Chapter 3 - Formation and Organization of Corporations Flashcards
Corporate Name (17)
Needs to be:
1) Distinguishable from that already reserved/registered for the use of another corp
2) Not be protected by law
3) Its use not contrary to existing law, RR
When is a name not distinguishable (17)
(a) When there are words such as “corporation”, “company”, “incorporated”, “limited”, or an abbreviation of such
(b) Punctuations, articles, conjunctions, etc.
Process of granting corporate name (17 & 18)
- Submit the intended corporate name to the SEC for verification
- If found distinguishable, not protected, and not contrary, the name is reserved
- Incorporators
Consequence of not being a valid name (17)
- SEC may summarily order the corp to immediately cease and desist from using the name and may require them to register a new one
- SEC shall cause the removal of all visible signages, etc. bearing such corporate name
- Upon approval, SEC shall issue certificate of incorporation
- If corp fails to comply, corp and its directors/officers may be held in contempt and/or be held administratively, civilly and/or criminally liable
Philips Export BV v. CA
To come within this scope, two requisites must be proven, namely: (1) that the complainant corporation acquired a prior right over the use of such corporate name; (2) the proposed name is either:
(a) identical; or
(b) deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law; or
(c) patently deceptive, confusing or contrary to existing law.
GSIS Family Bank v. BPI Family Bank
On the first point (a), the words “Family Bank” present in both petitioner and respondent’s corporate name satisfy the requirement that there be identical names in the existing corporate name and the proposed one. On the second point (b), in determining the existence of confusing similarity in corporate names, the test is whether the similarity is such as to mislead a person using ordinary care and discrimination, and even without such proof of actual confusion between the two corporate names, it suffices that confusion is probable or likely to occur. Such confusion is all the more likely to occur if the two corporations have similar businesses.
- Priority of adoption rule
Lyceum case (1993)
Doctrine of secondary meaning: A word or phrase originally incapable of exclusive appropriation with reference to an article on the market, because geographically or otherwise descriptive, might nevertheless have been used so long and so exclusively by one producer with reference to his article that, 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.
Applied: Lyceum did not gain that notoriety yet. While the corporate names of private respondent entities all carry the word “Lyceum,” confusion and deception are effectively precluded by the appending of geographic names to the word “Lyceum.”
De La Salle Montessori v. DLS Brothers (2018)
The Court there held that the word “Lyceum” today generally refers to a school or institution of learning. It is as generic in character as the word “university.” Since “Lyceum” denotes a school or institution of learning, it is not unnatural to use this word to designate an entity which is organized and operating as an educational institution
Here, the phrase “De La Salle” is not generic in relation to respondents. It is not descriptive of respondent’s business as institutes of learning, unlike the meaning ascribed to “Lyceum.”
PC Javier & Sons v. CA
SC held that such defense that petitioners should first be formally notified of the change of corporate name before they continue paying their loan obligations to respondent bank presupposes that there exists a requirement under a law or regulation ordering a bank that changes its corporate name to formally notify all its debtors. There is no such requirement in Corporation Code and Banking Laws, as well as the regulations and circulars of both the SEC and BSP
Philippine 1st Insurance Company v. Hartigan
The Court held that PFIC has a cause of Action, as said corporation’s change of name under its amended AOI is merely a change of name and not a change of being. An authorized change in the name of a corporation has no more effect upon its identity as a corporation than a change of name of a natural person has upon his identity.
Harrill v. Davis
GEN: Parties who associate themselves together and actively engage in business for profit under any name are liable as partners for the debts they incur under that name.
EXC: (1) Where parties procure a charter or file articles of association under a general law, thereby secure the color of a legal incorporation, believe that they are a corporation, and use the supposed franchise of the corporation in good faith, and third parties deal with them as a corporation, they become a corporation de facto and exempt from individual liability to such third parties, although there are unknown defects in the proceedings for their incorporation.
(2) Contracts necessarily made by promoters on behalf of a future corporation in order to obtain its charter or to complete its organization would be specifically enforced against it.
Hall v. Piccio
Persons acting as corporation may not claim rights of “de facto” corporation if they have not obtained certificate of incorporation.
Asia Banking v. Standard Products
In the absence of fraud a person who has contracted or otherwise dealt with a association in such a way as to recognize and in effect admit its legal existence as a corporate body is thereby estopped to deny its corporate existence in any action leading out of or involving such contract or dealing, unless its existence is attacked for causes which have arisen since making the contract or other dealing relied on as an estoppel and this applies to foreign as well as to domestic corporations
Cranson v. IBM
Where there had been a failure to comply with a condition precedent to the existence of the corporation – The corporation was not a legal entity and was therefore precluded from suing or being sued as such.
Where the corporation has obtained legal existence but has failed to comply with a condition subsequent to corporate existence – Such nonperformance afforded the State the right to institute proceedings for the forfeiture of the charter, but that such neglect or omission could never be set up by the corporation itself, or by its members and stockholders.
- When a defect in the incorporation process resulted from a failure to comply with a condition subsequent, the doctrine of estoppel may be applied for the benefit of a creditor to estop the corporation, or the members or stockholders thereof, from denying its corporate existence.
Salvatierra v. Garlitos
GEN: A corporation when registered has a juridical personality separate and distinct from its component members or stockholders and officers such that a corporation cannot be held liable for the personal indebtedness of a stockholder even if he should be its president and conversely, a stockholder or member cannot be held personally liable for any financial obligation by the corporation in excess of his unpaid subscription.
EXC: A 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 agent.
