Introduction
In the Philippines, registration with the Securities and Exchange Commission (SEC) is the central gateway to corporate personality. Unlike some jurisdictions that recognize broad common-law corporate existence, Philippine law is fundamentally statutory: a corporation exists only by virtue of law and compliance with the Corporation Code (now the Revised Corporation Code or “RCC”). This makes the question of “unregistered companies” unusually sharp.
This article explains what Philippine law means by “unregistered,” what business forms can legally exist without SEC registration, what cannot, and the legal consequences when groups operate as if they were corporations without being duly registered.
1. The SEC’s Role and the Concept of Corporate Personality
1.1. Creation of a Corporation Is a State Act
Under Philippine law, a corporation is an artificial being created by operation of law. The State, through the SEC, grants juridical personality after compliance with statutory requirements.
Core rule: No SEC registration, no corporation. Before SEC approval and issuance of a Certificate of Incorporation, the entity does not acquire separate juridical personality.
1.2. Why Registration Matters
SEC registration:
- creates a distinct legal person separate from incorporators, directors, or members;
- limits liability to corporate assets (subject to exceptions);
- enables the corporation to sue/be sued in its own name;
- authorizes it to exercise corporate powers.
Without it, the entity is not a corporation in law no matter what name it uses, how many people act for it, or how much business it conducts.
2. What Counts as “Unregistered”?
An “unregistered company” can mean different things in practice:
- A would-be corporation that never registered with the SEC but operates publicly as one (e.g., “XYZ Corporation” without SEC papers).
- A corporation whose registration is incomplete, rejected, revoked, expired, or dissolved but keeps operating.
- A group doing business under a corporate-sounding name without SEC incorporation (e.g., “ABC, Inc.” as a trade name only).
- A foreign corporation doing business in the Philippines without a license from the SEC.
Each scenario has different legal consequences, but all share a core feature: absence of lawful corporate authority from the SEC.
3. Entities That May Legally Exist Without SEC Registration
Not every business organization in the Philippines must register with the SEC. Some are governed elsewhere:
3.1. Sole Proprietorships (DTI Registration)
A sole proprietorship is owned by one person and registers its business name with the Department of Trade and Industry (DTI). It does not need SEC registration because it is not a corporation.
Key consequences:
- No separate juridical personality.
- Owner has unlimited personal liability.
3.2. General Partnerships (Optional SEC Registration but Practically Required)
Under the Civil Code, a partnership has juridical personality upon agreement of the parties, even before SEC registration. However, if a partnership has capital of ₱3,000 or more, the law requires it to be in a public instrument and recorded with the SEC. In practice, partnerships doing business typically register to:
- prove existence to banks and government agencies,
- secure permits and tax registration,
- avoid disputes about authority.
Still, juridically, a partnership can exist even if not SEC-registered, though non-registration may cause enforceability issues against third parties.
3.3. Cooperatives (CDA Registration)
Cooperatives are formed under the Cooperative Code and register with the Cooperative Development Authority (CDA), not the SEC.
3.4. Local Associations/Organizations Not Seeking Corporate Personality
Groups may exist as informal associations without SEC registration if they do not claim to be corporations and accept the legal consequences (no separate personality, members may be personally liable depending on acts).
4. Entities That Cannot Legally Exist Without SEC Registration
4.1. Domestic Stock and Non-Stock Corporations
A domestic corporation does not come into existence until SEC registration is completed.
If it operates without registration, it is not a corporation. It is treated as:
- an unregistered association, or
- a partnership/agency-like arrangement, depending on facts.
4.2. One Person Corporations (OPC)
OPCs are a statutory corporate form. Without SEC registration, an OPC similarly has no corporate existence.
4.3. Foreign Corporations Doing Business Without License
A foreign corporation must obtain an SEC license to “do business” in the Philippines. Without a license:
- it is not allowed to maintain suits in Philippine courts related to its business operations here;
- it may face administrative sanctions and penalties.
5. Legal Status of an Unregistered “Corporation”
5.1. De Facto Corporations and Corporation by Estoppel
Philippine doctrine recognizes two limited relief concepts:
(a) De Facto Corporation
A de facto corporation can exist when:
- there is a valid law under which it could be incorporated,
- there is a bona fide attempt to incorporate,
- there is actual use of corporate powers.
This doctrine protects parties who relied in good faith on the entity’s apparent corporate status. But it requires a genuine and colorable attempt to comply with incorporation law. If no SEC filing was made at all, de facto status is generally unavailable.
(b) Corporation by Estoppel
Even without proper incorporation, persons who hold themselves out as a corporation and transact as such may be estopped from denying corporate existence to avoid liability.
Likewise, third parties who deal with them as a corporation may be estopped from later denying it if doing so would unfairly prejudice the would-be corporation or its members.
Effect:
- does not create real corporate personality;
- does prevent certain parties from escaping obligations by invoking lack of registration.
5.2. Practical Meaning
Operating without SEC registration is risky:
- The entity has no shield of limited liability.
- Decision-makers and members may face personal liability.
- Contracts may still be enforceable, but against individuals, not a corporation.
6. Consequences of Operating an Unregistered Corporation
6.1. No Separate Juridical Personality
The “company” cannot own property, enter contracts, or sue in its own name as a corporation. Assets are treated as jointly owned or personally owned by the persons behind the entity.
6.2. Personal Liability of Organizers and Officers
Those acting for an unregistered corporation may be liable as:
- partners,
- agents,
- or joint obligors.
Creditors can go after personal assets, not just business assets.
6.3. Exposure to Civil, Administrative, and Criminal Liability
Potential liabilities include:
- civil damages for misrepresentation or breach of contract;
- SEC administrative sanctions for using corporate names or representing corporate status without authority;
- possible criminal exposure under special laws (e.g., fraud, securities violations, estafa) depending on conduct.
6.4. Defective Incorporation vs. Non-Incorporation
There’s a critical difference:
Defective incorporation: papers filed but flawed → doctrines like de facto corporation or estoppel may soften consequences.
Non-incorporation: no SEC attempt at all → almost always treated as a non-corporate entity with full personal liability.
7. Corporate Name Use Without SEC Authority
Using “Inc.,” “Corp.,” or “Corporation” without SEC incorporation is unlawful and misleading. The SEC regulates corporate name creation to prevent:
- confusion with registered entities,
- fraud on investors or consumers,
- evasion of accountability.
Persons using a corporate name without registration may be required to:
- stop using the name,
- change business style,
- pay penalties.
8. Securities Law Angle (Investment Solicitation)
In practice, issues with SEC-unregistered companies often arise from fund-raising. Two layers apply:
Corporate law legitimacy: If the entity isn’t registered, it cannot offer shares because it isn’t a corporation.
Securities regulation (Securities Regulation Code): Public offering of securities generally requires SEC registration of the securities and compliance with disclosure rules.
Thus, an unregistered would-be corporation that sells “shares” or solicits “investment” is exposed not only to partnership-style liability but also to securities enforcement, cease-and-desist orders, and possible prosecution.
9. Effects on Contracts and Third Parties
9.1. Validity of Contracts
Contracts entered into by an unregistered company are generally not void solely because of non-registration. But the contracting party is actually dealing with the individuals behind it.
9.2. Who Is Bound?
- The people who signed or authorized the contract are bound.
- Members who knowingly allowed the representation may be bound under estoppel principles.
9.3. Third-Party Remedies
Third parties can:
- sue the individuals directly;
- attach personal assets;
- claim fraud/misrepresentation if corporate status was falsely used.
10. Post-Registration: Can Later SEC Registration “Cure” Past Acts?
If an entity later incorporates properly:
- the corporation becomes a new juridical person from SEC approval onward.
- past obligations do not automatically transfer unless the corporation expressly assumes them and creditors agree (novation), or facts support assumption.
So organizers cannot rely on later registration to escape personal liability for earlier transactions.
11. Dissolved or Delinquent Corporations Still Operating
A corporation once registered but later:
- dissolved, or
- delinquent/revoked, or
- expired term (if not perpetually existent under RCC) loses authority to exercise corporate powers except for winding up.
Continuing regular business after loss of good standing can expose directors/officers to personal liability similar to those of unregistered entities.
12. Compliance Checklist (Philippine Setting)
If you want to operate as a corporation in the Philippines, you need at minimum:
- SEC-approved Articles of Incorporation (and By-laws unless OPC).
- Certificate of Incorporation issued by SEC.
- BIR registration and local permits (LGU, barangay, mayor’s permit).
- Ongoing SEC reportorial compliance.
If any of these are missing, you may have a business, but not a corporation in law.
Conclusion
Under Philippine corporation law, SEC registration is not a mere procedural formality—it is the source of corporate existence. A group that operates as a “corporation” without SEC registration is legally not a corporation, and will be treated as an unregistered association or partnership-like body. The practical fallout is severe: no separate personality, no limited liability, personal exposure for organizers and officers, and heightened risk when soliciting investments.
At the same time, Philippine jurisprudence uses fairness doctrines such as de facto corporation and corporation by estoppel to protect good-faith reliance or prevent opportunistic denial of obligations. These doctrines do not legalize non-registration; they simply allocate liability equitably in particular disputes.
In short: you can do business without SEC registration only if you are not claiming to be a corporation. The moment you hold out as one, SEC registration becomes legally indispensable, and failure to comply strips away the corporate veil before it ever existed.