SECTION 20Sec. 20. De facto corporations. The due incorporation of any corporation claiming in good faith to be a corporation under this Code, and its right to exercise corporate powers, shall not be inquired into collaterally in any private suit to which such corporation may be a party. Such inquiry may be made by the Solicitor General in a quo warranto proceeding.

HALL v PICCIO86 Phil 603, GR No L-2598, June 29, 1950

Facts: On May 28, 1947, petitioners C. Arnold Hall and Bradley P. Hall, and 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, . 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. The said articles of incorporation was filed in the office of SEC. Pending action of the articles of incorporation by SEC, the respondents filed a civil case against the petitioners alleging that Far Eastern Lumber and Commercial Co was an unregistered partnership and that they wished it dissolved because of bitter dissension among the members, mismanagement and fraud by the managers and heavy financial losses. The court (thru Judge Piccio) ordered the dissolution of the company. Halls offered to file a counter bond for the discharge of the receiver but the judge refused to accept the offer and discharge the receiver.

Issue: W/N the court had jurisdiction 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.

Held: Yes, the court has jurisdiction to take cognizance of the case!

Section 20 of the Corporation Law does not apply in this situation

First, 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." )

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.

MUNICIPALITY OF MALABANG v BENITO27 SCRA 433, GR No. L 28113, March 28, 1969

FACTS: Petitioner, Amer Macaorao Balindong, is the mayor of Malabang, Lanao del Sur. Respondents are the mayor and councilors of Balabagan, Lanao del Sur. Balabagan was formerly a part of the municipality of Malabang and was created on March 15, 1960, by Executive Order 386 of the then President Carlos P. Garcia, out of barrios and sitios of the latter municipality. The petitioners filed an action for prohibition to nullify EO 386 and to restrain the respondents from performing the functions of their respective office relying on the ruling of this Court in Pelaez v. Auditor General and Municipality of San Joaquin v. Siva which stated that the power to create barrios in the provincial board is a statutory denial of the presidential authority to create a new barrio [and] implies a negation of the bigger power to create municipalities. The respondents argued that the ruling in Pelaez can have no application in this case because unlike the municipalities involved in Pelaez, the municipality of Balabagan is at least a de facto corporation, having been organized under color of a statute before this was declared unconstitutional, its officers having been either elected or appointed, and the municipality itself having discharged its corporate functions for the past five years preceding the institution of this action. It is contended that as a de facto corporation, its existence cannot be collaterally attacked, although it may be inquired into directly in an action for quo warranto at the instance of the State and not of an individual like the petitioner Balindong.Generally , an inquiry into the legal existence of a municipality is reserved to the State in a proceeding for quo warranto or other direct proceeding, and that only in a few exceptions may a private person exercise this function of government. But the rule disallowing collateral attacks applies only where the municipal corporation is at least a de facto corporations. For where it is neither a corporation de jure nor de facto, but a nullity, the rule is that its existence may be, questioned collaterally or directly in any action or proceeding by any one whose rights or interests ate affected thereby, including the citizens of the territory incorporated unless they are estopped by their conduct from doing so.

ISSUE: Whether or not the municipality of Balabagan is a de facto corporation. RULING: No, the municipality of Balabagan is not a de facto corporation. EO 386 is declared void and the respondents are permanently restrained from performing the functions of their respective offices.

I. The color of authority requisite to the organization of a de facto municipal corporation may be:

1. A valid law enacted by the legislature.2. An unconstitutional law, valid on its face, which has either (a) been

upheld for a time by the courts or (b) not yet been declared void; provided that a warrant for its creation can be found in some other valid law or in the recognition of its potential existence by the general laws or constitution of the state.

II. There can be no de facto municipal corporation unless either directly or potentially, such a de jure corporation is authorized by some legislative fiat.III. There can be no color of authority in an unconstitutional statute alone, the invalidity of which is apparent on its face.IV. There can be no de facto corporation created to take the place of an existing de jure corporation, as such organization would clearly be a usurper.10

The mere fact that Balabagan was organized at a time when the statute had not been invalidated cannot conceivably make it a de facto corporation, as, independently of the Administrative Code provision in question, there is no other valid statute to give color of authority to its creation.Executive Order 386 "created no office." This is not to say, however, that the acts done by the municipality of Balabagan in the exercise of its corporate powers are a nullity because the executive order "is, in legal contemplation, as inoperative as though it had never been passed."

SAWADJAAN v CA459 SCRA 516, GR No 141735, June 8, 2005

FACTS: Sappari K. Sawadjaan was among the first employees of the Philippine Amanah Bank (PAB) when it was created by virtue of Presidential Decree No. 264 on 02 August 1973. He started as a security guard and was eventually promoted to a loans analyst.

In February 1988, while designated as appraiser/investigator, Sawadjaan was assigned to inspect the properties offered as collaterals by Compressed Air Machineries and Equipment Corporation (CAMEC) for a credit line of Five Million Pesos (P5,000,000.00). On the basis of his Inspection and Report, the PAB granted the loan application. When the loan matured on 17 May 1989, CAMEC requested an extension of 180 days, but was granted only 120 days to repay the loan. Sawadjaan was then promoted to Loans Analyst I on 01 July 1989.

In January 1990, Congress passed Republic Act 6848 creating the AIIBP and repealing P.D. No. 264 (which created the PAB). All assets, liabilities and capital accounts of the PAB were transferred to the AIIBP, and the existing personnel of the PAB were to continue to discharge their functions unless discharged. In the reorganization, Sawadjaan was among the personnel retained by the AIIBP.

Upon failure of CAMEC to pay, the bank, now AIIBP, discovered the ff: the TCT offered by CAMEC was spurious, the property described therein was inexistent, and that the property covered by another TCT had a prior existing mortgage in favor of one Divina Pablico.

On 08 June 1993, the Board of Directors of the AIIBP created an Investigating Committee to look into the CAMEC transaction, which had cost the bank P6,000,000.00 in losses. The Board eventually held Sawadjaan liable for the administrative offense of conduct prejudicial to the best interest of the service and imposed on him the penalty from (originally) dismissal to suspension for 6 months. Sawadjaan appealed the decision but the court affirmed the bank’s finding. Sawadjaan filed a motion for new trial claiming that he had recently discovered that at the time his employment was terminated, the AIIBP had not yet adopted its corporate by-laws.

ISSUE: W/N the alleged Islamic Bank has no valid by-laws and has lost its juridical personality as a corporation on 16 April 1990

W/N Islamic Bank and its alleged Board of Directors have no jurisdiction to act in the manner they did in the absence of a valid by-laws;

RULING: AIIBP has a juridical personality to act as corporation!

The AIIBP was created by Rep. Act No. 6848. It has a main office where it conducts business, has shareholders, corporate officers, a board of directors, assets, and personnel. It is, in fact, here represented by the Office of the Government Corporate Counsel, "the principal law office of government-owned corporations, one of which is respondent bank." At the very least, by its failure to submit its by-laws on time, the AIIBP may be considered a de facto corporation whose right to exercise corporate powers may not be inquired into collaterally in any private suit to which such corporations may be a party. Moreover, a corporation which has failed to file its by-laws within the prescribed period does not ipso facto lose its powers as such. The SEC Rules on Suspension/Revocation of the Certificate of Registration of Corporations, details the procedures and remedies that may be availed of before an order of revocation can be issued. There is no showing that such a procedure has been initiated in this case.In any case, petitioner’s argument is irrelevant because this case is not a corporate controversy, but a labor dispute; and it is an employer’s basic right to freely select or discharge its employees, if only as a measure of self-protection against acts inimical to its interest. Regardless of whether AIIBP is a corporation, a partnership, a sole proprietorship, or a sari-sari store, it is an undisputed fact that AIIBP is the petitioner’s employer. AIIBP chose to retain his services during its reorganization, controlled the means and methods by which his work was to be performed, paid his wages, and, eventually, terminated his services.

SECTION 21Sec. 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.

SALVATIERRA v GARLITOS103 Phil 757, GR No L-11442, May 23, 1958

Facts: Manuela T. Vda. de Salvatierra is the owner of a parcel of land located at Maghobas, Poblacion, Burauen, Teyte. On March 7, 1954, Salvatierra entered into a contract of lease with the Philippine Fibers Producers Co., Inc., allegedly a corporation "duly organized and existing under the laws of the Philippines, with business address in Burauen, Leyte, and represented by Mr. Segundino Q. Refuerzo, the President". The contract provided that the lifetime of the lease would 10 years, that the land will be planted with kenaf, ramie or other crops suitable to the soil; that the lessor would be entitled to 30% of the net income from the harvest of any, crop without being responsible for the cost of production thereof; and that after every harvest, the lessee was bound to

declare at the earliest possible time the income derived and to deliver the corresponding share due the lessor.

However, the obligations imposed were not complied with by the alleged corporation. Salvatierra filed for accounting, rescission and damages. She claimed that the defendant corporation planted the land with kenaf but it refused to render an accounting of the income it derived and to deliver the lessor's share (estimated gross income was P4,500 and the deductible expenses amounted to P1,000).

The court granted plaintiff's prayer and required defendants to render a complete accounting of the harvest of the land and to deliver 30% of the net income realized from the last harvest. If the defendant’s fail to abide by this rule, the gross income would be fixed at P4,200 or a net income of P3,200 after deducting the expenses for production, 30% of which or P960 was due the plaintiff pursuant to the contract of lease, which was declared rescinded.

The court then issued a issued a writ of execution causing the attachment of 3 parcels of land registered in the name of Segundino Refuerzo as there was no available property of the Philippine Fibers Producers Co., Inc., for attachment. Refuerzo claimed that the decision was null and void with respect to him, there being no allegation in the complaint pointing to his personal liability and that the liability be limited to the defendant corporation. The court then ordered the release of all properties belonging to Refuerzo.

Issue: Whether or not Refuerzo should be held liable to Salvatierra?

Ruling: Refuerzo is liable to Salvatierra!

Refuerzo, as president of the unregistered corporation Philippine Fibers Producers Co., Inc., was the moving spirit behind the consummation of the lease agreement by acting as its representative. His liability cannot be limited or restricted that imposed upon 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.

Refuerzo’s defense is premised on the fact that the complaint contained no allegation which holds him personally liable, for while he was a signatory to the contract, he did so in his capacity as president of the corporation. Salvatierra, on the other hand, contends that her failure to specify Refuerzo’s personal liability was because she was under the impression that the Philippine Fibers Producers Co., Inc., represented by Refuerzo was a duly registered corporation as appearing in the contract, but a subsequent inquiry from the Securities and Exchange Commission yielded otherwise.

While as a general rule a person who has contracted or dealt with an association in such a way as to recognize its existence as a corporate body is estopped from denying the same in an action arising out of such transaction or dealing, yet this doctrine may not be held to be applicable where fraud takes a part in the said transaction. In the instant case, on plaintiff's charge that she was unaware of the fact that the Philippine Fibers Producers Co., Inc., had no juridical personality, defendant Refuerzo gave no confirmation or denial and the circumstances surrounding the execution of the contract lead to the inescapable conclusion that plaintiff Manuela T. Vda. de Salvatierra was really

made to believe that such corporation was duly organized in accordance with law.

A registered corporation has a juridical personality separate and distinct from its component members such that a corporation cannot be held liable for the personal indebtedness of a stockholder even if he should be its president and conversely, a stockholder or member cannot be held personally liable for any financial obligation of the corporation in excess of his unpaid subscription. But this rule is understood to refer merely to registered corporations and cannot be made applicable to the liability of members of an unincorporated association. 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. 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 rights 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 comes personally liable for contracts entered into or for other acts performed as such, agent.

ALBERT v UNIVERSITY PUBLISHING13 SCRA 84, GR No L-19118, January 30, 1965

Facts: On September 24, 1949, Mariano A. Albert sued University Publishing

Co., Inc. Albert alleged that the defendant was a corporation duly organized and existing under the laws of the Philippines. On July 19, 1948, defendant, through Jose M. Aruego, its President, entered into a contract with Albert and that he agreed to pay plaintiff P30,000.00 for the exclusive right to publish his revised Commentaries on the Revised Penal Code and for his share in previous sales of the book's first edition. The defendant promised to pay in 8 quarterly installments of P3,750.00 starting July 15, 1948 and as per the contract, failure to pay one installment would render the rest due. The defendant failed to pay the second installment. He however claimed that it was Albert who breached their contract by failing to deliver his manuscript. Albert died before trial and his estate's administrator was substituted for him.

The lower court ordered the defendant corporation to pay Albert the sum of P 23,000.00.

Albert, however, petitioned for a writ of execution against Jose M. Aruego, as the real defendant as he discovered that there is no such entity as University Publishing Co., Inc." The certification from SEC states that there is no record showing the registration of unveristy Publishing Co, Inc. either as a corporation or partnership. Aruego countered stating that he is not a party to the case.

Issue: Whether or not Jose Aruego is a party to the case (liable).

Ruling: Yes, Jose Aruego is the real party to the case!

University Publishing Co., Inc. is indeed unregistered in the Securities and Exchange Commission. And on account of its non-registration, it cannot be considered a corporation, not even a corporation de facto. It has therefore no personality separate from Jose M. Aruego; it cannot be sued independently.

The corporation-by-estoppel doctrine has not been invoked. At any rate, the same is inapplicable here. Aruego represented a non-existent entity and induced not only Albert but even the court to believe in such representation. He signed the contract as "President" of "University Publishing Co., Inc.," stating that this was "a corporation duly organized and existing under the laws of the Philippines," and obviously misled Albert into believing the same. One who has induced another to act upon his wilful misrepresentation that a corporation was duly organized and existing under the law, cannot thereafter set up against his victim the principle of corporation by estoppel.

The evidence is patently clear that Jose M. Aruego, acting as representative of a non-existent principal, was the real party to the contract sued upon; that he was the one who reaped the benefits resulting from it, so much so that partial payments of the consideration were made by him; that he violated its terms, thereby precipitating the suit in question; and that in the litigation he was the real defendant. Perforce, in line with the ends of justice, responsibility under the judgment falls on him.

LOZANO v DE LOS SANTOS274 SCRA 452, GR No 125221, June 19, 1997

Facts: On December 19, 1995, petitioner Reynaldo M. Lozano filed for damages against respondent Antonio Anda before the Municipal Circuit Trial Court in Mabalacat and Magalang, Pampanga. Lozano 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 respondent agreed to consolidate their respective associations and form the Unified Mabalacat-Angeles Jeepney Operators' and Drivers Association, Inc. (UMAJODA); They also agreed to elect 1 set of who shall be given the sole authority to collect the daily dues from the members of the consolidated association; Both petitioner and respondent ran for president. Petitioner won and private respondent protested and refused to recognize the results of the election. He 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

Private respondent moved to dismiss the complaint for lack of jurisdiction, claiming that jurisdiction was lodged with the SEC. The MCTC denied both the motion and the reconsideration.

The RTC found the dispute to be intracorporate and subject to the jurisdiction of the SEC. It ordered the MCTC to dismiss the civil case.

Issue: Whether or not the Securities and Exchange commission has jurisdiction over a case of damages between heads/presidents of 2 associations who intended to consolidate/merge their associations but not yet approved and registered with the SEC.

Ruling: No. SEC has no jurisdiction over the case!

The jurisdiction of the SEC is set forth in Section 5 of PD 902-A.The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law. 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.

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.

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. 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.

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.

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 advanced by private respondent cannot override jurisdictional requirements. Jurisdiction is fixed by law and is not subject to the agreement of the parties. 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.

Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness. 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.

SECTION 23

Sec. 23. The board of directors or trustees. – Unless otherwise provided in this Code, the corporate powers of all corporations formed under this code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one 91) year until all their successors are elected and qualified.Every director must own at least one (1) share of the capital stock of the corporation of which he is a director, which share shall stand in his name on the books of the corporation. Any director who ceases to be the owner of at least one (1) share of the capital stock of the corporation of which he is a director shall thereby cease to be a director. Trustees of non-stock corporations must be members thereof. A majority of the directors or trustees of all corporations organized under this Code must be residents of the Philippines.

DETECTIVE & PROTECTIVE BUREAU v CLORIBEL 26 SCRA 255, GR No L-23428, November 29, 1968

Facts:The plaintiff was a corporation duly organized and existing under the

laws of the Philippines and the defendant (Alberto) was managing director of plaintiff corporation from 1952 until January 14, 1964.

In June, 1963, defendant illegally seized and took control of all the assets as well as records of the of the corporation from the accountant-cashier and concealed them illegally and refused to allow any member of the corporation to see and examine the same. On January 14, 1964, the stockholders, in a meeting, removed defendant as managing director and elected Jose de la Rosa in his stead. The defendant refused to vacate his office and to deliver the assets and books to Jose de la Rosa. The defendant had also been illegally disposing of corporate funds. The plaintiff determined that it was necessary to appoint a receiver to take charge of the assets and receive the income of the corporation. Plaintiff prayed that a preliminary injunction ex-parte be issued restraining defendant from exercising the functions of managing director and from disbursing and disposing of its funds; that Jose M. Barredo be appointed receiver; that, after judgment, the injunction be made permanent and defendant be ordered to render an accounting.

The lower court, thru Judge Cloribel, granted the writ of preliminary injunction, conditioned upon plaintiff's filing a bond of P5,000.00. Alberto filed a motion to admit a counter-bond for the purpose of lifting the order granting the writ of preliminary injunction. And in spite of the opposition filed by the plaintiff, the Judge admitted the counterbond, setting aside the writ of preliminary injunction.

Issue: Whether or not the Judge committed grave abuse of discretion in admitting and approving the counter bond. Whether or not public interest requires that the writ be not set aside because respondent had arrogated unto himself all the powers of petitioning corporation, to the irreparable damage of the corporation;

Ruling: No. The dissolution of a writ of preliminary injunction issued after hearing, even if the dissolution is ordered without giving the other party an

opportunity to be heard, does not constitute an abuse of discretion and may be cured not by certiorari but by appeal!

Petitioner contends that respondent Alberto had arrogated to himself the power of the Board of Directors of the corporation because he refused to vacate the office and surrender the same to Jose de la Rosa who had been elected managing director by the Board to succeed him. This assertion, however, was disputed by respondent Alberto who stated that Jose de la Rosa could not be elected managing director because he did not own any stock in the corporation.

There is in the record no showing that Jose de la Rosa owned a share of stock in the corporation. If he did not own any share of stock, certainly he could not be a director pursuant to the mandatory provision of Section 30 of the Corporation Law, which in part provides:

Sec. 30. Every director must own in his own right at least one share of the capital stock of the stock corporation of which he is a director, which stock shall stand in his name on the books of the corporations....

If he could not be a director, he could also not be a managing director of the corporation, pursuant to Article V, Section 3 of the By-Laws of the Corporation which provides that:

The manager shall be elected by the Board of Directors from among its members.... (Record, p. 48)

If the managing director-elect was not qualified to become managing director, respondent Fausto Alberto could not be compelled to vacate his office and cede the same to the managing director-elect because the by-laws of the corporation provides in Article IV, Section 1 that "Directors shall serve until the election and qualification of their duly qualified successor."

PASCUAL & SANTOS v MEMBERS OF TRAMO LAKAS NEIGHBORHOOD ASSN442 SCRA 448, GR No 144880, November 17, 2004

Facts:The Members of Tramo Wakas Neighborhood Association, represented

by Dominga Magno (respondents), lodged before the Presidential Action Center a petition praying that ownership over 3 parcels of land situated in Barangay San Dionisio, Parañaque, Metro Manila with an aggregate area of 35,195 square meters be awarded to them. Respondents alleged that petitioner claims ownership of the subject lots which they have openly, peacefully and continuously occupied since 1957. This was referred to the Land Management Bureau (LMB). The LMB found for respondents.

The appeal lodged by the petitioner before the Office of DENR Secretary was dismissed for lack of merit. Both the LMB and the Office of the President affirmed the decision of DENR.Petitioner filed its petition for review with the CA and asked that the decision of the OP and DENR be set aside and to declare that the subject lots as no longer forming part of the public domain and have been validly acquired by petitioner. The CA dismissed the appeal due to infirm Verification and Certification of non-forum shopping and belated filing.

For one, the Verification and Certification of non-forum shopping was signed merely by Estela Lombos and Anita Pascual who allege that they are the duly authorized representatives of petitioner corporation, without showing any proof whatsoever of such authority.

The petitioner filed a Motion for Reconsideration arguing that that there was no showing that the persons acting on its behalf were not authorized to do so and that its petition was filed within the additional 15-day period granted by the CA. Attached to the Motion was a Secretary's Certificate showing that petitioner's Board of Directors approved a Resolution on February 11, 2000 appointing Estela Lombos and Anita Pascual, incumbent directors of the corporation, as its duly authorized representatives who may sign all papers, execute all documents, and do such other acts as may be necessary to prosecute the petition for review that it would file with the CA

The CA again denied petitioner’s motion for reconsideration stressing that any person who claims authority to sign, in behalf of another, the Certificate of Non-Forum Shopping, as required by the rules, must show sufficient proof thereof. Bare allegations are not proof, and the representation of one who acts in behalf of another cannot, by itself, serve as proof of his authority to act as agent or of the extent of his authority as agent.

Issue: Whether or not the persons who executed the verification and certification of non-forum shopping attached to PSI’s manifestation/petition for review filed with the CA were authorized to do so.

Ruling: Lombos and Pascual were authorized to execute the verification and certification of non-forum shopping. Case is remanded to the appellate court to give due course to the appeal.

When the petition for certiorari was filed with the CA, there was no proof attached thereto that Lombos and Pascual were authorized to sign the verification and non-forum shopping certification. Subsequent to the CA's dismissal of the petition, however, petitioner filed a motion for reconsideration to which it attached a certificate issued by its board secretary stating that on February 11, 2000 or prior to the filing of the petition, Lombos and Pascual had been authorized by petitioner's board of directors to file the petition before the CA. It has been ruled that the subsequent submission of proof of authority to act on behalf of a petitioner corporation justifies the relaxation of the Rules for the purpose of allowing its petition to be given due course.

And while the requirement of the certificate of non-forum shopping is mandatory, nonetheless the requirements must not be interpreted too literally and thus defeat the objective of preventing the undesirable practice of forum shopping.

The requirement that the petitioner should sign the certificate of non-forum shopping applies even to corporations, considering that the mandatory directives of the Rules of Court make no distinction between natural and juridical persons. Except for the powers which are expressly conferred on it by the Corporation Code and those that are implied by or are incidental to its existence, a corporation has no powers. It exercises its powers through its board of directors and/or its duly authorized officers and agents. Thus, its power to sue and be sued in any court is lodged with the board of directors that exercises its corporate powers. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors.