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INTERNATIONAL EXPRESS TRAVEL v. CA

FACTS:

Petitioner International Express Travel and Tour Services, Inc. (International Express) offered its services as a travel agency to the Philippine Football Federation (Federation) in June 1989. The offer was accepted, and International Express secured airline tickets for the trips of Federation's athletes and officials. The total cost of the tickets amounted to P449,654.83. The Federation made two partial payments in September 1989, totaling P176,467.50. After several demands for payment, the Federation only made a partial payment of P31,603.00 and issued a personal check of P50,000. Despite further demands, no additional payments were made. International Express filed a civil case against Henri Kahn (President of the Federation) and the Federation seeking payment for the outstanding balance, claiming that Kahn guaranteed the obligation. The Federation failed to file its answer and was declared in default. The trial court held Kahn personally liable for the unpaid obligation of the Federation, while dismissing the complaint against the Federation. Kahn appealed to the Court of Appeals, which reversed the trial court's decision, ruling that Kahn should not be held liable and recognizing the juridical existence of the Federation. International Express sought reconsideration, but it was denied. International Express now seeks recourse to the Supreme Court, raising several assigned errors.

ISSUES:

  1. Whether Henri Kahn can be held personally liable for the unpaid obligation of the Philippine Football Federation.

  2. Whether the Philippine Football Federation is liable for the unpaid obligation.

RULING:

  1. Yes, Henri Kahn can be held personally liable for the unpaid obligation of the Philippine Football Federation. The trial court ruled that because the petitioner and Henri Kahn both failed to provide evidence proving the corporate existence of the Federation, it should be treated as a voluntary unincorporated association. As such, the officers or agents of the Federation, including Henri Kahn, are personally liable for the contracts entered into on behalf of the Association. The Court of Appeals, however, reversed this ruling and recognized the separate and distinct personality of the Federation. This decision is being appealed to the Supreme Court.

  2. The issue of whether the Philippine Football Federation is liable for the unpaid obligation was not fully addressed by the Court of Appeals. The trial court dismissed the complaint against the Federation because it was declared in default for failing to file an answer. The appellate court stated that it cannot pronounce judgment against the Federation without violating due process since the plaintiff did not appeal the dismissal of the complaint against it. Thus, the question of the Federation's liability remains unresolved in this case.

PRINCIPLES:

  • A voluntary unincorporated association has no power to enter into or ratify a contract. The officers or agents of the association who enter into contracts on its behalf are personally liable for the obligations arising from those contracts.

  • An alleged guarantor's personal liability for an obligation must be proven through evidence. Without sufficient evidence of a guarantee, the alleged guarantor cannot be held personally liable.

  • A defendant cannot be held personally liable for an obligation of an entity with separate and distinct juridical personality unless there is evidence of personal guarantee or assumption of liability.