International Express Travel vs. CA Aaaaaaaaaaa

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Corporation Law- Theory of Concession

INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., Petitioner,


vs.
HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINES FOOTBALL FEDERATION, Respondents.
G.R. No. 119002. October 19, 2000.

Ponente: Kapunan, J.
Principles/Doctrines:
 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, and the procedure and conditions provided under
the law for the acquisition of such juridical personality must be complied with.
 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. 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.
Nature of the case: Petition for review in certiorari of a decision of the Court of Appeals.

Facts:
On June 30, 1989, the petitioner International Express Travel and Tour Services, Inc., through its
managing director, 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.
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.
On 4 October 1989, petitioner wrote the Federation, through the private respondent a demand letter
requesting for the amount of P265,894.33. On 30 October 1989, the Federation, through the Project
Gintong Alay, paid the amount of P31,603.00.
On 27 December 1989, Henri Kahn issued a personal check in the amount of P50,000 as partial
payment for the outstanding balance of the Federation. Thereafter, no further payments were made
despite repeated demands.
Petitioner filed 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.
Henri Kahn filed his answer with counterclaim. While not denying the allegation that the Federation
owed the amount P207,524.20, representing the unpaid balance for the plane tickets, he averred that the
petitioner has no cause of action against him either in his personal capacity or in his official capacity as
president of the Federation. He maintained that he did not guarantee payment but merely acted as an
agent of the Federation which has a separate and distinct juridical personality.
On the other hand, the Federation failed to file its answer, hence, was declared in default by the trial
court.
RTC- The trial court rendered judgment and ruled in favor of the petitioner and declared Henri
Kahn personally liable for the unpaid obligation of the Federation.
Only Henri Kahn elevated the above decision to the Court of Appeals. 
CA- The respondent court rendered a decision reversing the trial court. The Court of Appeals recognized
the juridical existence of the Federation. It rationalized that since petitioner failed to prove that Henri Kahn
guaranteed the obligation of the Federation, he should not be held liable for the same as said entity has a
separate and distinct personality from its officers.
Hence, this petition.
Issues:
1. Whether or not the Philippine Football Federation is a corporation or a juridical person
2. Whether or not the International Express Travel and Tour Service is estopped from denying the
corporate existence of Philippine Football Federation and of it having a separate personality when it deals
with it as a corporate entity.

Held:
1. No. 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.
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.
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. 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.
2. No. 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. 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. The decision of the Regional
Trial Court of Manila, Branch 35, in Civil Case No. 90-53595 is hereby REINSTATED.

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