondents filed a
collection suit against Chua, Yao and Petitioner Lim Tong Lim with a prayer for a writ of preliminary attachment.
The suit was brought against the three in their capacities as general partners, on the allegation that "Ocean
Quest Fishing Corporation" was a nonexistent corporation as shown by a Certification from the Securities and
Exchange Commission. 5 On September 20, 1990, the lower court issued a Writ of Preliminary Attachment,
which the sheriff enforced by attaching the fishing nets on board F/B Lourdes which was then docked at the
Fisheries Port, Navotas, Metro Manila.
Instead of answering the Complaint, Chua filed a Manifestation admitting his liability and requesting a
reasonable time within which to pay. He also turned over to respondent some of the nets which were in his
possession. Peter Yao filed an Answer, after which he was deemed to have waived his right to cross-examine
witnesses and to present evidence on his behalf, because of his failure to appear in subsequent hearings. Lim
Tong Lim, on the other hand, filed an Answer with Counterclaim and Crossclaim and moved for the lifting of the
Writ of Attachment. 6 The trial court maintained the Writ, and upon motion of private respondent, ordered the
sale of the fishing nets at a public auction. Philippine Fishing Gear Industries won the bidding and deposited with
the said court the sales proceeds of P900,000. 7
On November 18, 1992, the trial court rendered its Decision, ruling that Philippine Fishing Gear Industries was
entitled to the Writ of Attachment and that Chua, Yao and Lim, as general partners, were jointly liable to pay
respondent. 8
The trial court ruled that a partnership among Lim, Chua and Yao existed based (1) on the testimonies of the
witnesses presented and (2) on a Compromise Agreement executed by the three 9 in Civil Case No. 1492-MN
which Chua and Yao had brought against Lim in the RTC of Malabon, Branch 72, for (a) a declaration of nullity of
commercial documents; (b) a reformation of contracts; (c) a declaration of ownership of fishing boats; (d) an
injunction and (e) damages. 10 The Compromise Agreement provided:
a) That the parties plaintiffs & Lim Tong Lim agree to have the four (4) vessels
sold in the amount of P5,750,000.00 including the fishing net. This

P5,750,000.00 shall be applied as full payment for P3,250,000.00 in favor of JL

Holdings Corporation and/or Lim Tong Lim;
b) If the four (4) vessel[s] and the fishing net will be sold at a higher price than
P5,750,000.00 whatever will be the excess will be divided into 3: 1/3 Lim Tong
Lim; 1/3 Antonio Chua; 1/3 Peter Yao;
c) If the proceeds of the sale the vessels will be less than P5,750,000.00
whatever the deficiency shall be shouldered and paid to JL Holding Corporation
by 1/3 Lim Tong Lim; 1/3 Antonio Chua; 1/3 Peter Yao. 11
The trial court noted that the Compromise Agreement was silent as to the nature of their obligations, but that joint
liability could be presumed from the equal distribution of the profit and loss. 21
Lim appealed to the Court of Appeals (CA) which, as already stated, affirmed the RTC.
Ruling of the Court of Appeals
In affirming the trial court, the CA held that petitioner was a partner of Chua and Yao in a fishing business and
may thus be held liable as a such for the fishing nets and floats purchased by and for the use of the partnership.
The appellate court ruled:
The evidence establishes that all the defendants including herein appellant Lim Tong Lim
undertook a partnership for a specific undertaking, that is for commercial fishing . . . . Oviously,
the ultimate undertaking of the defendants was to divide the profits among themselves which is
what a partnership essentially is . . . . By a contract of partnership, two or more persons bind
themselves to contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves (Article 1767, New Civil Code). 13
Hence, petitioner brought this recourse before this Court. 14
The Issues
In his Petition and Memorandum, Lim asks this Court to reverse the assailed Decision on the following grounds:
I THE COURT OF APPEALS ERRED IN HOLDING, BASED ON A COMPROMISE
AGREEMENT THAT CHUA, YAO AND PETITIONER LIM ENTERED INTO IN A SEPARATE
CASE, THAT A PARTNERSHIP AGREEMENT EXISTED AMONG THEM.
II SINCE IT WAS ONLY CHUA WHO REPRESENTED THAT HE WAS ACTING FOR OCEAN
QUEST FISHING CORPORATION WHEN HE BOUGHT THE NETS FROM PHILIPPINE
FISHING, THE COURT OF APPEALS WAS UNJUSTIFIED IN IMPUTING LIABILITY TO
PETITIONER LIM AS WELL.
III THE TRIAL COURT IMPROPERLY ORDERED THE SEIZURE AND ATTACHMENT OF
PETITIONER LIM'S GOODS.
In determining whether petitioner may be held liable for the fishing nets and floats from respondent, the Court
must resolve this key issue: whether by their acts, Lim, Chua and Yao could be deemed to have entered into a
partnership.
This Court's Ruling
The Petition is devoid of merit.
First and Second Issues:
Existence of a Partnership
and Petitioner's Liability
In arguing that he should not be held liable for the equipment purchased from respondent, petitioner controverts
the CA finding that a partnership existed between him, Peter Yao and Antonio Chua. He asserts that the CA
based its finding on the Compromise Agreement alone. Furthermore, he disclaims any direct participation in the
purchase of the nets, alleging that the negotiations were conducted by Chua and Yao only, and that he has not
even met the representatives of the respondent company. Petitioner further argues that he was a lessor, not a
partner, of Chua and Yao, for the "Contract of Lease " dated February 1, 1990, showed that he had merely

leased to the two the main asset of the purported partnership the fishing boat F/B Lourdes. The lease was for
six months, with a monthly rental of P37,500 plus 25 percent of the gross catch of the boat.
We are not persuaded by the arguments of petitioner. The facts as found by the two lower courts clearly showed
that there existed a partnership among Chua, Yao and him, pursuant to Article 1767 of the Civil Code which
provides:
Art. 1767 By the contract of partnership, two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the profits among
themselves.
Specifically, both lower courts ruled that a partnership among the three existed based on the following factual
findings: 15
(1) That Petitioner Lim Tong Lim requested Peter Yao who was engaged in commercial fishing to
join him, while Antonio Chua was already Yao's partner;
(2) That after convening for a few times, Lim, Chua, and Yao verbally agreed to acquire two
fishing boats, the FB Lourdes and the FB Nelson for the sum of P3.35 million;
(3) That they borrowed P3.25 million from Jesus Lim, brother of Petitioner Lim Tong Lim, to
finance the venture.
(4) That they bought the boats from CMF Fishing Corporation, which executed a Deed of Sale
over these two (2) boats in favor of Petitioner Lim Tong Lim only to serve as security for the loan
extended by Jesus Lim;
(5) That Lim, Chua and Yao agreed that the refurbishing, re-equipping, repairing, dry docking
and other expenses for the boats would be shouldered by Chua and Yao;
(6) That because of the "unavailability of funds," Jesus Lim again extended a loan to the
partnership in the amount of P1 million secured by a check, because of which, Yao and Chua
entrusted the ownership papers of two other boats, Chua's FB Lady Anne Mel and Yao's FB
Tracy to Lim Tong Lim.
(7) That in pursuance of the business agreement, Peter Yao and Antonio Chua bought nets from
Respondent Philippine Fishing Gear, in behalf of "Ocean Quest Fishing Corporation," their
purported business name.
(8) That subsequently, Civil Case No. 1492-MN was filed in the Malabon RTC, Branch 72 by
Antonio Chua and Peter Yao against Lim Tong Lim for (a) declaration of nullity of commercial
documents; (b) reformation of contracts; (c) declaration of ownership of fishing boats; (4)
injunction; and (e) damages.
(9) That the case was amicably settled through a Compromise Agreement executed between the
parties-litigants the terms of which are already enumerated above.
From the factual findings of both lower courts, it is clear that Chua, Yao and Lim had decided to engage in a
fishing business, which they started by buying boats worth P3.35 million, financed by a loan secured from Jesus
Lim who was petitioner's brother. In their Compromise Agreement, they subsequently revealed their intention to
pay the loan with the proceeds of the sale of the boats, and to divide equally among them the excess or loss.
These boats, the purchase and the repair of which were financed with borrowed money, fell under the term
"common fund" under Article 1767. The contribution to such fund need not be cash or fixed assets; it could be an
intangible like credit or industry. That the parties agreed that any loss or profit from the sale and operation of the
boats would be divided equally among them also shows that they had indeed formed a partnership.
Moreover, it is clear that the partnership extended not only to the purchase of the boat, but also to that of the
nets and the floats. The fishing nets and the floats, both essential to fishing, were obviously acquired in
furtherance of their business. It would have been inconceivable for Lim to involve himself so much in buying the
boat but not in the acquisition of the aforesaid equipment, without which the business could not have proceeded.
Given the preceding facts, it is clear that there was, among petitioner, Chua and Yao, a partnership engaged in
the fishing business. They purchased the boats, which constituted the main assets of the partnership, and they
agreed that the proceeds from the sales and operations thereof would be divided among them.
We stress that under Rule 45, a petition for review like the present case should involve only questions of law.

Thus, the foregoing factual findings of the RTC and the CA are binding on this Court, absent any cogent proof
that the present action is embraced by one of the exceptions to the rule. 16 In assailing the factual findings of the
two lower courts, petitioner effectively goes beyond the bounds of a petition for review under Rule 45.
Compromise Agreement
Not the Sole Basis of Partnership
Petitioner argues that the appellate court's sole basis for assuming the existence of a partnership was the
Compromise Agreement. He also claims that the settlement was entered into only to end the dispute among
them, but not to adjudicate their preexisting rights and obligations. His arguments are baseless. The Agreement
was but an embodiment of the relationship extant among the parties prior to its execution.
A proper adjudication of claimants' rights mandates that courts must review and thoroughly appraise all relevant
facts. Both lower courts have done so and have found, correctly, a preexisting partnership among the parties. In
implying that the lower courts have decided on the basis of one piece of document alone, petitioner fails to
appreciate that the CA and the RTC delved into the history of the document and explored all the possible
consequential combinations in harmony with law, logic and fairness. Verily, the two lower courts' factual findings
mentioned above nullified petitioner's argument that the existence of a partnership was based only on the
Compromise Agreement.
Petitioner Was a Partner,
Not a Lessor
We are not convinced by petitioner's argument that he was merely the lessor of the boats to Chua and Yao, not a
partner in the fishing venture. His argument allegedly finds support in the Contract of Lease and the registration
papers showing that he was the owner of the boats, including F/B Lourdes where the nets were found.
His allegation defies logic. In effect, he would like this Court to believe that he consented to the sale of his own
boats to pay a debt of Chua and Yao, with the excess of the proceeds to be divided among the three of them. No
lessor would do what petitioner did. Indeed, his consent to the sale proved that there was a preexisting
partnership among all three.
Verily, as found by the lower courts, petitioner entered into a business agreement with Chua and Yao, in which
debts were undertaken in order to finance the acquisition and the upgrading of the vessels which would be used
in their fishing business. The sale of the boats, as well as the division among the three of the balance remaining
after the payment of their loans, proves beyond cavil that F/B Lourdes, though registered in his name, was not
his own property but an asset of the partnership. It is not uncommon to register the properties acquired from a
loan in the name of the person the lender trusts, who in this case is the petitioner himself. After all, he is the
brother of the creditor, Jesus Lim.
We stress that it is unreasonable indeed, it is absurd for petitioner to sell his property to pay a debt he did
not incur, if the relationship among the three of them was merely that of lessor-lessee, instead of partners.
Corporation by Estoppel
Petitioner argues that under the doctrine of corporation by estoppel, liability can be imputed only to Chua and
Yao, and not to him. Again, we disagree.
Sec. 21 of the Corporation Code of the Philippines provides:
Sec. 21. Corporation by estoppel. All persons who assume to act as a corporation knowing it
to be without authority to do so shall be liable as general partners for all debts, liabilities and
damages incurred or arising as a result thereof: Provided however, That when any such
ostensible corporation is sued on any transaction entered by it as a corporation or on any tort
committed by it as such, it shall not be allowed to use as a defense its lack of corporate
personality.
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.
Thus, even if the ostensible corporate entity is proven to be legally nonexistent, a party may be estopped from
denying its corporate existence. "The reason behind this doctrine is obvious an unincorporated association
has no personality and would be incompetent to act and appropriate for itself the power and attributes of a
corporation as provided by law; it cannot create agents or confer authority on another to act in its behalf; thus,

those who act or purport to act as its representatives or agents do so without authority and at their own risk. And
as it is an elementary principle of law that a person who acts as an agent without authority or without a principal
is himself regarded as the principal, possessed of all the right and subject to all the liabilities of a principal, a
person acting or purporting to act on behalf of a corporation which has no valid existence assumes such
privileges and obligations and becomes personally liable for contracts entered into or for other acts performed as
such agent. 17
The doctrine of corporation by estoppel may apply to the alleged corporation and to a third party. In the first
instance, an unincorporated association, which represented itself to be a corporation, will be estopped from
denying its corporate capacity in a suit against it by a third person who relied in good faith on such
representation. It cannot allege lack of personality to be sued to evade its responsibility for a contract it entered
into and by virtue of which it received advantages and benefits.
On the other hand, a third party who, knowing an association to be unincorporated, nonetheless treated it as a
corporation and received benefits from it, may be barred from denying its corporate existence in a suit brought
against the alleged corporation. In such case, all those who benefited from the transaction made by the
ostensible corporation, despite knowledge of its legal defects, may be held liable for contracts they impliedly
assented to or took advantage of.
There is no dispute that the respondent, Philippine Fishing Gear Industries, is entitled to be paid for the nets it
sold. The only question here is whether petitioner should be held jointly 18 liable with Chua and Yao. Petitioner
contests such liability, insisting that only those who dealt in the name of the ostensible corporation should be
held liable. Since his name does not appear on any of the contracts and since he never directly transacted with
the respondent corporation, ergo, he cannot be held liable.
Unquestionably, petitioner benefited from the use of the nets found inside F/B Lourdes, the boat which has
earlier been proven to be an asset of the partnership. He in fact questions the attachment of the nets, because
the Writ has effectively stopped his use of the fishing vessel.
It is difficult to disagree with the RTC and the CA that Lim, Chua and Yao decided to form a corporation. Although
it was never legally formed for unknown reasons, this fact alone does not preclude the liabilities of the three as
contracting parties in representation of it. Clearly, under the law on estoppel, those acting on behalf of a
corporation and those benefited by it, knowing it to be without valid existence, are held liable as general
partners.
Technically, it is true that petitioner did not directly act on behalf of the corporation. However, having reaped the
benefits of the contract entered into by persons with whom he previously had an existing relationship, he is
deemed to be part of said association and is covered by the scope of the doctrine of corporation by estoppel. We
reiterate the ruling of the Court in Alonso v. Villamor: 19
A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the
subtle art of movement and position, entraps and destroys the other. It is, rather, a contest in
which each contending party fully and fairly lays before the court the facts in issue and then,
brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of
procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won
by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and
becomes its great hindrance and chief enemy, deserves scant consideration from courts. There
should be no vested rights in technicalities.
Third Issue:
Validity of Attachment
Finally, petitioner claims that the Writ of Attachment was improperly issued against the nets. We agree with the
Court of Appeals that this issue is now moot and academic. As previously discussed, F/B Lourdes was an asset
of the partnership and that it was placed in the name of petitioner, only to assure payment of the debt he and his
partners owed. The nets and the floats were specifically manufactured and tailor-made according to their own
design, and were bought and used in the fishing venture they agreed upon. Hence, the issuance of the Writ to
assure the payment of the price stipulated in the invoices is proper. Besides, by specific agreement, ownership
of the nets remained with Respondent Philippine Fishing Gear, until full payment thereof.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

SO ORDERED.
Melo, Purisima and Gonzaga-Reyes, JJ., concur.
Vitug, J., pls. see concurring opinion.
Separate Opinions
VITUG, J., concurring opinion;
I share the views expressed in the ponencia of an esteemed colleague, Mr. Justice Artemio V. Panganiban,
particularly the finding that Antonio Chua, Peter Yao and petitioner Lim Tong Lim have incurred the liabilities of
general partners. I merely would wish to elucidate a bit, albeit briefly, the liability of partners in a general
partnership.
When a person by his act or deed represents himself as a partner in an existing partnership or with one or more
persons not actual partners, he is deemed an agent of such persons consenting to such representation and in
the same manner, if he were a partner, with respect to persons who rely upon the representation. 1 The
association formed by Chua, Yao and Lim, should be, as it has been deemed, a de facto partnership with all the
consequent obligations for the purpose of enforcing the rights of third persons. The liability of general partners
(in a general partnership as so opposed to a limited partnership) is laid down in Article 1816 2 which posits that
all partners shall be liable pro rata beyond the partnership assets for all the contracts which may have been
entered into in its name, under its signature, and by a person authorized to act for the partnership. This rule is to
be construed along with other provisions of the Civil Code which postulate that the partners can be held
solidarily liable with the partnership specifically in these instances (1) where, by any wrongful act or omission
of any partner acting in the ordinary course of the business of the partnership or with the authority of his copartners, loss or injury is caused to any person, not being a partner in the partnership, or any penalty is incurred,
the partnership is liable therefor to the same extent as the partner so acting or omitting to act; (2) where one
partner acting within the scope of his apparent authority receives money or property of a third person and
misapplies it; and (3) where the partnership in the course of its business receives money or property of a third
person and the money or property so received is misapplied by any partner while it is in the custody of the
partnership 3 consistently with the rules on the nature of civil liability in delicts and quasi-delicts.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 125221 June 19, 1997
REYNALDO M. LOZANO, petitioner,
vs.
HON. ELIEZER R. DE LOS SANTOS, Presiding Judge, RTC, Br. 58, Angeles City; and ANTONIO ANDA,
respondents.
PUNO, J.:
This petition for certiorari seeks to annul and set aside the decision of the Regional Trial Court, Branch 58,
Angeles City which ordered the Municipal Circuit Trial Court, Mabalacat and Magalang, Pampanga to dismiss
Civil Case No. 1214 for lack of jurisdiction.
The facts are undisputed. On December 19, 1995, petitioner Reynaldo M. Lozano filed Civil Case No. 1214 for
damages against respondent Antonio Anda before the Municipal Circuit Trial Court (MCTC), Mabalacat and
Magalang, Pampanga. Petitioner alleged that he was the president of the Kapatirang Mabalacat-Angeles
Jeepney Drivers' Association, Inc. (KAMAJDA) while respondent Anda was the president of the Samahang
Angeles-Mabalacat Jeepney Operators' and Drivers' Association, Inc. (SAMAJODA); in August 1995, upon the
request of the Sangguniang Bayan of Mabalacat, Pampanga, petitioner and private respondent agreed to
consolidate their respective associations and form the Unified Mabalacat-Angeles Jeepney Operators' and

Drivers Association, Inc. (UMAJODA); petitioner and private respondent also agreed to elect one set of officers
who shall be given the sole authority to collect the daily dues from the members of the consolidated association;
elections were held on October 29, 1995 and both petitioner and private respondent ran for president; petitioner
won; private respondent protested and, alleging fraud, refused to recognize the results of the election; private
respondent also refused to abide by their agreement and continued collecting the dues from the members of his
association despite several demands to desist. Petitioner was thus constrained to file the complaint to restrain
private respondent from collecting the dues and to order him to pay damages in the amount of P25,000.00 and
attorney's fees of P500.00. 1
Private respondent moved to dismiss the complaint for lack of jurisdiction, claiming that jurisdiction was lodged
with the Securities and Exchange Commission (SEC). The MCTC denied the motion on February 9, 1996. 2 It
denied reconsideration on March 8, 1996. 3
Private respondent filed a petition for certiorari before the Regional Trial Court, Branch 58, Angeles City. 4 The
trial court found the dispute to be intracorporate, hence, subject to the jurisdiction of the SEC, and ordered the
MCTC to dismiss Civil Case No. 1214 accordingly. 5 It denied reconsideration on May 31, 1996. 6
Hence this petition. Petitioner claims that:
THE RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION AND SERIOUS ERROR OF LAW IN CONCLUDING
THAT THE SECURITIES AND EXCHANGE COMMISSION HAS JURISDICTION OVER A CASE
OF DAMAGES BETWEEN HEADS/PRESIDENTS OF TWO (2) ASSOCIATIONS WHO
INTENDED TO CONSOLIDATE/MERGE THEIR ASSOCIATIONS BUT NOT YET [SIC]
APPROVED AND REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION. 7
The jurisdiction of the Securities and Exchange Commission (SEC) is set forth in Section 5 of Presidential
Decree No. 902-A. Section 5 reads as follows:
Sec. 5. . . . [T]he Securities and Exchange Commission [has] original and exclusive jurisdiction
to hear and decide cases involving:
(a) Devices or schemes employed by or any acts of the board of directors, business associates,
its officers or partners, amounting to fraud and misrepresentation which may be detrimental to
the interest of the public and/or of the stockholders, partners, members of associations or
organizations registered with the Commission.
(b) Controversies arising out of intracorporate or partnership relations, between and among
stockholders, members or associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members, or associates, respectively;
and between such corporation, partnership or association and the state insofar as it concerns
their individual franchise or right to exist as such entity.
(c) Controversies in the election or appointment of directors, trustees, officers or managers of
such corporations, partnerships or associations.
(d) Petitions of corporations, partnerships or associations to be declared in the state of
suspension of payments in cases where the corporation, partnership or association possesses
sufficient property to cover all its debts but foresees the impossibility of meeting them when they
respectively fall due or in cases where the corporation, partnership or association has no
sufficient assets to over its liabilities, but is under the management of a Rehabilitation Receiver
or Management Committee created pursuant to this Decree.
The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law. 8
This jurisdiction is determined by a concurrence of two elements: (1) the status or relationship of the
parties; and (2) the nature of the question that is the subject of their controversy. 9
The first element requires that the controversy must arise out of intracorporate or partnership relations between
and among stockholders, members, or associates; between any or all of them and the corporation, partnership
or association of which they are stockholders, members or associates, respectively; and between such
corporation, partnership or association and the State in so far as it concerns their individual franchises. 10 The
second element requires that the dispute among the parties be intrinsically connected with the regulation of the

corporation, partnership or association or deal with the internal affairs of the corporation, partnership or
association. 11 After all, the principal function of the SEC is the supervision and control of corporations,
partnership and associations with the end in view that investments in these entities may be encouraged and
protected, and their entities may be encouraged and protected, and their activities pursued for the promotion of
economic development. 12
There is no intracorporate nor partnership relation between petitioner and private respondent. The controversy
between them arose out of their plan to consolidate their respective jeepney drivers' and operators' associations
into a single common association. This unified association was, however, still a proposal. It had not been
approved by the SEC, neither had its officers and members submitted their articles of consolidation is
accordance with Sections 78 and 79 of the Corporation Code. Consolidation becomes effective not upon mere
agreement of the members but only upon issuance of the certificate of consolidation by the SEC. 13 When the
SEC, upon processing and examining the articles of consolidation, is satisfied that the consolidation of the
corporations is not inconsistent with the provisions of the Corporation Code and existing laws, it issues a
certificate of consolidation which makes the reorganization official. 14 The new consolidated corporation comes
into existence and the constituent corporations dissolve and cease to exist. 15
The KAMAJDA and SAMAJODA to which petitioner and private respondent belong are duly registered with the
SEC, but these associations are two separate entities. The dispute between petitioner and private respondent is
not within the KAMAJDA nor the SAMAJODA. It is between members of separate and distinct associations.
Petitioner and private respondent have no intracorporate relation much less do they have an intracorporate
dispute. The SEC therefore has no jurisdiction over the complaint.
The doctrine of corporation by estoppel 16 advanced by private respondent cannot override jurisdictional
requirements. Jurisdiction is fixed by law and is not subject to the agreement of the parties. 17 It cannot be
acquired through or waived, enlarged or diminished by, any act or omission of the parties, neither can it be
conferred by the acquiescence of the court. 18
Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness. 19
It applies when persons assume to form a corporation and exercise corporate functions and enter into business
relations with third person. Where there is no third person involved and the conflict arises only among those
assuming the form of a corporation, who therefore know that it has not been registered, there is no corporation
by estoppel. 20
IN VIEW WHEREOF, the petition is granted and the decision dated April 18, 1996 and the order dated May 31,
1996 of the Regional Trial Court, Branch 58, Angeles City are set aside. The Municipal Circuit Trial Court of
Mabalacat and Magalang, Pampanga is ordered to proceed with dispatch in resolving Civil Case No. 1214. No
costs.
SO ORDERED.
Regalado, Romero, Mendoza and Torres, Jr., JJ., concur.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 101897. March 5, 1993.
LYCEUM OF THE PHILIPPINES, INC., petitioner, vs. COURT OF APPEALS, LYCEUM OF APARRI, LYCEUM
OF CABAGAN, LYCEUM OF CAMALANIUGAN, INC., LYCEUM OF LALLO, INC., LYCEUM OF TUAO, INC.,
BUHI LYCEUM, CENTRAL LYCEUM OF CATANDUANES, LYCEUM OF SOUTHERN PHILIPPINES, LYCEUM
OF EASTERN MINDANAO, INC. and WESTERN PANGASINAN LYCEUM, INC., respondents.
Quisumbing, Torres & Evangelista Law Offices and Ambrosio Padilla for petitioner.

Antonio M. Nuyles and Purungan, Chato, Chato, Tarriela & Tan Law Offices for respondents.
Froilan Siobal for Western Pangasinan Lyceum.
SYLLABUS
1. CORPORATION LAW; CORPORATE NAMES; REGISTRATION OF PROPOSED NAME WHICH IS
IDENTICAL OR CONFUSINGLY SIMILAR TO THAT OF ANY EXISTING CORPORATION, PROHIBITED;
CONFUSION AND DECEPTION EFFECTIVELY PRECLUDED BY THE APPENDING OF GEOGRAPHIC
NAMES TO THE WORD "LYCEUM". The Articles of Incorporation of a corporation must, among other things,
set out the name of the corporation. Section 18 of the Corporation Code establishes a restrictive rule insofar as
corporate names are concerned: "Section 18. Corporate name. No corporate name may be allowed by the
Securities an Exchange Commission if the proposed name is identical or deceptively or confusingly similar to
that of any existing corporation or to any other name already protected by law or is patently deceptive, confusing
or contrary to existing laws. When a change in the corporate name is approved, the Commission shall issue an
amended certificate of incorporation under the amended name." The policy underlying the prohibition in Section
18 against the registration of a corporate name which is "identical or deceptively or confusingly similar" to that of
any existing corporation or which is "patently deceptive" or "patently confusing" or "contrary to existing laws," is
the avoidance of fraud upon the public which would have occasion to deal with the entity concerned, the evasion
of legal obligations and duties, and the reduction of difficulties of administration and supervision over
corporations. We do not consider that the corporate names of private respondent institutions are "identical with,
or deceptively or confusingly similar" to that of the petitioner institution. True enough, the corporate names of
private respondent entities all carry the word "Lyceum" but confusion and deception are effectively precluded by
the appending of geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri"
can be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan"
would be confused with the Lyceum of the Philippines.
2. ID.; ID.; DOCTRINE OF SECONDARY MEANING; USE OF WORD "LYCEUM," NOT ATTENDED WITH
EXCLUSIVITY. It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary
meaning in relation to petitioner with the result that word, although originally a generic, has become appropriable
by petitioner to the exclusion of other institutions like private respondents herein. The doctrine of secondary
meaning originated in the field of trademark law. Its application has, however, been extended to corporate names
sine the right to use a corporate name to the exclusion of others is based upon the same principle which
underlies the right to use a particular trademark or tradename. In Philippine Nut Industry, Inc. v. Standard
Brands, Inc., the doctrine of secondary meaning was elaborated in the following terms: " . . . a word or phrase
originally incapable of exclusive appropriation with reference to an article on the market, because geographically
or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with
reference to his article that, in that trade and to that branch of the purchasing public, the word or phrase has
come to mean that the article was his product." The question which arises, therefore, is whether or not the use
by petitioner of "Lyceum" in its corporate name has been for such length of time and with such exclusivity as to
have become associated or identified with the petitioner institution in the mind of the general public (or at least
that portion of the general public which has to do with schools). The Court of Appeals recognized this issue and
answered it in the negative: "Under the doctrine of secondary meaning, a word or phrase originally incapable of
exclusive appropriation with reference to an article in the market, because geographical or otherwise descriptive
might nevertheless have been used so long and so exclusively by one producer with reference to this article that,
in that trade and to that group of the purchasing public, the word or phrase has come to mean that the article
was his produce (Ana Ang vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the
distinctiveness into which the name or phrase has evolved through the substantial and exclusive use of the
same for a considerable period of time. . . . No evidence was ever presented in the hearing before the
Commission which sufficiently proved that the word 'Lyceum' has indeed acquired secondary meaning in favor of
the appellant. If there was any of this kind, the same tend to prove only that the appellant had been using the
disputed word for a long period of time. . . . In other words, while the appellant may have proved that it had been
using the word 'Lyceum' for a long period of time, this fact alone did not amount to mean that the said word had
acquired secondary meaning in its favor because the appellant failed to prove that it had been using the same
word all by itself to the exclusion of others. More so, there was no evidence presented to prove that confusion
will surely arise if the same word were to be used by other educational institutions. Consequently, the allegations
of the appellant in its first two assigned errors must necessarily fail." We agree with the Court of Appeals. The
number alone of the private respondents in the case at bar suggests strongly that petitioner's use of the word
"Lyceum" has not been attended with the exclusivity essential for applicability of the doctrine of secondary
meaning. Petitioner's use of the word "Lyceum" was not exclusive but was in truth shared with the Western

Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC
using "Lyceum" as part of their corporation names. There may well be other schools using Lyceum or Liceo in
their names, but not registered with the SEC because they have not adopted the corporate form of organization.
3. ID.; ID.; MUST BE EVALUATED IN THEIR ENTIRETY TO DETERMINE WHETHER THEY ARE
CONFUSINGLY OR DECEPTIVELY SIMILAR TO ANOTHER CORPORATE ENTITY'S NAME. petitioner
institution is not entitled to a legally enforceable exclusive right to use the word "Lyceum" in its corporate name
and that other institutions may use "Lyceum" as part of their corporate names. To determine whether a given
corporate name is "identical" or "confusingly or deceptively similar" with another entity's corporate name, it is not
enough to ascertain the presence of "Lyceum" or "Liceo" in both names. One must evaluate corporate names in
their entirety and when the name of petitioner is juxtaposed with the names of private respondents, they are not
reasonably regarded as "identical" or "confusingly or deceptively similar" with each other.
DECISION
FELICIANO, J p:
Petitioner is an educational institution duly registered with the Securities and Exchange Commission ("SEC").
When it first registered with the SEC on 21 September 1950, it used the corporate name Lyceum of the
Philippines, Inc. and has used that name ever since.
On 24 February 1984, petitioner instituted proceedings before the SEC to compel the private respondents, which
are also educational institutions, to delete the word "Lyceum" from their corporate names and permanently to
enjoin them from using "Lyceum" as part of their respective names.
Some of the private respondents actively participated in the proceedings before the SEC. These are the
following, the dates of their original SEC registration being set out below opposite their respective names:
Western Pangasinan Lyceum 27 October 1950
Lyceum of Cabagan 31 October 1962
Lyceum of Lallo, Inc. 26 March 1972
Lyceum of Aparri 28 March 1972
Lyceum of Tuao, Inc. 28 March 1972
Lyceum of Camalaniugan 28 March 1972
The following private respondents were declared in default for failure to file an answer despite service of
summons:
Buhi Lyceum;
Central Lyceum of Catanduanes;
Lyceum of Eastern Mindanao, Inc.; and
Lyceum of Southern Philippines
Petitioner's original complaint before the SEC had included three (3) other entities:
1. The Lyceum of Malacanay;
2. The Lyceum of Marbel; and
3. The Lyceum of Araullo
The complaint was later withdrawn insofar as concerned the Lyceum of Malacanay and the Lyceum of Marbel,
for failure to serve summons upon these two (2) entities. The case against the Liceum of Araullo was dismissed
when that school motu proprio change its corporate name to "Pamantasan ng Araullo."
The background of the case at bar needs some recounting. Petitioner had sometime before commenced in the
SEC a proceeding (SEC-Case No. 1241) against the Lyceum of Baguio, Inc. to require it to change its corporate
name and to adopt another name not "similar [to] or identical" with that of petitioner. In an Order dated 20 April
1977, Associate Commissioner Julio Sulit held that the corporate name of petitioner and that of the Lyceum of
Baguio, Inc. were substantially identical because of the presence of a "dominant" word, i.e., "Lyceum," the name
of the geographical location of the campus being the only word which distinguished one from the other corporate
name. The SEC also noted that petitioner had registered as a corporation ahead of the Lyceum of Baguio, Inc. in

point of time, 1 and ordered the latter to change its name to another name "not similar or identical [with]" the
names of previously registered entities.
The Lyceum of Baguio, Inc. assailed the Order of the SEC before the Supreme Court in a case docketed as G.R.
No. L-46595. In a Minute Resolution dated 14 September 1977, the Court denied the Petition for Review for lack
of merit. Entry of judgment in that case was made on 21 October 1977. 2
Armed with the Resolution of this Court in G.R. No. L-46595, petitioner then wrote all the educational institutions
it could find using the word "Lyceum" as part of their corporate name, and advised them to discontinue such use
of "Lyceum." When, with the passage of time, it became clear that this recourse had failed, petitioner instituted
before the SEC SEC-Case No. 2579 to enforce what petitioner claims as its proprietary right to the word
"Lyceum." The SEC hearing officer rendered a decision sustaining petitioner's claim to an exclusive right to use
the word "Lyceum." The hearing officer relied upon the SEC ruling in the Lyceum of Baguio, Inc. case (SECCase No. 1241) and held that the word "Lyceum" was capable of appropriation and that petitioner had acquired
an enforceable exclusive right to the use of that word.
On appeal, however, by private respondents to the SEC En Banc, the decision of the hearing officer was
reversed and set aside. The SEC En Banc did not consider the word "Lyceum" to have become so identified with
petitioner as to render use thereof by other institutions as productive of confusion about the identity of the
schools concerned in the mind of the general public. Unlike its hearing officer, the SEC En Banc held that the
attaching of geographical names to the word "Lyceum" served sufficiently to distinguish the schools from one
another, especially in view of the fact that the campuses of petitioner and those of the private respondents were
physically quite remote from each other. 3
Petitioner then went on appeal to the Court of Appeals. In its Decision dated 28 June 1991, however, the Court
of Appeals affirmed the questioned Orders of the SEC En Banc. 4 Petitioner filed a motion for reconsideration,
without success.
Before this Court, petitioner asserts that the Court of Appeals committed the following errors:
1. The Court of Appeals erred in holding that the Resolution of the Supreme Court in G.R. No. L-46595 did not
constitute stare decisis as to apply to this case and in not holding that said Resolution bound subsequent
determinations on the right to exclusive use of the word Lyceum.
2. The Court of Appeals erred in holding that respondent Western Pangasinan Lyceum, Inc. was incorporated
earlier than petitioner.
3. The Court of Appeals erred in holding that the word Lyceum has not acquired a secondary meaning in favor of
petitioner.
4. The Court of Appeals erred in holding that Lyceum as a generic word cannot be appropriated by the petitioner
to the exclusion of others. 5
We will consider all the foregoing ascribed errors, though not necessarily seriatim. We begin by noting that the
Resolution of the Court in G.R. No. L-46595 does not, of course, constitute res adjudicata in respect of the case
at bar, since there is no identity of parties. Neither is stare decisis pertinent, if only because the SEC En Banc
itself has re-examined Associate Commissioner Sulit's ruling in the Lyceum of Baguio case. The Minute
Resolution of the Court in G.R. No. L-46595 was not a reasoned adoption of the Sulit ruling.
The Articles of Incorporation of a corporation must, among other things, set out the name of the corporation. 6
Section 18 of the Corporation Code establishes a restrictive rule insofar as corporate names are concerned:
"SECTION 18. Corporate name. No corporate name may be allowed by the Securities an Exchange
Commission if the proposed name is identical or deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently deceptive, confusing or contrary to
existing laws. When a change in the corporate name is approved, the Commission shall issue an amended
certificate of incorporation under the amended name." (Emphasis supplied)
The policy underlying the prohibition in Section 18 against the registration of a corporate name which is "identical
or deceptively or confusingly similar" to that of any existing corporation or which is "patently deceptive" or
"patently confusing" or "contrary to existing laws," is the avoidance of fraud upon the public which would have
occasion to deal with the entity concerned, the evasion of legal obligations and duties, and the reduction of
difficulties of administration and supervision over corporations. 7
We do not consider that the corporate names of private respondent institutions are "identical with, or deceptively

or confusingly similar" to that of the petitioner institution. True enough, the corporate names of private
respondent entities all carry the word "Lyceum" but confusion and deception are effectively precluded by the
appending of geographic names to the word "Lyceum." Thus, we do not believe that the "Lyceum of Aparri" can
be mistaken by the general public for the Lyceum of the Philippines, or that the "Lyceum of Camalaniugan"
would be confused with the Lyceum of the Philippines.
Etymologically, the word "Lyceum" is the Latin word for the Greek lykeion which in turn referred to a locality on
the river Ilissius in ancient Athens "comprising an enclosure dedicated to Apollo and adorned with fountains and
buildings erected by Pisistratus, Pericles and Lycurgus frequented by the youth for exercise and by the
philosopher Aristotle and his followers for teaching." 8 In time, the word "Lyceum" became associated with
schools and other institutions providing public lectures and concerts and public discussions. Thus today, the
word "Lyceum" generally refers to a school or an institution of learning. While the Latin word "lyceum" has been
incorporated into the English language, the word is also found in Spanish (liceo) and in French (lycee). As the
Court of Appeals noted in its Decision, Roman Catholic schools frequently use the term; e.g., "Liceo de Manila,"
"Liceo de Baleno" (in Baleno, Masbate), "Liceo de Masbate," "Liceo de Albay." 9 "Lyceum" is in fact as generic in
character as the word "university." In the name of the petitioner, "Lyceum" appears to be a substitute for
"university;" in other places, however, "Lyceum," or "Liceo" or "Lycee" frequently denotes a secondary school or
a college. It may be (though this is a question of fact which we need not resolve) that the use of the word
"Lyceum" may not yet be as widespread as the use of "university," but it is clear that a not inconsiderable
number of educational institutions have adopted "Lyceum" or "Liceo" as part of their corporate names. Since
"Lyceum" or "Liceo" denotes a school or institution of learning, it is not unnatural to use this word to designate an
entity which is organized and operating as an educational institution.
It is claimed, however, by petitioner that the word "Lyceum" has acquired a secondary meaning in relation to
petitioner with the result that that word, although originally a generic, has become appropriable by petitioner to
the exclusion of other institutions like private respondents herein.
The doctrine of secondary meaning originated in the field of trademark law. Its application has, however, been
extended to corporate names sine the right to use a corporate name to the exclusion of others is based upon the
same principle which underlies the right to use a particular trademark or tradename. 10 In Philippine Nut
Industry, Inc. v. Standard Brands, Inc., 11 the doctrine of secondary meaning was elaborated in the following
terms:
" . . . a word or phrase originally incapable of exclusive appropriation with reference to an article on the market,
because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively
by one producer with reference to his article that, in that trade and to that branch of the purchasing public, the
word or phrase has come to mean that the article was his product." 12
The question which arises, therefore, is whether or not the use by petitioner of "Lyceum" in its corporate name
has been for such length of time and with such exclusivity as to have become associated or identified with the
petitioner institution in the mind of the general public (or at least that portion of the general public which has to do
with schools). The Court of Appeals recognized this issue and answered it in the negative:
"Under the doctrine of secondary meaning, a word or phrase originally incapable of exclusive appropriation with
reference to an article in the market, because geographical or otherwise descriptive might nevertheless have
been used so long and so exclusively by one producer with reference to this article that, in that trade and to that
group of the purchasing public, the word or phrase has come to mean that the article was his produce (Ana Ang
vs. Toribio Teodoro, 74 Phil. 56). This circumstance has been referred to as the distinctiveness into which the
name or phrase has evolved through the substantial and exclusive use of the same for a considerable period of
time. Consequently, the same doctrine or principle cannot be made to apply where the evidence did not prove
that the business (of the plaintiff) has continued for so long a time that it has become of consequence and
acquired a good will of considerable value such that its articles and produce have acquired a well-known
reputation, and confusion will result by the use of the disputed name (by the defendant) (Ang Si Heng vs.
Wellington Department Store, Inc., 92 Phil. 448).
With the foregoing as a yardstick, [we] believe the appellant failed to satisfy the aforementioned requisites. No
evidence was ever presented in the hearing before the Commission which sufficiently proved that the word
'Lyceum' has indeed acquired secondary meaning in favor of the appellant. If there was any of this kind, the
same tend to prove only that the appellant had been using the disputed word for a long period of time.
Nevertheless, its (appellant) exclusive use of the word (Lyceum) was never established or proven as in fact the
evidence tend to convey that the cross-claimant was already using the word 'Lyceum' seventeen (17) years prior
to the date the appellant started using the same word in its corporate name. Furthermore, educational

institutions of the Roman Catholic Church had been using the same or similar word like 'Liceo de Manila,' 'Liceo
de Baleno' (in Baleno, Masbate), 'Liceo de Masbate,' 'Liceo de Albay' long before appellant started using the
word 'Lyceum'. The appellant also failed to prove that the word 'Lyceum' has become so identified with its
educational institution that confusion will surely arise in the minds of the public if the same word were to be used
by other educational institutions.
In other words, while the appellant may have proved that it had been using the word 'Lyceum' for a long period of
time, this fact alone did not amount to mean that the said word had acquired secondary meaning in its favor
because the appellant failed to prove that it had been using the same word all by itself to the exclusion of others.
More so, there was no evidence presented to prove that confusion will surely arise if the same word were to be
used by other educational institutions. Consequently, the allegations of the appellant in its first two assigned
errors must necessarily fail." 13 (Underscoring partly in the original and partly supplied)
We agree with the Court of Appeals. The number alone of the private respondents in the case at bar suggests
strongly that petitioner's use of the word "Lyceum" has not been attended with the exclusivity essential for
applicability of the doctrine of secondary meaning. It may be noted also that at least one of the private
respondents, i.e., the Western Pangasinan Lyceum, Inc., used the term "Lyceum" seventeen (17) years before
the petitioner registered its own corporate name with the SEC and began using the word "Lyceum." It follows that
if any institution had acquired an exclusive right to the word "Lyceum," that institution would have been the
Western Pangasinan Lyceum, Inc. rather than the petitioner institution.
In this connection, petitioner argues that because the Western Pangasinan Lyceum, Inc. failed to reconstruct its
records before the SEC in accordance with the provisions of R.A. No. 62, which records had been destroyed
during World War II, Western Pangasinan Lyceum should be deemed to have lost all rights it may have acquired
by virtue of its past registration. It might be noted that the Western Pangasinan Lyceum, Inc. registered with the
SEC soon after petitioner had filed its own registration on 21 September 1950. Whether or not Western
Pangasinan Lyceum, Inc. must be deemed to have lost its rights under its original 1933 registration, appears to
us to be quite secondary in importance; we refer to this earlier registration simply to underscore the fact that
petitioner's use of the word "Lyceum" was neither the first use of that term in the Philippines nor an exclusive use
thereof. Petitioner's use of the word "Lyceum" was not exclusive but was in truth shared with the Western
Pangasinan Lyceum and a little later with other private respondent institutions which registered with the SEC
using "Lyceum" as part of their corporation names. There may well be other schools using Lyceum or Liceo in
their names, but not registered with the SEC because they have not adopted the corporate form of organization.
We conclude and so hold that petitioner institution is not entitled to a legally enforceable exclusive right to use
the word "Lyceum" in its corporate name and that other institutions may use "Lyceum" as part of their corporate
names. To determine whether a given corporate name is "identical" or "confusingly or deceptively similar" with
another entity's corporate name, it is not enough to ascertain the presence of "Lyceum" or "Liceo" in both names.
One must evaluate corporate names in their entirety and when the name of petitioner is juxtaposed with the
names of private respondents, they are not reasonably regarded as "identical" or "confusingly or deceptively
similar" with each other.
WHEREFORE, the petitioner having failed to show any reversible error on the part of the public respondent
Court of Appeals, the Petition for Review is DENIED for lack of merit, and the Decision of the Court of Appeals
dated 28 June 1991 is hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Bidin, Davide, Jr., Romero and Melo, JJ ., concur.
Gutierrez, Jr., J ., on terminal leave.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-2598

June 29, 1950

C. 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
a de facto corporation, dissolution thereof may only be ordered in a quo warranto proceeding 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 contracts with the corporation through 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 a de facto corporation, 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 also Humphreys vs. Drew, 59 Fla., 295; 52 So.,
362.)
Second, this is not a suit in which the corporation is a party. This is a litigation between stockholders of the
alleged corporation, for the purpose of obtaining its dissolution. Even the existence of a de jure corporation 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; 1 but 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.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 122174

October 3, 2002

INDUSTRIAL REFRACTORIES CORPORATION OF THE PHILIPPINES, petitioner,

vs.
COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION and REFRACTORIES CORPORATION
OF THE PHILIPPINES, respondents.
AUSTRIA-MARTINEZ, J.:
Filed before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision of
the Court of Appeals in CA-G.R. SP No. 35056, denying due course and dismissing the petition filed by Industrial
Refractories Corp. of the Philippines (IRCP).
Respondent Refractories Corporation of the Philippines (RCP) is a corporation duly organized on October 13,
1976 for the purpose of engaging in the business of manufacturing, producing, selling, exporting and otherwise
dealing in any and all refractory bricks, its by-products and derivatives. On June 22, 1977, it registered its
corporate and business name with the Bureau of Domestic Trade.
Petitioner IRCP on the other hand, was incorporated on August 23, 1979 originally under the name "Synclaire
Manufacturing Corporation". It amended its Articles of Incorporation on August 23, 1985 to change its corporate
name to "Industrial Refractories Corp. of the Philippines". It is engaged in the business of manufacturing all kinds
of ceramics and other products, except paints and zincs.
Both companies are the only local suppliers of monolithic gunning mix. 1

Discovering that petitioner was using such corporate name, respondent RCP filed on April 14, 1988 with the
Securities and Exchange Commission (SEC) a petition to compel petitioner to change its corporate name on the
ground that its corporate name is confusingly similar with that of petitioners such that the public may be
confused or deceived into believing that they are one and the same corporation. 2
The SEC decided in favor of respondent RCP and rendered judgment on July 23, 1993 with the following
dispositive portion:
"WHEREFORE, judgment is hereby rendered in favor of the petitioner and against the respondent declaring the
latters corporate name Industrial Refractories Corporation of the Philippines as deceptively and confusingly
similar to that of petitioners corporate name Refractories Corporation of the Philippines. Accordingly,
respondent is hereby directed to amend its Articles of Incorporation by deleting the name Refractories
Corporation of the Philippines in its corporate name within thirty (30) days from finality of this Decision. Likewise,
respondent is hereby ordered to pay the petitioner the sum of P50,000.00 as attorneys fees." 3
Petitioner appealed to the SEC En Banc, arguing that it does not have any jurisdiction over the case, and that
respondent RCP has no right to the exclusive use of its corporate name as it is composed of generic or common
words.4
In its Decision dated July 23, 1993, the SEC En Banc modified the appealed decision in that petitioner was
ordered to delete or drop from its corporate name only the word "Refractories". 5
Petitioner IRCP elevated the decision of the SEC En Banc through a petition for review on certiorari to the Court
of Appeals which then rendered the herein assailed decision. The appellate court upheld the jurisdiction of the
SEC over the case and ruled that the corporate names of petitioner IRCP and respondent RCP are confusingly
or deceptively similar, and that respondent RCP has established its prior right to use the word "Refractories" as
its corporate name.6 The appellate court also found that the petition was filed beyond the reglementary period. 7
Hence, herein petition which we must deny.
Petitioner contends that the petition before the Court of Appeals was timely filed. It must be noted that at the time
the SEC En Banc rendered its decision on May 10, 1994, the governing rule on appeals from quasi-judicial
agencies like the SEC was Supreme Court Circular No. 1-91. As provided therein, the remedy should have
been a petition for review filed before the Court of Appeals within fifteen (15) days from notice, raising questions
of fact, of law, or mixed questions of fact and law.8 A motion for reconsideration suspends the running of the
period.9
In the case at bench, there is a discrepancy between the dates provided by petitioner and respondent. Petitioner
alleges the following dates of receipt and filing:10
June 10, 1994 Receipt of SECs Decision dated May 10, 1994
June 20, 1994 Filing of Motion for Reconsideration
September 1, 1994 Receipt of SECs Order dated August 3, 1994 denying petitioners motion for
reconsideration
September 2, 1994 Filing of Motion for extension of time
September 6, 1994 Filing of Petition
Respondent RCP, however, asserts that the foregoing dates are incorrect as the certifications issued by the SEC
show that petitioner received the SECs Decision dated May 10, 1994 on June 9, 1994, filed the motion for
reconsideration via registered mail on June 25, 1994, and received the Order dated August 3, 1994 on August
15, 1994.11 Thus, the petition was filed twenty-one (21) days beyond the reglementary period provided in
Supreme Court Circular No. 1-91.12
If reckoned from the dates supplied by petitioner, then the petition was timely filed. On the other hand, if
reckoned from the dates provided by respondent RCP, then it was filed way beyond the reglementary period. On
this score, we agree with the appellate courts finding that petitioner failed to rebut respondent RCPs allegations
of material dates of receipt and filing. 13 In addition, the certifications were executed by the SEC officials based
on their official records14 which enjoy the presumption of regularity.15 As such, these are prima facie evidence

of the facts stated therein. 16 And based on such dates, there is no question that the petition was filed with the
Court of Appeals beyond the fifteen (15) day period. On this ground alone, the instant petition should be denied
as the SEC En Bancs decision had already attained finality and the SECs findings of fact, when supported by
substantial evidence, is final.17
Nevertheless, to set the matters at rest, we shall delve into the other issues posed by petitioner.
Petitioners arguments, substantially, are as follows: (1) jurisdiction is vested with the regular courts as the
present case is not one of the instances provided in P.D. 902-A; (2) respondent RCP is not entitled to use the
generic name "refractories"; (3) there is no confusing similarity between their corporate names; and (4) there is
no basis for the award of attorneys fees.18
Petitioners argument on the SECs jurisdiction over the case is utterly myopic. The jurisdiction of the SEC is not
merely confined to the adjudicative functions provided in Section 5 of P.D. 902-A, as amended. 19 By express
mandate, it has absolute jurisdiction, supervision and control over all corporations. 20 It also exercises regulatory
and administrative powers to implement and enforce the Corporation Code, 21 one of which is Section 18, which
provides:
"SEC. 18. Corporate name. -- No corporate name may be allowed by the Securities and Exchange Commission
if the proposed name is identical or deceptively or confusingly similar to that of any existing corporation or to any
other name already protected by law or is patently deceptive, confusing or contrary to existing laws. When a
change in the corporate name is approved, the Commission shall issue an amended certificate of incorporation
under the amended name."
It is the SECs duty to prevent confusion in the use of corporate names not only for the protection of the
corporations involved but more so for the protection of the public, and it has authority to de-register at all times
and under all circumstances corporate names which in its estimation are likely to generate confusion. 22 Clearly
therefore, the present case falls within the ambit of the SECs regulatory powers. 23
Likewise untenable is petitioners argument that there is no confusing or deceptive similarity between petitioner
and respondent RCPs corporate names. Section 18 of the Corporation Code expressly prohibits the use of a
corporate name which is "identical or deceptively or confusingly similar to that of any existing corporation or to
any other name already protected by law or is patently deceptive, confusing or contrary to existing laws". The
policy behind the foregoing prohibition is to avoid fraud upon the public that will have occasion to deal with the
entity concerned, the evasion of legal obligations and duties, and the reduction of difficulties of administration
and supervision over corporation.24
Pursuant thereto, the Revised Guidelines in the Approval of Corporate and Partnership Names 25 specifically
requires that: (1) a corporate name shall not be identical, misleading or confusingly similar to one already
registered by another corporation with the Commission; 26 and (2) if the proposed name is similar to the name of
a registered firm, the proposed name must contain at least one distinctive word different from the name of the
company already registered.27
As held in Philips Export B.V. vs. Court of Appeals,28 to fall within the prohibition of the law, two requisites
must be proven, to wit:
(1) that the complainant corporation acquired a prior right over the use of such corporate name;
and
(2) the proposed name is either: (a) identical, or (b) deceptively or confusingly similar to that of any existing
corporation or to any other name already protected by law; or (c) patently deceptive, confusing or contrary to
existing law.
As regards the first requisite, it has been held that the right to the exclusive use of a corporate name with
freedom from infringement by similarity is determined by priority of adoption.29 In this case, respondent RCP
was incorporated on October 13, 1976 and since then has been using the corporate name "Refractories Corp. of
the Philippines". Meanwhile, petitioner was incorporated on August 23, 1979 originally under the name
"Synclaire Manufacturing Corporation". It only started using the name "Industrial Refractories Corp. of the
Philippines" when it amended its Articles of Incorporation on August 23, 1985, or nine (9) years after respondent

RCP started using its name. Thus, being the prior registrant, respondent RCP has acquired the right to use the
word "Refractories" as part of its corporate name.
Anent the second requisite, in determining the existence of confusing similarity in corporate names, the test is
whether the similarity is such as to mislead a person using ordinary care and discrimination and the Court must
look to the record as well as the names themselves. 30 Petitioners corporate name is "Industrial Refractories
Corp. of the Phils.", while respondents is "Refractories Corp. of the Phils." Obviously, both names contain the
identical words "Refractories", "Corporation" and "Philippines". The only word that distinguishes petitioner from
respondent RCP is the word "Industrial" which merely identifies a corporations general field of activities or
operations. We need not linger on these two corporate names to conclude that they are patently similar that
even with reasonable care and observation, confusion might arise. 31 It must be noted that both cater to the
same clientele, i.e. the steel industry. In fact, the SEC found that there were instances when different steel
companies were actually confused between the two, especially since they also have similar product
packaging.32 Such findings are accorded not only great respect but even finality, and are binding upon this
Court, unless it is shown that it had arbitrarily disregarded or misapprehended evidence before it to such an
extent as to compel a contrary conclusion had such evidence been properly appreciated. 33 And even without
such proof of actual confusion between the two corporate names, it suffices that confusion is probable or likely to
occur.34
Refractory materials are described as follows:
"Refractories are structural materials used at high temperatures to [sic] industrial furnaces. They are supplied
mainly in the form of brick of standard sizes and of special shapes. Refractories also include refractory cements,
bonding mortars, plastic firebrick, castables, ramming mixtures, and other bulk materials such as dead-burned
grain magneside, chrome or ground ganister and special clay." 35
While the word "refractories" is a generic term, its usage is not widespread and is limited merely to the
industry/trade in which it is used, and its continuous use by respondent RCP for a considerable period has made
the term so closely identified with it. 36 Moreover, as held in the case of Ang Kaanib sa Iglesia ng Dios kay
Kristo Hesus, H.S.K. sa Bansang Pilipinas, Inc. vs. Iglesia ng Dios kay Cristo Jesus, Haligi at Suhay ng
Katotohanan, petitioners appropriation of respondent's corporate name cannot find justification under the
generic word rule. 37 A contrary ruling would encourage other corporations to adopt verbatim and register an
existing and protected corporate name, to the detriment of the public. 38
Finally, we find the award of P50,000.00 as attorney's fees to be fair and reasonable. Article 2208 of the Civil
Code allows the award of such fees when its claimant is compelled to litigate with third persons or to incur
expenses to protect its just and valid claim. In this case, despite its undertaking to change its corporate name in
case another firm has acquired a prior right to use such name, 39 it refused to do so, thus compelling respondent
to undergo litigation and incur expenses to protect its corporate name.
WHEREFORE, the instant petition for review on certiorari is hereby DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.
Bellosillo, Acting C.J., (Chairman), Quisumbing, and Callejo, Sr., JJ., concur.
Mendoza, J., on official leave.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 150416

July 21, 2006

SEVENTH DAY ADVENTIST CONFERENCE CHURCH OF SOUTHERN PHILIPPINES, INC., and/or

represented by MANASSEH C. ARRANGUEZ, BRIGIDO P. GULAY, FRANCISCO M. LUCENARA, DIONICES

O. TIPGOS, LORESTO C. MURILLON, ISRAEL C. NINAL, GEORGE G. SOMOSOT, JESSIE T. ORBISO,

LORETO PAEL and JOEL BACUBAS, petitioners,
vs.
NORTHEASTERN MINDANAO MISSION OF SEVENTH DAY ADVENTIST, INC., and/or represented by
JOSUE A. LAYON, WENDELL M. SERRANO, FLORANTE P. TY and JETHRO CALAHAT and/or SEVENTH
DAY ADVENTIST CHURCH [OF] NORTHEASTERN MINDANAO MISSION, * Respondents.
DECISION
CORONA, J.:
This petition for review on certiorari assails the Court of Appeals (CA) decision 1 and resolution2 in CA-G.R. CV
No. 41966 affirming, with modification, the decision of the Regional Trial Court (RTC) of Bayugan, Agusan del
Sur, Branch 7 in Civil Case No. 63.
This case involves a 1,069 sq. m. lot covered by Transfer Certificate of Title (TCT) No. 4468 in Bayugan, Agusan
del Sur originally owned by Felix Cosio and his wife, Felisa Cuysona.
On April 21, 1959, the spouses Cosio donated the land to the South Philippine Union Mission of Seventh Day
Adventist Church of Bayugan Esperanza, Agusan (SPUM-SDA Bayugan). 3 Part of the deed of donation read:
KNOW ALL MEN BY THESE PRESENTS:
That we Felix Cosio[,] 49 years of age[,] and Felisa Cuysona[,] 40 years of age, [h]usband and wife, both are
citizen[s] of the Philippines, and resident[s] with post office address in the Barrio of Bayugan, Municipality of
Esperanza, Province of Agusan, Philippines, do hereby grant, convey and forever quit claim by way of Donation
or gift unto the South Philippine [Union] Mission of Seventh Day Adventist Church of Bayugan, Esperanza,
Agusan, all the rights, title, interest, claim and demand both at law and as well in possession as in expectancy of
in and to all the place of land and portion situated in the Barrio of Bayugan, Municipality of Esperanza, Province
of Agusan, Philippines, more particularly and bounded as follows, to wit:
1. a parcel of land for Church Site purposes only.
2. situated [in Barrio Bayugan, Esperanza].
3. Area: 30 meters wide and 30 meters length or 900 square meters.
4. Lot No. 822-Pls-225. Homestead Application No. V-36704, Title No. P-285.
5. Bounded Areas
North by National High Way; East by Bricio Gerona; South by Serapio Abijaron and West by Feliz Cosio xxx. 4
The donation was allegedly accepted by one Liberato Rayos, an elder of the Seventh Day Adventist Church, on
behalf of the donee.
Twenty-one years later, however, on February 28, 1980, the same parcel of land was sold by the spouses Cosio
to the Seventh Day Adventist Church of Northeastern Mindanao Mission (SDA-NEMM). 5 TCT No. 4468 was
thereafter issued in the name of SDA-NEMM.6
Claiming to be the alleged donees successors-in-interest, petitioners asserted ownership over the property. This
was opposed by respondents who argued that at the time of the donation, SPUM-SDA Bayugan could not legally
be a donee
because, not having been incorporated yet, it had no juridical personality. Neither were petitioners members of
the local church then, hence, the donation could not have been made particularly to them.
On September 28, 1987, petitioners filed a case, docketed as Civil Case No. 63 (a suit for cancellation of title,
quieting of ownership and possession, declaratory relief and reconveyance with prayer for preliminary injunction
and damages), in the RTC of Bayugan, Agusan del Sur. After trial, the trial court rendered a decision 7 on
November 20, 1992 upholding the sale in favor of respondents.
On appeal, the CA affirmed the RTC decision but deleted the award of moral damages and attorneys fees. 8
Petitioners motion for reconsideration was likewise denied. Thus, this petition.
The issue in this petition is simple: should SDA-NEMMs ownership of the lot covered by TCT No. 4468 be

upheld?9 We answer in the affirmative.

The controversy between petitioners and respondents involves two supposed transfers of the lot previously
owned by the spouses Cosio: (1) a donation to petitioners alleged predecessors-in-interest in 1959 and (2) a
sale to respondents in 1980.
Donation is undeniably one of the modes of acquiring ownership of real property. Likewise, ownership of a
property may be transferred by tradition as a consequence of a sale.
Petitioners contend that the appellate court should not have ruled on the validity of the donation since it was not
among the issues raised on appeal. This is not correct because an appeal generally opens the entire case for
review.
We agree with the appellate court that the alleged donation to petitioners was void.
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another
person who accepts it. The donation could not have been made in favor of an entity yet inexistent at the time it
was made. Nor could it have been accepted as there was yet no one to accept it.
The deed of donation was not in favor of any informal group of SDA members but a supposed SPUM-SDA
Bayugan (the local church) which, at the time, had neither juridical personality nor capacity to accept such gift.
Declaring themselves a de facto corporation, petitioners allege that they should benefit from the donation.
But there are stringent requirements before one can qualify as a de facto corporation:
(a) the existence of a valid law under which it may be incorporated;
(b) an attempt in good faith to incorporate; and
(c) assumption of corporate powers.10
While there existed the old Corporation Law (Act 1459), 11 a law under which SPUM-SDA Bayugan could have
been organized, there is no proof that there was an attempt to incorporate at that time.
The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the
existence of a de facto corporation.12 We have held that an organization not registered with the Securities and
Exchange Commission (SEC) cannot be considered a corporation in any concept, not even as a corporation de
facto.13 Petitioners themselves admitted that at the time of the donation, they were not registered with the SEC,
nor did they even attempt to organize 14 to comply with legal requirements.
Corporate existence begins only from the moment a certificate of incorporation is issued. No such certificate was
ever issued to petitioners or their supposed predecessor-in-interest at the time of the donation. Petitioners
obviously could not have claimed succession to an entity that never came to exist. Neither could the principle of
separate juridical personality apply since there was never any corporation 15 to speak of. And, as already stated,
some of the representatives of petitioner Seventh Day Adventist Conference Church of Southern Philippines, Inc.
were not even members of the local church then, thus, they could not even claim that the donation was
particularly for them.16
"The de facto doctrine thus effects a compromise between two conflicting public interest[s]the one opposed to
an unauthorized assumption of corporate privileges; the other in favor of doing justice to the parties and of
establishing a general assurance of security in business dealing with corporations." 17
Generally, the doctrine exists to protect the public dealing with supposed corporate entities, not to favor the
defective or non-existent corporation.18
In view of the foregoing, petitioners arguments anchored on their supposed de facto status hold no water. We
are convinced that there was no donation to petitioners or their supposed predecessor-in-interest.
On the other hand, there is sufficient basis to affirm the title of SDA-NEMM. The factual findings of the trial court
in this regard were not convincingly disputed. This Court is not a trier of facts. Only questions of law are the
proper subject of a petition for review on certiorari. 19
Sustaining the validity of respondents title as well as their right of ownership over the property, the trial court

stated:
[W]hen Felix Cosio was shown the Absolute Deed of Sale during the hearing xxx he acknowledged that the
same was his xxx but that it was not his intention to sell the controverted property because he had previously
donated the same lot to the South Philippine Union Mission of SDA Church of Bayugan-Esperanza. Cosio
avouched that had it been his intendment to sell, he would not have disposed of it for a mere P2,000.00 in two
installments but for P50,000.00 or P60,000.00. According to him, the P2,000.00 was not a consideration of the
sale but only a form of help extended.
A thorough analysis and perusal, nonetheless, of the Deed of Absolute Sale disclosed that it has the
essential requisites of contracts pursuant to xxx Article 1318 of the Civil Code, except that the
consideration of P2,000.00 is somewhat insufficient for a [1,069-square meter] land. Would then this inadequacy
of the consideration render the contract invalid?
Article 1355 of the Civil Code provides:
Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has
been fraud, mistake or undue influence.
No evidence [of fraud, mistake or undue influence] was adduced by [petitioners].
xxx
Well-entrenched is the rule that a Certificate of Title is generally a conclusive evidence of [ownership] of
the land. There is that strong and solid presumption that titles were legally issued and that they are valid. It is
irrevocable and indefeasible and the duty of the Court is to see to it that the title is maintained and respected
unless challenged in a direct proceeding. xxx The title shall be received as evidence in all the Courts and shall
be conclusive as to all matters contained therein.
[This action was instituted almost seven years after the certificate of title in respondents name was issued in
1980.]20
According to Art. 1477 of the Civil Code, the ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof. On this, the noted author Arturo Tolentino had this to say:
The execution of [a] public instrument xxx transfers the ownership from the vendor to the vendee who may
thereafter exercise the rights of an owner over the same 21
Here, transfer of ownership from the spouses Cosio to SDA-NEMM was made upon constructive delivery of the
property on February 28, 1980 when the sale was made through a public instrument. 22 TCT No. 4468 was
thereafter issued and it remains in the name of SDA-NEMM.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.
Puno, Chairperson, Sandoval-Gutierrez, Azcuna, Garcia, J.J., concur.