Laureano Investment & Development Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Spouses Reynaldo and Florence Laureano executed several Deeds of Real Estate Mortgage with Philippine National Cooperative Bank (PNCB) to secure loans. Upon failure to pay, PNCB extrajudicially foreclosed the mortgaged properties, consolidating titles in its name. Private respondent Bormaheco, Inc. became the successor of PNCB's obligations and liabilities over these lots through a Deed of Sale/Assignment. Bormaheco, Inc. subsequently filed an Ex-Parte Petition for the Issuance of a Writ of Possession. Procedural History: Petitioner Corporation, represented as "Lideco Corporation," filed a Motion for Intervention and to Admit Complaint in Intervention, which the Regional Trial Court (RTC) initially granted. However, Bormaheco, Inc. filed a Motion to Strike Out the Complaint in Intervention, arguing that "Lideco Corporation" lacked personality to intervene as it was not a registered corporation and its supporting documents pertained to different properties. The RTC granted this motion, ordering the complaint and related pleadings expunged. Petitioner then moved to substitute "Lideco Corporation" with Laureano Investment and Development Corporation and adopt the prior pleadings. The RTC denied this motion, finding that the tax declarations referred to properties different from those subject of the case and that substitution was not proper under the Rules of Court, also noting that the tax declarations were canceled prior to Bormaheco's purchase. Petitioner's motion for reconsideration was denied. The Petition: Petitioner sought reversal of the Court of Appeals' decision, which upheld the RTC's orders, questioning whether a plaintiff can sue under a name other than its registered corporate name and whether Bormaheco was estopped from contesting "Lideco Corporation's" legal personality and if bad faith attended Bormaheco's motion to strike.
Issue(s)
Whether Respondent Bormaheco, Inc. is estopped from contesting the legal personality to sue of "Lideco Corporation". Whether bad faith attended the filing of private respondent's motion to strike out the complaint in intervention and related pleadings. Whether "Lideco Corporation" had the personality to intervene in the case. Whether petitioner corporation had a legal interest in the subject properties.
Ruling
The petition is denied for failure to show any reversible error on the part of the Court of Appeals. The questioned Decision of the Court of Appeals is affirmed.
Ratio Decidendi
On the issue of estoppel: The Court held that Bormaheco, Inc. was not estopped from questioning the juridical personality of "Lideco Corporation." While Bormaheco's motion to strike did use "LIDECO" as an acronym for Laureano Investment and Development Corporation, it explicitly stated this fact. This did not constitute a false representation or concealment, nor did it convey an impression inconsistent with its subsequent assertion that "Lideco Corporation" was not a registered entity. The Court emphasized that a corporation must sue in its registered name, and "Lideco Corporation" had not shown it was duly registered with the Securities and Exchange Commission (SEC). The Court noted that "Lideco Corporation" did not appear in its complaint in intervention to be an acronym for Laureano Investment and Development Corporation, and petitioner was presumed to know its registered name and the legal provisions governing its corporate name. Therefore, Bormaheco could not be estopped from questioning the personality of an entity it did not represent as being the same as the registered corporation. On the issue of bad faith: The Court found that petitioner failed to demonstrate that Bormaheco acted in bad faith. Bad faith requires a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The Court found no evidence of false representation, concealment, or deliberate conveyance of inconsistent facts by Bormaheco. Instead, Bormaheco acted upon the representation made by "Lideco Corporation" that it was a duly registered entity, which was later disproven by the SEC certification. The Court concluded that Bormaheco's actions were based on the facts presented and the legal requirements for intervention, not on ill will or dishonest purpose. On the issue of "Lideco Corporation's" personality to intervene: The Court affirmed the lower courts' findings that "Lideco Corporation" lacked the personality to intervene. This was primarily because it was not a duly registered corporation. On the issue of petitioner's legal interest: Even assuming arguendo that "Lideco Corporation" could be used by petitioner, the Court found that neither entity had a legal interest in the subject of the litigation. The tax declarations presented by petitioner pertained to properties on Lot 3, Block 4, while the subject of Bormaheco's petition for a writ of possession were Lots 4 and 5, Block 4. This factual finding, affirmed by the Court of Appeals, was not subject to review by the Supreme Court as it is not a trier of facts, and petitioner failed to show that these findings were arbitrary or fell under any exceptions allowing review. The Court also noted that the tax declarations were canceled years before Bormaheco's purchase, further weakening any claim of interest.
Main Doctrine
A corporation cannot validly bring suit under a name other than that registered with the Securities and Exchange Commission, and to intervene in a case, it must demonstrate a real interest in the subject matter of the litigation.