Title
Laureano Investment and Development Corp. vs. Court of Appeals
Case
G.R. No. 100468
Decision Date
May 6, 1997
Spouses Laureano defaulted on loans secured by mortgaged properties, leading to foreclosure. Bormaheco, successor to PNCB, sought possession; petitioner's intervention denied due to unregistered corporate name and lack of legal interest. SC upheld lower courts' rulings.
corporation
intervention
registered
A

Case Summary (G.R. No. 100468)

Petitioner

Laureano Investment and Development Corporation asserted its right to intervene in an ex parte petition for issuance of writs of possession filed by Bormaheco for Lots 4 and 5, Block 4, Bel‑Air Village, Makati, by filing a Motion for Intervention and an attached Complaint in Intervention under the name “Lideco Corporation.”

Respondent

Bormaheco, Inc. purchased the disputed lots from PNCB by bulk sale and had Transfer Certificates of Title Nos. 157724 and 157725 issued to it. Bormaheco moved to strike out the Complaint in Intervention on the ground that “Lideco Corporation” lacked juridical personality because it was not a corporation duly registered with the SEC and, alternatively, that the intervenor had no real interest in the lots in question.

Key Dates

  • Execution of mortgages by the Laureano spouses: various dates in 1962–1964.
  • Consolidation of titles in PNCB: February 20, 1984.
  • Deed of Sale/Assignment PNCB to Bormaheco: September 26, 1988; titles in Bormaheco’s name issued October 12, 1988.
  • Bormaheco’s ex parte petition for writ of possession: filed five days after titles issued (docketed as LRC Case No. M‑1530).
  • Motion for Intervention by petitioner as “Lideco Corporation”: filed January 18, 1989.
  • Trial court orders striking and denying intervention: September 8, 1989; May 7, 1990; August 8, 1990.
  • Court of Appeals decision and Supreme Court review: appellate and supreme court rulings culminating in denial of the petition (Supreme Court decision promulgated May 6, 1997).

Applicable Law

  • 1987 Philippine Constitution (applicable because decision date is after 1990).
  • Rules of Court (Rule 3 on parties; Rule 45 certiorari).
  • Civil Code provisions recognizing juridical personality of corporations (Articles 44 and 46).
  • Corporation Code, Article 36 (corporate power and capacity to sue and be sued).
  • Relevant jurisprudential doctrines: estoppel, forum shopping, and standards for bad faith.

Facts and Background

Spouses Reynaldo and Florence Laureano executed several real estate mortgages to secure obligations to PNCB, later foreclosed extrajudicially, with PNCB purchasing the properties. Titles were consolidated in PNCB’s name in 1984. Bormaheco acquired the lots from PNCB in 1988 and sought writs of possession. Petitioner sought to intervene in those proceedings under the name “Lideco Corporation,” while attaching tax declarations that, according to the trial court, related to different lots and improvements (houses on Lot 3, Block 4) than those at issue (Lots 4 and 5, Block 4). Bormaheco challenged the intervention on grounds that “Lideco Corporation” was not registered with the SEC and that the asserted interests did not pertain to the subject lots.

Procedural History

  • Trial court granted intervention in an initial order based on a prima facie showing, but later, on Bormaheco’s motion, concluded that “Lideco Corporation” lacked personality to intervene because it was not a registered corporation and the supporting documents referenced different properties; the court struck the complaint in intervention.
  • Petitioner moved to substitute itself as intervenor and to adopt the complaint in intervention; the trial court denied substitution, holding substitution was not authorized under the cited provisions of the Rules of Court and that petitioner had not shown an interest in the subject lots.
  • Petitioner’s motion for reconsideration was denied. The Court of Appeals affirmed the trial court’s orders. Petitioner filed a Rule 45 petition for review on certiorari to the Supreme Court.

Issues Presented

  1. Whether Bormaheco is estopped from contesting the legal personality to sue of “Lideco Corporation.”
  2. Whether bad faith attended Bormaheco’s filing of its motion to strike out the complaint in intervention.
    (Private respondent also alleged forum shopping by petitioner, raising separate procedural allegations.)

Trial Court and Court of Appeals Findings

The trial court found that (a) “Lideco Corporation” had represented itself as a corporation duly organized and registered but no SEC record supported that representation; (b) the tax declarations attached to the intervention related to different lots (Lot 3, not Lots 4 and 5) and had been cancelled years before Bormaheco’s purchase; and (c) substitution as intervenor was not an instance contemplated under the cited Rules of Court provisions. Based on lack of juridical personality and absence of real interest in the subject lots, the trial court struck the intervention. The Court of Appeals affirmed, concluding there was no grave abuse of discretion.

Supreme Court’s Legal Standard on Estoppel

The Court recited the doctrine of estoppel and its requisites: a representation or admission rendering a person conclusively bound, and estoppel by pais requiring (a) conduct amounting to false representation or concealment of material facts, (b) intent or expectation that the conduct be acted upon, and (c) knowledge, actual or constructive, of the actual facts. The Court applied these standards in assessing whether Bormaheco’s earlier use of “LIDECO” as an acronym for Laureano Investment precluded it from later contesting the corporate name “Lideco Corporation.”

Supreme Court’s Analysis and Conclusion on Estoppel

The Supreme Court found that the motion in which Bormaheco used “LIDECO” explicitly identified it as an acronym for Laureano Investment and Development Corporation; therefore, there was no false representation or concealment by Bormaheco that could satisfy the elements of estoppel. The Court also emphasized that “Lideco Corporation” (a name indicating a corporation) is distinct from an acronym and that petitioner itself was presumed to know the name under which it was registered. Consequently, Bormaheco was not estopped from contesting the juridical personality of an entity that affirmatively represented itself as “Lideco Corporation” and for which no SEC registration existed in the records.

Supreme Court’s Analysis on Corporate Name and Juridical Personality

The Court reiterated that only a natural or juridical person may be party to civil actions (Rule 3, Sec. 1, Rules of Court), and that corporations possess independent juridical personality and the capacity to sue and be sued in their corporate names under the Civil Code and Corporation Code (Articles 44, 46; Corp. Code Art. 36). The Court agreed with the trial and appellate courts that an entity purporting to be “Lideco Corporation” could not validly intervene if it lacked SEC registration and therefore lacked the legal personality necessary to be a party in its asserted corporate name.

Supreme Court’s Analysis on Lack of Real Interest and Factual Findings

Beyond the name issue, the Court accepted the factual finding that the tax declarations attached to the intervention related to houses on Lot 3, Block 4, whereas the litigation concerned Lots 4 and 5, Block 4. Because the intervenor failed to show documentary evidence of an interest in the lots that were the subject matter of the writ of possession, the Court held that the intervenor lacked the requisite real interest in the co

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