Controlling jurisprudence has been consistent that organization and commencement of transactions of corporate business are but conditions subsequent and not a prerequisite for the acquisition of the corporate personality. Even the adoption and filing of bylaws is also a condition subsequent. Under Section 19 of the Corporation Code of the Philippines, a corporation commences its corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission (SEC) issues the certificate of incorporation under its official seal. In fact, such certificate may even be issued prior to the filing of its bylaws, which under Section 46 of the said Code, must be adopted “within one month after receipt of official notice of the issuance of its certificate of incorporation.” (Chung Ka Bio, et al., petitioners, vs. Intermediate Appellate Court, et. al., INC., respondents. G.R. 71837.  July 26, 1988.)

Primary registration with the SEC grants juridical or artificial personality to the entity, however,  to undertake certain business activities (example: broker or dealer in securities) requires a secondary license from the SEC. The primary registration also does not constitute a permit to undertake activities for which other government agencies require a special or separate license or permit.

We deal here with are legal consequences when two or more persons not organized as a juridical personality enter into a business transaction or exercise the powers or functions of a corporation. The Supreme Court held that a voluntary unincorporated association or entity has no power to enter into, or to ratify, a contract. A contract entered into by its officers or agents on behalf of such entity is not binding on, or enforceable against it. The officers or agents are themselves personally liable (International Express Travel & Tour Services Inc., petitioner, vs. Hon. Court of Appeals, respondents. G.R. 119002.  October 19, 2000). It has also been ruled that an entity without juridical personality as defendant in a case or when two or more persons not organized as an entity with juridical personality enter into a transaction, may be sued under the name (by which) they are generally or commonly known (Lapanday Agricultural & Development Corp., petitioner, vs. Maximo Estita, et. al., G.R. 162109.  January 21, 2005). (See also Section 15, Rule 3, of the 1997 Rules of Civil Procedure). But even assuming, in gratia argumenti, that an entity does not have a juridical personality, it nonetheless may be sued as such if it is known to have been transacting business with third persons (Ibid).

On the other hand there are certain rules with regard to what is legally termed as “ostensible” corporations, another way of dealing with unincorporated entities. A third party who while knowing an association or entity to be unincorporated, nonetheless treated it as a corporation and received benefits from it, is barred from denying its corporate existence in a suit brought against the alleged corporation. In such case, all who benefit from the transaction made by the ostensible corporation, despite knowledge of the legal defects in its incorporation, can be held liable for contracts entered with it since there is implied assent to or advantage in such dealing (Ibid).

DEVELOPER Shang Properties Inc. reported a 55.4-percent rise in net profit in 2007 to P944.5 million from P607.9 million a year earlier.

Cebu Holdings allots nearly P1B in capex

CEBU CITY—Cebu Holdings Inc. has allotted close to P1 billion in capital expenditure this year on the heels of record revenues in 2007, aimed at strengthening its in the real estate and retail trade in Metro Cebu.

ONE hundred IBM employees from thirty-three countries were selected to participate in IBM’s new Corporate Services Corps program, part of the Global Citizen’s Portfolio initiative announced by chief executive Sam Palmisano, to develop leadership skills while addressing socioeconomic challenges in emerging markets.

SALES of preneed companies in the first quarter of the year fell 27.1 percent to P3.84 billion, from P5.26 billion a year earlier as the number of education, life and pension plans sold dropped 4.22 percent to 52,671.

LEADING preneed company Eternal Plans Inc. is set to release nationwide the education plan-benefit checks of planholders for the first semester of schoolyear 2008-2009, the company said in a statement.

IN a bid to make its contribution in the government’s thrust against global warming and climate change, Pangea Green Energy is set to inaugurate today the Quezon City Controlled Disposal Facility Biogas Emission Reduction Project that is expected to reduce the country’s greenhouse-gas emissions.

Controlling jurisprudence has been consistent that organization and commencement of transactions of corporate business are but conditions subsequent and not a prerequisite for the acquisition of the corporate personality.