Case Summary (G.R. No. 100468)
Relevant Dates and Procedural Background
The Court of Appeals issued its Decision on February 28, 1991, and denied the petitioner’s motion for reconsideration on June 10, 1991. The Regional Trial Court (RTC) of Makati, Branch 141, made three critical rulings between 1989 and 1990: (1) dismissing the intervention of “Lideco Corporation” due to lack of legal personality, (2) denying the petitioner’s motion to substitute as intervenor, and (3) denying the motion for reconsideration.
Facts and Ownership Background
Spouses Reynaldo and Florence Laureano, majority stockholders of the petitioner, had loan transactions with Philippine National Cooperative Bank (PNCB), secured by real estate mortgages on various dates between 1962 and 1964. Upon their failure to pay, PNCB foreclosed the mortgages extrajudicially and acquired the properties in 1984. The titles were consolidated under PNCB’s name, but PNCB did not enforce possession due to ongoing litigation regarding the property titles. Bormaheco, Inc. succeeded PNCB’s obligations via a bulk sale on September 26, 1988, acquiring ownership and registered titles over the disputed lots. Subsequently, Bormaheco filed a petition for a writ of possession in court, prompting intervention by “Lideco Corporation.”
Trial Court’s Rulings on Intervention and Substitution
The RTC initially granted intervention to “Lideco Corporation,” but following a motion by Bormaheco to strike out the complaint in intervention, the court ruled on September 8, 1989, that “Lideco Corporation” lacked legal personality to intervene. The court noted that the petitioner had represented itself under a name different from its registered name (“Laureano Investment and Development Corporation”) and that “Lideco Corporation” was not a duly registered entity with the SEC. Furthermore, the tax declarations submitted referred to properties different from those subject of the litigation, undermining claims of real interest.
On May 7, 1990, the RTC denied the petitioner’s motion to substitute itself as party intervenor, citing insufficient evidence to establish an interest in the subject properties and noting that substitution is only allowed under specific circumstances outlined in the Rules of Court, none applicable to this situation. The motion for reconsideration was also denied on August 8, 1990.
Petitioner’s Contentions and Issues Raised
The petitioner asserted two main issues: (1) that Bormaheco, Inc. was estopped from contesting the legal personality of “Lideco Corporation” because Bormaheco had used “LIDECO” as an acronym for Laureano Investment and Development Corporation; and (2) that bad faith attended Bormaheco’s motion to strike out the complaint in intervention.
Respondent’s Opposition and Allegations
Bormaheco maintained that “Lideco Corporation” did not satisfy the requisites to be a party to the case—namely legal personality, capacity to sue or be sued, and real interest in the subject matter. It argued that the petitioner was attempting to relitigate settled matters following extrajudicial foreclosure, and filed a motion to declare the petitioner guilty of forum shopping. Bormaheco cited numerous prior cases involving the Laureano spouses as evidence of vexatious litigation aimed at preventing exercise of ownership rights over the properties. It also asserted damages due to lost rental income and tax payments made since 1988.
Legal Analysis on Estoppel
The Court examined the doctrine of estoppel, requiring false representation, intent for reliance, and knowledge of facts. Although Bormaheco used "LIDECO" as an acronym for Laureano Investment and Development Corporation in an earlier motion, it never represented “Lideco Corporation” as a separate, duly registered entity. Thus, no false representation or concealment was made justifying estoppel. The petitioner, presumed to be aware of its registered corporate name, could not rely on such representation to justify using an unregistered name. Under the 1987 Rules of Court and the Corporation Code, only duly registered corporations may sue or be sued in their corporate name.
Legal Capacity and Personality to Intervene
A corporation’s legal personality and capacity to sue or be sued require proper registration. The trial and appellate courts correctly found that “Lideco Corporation” lacked legal personality because it was not registered with the SEC. The petitioner failed to demonstrate that “Lideco Corporation” was the same legal entity as Laureano Investment and Development Corporation, or that it had a legal basis to intervene under that name.
Lack of Real Interest in Subject Property
The courts further held that the petitioner’s pleadings and evidence showed an interest in properties different from those subject of the writ of possession proceedings. The petitioner’s tax declarations pertained to Lot 3, Block 4, while the case involved Lots 4 and 5, Block 4, Bel-Air Village. Hence, the petitioner failed the requisite real interest test to intervene.
Bad Faith Allegations Addressed
Bad faith requires a conscious and intentional wrongful design or ill will. The petitioner failed to prove that Bormaheco deliberately acted with dishonesty or ulterior motives in filing the motion to strike out. The Court held that the motion was legally grounded and not motivated by bad faith.
Forum Shopping Claim by Respondent
Bormaheco accused the petitioner and its representatives of for
Case Syllabus (G.R. No. 100468)
Facts and Procedural History
- Petitioner, Laureano Investment & Development Corporation (hereafter “petitioner”), is a corporation majority-owned by spouses Reynaldo and Florence Laureano.
- The spouses entered into several loan and credit transactions with Philippine National Cooperative Bank (PNCB), secured by multiple real estate mortgages on properties located at Bel-Air Subdivision, Makati, Metro Manila.
- Due to default, PNCB foreclosed and purchased the mortgaged properties at extrajudicial foreclosure sales; title consolidated in the name of PNCB on February 20, 1984.
- PNCB did not immediately secure possession due to pending cases involving ownership of the subject lots.
- Bormaheco, Inc. (private respondent) became successor-in-interest of PNCB’s obligations and liabilities over the properties through a Deed of Sale/Assignment executed on September 26, 1988.
- Titles for Lots 4 and 5, Block 4, Bel-Air Subdivision were transferred to Bormaheco on October 12, 1988.
- Bormaheco filed an Ex-Parte Petition for Issuance of Writ of Possession over these lots.
- Petitioner filed a Motion for Intervention and Complaint in Intervention on January 18, 1989, under the name “Lideco Corporation” — purporting to be a corporation distinct from Laureano Investment and Development Corporation.
- The Regional Trial Court initially granted intervention to “Lideco Corporation” on February 9, 1988.
- Bormaheco moved to strike out the complaint in intervention, alleging “Lideco Corporation” was not a duly registered corporation and lacked personality to intervene; motion was granted on September 8, 1989.
- Petitioner sought to substitute itself as intervenor in place of “Lideco Corporation” and adopt the latter’s pleadings; this motion was denied on May 7, 1990.
- Motion for reconsideration was denied on August 8, 1990.
- Petitioner’s motion for reconsideration of the Court of Appeals’ decision was denied on June 10, 1991.
- Petitioner filed a petition for review under Rule 45 seeking reversal of these decisions.
Legal Issues Presented
- Whether a plaintiff or petitioner purporting to be a corporation may validly bring suit under a name different from that registered with the Securities and Exchange Commission (SEC).
- Whether private respondent Bormaheco, Inc. was estopped from contesting the legal personality of “Lideco Corporation.”
- Whether bad faith attended the filing by Bormaheco of its motion to strike out the complaint in intervention and related pleadings.
- Allegation of forum shopping by petitioner and/or its majority stockholders based on multiple related cases filed.
Summary of Court’s Findings on Juridical Personality and Corporate Name
- The use of corporate name presupposes registration with the SEC; the Corporation Code requires that every corporation must sue and be sued in its registered corporate name.
- “Lideco Corporation” was not a corporation registered with the SEC; this was confirmed by certification from the SEC.
- Petitioner’s representation of “Lideco Corporation” in its motion for intervention was therefore a distinct entity from Laureano Investment and Development Corporation, lacking legal personality.
- The trial court properly ruled that “Lideco Corporation” lacked personality to intervene in the case due to absence of SEC registration.
- The petitioner should have used its registered corporate name, Laureano Investment and Development Corporation, when intervening, but it represented itself only as “Lideco Corporation” in pleadings.
- No indication in