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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
A private corporation organized under this Code commences its corporate existence and juridical personality from the date the Commission issues the certificate of incorporation under its official seal thereupon the incorporators, stockholders/members and their successors shall constitute a body corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is sooner dissolved in accordance with law. (Section 18, Revised Corporation Code)
Republic Act No. 11232 or the Revised Corporation Code provides that:
“Section 18. Registration, Incorporation and Commencement of Corporation Existence. – A person or group of persons desiring to incorporate shall submit the intended corporate name to the Commission for verification. If the Commission finds that the name is distinguishable from a name already reserved or registered for the use of another corporation, not protected by law and is not contrary to law, rules and regulation, the name shall be reserved in favor of the incorporators. The incorporators shall then submit their articles of incorporation and bylaws to the Commission.
If the Commission finds that the submitted document s and information are fully compliant with the requirements of this Code, other relevant laws, rules and regulations, the Commission shall issue the certificate of incorporation.
A private corporation organized under this Code commences its corporate existence and juridical personality from the date the Commission issues the certificate of incorporation under its official seal thereupon the incorporators, stockholders/members and their successors shall constitute a body corporate under the name stated in the articles of incorporation for the period of time mentioned therein, unless said period is extended or the corporation is sooner dissolved in accordance with law.” (Emphasis supplied.)
A de jure corporation is a corporation created in strict or substantial compliance with the mandatory requirements for incorporation, and the right of which to exist as a corporation cannot be successfully attacked or questioned by any party. (p. 8, Commercial Law Recap, Villanueva-Castro, 2020.)
A de facto corporation is an association of persons existing under a valid law which it may be incorporated after having attempted in good faith to incorporate, and assuming corporation powers. (Seventh Day Adventist Conference Church of Southern Philippines Inc. v. Northeastern Mindanao Mission of Seventh Day Adventists, Inc., G.R. No. 150416, July 21, 2006.)
According to jurisprudence, the following are the requirements before one can qualify as a de facto corporation:
(a) the existence of a valid law under which it may be incorporated;
(b) an attempt in good faith to incorporate; and
(c) assumption of corporate powers. (Seventh Day Adventist Conference Church of Southern Philippines Inc. v. Northeastern Mindanao Mission of Seventh Day Adventists, Inc., Id.)
Jurisprudence provides:
“The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of a de facto corporation.” (Missionary Sisters of Our Lady of Fatima v. Alzona, G.R. No. 224307, August 06, 2018)
What are the differences between a de jure corporation and a de facto corporation?
As to its creation:
A de facto corporation is defective as it has not complied with all the requirements for incorporation notwithstanding the existence of a colorable compliance, while a de jure corporation has complied with all the mandatory requirements for incorporation.
As to the question of its corporate existence:
A de facto corporation can only be questioned by the State in a direct proceeding, while the existence of a de jure corporation cannot be questioned by anyone, not even the State.
As to its capacity to sue and be sued:
Both a de facto corporation and a de jure corporation can sue and be sued.
As to the liability of its officers and directors:
The officers and directors of both a de facto corporation and a de jure corporation are liable only to the extent of their subscription unless they acted in bad faith.
As to being subject of a direct or collateral attack:
A de facto corporation can be subject to a direct attack, while the existence of a de jure corporation is not subject to either direct or collateral attack.
Related Article:
When is there a bona fide attempt in good faith to incorporate?
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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