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Paz v.

New International Environmental Universality

• Petitioner, the officer in charge of the Aircraft Hangar at the Davao International Airport,
Davao International Airport entered into a MOA with Captain Allan Clarke (Capt. Clarke),
president of International Environmental University
o The MOA involved lease on aircraft hangar space at the said airport for 4 years
(with 6 months prior notice in termination) for the use of such space “exclusively
for company aircraft/helicopters”
• Petitioner sent several letters of complaint to Capt. Clarke asking it to abide by the MOA
to use the hangar for company aircrafts and helicopters and stop using it for parking
vehicles and as a site for fabrication works
o The final letter was sent as a consequence of an incident involving an Isuzu truck
was driven by an employee of the respondent and bumped the left wing of an
o Petitioner now thus demands for the respondent to immediately vacate the
• Respondent filed a complaint for breach of a contract before the RTC claiming that
o Petitioner had disconnected its electric and telephone lines
o Security guards prevented them from entering the premises
o Petitioners violated the terms of the MOA (6 months prior notice)
• Petitioners allege, on the other hand, that respondent had no cause of action against
him as MOA was executed between him and Captain Clarke in the latter’s personal
• RTC ruled in favor of respondent
o Liable for indirect contempt (refusal to follow TRO) and breach of contract for
illegally terminating the MOA before the expiration of the term thereof
o On the challenge of judicial personality, RTC quoted the order of the SEC: (feel
ko ito yung relevant)
§ Respondent was issued a Certificate of Incorporation as New
International Universality, but that, subsequently, when it amended its
AOI the SEC Extension Office in Davao erroneously used the name New
International Environmental UNIVERSITY, Inc.
• The latter name was used by respondent when it filed its amended
complaint and the petition for indirect contempt believing that it
was allowed to do so, as it was only after the filing of the
complaints that the SEC directed it to revert to its correct name
• CA affirmed the RTC
o CA ruled that while there no corporate entity at the time of the execution of the
MOA, petitioner is nonetheless estopped from sating that he had contracted with
respondent as a corporation, having recognized the latter as the Second Party to
the MOA that will use the hangar space exclusively for company
o Petitioner was also found to have issued checks to respondent which belied his
claim of contracting with Capt. Clarke in the latter’s personal capacity

Issues: Whether Capt. Clarke is an indispensible party to the case—No; Whether respondent
lacked legal capacity and personality in the suit—No

• Capt. Clarke was merely an agent of respondent
o His participation was limited to being a representative of respondent; as a mere
representative, Capt. Clarke acquired no rights whatsoever, nor did he incur any
liabilities, arising from the contract between petitioner and respondent
o Therefore, he was not an indispensible party to the case
• CA also correctly pointed out that from the very language itself of the MOA entered into
by the petitioner, whereby he obligated himself to allow the use of the hangar space for
company aircraft/helicopter, petitioner cannot deny that he contracted with
o In petitioner’s final letter to respondent, he reiterated and strongly demanded the
respondent to immediately vacate the hangar space “his company is
• Sec. 21 of the Corporation Code:
o One who assumes an obligation to an ostensible corporation, as such,
cannot resist performance thereon on the ground that there was in fact no
o In the case at bar…
§ Petitioner is bound by his obligation under the MOA not only on estoppel,
but by express provision of law
§ It is futile to insist that petitioner issued receipts for rental payments in
respondent’s name and not with Capt. Clarke’s, whom petitioner allegedly
contracted in the latter’s personal capacity, only because it was upon the
instruction of an employee

People v. Garcia
• In 1993, Carlos Garcia, Patricio Botero and Luisa Miraples were accused of illegal
• It was alleged that they represented themselves as the incorporators and officers of
Ricorn Philippine International Shipping Lines, Inc.
o That they represented Ricorn is a recruitment agency for seamen
o That they represented Garcia as the president, Botero as vice president, and
Miraples as the treasurer
• It was later discovered that Ricorn was never registered with the SEC and that it was
never authorized to recruit by the POEA
• Thereafter, Botero and Garcia were convicted. Botero appealed
o Botero avers that he was not an incorporator, but he was a mere employee of
Ricorn in charge of following up on their documents

Issue: Whether or not Botero is a mere employee of Ricorn—No

• It was proven by evidence that he was introduced to applicant’s as the vice president of
o When he was receiving applicants he was receiving them behind a desk which
has a nameplate representing his name and his position as VP of Ricorn
• Relevant Issue: In light of Ricorn not being incorporated, how will this affect his liability in
the crime of illegal recruitment?
o Under the law, if the offender is a corporation, partnership, association or
entity, the penalty shall be imposed upon the officer or officers of the
corporation, partnership, or entity responsible for such violation
o In the case at bar…
§ Even if Ricorn was not incorporated, Botero and his cohorts are
estopped from denying liability as corporate officers of Ricorn
§ Sec. 25 of the Corporation Code: all persons who assume to act as a
corporation knowing it to be without authority to do so shall be
liable as a GENERAL PARTNERS for all the 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 any tort committed by it
as such, it shall not be allowed to used as a defense its lack of
corporate personality

International Express Travel and Tour Services v. CA

• International Express Travel and Tour Services, Inc. (IETTI) offered to the Philippine
Football Federation (PFF) its travel services for the South East Asian Games. PFF,
through Henri Kahn, its president, agreed. IETTI then delivered plane tickets to PFF,
PFF in turn made a down payment
• However, PFF was not able to complete the full payment in subsequent installments
despite repeated demands from IETTI
• IETTI then sued PFF and Kahn was impleaded as a co-defendant
• Kahn averred that he should not be impleaded because he merely acted as an
agent of PFF, which he averred is a corporation with separate and distinct
personality from him
• The trial court ruled against Kahn and held him personally liable for the said obligation
o It ruled that Kahn failed to prove that PFF is a corporation
• The CA reversed the decision
o The CA took judicial notice of the existence of PFF as a national sports
association and as such, PFF is empowered to enter into contracts through its
o PFF is therefore liable for the contract entered into by its agent Kahn
o The CA further ruled that IETTI is in estoppel; that it cannot now deny the
corporate existence of PFF in such a manner as to recognize and in effect admit
its existence

Issue: Whether PFF is a corporation—NO

• PFF, upon its creation, is not automatically considered a national sports association
o It must first be recognized and accredited by the Philippine Amateur Athletic
Federation and the Department of Youth and Sports Development
o This fact was never proved by Kahn
• Therefore, PFF is considered as an unincorporated sports association
o Under the law, 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 the contract entered into or for other acts performed as such agent
o Kahn is therefore personally liable for the contract entered into by PFF with IETTI
• There is also no merit on finding IETTI is in estoppel
o The application of the doctrine of corporation by estoppel 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
o In the case at bar, IETTI is not trying to escape liability from the contract but
rather is the one claiming from the contract