Section 19: DE FACTO CORPORATION

Question 1

What is Section 19: De Facto Corporation?

Answer 1

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.

Question 2

IN SIMPLE TERMS

Answer 2

• has NOT COMPLIED with all requirements to MAKE IT DE JURE

BUT

has SUFFICIENT compliance that it CAN BE TREATED as a corporation against THIRD PERSONS

but NOT as against the STATE

Question 3

What is a De Jure Corporation?

Answer 3

one that has SUBSTANTIALLY COMPLIED with all the requirements of law and has been issued a CERTIFICATE OF INCORPORATION through SEC (Securities and Exchange Commission)

LEGALLY EXIST

Question 4

What are the requisites for a De Facto Corporation?

Answer 4

1) A valid law under which the corporation is organized;

(2) An attempt in good faith to incorporate; have been issued a CERTIFICATE OF INCORPORATION

(3) An assumption of corporate powers in GOOD FAITH
- UNAWARE of the defects of the corporation

Question 5

What are the defects of a De Facto Corporation?

Answer 5

1. Failure to state all the matteres required under the RCC
2. No. of incorporators is more than 15
3. One of the incorporatoes, who is a natural person, is not of legal age
4. The corporate name of the corporation resembles another corporation
5. By-laws filed late

Question 6

What are the rights of De Facto Corporation?

Answer 6

right to limited liability is available to stockholders or members

Question 7

DE FACTO VS DE JURE

Answer 7

De Facto and De Jure Corporations are essentially the SAME as against THIRD PERSONS.

ONLY DIFFERENCE IS HOW THE STATE TREATS THEM

Question 8

QUO WARRANTO

Answer 8

ONLY THE STATE CAN ATTACK A CORPORATION THROUGH QUO WARRANTO