Manuela Vda.
De Salvatierra vs Lorenzo Garlitos result, she sued and demanded separation pay, social security
103 Phil 757 – Business Organization – Corporation Law –
Separate and Distinct Personality – When Not Applicable
FACTS: In 1954, Manuela Vda. De Salvatierra entered into a lease
contract with Philippine Fibers Producers Co., Inc. (PFPC). PFPC
was represented by its president Segundino Refuerzo. It was
agreed that Manuela shall lease her land to PFPC in exchange of
rental payments plus shares from the sales of crops. However,
PFPC failed to comply with its obligations and so in 1955, Manuela
sued PFPC and she won. An order was issued by Judge Lorenzo
Garlitos of CFI Leyte ordering the execution of the judgment
against Refuerzo’s property (there being no property under PFPC).
Refuerzo moved for reconsideration on the ground that he should
not be held personally liable because he merely signed the lease
contract in his official capacity as president of PFPC. Garlitos
granted Refuerzo’s motion.
Manuela assailed the decision of the judge on the ground that she
sued PFPC without impleading Refuerzo because she initially
believed that PFPC was a legitimate corporation. However, during
trial, she found out that PFPC was not actually registered with the
Securities and Exchange Commission (SEC) hence Refuerzo should
be personally liable.
ISSUE: Whether or not Manuela is correct.
HELD: Yes. It is true that as a general rule, the corporation has a
personality separate and distinct from its incorporators and as
such the incorporators cannot be held personally liable for the
obligations of the corporation. However, this doctrine is not
applicable to unincorporated associations. The reason behind this
doctrine is obvious-since an organization which before the law is
non-existent has no personality and would be incompetent to act
and appropriate for itself the powers and attribute 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. In this case, Refuerzo was the
moving spirit behind PFPC. As such, his liability cannot be limited
or restricted that imposed upon [would-be] corporate
shareholders. In acting on behalf of a corporation which he knew
to be unregistered, he assumed the risk of reaping the
consequential damages or resultant rights, if any, arising out of
such transaction.
CHIANG KAI SHEK SCHOOL VS COURT OF APPEALS and FAUSTINA
FRANCO OH
G.R. No. L-58028 [April 18, 1989]
Facts: Fausta F. Oh had been teaching in the Chiang Kai Shek
School since 1932 for a continuous period of almost 33 years. She
was told she had no assignment for the next semester. For no
apparent or given reason, she was dismissed from her work. As a
Angeles-Mabalacat Jeepney Operators’ and Drivers’ Association,
benefits, salary differentials, maternity benefits and moral and Inc.). In 1995, the two agreed to consolidate the two corporations,
exemplary damages. The original defendant was the Chiang Kai thus, UMAJODA (Unified Mabalacat-Angeles Jeepney Operators’
Shek School but when it filed a motion to dismiss on the ground and Drivers Association, Inc.). In the same year, elections for the
that it could not be sued, the complaint was amended. Certain officers of UMAJODA were held. Lozano and Anda both ran for
officials of the school were also impleaded to make them president. Lozano won but Anda alleged fraud and the elections
solidarily liable with the school. and thereafter he refused to participate with UMAJODA. Anda
continued to collect fees from members of SAMAJODA and
The Court of First Instance of Sorsogon dismissed the refused to recognize Lozano as president of UMAJODA. Lozano
complaint. On appeal, its decision was set aside by the respondent then filed a complaint for damages against Anda with the MCTC
court, which held the school suable and liable while absolving the of Mabalacat (and Magalang), Pampanga. Anda moved for the
other defendants. The motion for reconsideration having been dismissal of the case for lack of jurisdiction. The MCTC judge
denied, the school then came to this Court in this petition for denied Anda’s motion. On certiorari, Judge Eliezer De Los Santos
review on certiorari. of RTC Angeles City reversed and ordered the dismissal of the case
on the ground that what is involved is an intra-corporate dispute
Issue: Whether or not a school that has not been incorporated which should be under the jurisdiction of the Securities and
may be sued by reason alone of its long continued existence and Exchange Commission (SEC).
recognition by the government
ISSUE: Whether or not the RTC Judge is correct.
Ruling: As a school, the petitioner was governed by Act No. 2706
as amended by C.A. No. 180, which provided as follows: Unless HELD: No. The regular courts have jurisdiction over the case. The
exempted for special reasons by the Secretary of Public case between Lozano and Anda is not an intra-corporate dispute.
Instruction, any private school or college recognized by the UMAJODA is not yet incorporated. It is yet to submit its articles of
government shall be incorporated under the provisions of Act No. incorporation to the SEC. It is not even a dispute between
1459 known as the Corporation Law, within 90 days after the date KAMAJDA or SAMAJODA. The controversy between Lozano and
of recognition, and shall file with the Secretary of Public Anda does not arise from intra-corporate relations but rather
Instruction a copy of its incorporation papers and by-laws. Having from a mere conflict from their plan to merge the two
been recognized by the government, it was under obligation to associations.
incorporate under the Corporation Law within 90 days from such
recognition. It appears that it had not done so at the time the NOTE: Regular courts can now hear intra-corporate disputes
complaint was filed notwithstanding that it had been in existence (expanded jurisdiction).
even earlier than 1932. The petitioner cannot now invoke its own
non-compliance with the law to immunize it from the private
respondent’s complaint. There should also be no question that
having contracted with the private respondent every year for
thirty two years and thus represented itself as possessed of
juridical personality to do so, the petitioner is now estopped from
denying such personality to defeat her claim against it. According
to Article 1431 of the Civil Code, “through estoppel an admission
or representation is rendered conclusive upon the person making
it and cannot be denied or disproved as against the person relying
on it.” As the school itself may be sued in its own name, there is
no need to apply Rule 3, Section 15, under which the persons
joined in an association without any juridical personality may be
sued with such association. Besides, it has been shown that the
individual members of the board of trustees are not liable, having
been appointed only after the private respondent’s dismissal.
Reynaldo Lozano vs Eliezer De Los Santos
274 SCRA 452 – Business Organization – Corporation Law –
Jurisdiction of the SEC
FACTS: Reynaldo Lozano was the president of KAMAJDA
(Kapatirang Mabalacat-Angeles Jeepney Drivers’ Association, Inc.).
Antonio Anda was the president of SAMAJODA (Samahang