Commercial Law

People of the Philippines vs Carlos Garcia y Pineda

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271 SCRA 621 – Business Organization – Corporation Law – Corporation By Estoppel – Ostensible Corporation

In 1993, Carlos Garcia, Patricio Botero, and Luisa Miraples were accused of illegal recruitment. It was alleged that they represented themselves as the incorporators and officers of Ricorn Philippine International Shipping Lines, Inc.; that Ricorn is a recruitment agency for seamen; that Garcia is the president, Botero is the vice-president, and Miraples (now at large) is the treasurer. It was later discovered that Ricorn was never registered with the Securities and Exchange Commission (SEC) and that it was never authorized to recruit by the Philippine Overseas Employment Agency (POEA). Botero and Garcia were convicted. Botero appealed.

In his defense, Botero averred that he was not an incorporator; that he was merely an employee of Ricorn in charge of following up on their documents.

ISSUE: Whether or not Botero is a mere employee of Ricorn.

HELD: No. It was proven by evidence that he was introduced to the applicants as the vice president of Ricorn. When he was receiving applicants, he was receiving them behind a desk which has a nameplate representing his name and his position as VP of Ricorn.

But Ricorn was never incorporated? How will this affect his liability in the crime illegal recruitment?

Under the law, if the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation. In this case, even if Ricorn was not incorporated, Botero and his cohorts are estopped from denying liability as corporate officers of Ricorn. Section 25 of the Corporation Code provides that “All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all the debts, liabilities and damages incurred or arising as a result thereof: Provided, however, That when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality.”

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