INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., petitioner, vs.
HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINE FOOTBALL FEDERATION,
respondents. [G.R. No. 119002. October 19, 2000]
Facts:
1. The petitioner International Travel and Tour Services wrote a letter to the Philippine
Football Federation (Federation) through its president private respondent Henri Kahn,
wherein the former offered its services as a travel agency to the latter. The offer was
accepted.
2. Petitioner secured the airline tickets for the trips of the athletes and officials of the
Federation to the South East Asian Games in Kuala Lumpur as well as various other
trips to the People's Republic of China and Brisbane. The total cost of the tickets
amounted to P449,654.83. For the tickets received, the Federation made two partial
payments, both in September of 1989, in the total amount of P176,467.50.[2]
3. Subsequently the petitioner wrote a demand letter for the payment of the balance.
The federation paid the amount of P31,603 and P50,000 as partial payment. Thereafter,
no payments were made despite repeated demand.
4. This prompted petitioner to file a civil case before the Regional Trial Court of Manila.
Petitioner sued Henri Kahn in his personal capacity and as President of the Federation
and impleaded the Federation as an alternative defendant. Petitioner sought to hold
Henri Kahn liable for the unpaid balance for the tickets purchased by the Federation on
the ground that Henri Kahn allegedly guaranteed the said obligation.[6]
5. On the other hand, Henri, in its answer, maintained that he did not guaranteepayment
but merely acted as an agent of the Federation which has a separate and distinct
personality.
6. the federation failed to answer and declared to be in default.
7. RTC: declared that Henri Kahn is personally liable.
8. CA: Reversed and set aside the judgment and recognized the juridical existence of
the Federation.
Issue:
1. A. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER HAD DEALT WITH THE PHILIPPINE FOOTBALL FEDERATION (PFF)
AS A CORPORATE ENTITY AND IN NOT HOLDING THAT PRIVATE RESPONDENT
HENRI KAHN WAS THE ONE WHO REPRESENTED THE PFF AS HAVING A
CORPORATE PERSONALITY.
2. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING PRIVATE
RESPONDENT HENRI KAHN PERSONALLY LIABLE FOR THE OBLIGATION OF
THE UNINCORPORATED PFF, HAVING NEGOTIATED WITH PETITIONER AND
CONTRACTED THE OBLIGATION IN BEHALF OF THE PFF, MADE A PARTIAL
PAYMENT AND ASSURED PETITIONER OF FULLY SETTLING THE OBLIGATION.
Held:
1. Yes. It is a basic postulate that before a corporation may acquire juridical personality,
the State must give its consent either in the form of a special law or a general enabling
act. We cannot agree with the view of the appellate court and the private respondent
that the Philippine Football Federation came into existence upon the passage of these
laws. Nowhere can it be found in R.A. 3135 or P.D. 604 any provision creating the
Philippine Football Federation. These laws merely recognized the existence of national
sports associations and provided the manner by which these entities may acquire
juridical personality.
Clearly the above cited provisions require that before an entity may be considered as a
national sports association, such entity must be recognized by the accrediting
organization, the Philippine Amateur Athletic Federation under R.A. 3135, and the
Department of Youth and Sports Development under P.D. 604. This fact of recognition,
however, Henri Kahn failed to substantiate. In attempting to prove the juridical existence
of the Federation, Henri Kahn attached to his motion for reconsideration before the trial
court a copy of the constitution and by-laws of the Philippine Football Federation.
Unfortunately, the same does not prove that said Federation has indeed been
recognized and accredited by either the Philippine Amateur Athletic Federation or the
Department of Youth and Sports Development. Accordingly, we rule that the Philippine
Football Federation is not a national sports association within the purview of the
aforementioned laws and does not have corporate existence of its own.
2, YES.
Thus being said, it follows that private respondent Henry Kahn should be held liable for
the unpaid obligations of the unincorporated Philippine Football Federation. It is a
settled principal in corporation law that any person acting or purporting to act on behalf
of a corporation which has no valid existence assumes such privileges and becomes
personally liable for contract entered into or for other acts performed as such agent.[14]
As president of the Federation, Henri Kahn is presumed to have known about the
corporate existence or non-existence of the Federation. We cannot subscribe to the
position taken by the appellate court that even assuming that the Federation was
defectively incorporated, the petitioner cannot deny the corporate existence of the
Federation because it had contracted and dealt with the Federation in such a manner as
to recognize and in effect admit its existence.[15] The doctrine of corporation by
estoppel is mistakenly applied by the respondent court to the petitioner. The application
of the doctrine applies to a third party only when he tries to escape liability on a contract
from which he has benefited on the irrelevant ground of defective incorporation.[16] In
the case at bar, the petitioner is not trying to escape liability from the contract but rather
is the one claiming from the contract.
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE.
