Republic of the Philippines vs

Iglesia ni Cristo (March 1984)

Business Organization – Corporation Law – Corporations are not Filipino Citizens –
Registration of Public Lands
In 1978, Iglesia ni Cristo (INC) purchased a parcel of land from one Carmen Racimo in
Ilocos Norte. In 1979, INC sought to register said land under its name pursuant to Section
48 (b) of the Public Land Law. The Director of Lands opposed the application as it averred
that the said parcel of land is part of the alienable public land; that INC cannot register said
land because it is not a Filipino citizen. INC argues that it is a private land because Racimo,
its predecessor-in-interest has been in possession thereof for more than 30 years; that the
Constitutional prohibition does not apply to INC, a corporation sole (solely incorporated by
one man, Eraño Manalo, a Filipino citizen), hence it can acquire said property.
ISSUE: Whether or not INC can register said parcel of land under its name.
HELD: No.

1. The disputed land has never lost its public character. Racimo, though occupying said
land for more than 30 years, never applied for confirmation of incomplete or imperfect title
over said land. Under the law, all lands that were not acquired from the Government either
by purchase or by grant, belong to the public domain. As exception to the rule would be any
land that should have been in the possession of an occupant and of his predecessors-in-
interest since time immemorial, for such possession would justify the presumption that the
land had never been part of the public domain or that it had been a private property even
before the Spanish conquest.

2. Section 48 (b) of the Public Land Law allows the registration of alienable public lands
but only by Filipino citizens. INC is not a Filipino citizen. There is no basis on the contention
that as a corporation sole, INC is not prohibited from holding said land. The benefit only
applies to Filipino citizens not to a corporation sole which has citizenship.

NOTE: 60% rule: Corporations and Partnerships of which at least 60% of their capital
belong to Filipinos may acquire real property.
DEL ROSARIO VS NLRC (187 SCRA 777)
Del Rosario vs National Labor Relations Commission
187 SCRA 777 [GR No. 85416 July 24, 1990]

Facts: In POEA case no. 85-06-0394, the Philippine Overseas Employment Administration (POEA) promulgated a
decision on February 4,1986 dismissing the complaint for money claims for lack of merit. The decision was
appealed to the NLRC, which on April 30, 1987 reversed the POEA decision and ordered Philsa Construction and
Trading Co.Ind and Ariel Enterprises (the foreign employer) to jointly and severally pay private respondent the peso
equivalent of $16,039,000 salary differentials and $2,420.03 as vacation leave benefits. A writ of execution was
issued by the POEA but it was returned unsatisfied incapable of satisfying the judgement. Private respondent moved
for the issuance of an alias writ against the officers of Philsa. This motion was opposed by the officers led by
petitioners, the president and general manager of the corporation. However, POEA issued a resolution ordering the
sheriff to execute against the properties of the petitioner and if insufficient, against the cash and/or surety bond of
bonding company concerned for the full satisfaction of the judgement awarded.

Issue: Whether or not the POEA resolution is proper.

Held: No. Under the law, a corporation is bestowed juridical personality, separate and distinct from its stockholders.
But when the juridical personality of the corporation is used to defeat public convenience, justify wrong, protect or
defend crime, the corporation shall be considered as a mere association of persons and its responsible officers and/or
stockholders shall be individually liable. For the same reasons, a corporation shall be liable for obligations of a
stockholder or a corporation and its successor-in-interest shall be considered as one and the liability of the former
shall attach to the latter.

But for the separate juridical personality of a corporation to be disregarded, the wrong doing must be clearly and
convincingly established. It cannot be presumed.

Thus, at the time Philsa allowed its license to lapse in 1985 and even at the time it was delivered in 1986, there was
yet no judgement in favor of private respondent. An intent to evade payment of his claims cannot therefore be
implied from the expiration of Phila’s license and its delisting.

Neither will the organization of Philsa International Placement and Services Corp. and its registration with the
POEA as a private employment agency imply fraud since it was organized and registered in 1981, several years
before private respondent filed his complaint with the POEA in 1985. The creation of the second anticipation of
private respondent’s money claims and the consequent adverse judgement against Philsa.

Likewise, substantially identity of the incorporators of the two corporations does not necessarily imply fraud.
Manuela Vda. De Salvatierra vs
Lorenzo Garlitos
103 Phil 757 – Business Organization – Corporation Law – Separate and Distinct
Personality – When Not Applicable
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.
LAUREANO VS. CA

G.R. No. 100468 272 Scra 253

May 6, 1997

By: Karen P. Lustica

Facts: Spouses Reynaldo Laureano and Florence Laureano are majority stockholders of
LAUREANO INVESTMENT & DEVELOPMENT CORPORATION. They entered into a series
of loan and credit transactions with Philippine National Cooperative Bank (PNCB). To
secure payment of the loans, they executed Deeds of Real Estate Mortgage. In view of
their failure to pay their indebtedness, PNCB applied for extrajudicial foreclosure of the
real estate mortgages.

Bormaheco, Inc. became the successor of the obligations and liabilities of PNCB over
subject lots by virtue of a Deed of Sale/Assignment.

Bormaheco, Inc. filed an ex-parte petition with the Registry of Deeds of Makati for the
issuance of a writ of possession over various lots that it bought from a bank. A motion
for intervention was filed by LIDECO Corporation for certain adverse claims. Bormaheco
opposed the motion on the ground that Lideco has no personality to sue because it is
not a juridical entity. Apparently, Lideco is not a corporation registered with the
Securities and Exchange Commission. Bormaheco’s opposition was granted.

Lideco assailed the decision on the ground that LIDECO is an acronym for Laureano
Investment & Development Corporation which is a duly organized corporation.

Both the lower court and CA rendered a decision in favor of Bormaheco.

Issue: May a plaintiff/petitioner which purports to be a corporation validly bring suit

under a name other than that registered with the Securities and Exchange Commission?

Held: No.

Ratio: Section 1, Rule 3 of the Rules of Court provides that only natural or juridical
persons or entities authorized by law may be parties to a civil action. Under
the Civil Code, a corporation has a legal personality of its own (Article 44), and
may sue or be sued in its name, in conformity with the laws and regulations
 of its organization (Article 46). Additionally, Article 36 of the Corporation Code
similarly provides:

Art. 36. Corporate powers and capacity. — Every corporation incorporated under
this Code has the power and capacity:

1. To sue and be sued in its corporate name;

In the case at bar, “Lideco Corporation” had no personality to intervene since
it had not been duly registered as a corporation. If petitioner legally and
truly wanted to intervene, it should have used its corporate name as the law
requires and not another name which it had not registered. Indeed, as the
Respondent Court found, nowhere in the motion for intervention and complaint in
intervention does it appear that “Lideco Corporation” stands for Laureano Investment
and Development Corporation. Bormaheco, Inc., thus, was not estopped from
questioning the juridical personality of “Lideco Corporation,” even after the trial court
had allowed it to intervene in the case.

A corporation cannot sue under a name other than that registered with the SEC. The
contention that Laureano Investment & Development Corporation merely used the
abbreviation is not tenable. “Lideco Corporation” had no personality to intervene since it
had not been duly registered as a corporation.

Dispositive: The petition is hereby DENIED.