G.R. No. 93073 – 216 SCRA 738 – Mercantile Law – Corporation Law – Liability of Officers – Exception – Change of Corporate Name
In 1979, World Garment Manufacturing (WGM), through its board authorized Shozo Yamaguchi (president) and Fermin Canlas (treasurer) to obtain credit facilities from Republic Planters Bank (RPB). For this, 9 promissory notes were executed. Each promissory note was uniformly written in the following manner:
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___________, after date, for value received, I/we, jointly and severally promise to pay to the ORDER of the REPUBLIC PLANTERS BANK, at its office in Manila, Philippines, the sum of ___________ PESOS(….) Philippine Currency…
Please credit proceeds of this note to: ________ Savings Account ______XX Current Account No. 1372-00257-6 of WORLDWIDE GARMENT MFG. CORP. Sgd. Shozo Yamaguchi Sgd. Fermin Canlas |
However, no payment was made to RPB and the latter sued (WGM) in February 1982. In December 1982, WGM changed its name to Pinch Manufacturing Corporation (PMC). The trial court ruled that Canlas as well as the other signatory of the promissory note as solidarily liable for the amount stated therein. Only Canlas appealed. He averred that he cannot be held liable solidarily because in signing the promissory note, he did so within the scope and authority granted to him by the corporate board hence he should not be liable. The Court of Appeals agreed with him. The CA also ruled that the change of name of WGM to PMC extinguished the personality of WGM and hence so is its liability.
ISSUE: Whether or not the Court of Appeals is correct.
HELD: No. The change of name did not create a new corporation. Nor did it render PMC the successor of WGM. There is still only one corporation to speak of here. It is the same corporation with a different name, and its character is in no respect changed. A change in the corporate name does not make a new corporation, and whether effected by special act or under a general law, has no affect on the identity of the corporation, or on its property, rights, or liabilities. The corporation continues, as before, responsible in its new name for all debts or other liabilities which it had previously contracted or incurred.
Anent the issue of the liability of Canlas as treasurer of WGM, it is true that as a general rule, officers or directors under the old corporate name bear no personal liability for acts done or contracts entered into by officers of the corporation, if duly authorized. However, under the Negotiable Instruments Law, agents who sign a promissory note without indicating their capacity as such and without disclosing their principal shall be held personally liable to the promissory note. No parol evidence shall be admitted to prove the agency. In this case, Canlas signed the promissory note without indicating that he did so as agent or treasurer of WGM, hence, he is personally liable pursuant to the Negotiable Instruments Law.
Read another version of this digest here: Negotiable Instruments Law; Signature of Makers
