Sec. 18. Corporate name.

- No corporate name
may be allowed by the Securities and Exchange
Commission if the proposed name is identical or
deceptively or confusingly similar to that of any
existing corporation or to any other name already
protected by law or is patently deceptive,
confusing or contrary to existing laws. When a
change in the corporate name is approved, the
Commission shall issue an amended certificate of
incorporation under the amended name.

Remedy of corporation whose name has been

adopted by another
1. Injunction
2. De-registration
Change of corporate name

Compliance with formalities

o Corp name = artificial name and may be
changed
o May be changed after complying with the
formalities prescribed by law:
1. Amendment of the AOI
2. Filing of amendment with the SEC
Mere approval by the SH of change in name = X
automatically change the name of the corp as of
that date

Effectivity
o Once approved, commission must issue an
AMENDED CERT OF INCORP under the
amended name
o Change of name is deemed effective as of:
Date of approval by SEC of the
amended of articles
From date of filing with it if not acted
upon within 6 months from the date of
filing for causes X attributable to the
corp

Effect
o No more effect upon its identity as a
corporation than a change of name of
natural person upon his identity

Limitations upon use of corporate name

Similarity with another trade name

Test of infringement
Part of name
Prohibited use of certain words
Use of generic, geographical, and descriptive
terms and names
Use of a persons full name or surname
DOCTRINE OF SECONDARY MEANING
o Originated from trademark law
o A word or phrase originally incapable of
exclusive appropriation with reference to an
article
on
the
market,
because
geographically or other descriptive, might
nevertheless have been USED SO LONG
AND SO EXCLUSIVELY BY ONE PRODUCER
with reference to his article, in that trade
and to that branch of the purchasing public,
the word or phrase HAS COME TO MEAN
THAT THE ARTICLE WAS HIS PRODUCT
Use of business names different from corporate
name
Where business if junior corporation different or
non-competing

Use of changed or abandoned corporate names

Former name of same corporation

o Previous name CANNOT be appropriated or
used by any other person for a certain
period (5 YEARS) to avoid confusion and
avoid infringement of goodwill
Name(s) of merged or consolidated corporation
o The corp name(s) of the merged or
consolidated corp = X used by any other
corporation although there is already
dissolution of the absorbed corp
o Exception: With the CONSENT of the
surviving corporation
Name of dissolved corporation or whose
registration has been revoked
o X used by another corp within 3 YEARS from
approval of the dissolution
o or 6 YEARS from date of revocation
o E: Its use has been allowed at the time of
the dissolution or revocation by the SH or
members who represent MAJORITY of the
outstanding capital stock or membership of
the corp

Name of dissolved corporation acquired by new

corporation
o In the same position as the original
corporation would have been had it
continued to exist and may in proper cases,
enjoin the use of such name by another

Name of corporation dissolved through expiration

of term

o When the corp name is abandoned due to

the dissolution of the corp through
expiration of its corp life " such corp name
may be used by another corporation
Effect of misnomer of a corporation

Contracts
o GR: Mere misnomer of a corp in a bond,
note or other deed or contract does not
render the same invalid or inoperative
o Nor in a grant or conveyance to or by corp
or in case of subscription of the stock of a
corp

Suit by, or against, corporation

o Corp may sue or be sued thereon in its true
name with proper allegation and proof that
it is the corporation intended
o Identity may be established by parol
evidence
o Generally speaking, a corp if sued by the
wrong name is bound if duly served

Sec. 19. Commencement of corporate existence. A private corporation formed or organized under
this Code commences to have corporate existence
and
juridical
personality
and
is
deemed
incorporated from the date the Securities and
Exchange Commission issues a certificate of
incorporation
under
its
official
seal;
and
thereupon
the
incorporators,
stockholders/members and their successors shall
constitute a body politic and corporate under the
name stated in the articles of incorporation for
the period of time mentioned therein, // E: unless
said period is extended or the corporation is
sooner dissolved in accordance with law.

Acquisition of juridical personality

1. ISSUANCE OF CERTIFICATE OF INCORPORATION
A corp commences to have juridical personality
and legal existence only from the moment the
SEC issues to the incorporators a cert of
incorporation under its official seal
Certificate = final determination of the corps right
and competence to transact business
Entity without necessary corp legal personality =
status of an unregistered association " members
are personally liable
Corp must formally organize and commence the
transaction of its business within 2 YEARS FROM
THE DATE OF ITS INCORP otherwise its corporate
power shall cease and it shall be deemed
dissolved
2. FILING OF ARTICLES OF INCORPORATION
Religious corps does not require SEC to issue a
certificate of incorporation from and after the
filing with the SEC of the AOI
3. REGISTRATION OF COOPERATIVE
A cooperative acquires juridical personality upon
registration with the COOPERATIVE DEVELOPMENT
AUTHORITY
Sec. 20. De facto corporations. - The due
incorporation of any corporation claiming in good
faith to be a corporation under this Code, and its
right to exercise corporate powers, shall not be
inquired into collaterally in any private suit to
which such corporation may be a party. Such
inquiry may be made by the Solicitor General in a
quo warranto proceeding.

De Jure
- one created in strict or substantial conformity with
the
mandatory
statutory
requirement
of
incorporation
- the right of which to exist as a corporation cannot
be successfully attacked or questioned by any
party even in a direct proceeding for that purpose
by the State
De Facto
- actually exists for all practical purposes as a
corporation
- which has no legal right to corporate existence as
against the State
- not complied with all the requirements necessary
to be a de jure corporation but has complied
sufficiently to be accorded corporate status as
against third parties although not against the
State
Requisites of a de facto corporation
1. Valid law under which a corporation with powers
assumed might be incorporated
2. Bona fide attempt to organize a corporation under
such law
3. Actual user or exercise in good faith of corporate
powers conferred upon it by law
BONA FIDE ATTEMPT TO INCORPORATE
1. ABSENCE OF BONA FIDE ATTEMPT TO INCORPORATE
If no attempt in GF to create a corporate DJ =
there cannot be a DF corp
Mere intent is not sufficient

Bona fide attempt to comply with the requirement

of the law which amounts to colorable
compliance with the law

2. DEFECTS PRECLUDING CREATION OF CORPORATION

Absence of AOI
Failure to file AOI with the SEC
Lack of certificate of incorp from the SEC
Omissions = fatal to DF corp existence even if SH
claim GF
3. DEFECTS RESULTING IN CREATION OF A DF CORP

AOI fails to state all maters required by Code to be

state or some incorrectly
Name of corp closely resembles pre-existing corp
+ deceive public
Incorp or certain # = X residents of the Phil
Acknowledgment of the AOI or cert of incorp is
insufficient or defective in form or it was
acknowledged before the wrong officer
Percentage of Filipino ownership of the capital
stock required = less than that prescribed by law
Minimum paid up capital stock has not been paid
and received by the corp treasurer contrary to his
affidavit and
Failure to submit its by-laws on time

COLORABLE COMPLIANCE WITH THE LAW

There must be colorable compliance with the
statute, but there need not be substantial
compliance
Substantial compliance makes the body a corp de
jure
Will depend on the situation and knowledge of the
parties

The efforts to incorporate must give an

appearance of sufficiency of compliance with
statutory requirements, so that associated, may in
GF suppose that they have actually become
incorporated

Sec. 21. Corporation by estoppel. - 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 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.
Lim Tong Lim vs PFGI case:
The doctrine of corporation by estoppel may apply
to the alleged corporation and to a third party. In the
first instance, an unincorporated association, which
represented itself to be a corporation, will be estopped
from denying its corporate capacity in a suit against it
by a third person who relied in good faith on such
representation. It cannot allege lack of personality to be
sued to evade its responsibility for a contract it entered
into and by virtue of which it received advantages and
benefits.
Persons liable as general partners:
a third party who, knowing an association to be
unincorporated, nonetheless treated it as a corporation
and received benefits from it, may be barred from
denying its corporate existence in a suit brought against
the alleged corporation. In such case, all those who
benefited from the transaction made by the ostensible
corporation, despite knowledge of its legal defects, may

be held liable for contracts they impliedly assented to or

took advantage of.
Lozano vs De los Santos case:
The doctrine of corporation by estoppel cannot
override jurisdictional requirements. Jurisdiction is
fixed by law and is not subject to the agreement of the
parties. It cannot be acquired through or waived,
enlarged or diminished by, any act or omission of the
parties, neither can it be conferred by the acquiescence
of the court.
Corporation by estoppel is founded on principles of
equity and is designed to prevent injustice and
unfairness. It applies when persons assume to form a
corporation and exercise corporate functions and enter
into business relations with third persons. Where there
is no third person involved and the conflict arises only
among those assuming the form of a corporation, who
therefore know that it has not been registered, there is
no corporation by estoppel.
International Express Travel and Tours vs CA case:
It is a settled principal 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 becomes personally liable for contract
entered into or for other acts performed as such agent.
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.
Sec. 22. Effects on non-use of corporate charter
and continuous inoperation of a corporation. - If a

corporation does not formally organize and

commence the transaction of its business or the
construction of its works within two (2) years
from the date of its incorporation, " its corporate
powers cease and the corporation shall be
deemed dissolved. However, if a corporation has
commenced the transaction of its business but
subsequently becomes continuously inoperative
for a period of at least five (5) years, the same
shall be a ground for the suspension
Mandatory provision:
Condition precedent
- conditions non-compliance with which will prevent
the legal existence of a corporation
Conditions subsequent
- conditions to be complied with after acquiring
corporate existence in order that a corporation may
legally continue as such
Sec. 23. The board of directors or trustees. Unless otherwise provided in this Code, the
corporate powers of all corporations formed
under this Code shall be exercised, all business
conducted and all property of such corporations
controlled and held by the board of directors or
trustees to be elected from among the holders
of stocks, or where there is no stock, from
among the members of the corporation, who
shall hold office for one (1) year until their
successors are elected and qualified.
Every director must own at least one (1) share
of the capital stock of the corporation of which
he is a director, which share shall stand in his
name on the books of the corporation. Any
director who ceases to be the owner of at least

one (1) share of the capital stock of the

corporation of which he is a director shall
thereby cease to be a director. Trustees of nonstock corporations must be members thereof. a
majority of the directors or trustees of all
corporations organized under this Code must be
residents of the Philippines.
Business judgment rule
- courts cannot undertake to control the discretion
of the BOD about the administrative matters as to
which they have the legitimate power of action,
and contracts intra vires entered into by the board
of directors are binding upon the corporation and
courts will not intervene unless such contracts are
so unconscionable and oppressive as to amount to
a wanton destruction of the rights of the minority
Term of office of directors and trustees
GR: 1 year and until their successors are elected and
qualified
Hold over
- the office has a fixed term which has expired and
the incumbent is holding the succeeding term
Qualifications of directors or trustees
Stock Corporations:
- every director must own at least 1 share of the
capital stock
- share of stock held by the director must be
registered in his name on the books of the
corporation
- every director must continuously own at least a
share of stock during his term; otherwise he will
be automatically cease to be a director

majority of the directors must be residents of the

PH

Non-stock Corporations
- members in good standing
- majority of the directors must be residents of the
PH
Sec. 24. Election of directors or trustees. - At all
elections of directors or trustees, there must be
present, either in person or by representative
authorized to act by written proxy, the owners of
a majority of the outstanding capital stock, or if
there be no capital stock, a majority of the
members entitled to vote. The election must be
by ballot if requested by any voting stockholder
or
member.
In
stock
corporations,
every
stockholder entitled to vote shall have the right
to vote in person or by proxy the number of
shares of stock standing, at the time fixed in the
by-laws, in his own name on the stock books of
the corporation, or where the by-laws are silent,
at the time of the election; and said stockholder
may vote such number of shares for as many
persons as there are directors to be elected or he
may cumulate said shares and give one candidate
as many votes as the number of directors to be
elected multiplied by the number of his shares
shall equal, or he may distribute them on the
same principle among as many candidates as he
shall see fit: Provided, That the total number of
votes cast by him shall not exceed the number of
shares owned by him as shown in the books of
the corporation multiplied by the whole number
of directors to be elected: Provided, however,
That no delinquent stock shall be voted. Unless
otherwise
provided
in
the
articles
of
incorporation or in the by-laws, members of

corporations which have no capital stock may cast

as many votes as there are trustees to be elected
but may not cast more than one vote for one
candidate. Candidates receiving the highest
number of votes shall be declared elected. Any
meeting of the stockholders or members called
for an election may adjourn from day to day or
from time to time but not sine die or indefinitely
if, for any reason, no election is held, or if there
not present or represented by proxy, at the
meeting, the owners of a majority of the
outstanding capital stock, or if there be no capital
stock, a majority of the member entitled to vote.
Methods of voting

Straight voting
every SH may vote such number of shares for
as many persons as there are directors to be
elected

Cumulative voting for one candidate

SH is allowed to concentrate his vote and give
one candidate as many votes as the number of
his shares shall equal

Cumulative voting by distribution SH may

cumulate his shares by multiplying also the
number of his shares by the number of directors
to be elected and distribute the same among as
many candidates as he shall see fit