I come back so last time we discussed what the corporation is the definition under the

0:28
revised Corporation code we also talk about the tri-level existence in the corporate setting as well as some of the
0:35
attributes Corporation I noted that one of the things that you should memorize
0:40
in the preparation code is the definition of a corporation because once you understand uh what it means then you
0:48
can very well answer most of the questions particular subject be that as it may we
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also discuss the different classes of Corporations well we're going to discuss them more at
1:02
length when we come to that part of the syllabus we said that some are public
1:09
some are private and some are possible and some of the rules which govern the
1:14
determination of what a particular corporation is in terms of class we also
1:20
talk about the corporation Soul as well as the religious societies the close
1:26
corporations vis-a-b the types of Corporations according to
1:33
its affiliation and control so basically we have
1:39
discussed the first part of the syllabus you also talked about the rights
1:45
according to the corporation and even though it is not a natural person or a living being
1:51
still has some of the rights under the Constitution particularly the Bill of
1:57
Rights and we have talked about the uh how it can be invoked by a corporation
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so this particular rice or the equal protection plus and the two process clause on in the Bill of Rights and then
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we also talked about the right against unreasonable searches and seizures
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uh the difference between the Stonehill versus the open up case as well as the path versus this case then we also
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talked about the right against the incrimination and why the corporation no even though it
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has a separate political personality still it cannot be invoked by a corporation again
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it goes back to the idea that the existence of a corporation is a mere
2:42
Grant by the state and therefore it cannot go against the directives of the
2:48
state including the invocation of the right against self-determination
2:54
we also discussed some of the cases involving notice Provisions as well as
3:02
the Constitutional Provisions involving corporations so now we're going to
3:08
continue our discussion and this time how is a corporation organized so
3:14
Corporations are organized based on section 2 of the Revised Securities Act
which provides for promoters.
What is a promoter?

It is any person who acting alone or in conjunction with one or more other persons directly or indirectly takes
initiative in founding and organizing the business or Enterprise of an issuer or any person who in connection with
the founding and organizing of the business of an issuer, directly or indirectly receives in consideration of services
or property or both services or property 10 percentum or more of any class of securities of the issuer or 10
percentum or more of the proceeds from the sale of any class of such Securities.

This particular definition of what a promoter applies to Corporation governed by Securities Act under the
corporation code.

There is also this provision on a subscription CONTRACT so this refers generally to stock corporations.

But what really is a promoter?

so a promoter is a person or a group of persons so it can be an individual or it can be a group who bring about the
birth of the corporation organized Corporation so this promoter arranges for the capital, capital and financing of the
corporation as well as assembling the necessary assets, equipment licenses Personnel, leases and services, they
mobilize so that is a corporation can be established

Promoter attends to the legal matters involving the formation of a corporation

PROMOTER vs. AGENT

PROMOTER AGENT
the promoter is not the corporation yet that act for and an agent acts for an on behalf of a principal
in behalf of the
principal
only bring about the birth
of the corporation
it doesn't necessarily mean that you will eventually
become a member of the
corporation when it is established

PROMOTER vs. TRUSTEE

PROMOTER
promoter is usually rewarded for his efforts is usually
paid for that in order to create even though he might
receive some form of compensation
He is paid, will do all the legal pertaining to the
creation or establishment of this Corporation
TRUSTEE
holding a trust
the property or the money for the beneficiary for and in
behalf of the one for whom it is really intended

Cagayan fishing development versus San Diego,1937

FACTS:
Tabora owned several Parcels of land. Sometime in 1929, he executed mortgage on four Parcels in favor of the
Philippine national bank and a second and third mortgage were also executed involving the same parcels of land.
Then later on he sold the
same parcels of land to Cagayan Fishing development (CFD) and the latter was still being Incorporated it was not
yet established at that point. He was one of the promoters okay he was involved in the formation of the CFD,
There was this condition in this in the mortgage or at least the arrangement
between Cagayan fishing and the other promoters and Tabora that the titles to the parcels of land will not be
transferred unless the mortgage is fully paid. Thereafter, the CFD was finally registered and a year later the same
Parcels of land were sold to Theodoro Sandico who now caused the sale this time CFD. Deed of Sale and
promissory note were executed.

Sandico, however failed to pay the amount stated in the promissory note. The CFD
the company this time filed a case with trial Court. Sandico won the case and the MR of the CFD was denied.
Thus, it appealed to the SC.

ISSUE: Whether or not the sale between the company and Manuel Tabora is valid. (NO)

RULING:
SC held in the negative.

The corporation was not yet Incorporated. It was made five or six months before the actual incorporation of the
CFD. So it's not even a de facto Corporation. It was not legally existent at that particular time so it could not have
possibly disposed of the parcels of land. To the mind of the Court what happened was actually it was Manuel
Tabora because the portions of land was still in his name and he was the one who technically contracted with
Sandico and there was no way that the company could have acquired the lands and it did not therefore possess any
of the right to dispose of the Sandico.

Note:before a corporation may be said to be lawfully organized, many things have to be done according to the court.

PROMOTER does all of these preconditions or prerequisites

who complies with all of this requirements the promoters

promoters could not have acted as agent for the projected corporation
since that which no legal existence could have no agent therefore the
corporation the projected Corporation could not have been a principal because it was non-existent yet can there be
ratification in this case because the promoters know

in this case Manuel Tabora his wife as well as the others who wanted to form
the CFD uh could there be gratification of the act
and therefore the uh the CFD would be considered as having existed at the time that all of these transactions were
entered into according to the court no not in this case it cannot extend you know the the doctrine of ratification in
this particular case okay uh

now why was it that in this particular case the Supreme Court invalidated this sale now

between CFD and the Sandico when under normal circumstances it could be considered as a promoter's contract uh

according to decision this would result in inequity and Injustice because all of these transactions were deemed to
have been entered into by Tabora in order to
defraud his creditors so that eventually the creditors would not go after him and uh this was not allowed by the court
Okay so

take note class that the purpose of Promoter's contract is for the promotion of the projected or it is still to be
incorporated Corporation

the corporation can eventually be considered as a party but it requires ratification only
this particular case the court said the doctrine of ratification cannot be made
because it will result in Injustice to the creditors of Tabora because he was trying to circumvent the his obligations
Rizal light and Ice Company vs. Municipality of Morong, Rizal 14:33

FACTS:

Rizal light and ice company (RILC) was granted by the Public Service Commission with the certificate of public
convenience .so the Public Service Commission granted the secondary franchise to operate light heat and power
services in the municipality of Morong Rizal. sometime later RILC failed to comply with the order of the Public
Service Commission to raise its service voltage to expand its services. it also failed to appear in a hearing relative to
some violations as to certificate of public convenience. so later on the Public Service Commission issued two orders
and therefore RILC has this pending case before the Court. Because there are other that was granted to another
company Electric Company para kalabanin yung prangkisa ni RILC

This time, Morong become a party to the case okay involving RILC.

RILC contention: Morong had no juridical personality has no legal personality yet when it applied for the
certificate of public convenience to with the Public Service Commission
sometime in May 1962. so the certificate of incorporation was only issued on October 17 1962. The secondary
franchise was given first before the primary franchise

CONTENTION OF Philippine Service Commission: No, this is not true morong electric company is actually a de
facto Corporation.

Issue:can morong electric company be granted the franchise to operate

light and power no services in the municipality of Morong Rizal. (no)

RULING:

morong electric company did not have corporate personality at that time
that the second franchise was granted to it by the Public Services Commission

but the franchise itself is not invalid. the fact that it was not yet Incorporated does not invalidate the franchise
because later on according to the court the SEC issued
the certificate meaning the primary franchise and according to the
court it is enough that an organization is complete prior to the passage and
acceptance of the franchise.

This is an exception to the earlier case of Cagayan fishing development.

the incorporation of morong electric company sometime in October 1962 and
then later on its acceptance of the franchise perfected a contract
between the municipality of Morong and Morong Electric and also cured the earlier deficiency. so this is a case of
the Court deciding that there was no flaw.

This is an exception to the rule.

GEN RULE: you must first be granted the primary franchise your existence meaning the issuance of the certificate
by the SEC in your favor and then later on the issuance of the
franchise in your favor whatever that is, in this case it was electric power okay
which was being regulated by the Public Services Commission

why did the court rule in this wise? Because of Continuing Offer Theory
under this Theory a grant of a franchise prior to the time that the corporation actually existed operates as a
conditional Grant.

so meaning if later on nagrant na yung franchise mo walang problema sa pag-exist mo sa corporation primary
franchise operation then the secondary franchise will be validated it was a continuing offer.
now in case there it really is a defect in your incorporation meaning
maybe you were not able to comply with the nationality requirement or the citizenship requirement, residency
requirement or whatever especially in the case of nationalized Industries or regulated Industries such as this one then
the franchise no secondary franchise the certificate of public convenience might
be reward secondary then under the Continuing Offer Theory still valid (even nauna yung secondary theory pursuant
to COT)

Karam Jr versus CA

Karam and his cohorts were investors in Philippines Orient Airways

along with Barretto and Garcia. now Garcia commissioned the consultancy
services of the private respondents in this case. The purpose is
they wanted to ensure that they are able to comply with other requirements because in this case they wanted to get
the franchise to operate an airline company or operate
Airlines or air transportation. so they failed to pay the fee on the Consultants. Thus sinigil sila ng mga consultants.
so they filed the case in the court. okay now the court of course would in favor of respondents and it was appealed
later on by Karam

ISSUE:
whether or not Karam, the other investors and the
other investors in Filipinas Orient Airways were personally liable for the
consultancy services which were engaged by Garcia. (no)

RULING
according to the court no. so Karam as well as the other investors who had no knowledge and did not engage the
services of the Consultants are not personally liable for the consultancy expenses which led to the formation of the
corporation.

so why is that so?because they were subsequent investors remember last time
we talked about there being a need to get additional
investment or funds into corporation. one of the advantages of the corporate setting really is you can increase the
Capital stock and uh offer no offer shares to the public

so Karam, according to the court are subsequent investors only and

therefore they're not liable for any expenses which were incurred prior to the to
their joining the corporation.

another thing Filipinas Orient Airways was able to incorporate and therefore before going against the investors as
well as the individual stockholders of the corporation,
Philippines Orient would have to pay the consultancy. okay remember that it has a
personality separate and distinct from that of the members of the corporation.

okay so if you are not involved in the incorporation you're not involved as a
promoter as in this case, Karam was not involved as well as the others who elevated this case in the court of appeals
hindi ka dapat mgbayad kasi pumasok sila Incorporated na, buo na si Filipinas Orient Airways

what are subscription contracts? so any contract for the acquisition of an

issued stock in an existing corporation or a corporation still before shall
be deemed a subscription within the meaning of the code. okay so you subscribe that is
what a subscription contract is. Kasi gusto mong kumuha ng shares of stocks okay

what is this subscription agreement? it is any contract for the acquisition of an issued stock in an existing
Corporation or a corporation still to be formed.
what is the difference between a subscription agreement and a mere purchase or a purchase agreement?
Purchase Agreement is any contract for the acquisition of issued stock in an existing corporation.

In Subscription Agreement, you are only subscribing to a corporation which is yet to be formed. Nagiging
incorporator ka or kung formed na iyong corporation pero yung stock is not yet issued. So it is a new issuance, new
stocks still to be issued. So, that is covered in a subscription contract.

On the other hand, Purchase Agreement, parang ako lang bibili lang ako. Gusto kong kumuha ng shares sa
Jollibee.

SUBSCRIPTION AGREEMENT VS. PURCHASE AGREEMENT

SUBSCRIPTION AGREEMENT PURCHASE AGREEMENT

Govern by the Corporation Code/ Corp. Law (governs
the relationship between the corp and its stock holders)
whether under status na nagiincorporate pa lang or
incorporated na pero nag-iisue ng bagong stocks.
In case of insolvency, if insolvent, it becomes
immediately due and demandable.
Can the obligee release the obligor in subscription
contract? NO
It is governed by the Civil Law (kasi bentahan ito,
sales)
In case of insolvency, the contract is deemed rescinded.
The oblige may release the obligor from that particular
agreement or from that particular obligation.

Trillana vs. Quezon College29.19

sometime in 1948, Mrs. Damasa Crisostomo wrote to Quezon College because

she wanted to subscribe 200 shares of stocks in the corporation. so Quezon
college is private educational institution and there were
shares of stocks. And contingent upon the time that she is able to harvest
fish. Before parties enter into payment settlement, Damasa died
and there was no payment made. so question College this time decided to
present the demand letter claiming before the court against
the estate of damasa for what for 20 000 pesos.

Trillana was the administrator of the estate of Damasa okay and

Opposed, teka hindi naman nakabili eh, hindi naman natuloy kasi hindi naman nakaharvest ng fish or whatever.

ISSUE:
whether or not there was a subscription of the shares before her death. Is Damasa’s letter valid. (no)

can it now be invoked question college so that they can claim from the estate
of Damasa the 20 000 that was committed by Damasa.(no)

RULING:
The relationship between Damasa and the College was still in the preliminary stage. Notwithstanding the offer and
offer was accepted, however, Damasa has her own condition of paying which is when she harvest fish. because of
this particular Arrangement at least offer by damasa there was no counter offer by Quezon College. Hence, it was
not ripen into an enforceable contract. (it seems payable when able). The form of payment offered by Damasa is
based on a condition which is solely dependent on her own will. Thus, it is apparent that the effect of the obligation
becomes void. Quezon College should have accepted the terms, hence, it cannot claim from Damasa.
Note: A subscription agreement even if it is governed by the corporation code still it must first pass the law on
obligations and contracts before you can now use the corporation code

BAILA vs. SILANG TRAFFIC COMPANY, 1942

sometime in 1935 three people, Baila, Toledo, Nabal, agreed to buy shares of stocks from traffic company. the
agreement includes this provision that if they fail to pay any of the installments the shares are to revert to the
company and the payments made shall be forfeited

sometime in 1937 the directors the board of directors of cilantropic

company passed a resolution providing the certain installment payments on
shares of stocks made by buyers were to be reimbursed. Panabal,
Baila and Toledo were not included in this because according to the
silent traffic company on set date the Subscribe shares of stocks have already
reverted to the corporation and the payments made were already forfeited
because of the failure of these three people to pay.

Those three people decided to file a case to recover their sums paid despite the agreement.

so the trial court however said that the

company you is not at fault okay because there was this agreement.
court of appeals also affirmed the dismissal of the complaint but
this time it reversed the cancellation of the subscription contract. so both of the parties
went up to the Supreme Court.

ISSUE:
whether or not the agreement between the petitioners
and Silang traffic company is a subscription of the contract.(NO)

(okay so because if it is a subscription subscription contract again what will

happen the corporation code will be applied
it might affect the validity of the provision saying that in case of
payment of the installments then it will result in the
forfeitture of the shares.)

RULING:
the agreement was not a subscription contract but a sale/ purchase of shares of stocks on installment. that is how the
Supreme Court characterized the transaction

(1) it was the title itself of the document. (that is their intention)
(2) and a subscription is the mutual agreement of the subscribers to take and
pay for the stock of a corporation.

but the intention in this particular case was and to have an independent agreement between the individual Baila,
Toledo and Nabal and the corporation silang traffic company to buy shares of stocks at stipulated price and on
installment

Okay so how do we now determine whether the

contract is one for subscription or one which is only for sale or purchase of
stock? according to the Supreme Court in this case it is a matter of
construction and depends upon its terms and the intention of the parties

that's why here the court looked at the title looked at the intion of the
part is and other circumstances. So just because again it is titled subscription does not mean that it is a subscription
contract

In this case, it would really show what really was the

intention of the parties what type of contract they really wanted to enter
into okay. so here, it was not a subscription contract, bumibili lang sila pero installment

how will you now be released from your subscription obligation?

Velasco vs. Poisan

Poisan was the stockholder of the Philippine chemical product company.
He subscribed 20 shares okay and out of the 20 shares 15 were not yet paid so five the rest remain unpaid. Later, in a
resolution adopted by the board of the Philippine chemical Product Company, it was agreed that the unpaid
subscribed shares of certain Infante were to be taken up by the directors and the amount already paid will not be
refunded. that was the decision.

take note it was another shareholder named Infante.

Later, in the same board meeting, in relation to the unpaid subscribe shares of Posan,
he was absent at that particular meeting so the agreement or the resolution was
that he would be required to pay the amount and if he isn't able to do so, judicial
proceeding shall be taken against him for collection of sum of money. Consequently, due to his absence, he wasn’t
able to take it up with the board, he could not resist on the resolution made.

Then, he wrote the company that he doesn't want to get the 15 shares anymore. And informed them that he will not
get his reimbursement for the 5 shares .

Later on, the company lost money and became bankrupt and Velasco
became the assignee. So Velasco this Time filed a case against Poisan to recover the amount for the unpaid 15.

The lower court dismissed the case. Hence this case.

ISSUE:
Can Poisan be held liable for the unpaid subscription? (YES)

in this case insolvency supervene upon the corporation

and all the unpaid stock subscriptions now will become due and demandable.

a subscription contract or a stock subscription is a contract

between the corporation on one side and the subscriber on the other and the courts will enforce it for or against
either

okay so what does this mean? Kung hindi nabayaran, it will be enforce against the subscriber para bayaran iyong
corporation. Despite being paid, ayaw irelease ng corporation, then the Court will rule in favor of the subscriber.
That it is a contract between the corporation on one side and the subscriber on the other and the court will enforce it
for on against either.

Note: that the corporation even with the approval of the board of directors you cannot excuse any subscriber from
the payment of the subscription (Because it violates the so-called TRUST FUND DOCTRINE)
these subscribers should not be excused from the payment of what they should pay
because they agreed to subscribe to these shares so then now they are now debtors of the corporation and they
should pay that specially in the case of insolvency on the part of the corporation it becomes immediately due and
demandable in case of insolvency

Philippine national bank versus Mill

The same thing was reiterated.

the ruling in Velasco versus Poison was reiterated or emphasized. It also

talked about the Trust Fund Doctrine.

What is a Trust Fund Doctrine (TFD)?

when the subscriptions or the capital of Corporation constitute a fund
to which the creditors have a right to look for satisfaction of their claims and that the assigning in insolvency can
maintain an action upon any unpaid stock subscription in order to realize assets for the payment of its debt.

So basically when we talk about the TFD, the creditors should be assured, there is an assurance on the part of the
creditors huy may pambayad, kaya naming ito pinautang kasi may pambayad and therefore the subscriptions form
part of that pambayad. Hindi mo dapat galawin, hindi mo dapat i-excuse otherwise what will happen is the
creditors will lose their Assurance will lose their guarantee okay that is what the trust fund Doctrine is all about.

okay so the TFD covers subscribed Capital Stock okay which means
paid up as well up subscriptions which are still receivable. so paid and unpaid
Even iyong pinangako lang. Kaya nagiging due and demandable once the corporation becomes insolvent.

so what are the formalities in organizing a corporation? generally you need to charter meaning you have to
incorporate

Government of the Philippine islands versus Manila railroad ; 1929

FACTS:
there was this law which was passed Act No. 1510. The company was directed under this law to construct Telegraph
or phone voice holes with sufficient space you know to permit the government to install four wires for Telegraph
and telephone transmission.

the government filed this petition to compel Manila railroad to construct such posts
to accommodate six wire. There is another law, Act No. 1459 which says that all railroad shall corporations
construct poles that will be sufficient to carry wires that the government will deem necessary for public service.

ISSUE:
WON Act No. 1510 or Act No. 1459 is applicable. (Act No. 1510, the charter of the corporation)

RULING:
act number 15 10 the charter of the corporation
in as much as act number 1510 is the charter of the corporation and
constitutes a contract between either the government, it is governed by set provision and not act number 1459 which
is considered as the general law. Meaning it applies to all types of railroad companies. all railroad companies not
just Manila railroad
so the court concluded that the government or the state cannot compel Manila
railroad to construct polls that would carry more than what is stated in the
charter or in its Charter.

act number 1459 was intended to apply to all Railways okay which did not have a special Charter contract but this
manila railroad has a special charter
that has its own Charter Act number 1510 and therefore it will govern
the corporation.

Note:the charter of a corporation is

a contract between three parties and what are these THREE parties?

(1) State and the corporation to which the Charter is granted.

(2) contract between the stockholders and the state; and
(3) it is also a contract between the corporation and its stock holders

Rural Bank of Salinas (RBS) versus CA

FACTS:
Clemente Guerrero who was the president of Rural Bank executed a special power of attorney in favor of his white
Melania and he authorized her to dispose of his shares of stocks in the said Corporation the Rural Bank of Salinas.
Pursuant to that particular special power of attorney, the wife Melania assigned the shares to three persons.

Clemente died sometime later and Melania presented to the RBS the deed of assignment for regisratition. The RBS
denied the request the request of Melania. The latter filed with the SEC action for Mandamus.

RBS CONTENTION: It cannot grant the request because Clemente’s Estate should first be settled and liquidated
before the request for the registration of these shares assigned to these persons can be accommodated.

(May adopted daughter pa si Melania na nanggugulo gusto nya sabihin teka wag nyo isama yan wala dapat deed of
assign etc.)

SEC did was to issue an order directing the Rural Bank to cancel the stock certificates in the name of Clemente and
issue new ones to the assignees.

However, RBS maintained its stand until it went up to the CA to which the latter affirmed the same.

ISSUE: Can the SEC compel a corp. to register the transfer of shares of stocks? (YES)

RULING:

The Corporation cannot refuse a valid directive of an instrumentality of the state.

The SEC has a right to order the RBS to register its shares in the name of the new owners.

The assignees have the concomitant right to the transfer of stocks in their names because it is inherent in the
ownership of the stocks.

Will Mandamus lie? (YES)

Mandamus will lie in cases where a corporation refuses to as in this case register the
transfer and register the stock.
what about the bylaws if there are rules?

the bylaws will not be the ones to govern such cases by laws are intended merely for the protection of the
corporation and the prescribed regulation and not restriction. they are always subject to the Charter of the
corporation. the corporation in the
absence of such power cannot ordinarily inquire into or pass upon the legality
of the transactions by which the stock passes from one person to another.

(Meaning kahit may doubt sila, kung talagang totoo iyong SPA, as long as this value, SEC itself directed you to
transfer the stocks, you cannot now invoke your bylaws. So hindi sya priority)

Please remember that it was stated before the Tayag vs. Benguet Conso. Case, it was reiterated here.

It characterizes the law which governs our corp.

ARTICLE OF INCORPORATION (AI)- Charter of the corporation (iyon ang batas nya)

What is the nature of the AI? it is a contract between again the corporation and the state. It serves also as the
contract between the corporation and the stockholders and also as between the stockholders themselves.

So it is there in the AI, it shows kung ano iyong grant ng State. Meaning ano iyong inallow ng State na business mo
or purpose mo, iyong set up Ninyo andun din and then how would the stockholders now act as against each other or
for in each other.

It is also a public document is not a private document or a private instrument it is a public document because it is
registered with the SEC registration with the Securities and Exchange Commission makes it a public document okay
and therefore the
third persons who deal with the corporation are being bound by the provisions contained in the Articles even if they
have not seen the said articles.

Exception
corporation by estoppel (hindi nakumpleto ang registration; caveat emptor nawawala), third person who is bound by
the provsions in the AI will not apply.

what is the procedure?

we have the Corporation code and the corporation

code says certain contents of the Articles of
Incorporation. of course some of these: (1) Name of the Corporation (2) Your specif purpose (3) Place of the
corporation located is within the Phil. (4) names and nationalities and Residences of the incorporators (5) number of
director in case of the stock corporations (6) number of trustees for non-stock corp and the authorized capital stock.
(7) Par value (shares); (8) Non-stock (amount of capital) as well as the names and residence of the contributors and
such other matters.

Note: you can add others but what mentioned above are the mandatory inclusions.

Philippine Corporation the term for which a corporation is to exist is supposedly

AI in the old code but now because of the Perpetual existence
existence unless you want to put a term to it. (Absent indication of the term in the AI, meaning the existence is
perpetual)

What about the name of a corporation?

under the law no corporate name may be allowed by the SEC if proposed name is identical or deceptively or
confusingly similar to that of any existing Corporation or to any other name already protected by law

RED LINE TRANSIT vs. RURAL TRANSIT; 1924

Facts:
Rural Transit applied a Certificate of Convenience again with the Public Service Comm. Its route is Manila-
Tuguegarao and Manila-Ilagan, Isabela. Red Line Transit opposed the application on the ground that it already has
an existing franchise for that route. Nonetheless, the PSC approved Rural Transit application. Hence, RLT filed a
motion for reconsideration, stating that there is a pending case before the lower court for the dissolution of Rural
Transit,Ltd.

Rural Transit(before it was Bachrach Motors); competition among transportation providers bus companies.

ISSUE: won Bachrach Motors use the Rural Transit Co. Ltd name. (NO)

RULING: the Public Service Commission has no power to authorize one company to assume the name of another
as a trade name. It
can only give certificates of public convenience not to allow Bachrach
background to use Rural Transit name. the law requires corporations to
adopt and certify a distinctive name and it cannot change names except in the
manner provided by law individual. (Not with the mere expediency of what applying for
a public convenience and saying from background Motors rural Transit na po kami)

Same with natural persons you cannot just change your name although we are allowed to correct some a minor
mistakes in our names as appearing in our birth
records and as appearing or other documents by going to the
civil register. change of name has a process.
change then you have to go through Court processes

Same with this case. Both Bachrach Motors and Rural Transit Co. Ltd are Phil Corp. the Very law of
theircreation and continued existence requires each to adopt and certify a distinctive name. the name of a
corporation is essential to its existence it cannot change its name except in the manner provided by the statue.
because by that name
alone is it authorized to transact business.

because that is how people know the transacting public know you
and you cannot with the mere you know snap up your fingers say I am now going
to adopt this name from now on call me this name okay

so question is if a corporation enters into a contract not using its corporate name
is the contract still binding?
yes it is still binding because it should not Prejudice the one who contracted it.
But you have violation if you are not allowed to use any other
name now

Philippine Insurance versus Hartigan

Yaktong Lin fine fire and Marine Insurance Corporation was

incorporated in 1953. later the board of directors decided to come up with a
resolution amending the AI or the Articles of Incorporation and the
name the corporation's name was changed to Philippine first Insurance Corporation
later on the corporation signed as co-maker with Hartigan with a
promissory note in favor of China banking. there was this Indemnity
agreement.now the death became due and demandable.
Hartigan was not able to pay then China Bank ran after PFIC Yeptong Lim.
CONTENTION OF HARTIGAN: It was not alleged that PFIC is different from Yeptong Lim.

now the Court ruled in favor of Hartigan. Yeptong Lim cannot change his name and because of it the corporation
was being dissolved and therefore it cannot enter into that Indemnity agreement.

so PFIC moved for recon, dismissed and appealed.

ISSUE: Can a PFIC and Yeptong Lim changed its name and still attain its personality (YES)
RULING:
Can change the name in a manner provided by law, hence it will not result to the dissolution of the company it will
not affect its
identity

It can amend its name through amendment of the charter or the articles of
Incorporation. there is no Prohibition in the change of names.

so that's why sometimes in the broad sheets you will see a paid advertisement saying
that particular company is now known as this but it's still the same company and that is required to inform the public
so that they will not be misled
as well as confused okay so

G.R. each Corporation Shall Have a Name by which it is to Sue

and be sued and to do all legal acts the name
of a corporation in this respect designates the corporation in the same manner as the name of an individual likeus
designates the person and since an individual or a natural
person has the right to change his name under certain conditions.

if an individual according to this decision is can change his name for that reason as I'm sorry embarrassing it's a
humiliating name is a weird name okay then there's no compelling reason why a corporation which is a JURIDICAL
person may not enjoy the same right

there is nothing sacrosant in a name when it comes to artificial beings. the sentimental
considerations which individuals attach to their names are not present in corporations and Partnerships so more so
that it can change its name.

what is contrary to public policy is not the changing of name itself what is
contrary is the use by one corporation of the name of another Corporation as its trade name especially if the
change of the name or the use of another name is there to
defraud or to confuse the public

you are certain no one will disagree that such act can only result in confusion and open the door to Fraud's
Innovations and difficulties of administration and supervision

so what is the importance of incorporating as we have seen in the red line as well
as the first Philippine Insurance case name?

consider the three relationships:

(1) cooperation and the state; so the name is important for the purpose of
the first relationship which is the when the articles are approved by the state it is approved for the name stated in the
Articles of incorporations
later, when in the in in the exercise of the police power of the state it
regulates corporations

so in the case of red line transit vs. rural Transit Bachrach Motors and Rural
Transit case the wrongful use of corporate name was made as the basis for
the denial of the franchise Manila Ilagan Isablea routes okay and uh in the first
Philippine Insurance case it is used as one as the basis by
this day to say you cannot Sue in court because the court is an organ of this state and in failing to comply with the
representations in the Articles you must face the consequences.

Universal Music versus universal textile

ISSUE:
are they confusingly similar? (CONSIDERING THAT UNIVERSAL TEXTILE MILLS. (1953) AND
UNIVERSAL MILLS CORP(ORIGINAL NAME IS UNIVERSAL HOSIERY CORP.(1954) (YES)

Universal Mills Corp gauzed with fire. Universal Textile Mills filed a petition for being confusingly similar to
Universal Textile Mills. (considering that napagkamalan silang nasunugan) SEC favored Universal Textile Mills.
Thus, Universal Mills Corp appealed.

RULING:

They are not really identical but they are

similar that even under the test of reasonable care and observation confusion may arise. Since they are involved in
similar business because their both business is textile. Confusingly similar.

Stop using the name when there is a good will and patronage already.

ANG MGA KAANIB SA IGLESIA NG DIYOS KAY KRISTO HESUS HALIGI AT SUHAY NG
KATOTOHANAN SA BANSANG PILIPINAS INC vs. ANG MGA KAANIB SA IGLESIA NG DIYOS KAY
KRISTO HESUS HALIGI AT SUHAY NG KATOTOHANAN

These are two different religious groups.

FACTS:

IGLESIA NG DIYOS KAY KRISTO HESUS came from Iglesia ni Kristo. May mga humiwalay noong 1914 sa
Iglesia ni Kristo until it formed this IGLESIA NG DIYOS KAY KRISTO HESUS (older) Later on, meron na
namang nagbreak away, iyong nasirang Dating Daan.
Soriano: --Haligi at Suhay; the other one ---Haligi at Katothanan, Note: parehong may Iglesia ng Diyos kay
Kristo Hesus

ISSUE: Are these confusingly similar? (NO)

CONTENTION OF SORIANO: These are generic words and therefore can be used.

RULING:

The Older group cannot find justification under the generic word use. It is not generic.

according to the Supreme Court of contarty ruling would encourage other corporations to adopt verbatim and
register an existing and protected corporate name to the detriment of the public.the fact that there are other non-stock
religious Societies or corporations using the names Church of the Living God
Church of God Etc okay is of no consequence. it does
not authorize the use of the Soriano group of the essential and
distinguishing feature of the Iglesia ng Diyos kay Kristo Jesus Haligi at Suhay ng Katotohanan registered and
protected corporate name.

The reason why they became known as Ang Dating Daan na lang. Thus theSoriano group the younger ones has to
change the name.