International Express Travel vs. CA (343 SCRA 674) FIRST DIVISION [G.R. No. 119002. October 19, 2000.] INTERNATIONAL EXPRESS TRAVEL & TOUR SERVICES, INC., Petitioner, v. HON. COURT OF APPEALS, HENRI KAHN, PHILIPPINES FOOTBALL FEDERATION, Respondents. DEC

DOCTRINE: Private respondent Kahn should be held liable for the unpaid obligations of the unincorporated PFF. It is a settled principle 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 obligations and becomes personally liable for contracts entered into or for other acts performed as such agents. 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.

FACTS:
Petitioner International Express Travel & Tours Services, Inc. entered into an agreement with the Philippine Football Federation through its president Henry Kahn, herein private respondent, where the former supplied tickets for the trips of the athletes to the Southeast Asian Games and other various trips. The Federation failed to pay a balance of P265,894.33 which led petitioner to file a civil case in the RTC of Manila which decided in its favor and holding Henry Kahn personally liable. On appeal, the CA reversed the decision of the RTC absolving Kahn from personal liability holding that the Federation had a separate and distinct personality.

ISSUE:
​Whether Henry Kahn can be made personally liable.

HELD:
YES. While we agree with the appellate court that associations may be accorded corporate status, such does not automatically take place by the mere passage of RA 3135 otherwise known as the Revised Charter of the Philippine Amateur Athletic Federation and PD 604. 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. Nowhere can it be found in RA 3135 and PD 604 any provision creating the Philippine Football Federation. These laws merely recognized the existence of national sports associations and provided for the manner by which these entities may acquire juridical personality. The recognition of Philippine Amateur Athletic Federation required under RA 3135 and the Department of Youth and Sports Development under PD 604, extended to the PFF was not substantiated by Kahn. Accordingly, the PFF is not a national sports association within the purview of the aforementioned laws and does not have corporate existence of its own. This being said, it follows that private respondent Kahn should be held liable for the unpaid obligations of the unincorporated PFF. It is a settled principle 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 obligations and becomes personally liable for contracts entered into or for other acts performed as such agents. We cannot subscribe to the position taken by the appellate court that even assuming that the PFF was defectively incorporated, the petitioner cannot deny the corporate existence of the PFF because it had contracted and dealt with the PFF in such a manner as to recognize and in effect admits its existence. 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.