Articles of Incorporation, Corporate Name, and Commencement of Corporate Existence in Philippine Corporate Law

In the Philippines, the establishment and legal operation of a corporation are primarily governed by the Revised Corporation Code of the Philippines (Republic Act No. 11232). A corporation’s formation process, especially with regard to the Articles of Incorporation, corporate name, and commencement of corporate existence, is fundamental to its legal personality and operations. This process encompasses several legal requirements and considerations to ensure compliance and protect stakeholders.

1. Articles of Incorporation

The Articles of Incorporation are a corporation's foundational document, equivalent to a constitution, detailing the entity’s purpose, structure, and basic information. According to Section 13 of the Revised Corporation Code, the Articles of Incorporation must be filed with the Securities and Exchange Commission (SEC) for the corporation to be validly formed.

A. Contents of the Articles of Incorporation

The Articles of Incorporation must include the following information:

Corporate Name – The corporation’s official name, which must comply with the naming guidelines established by the SEC.
Purpose – A clear, lawful purpose for which the corporation is organized, which can be a single purpose or multiple related purposes.
Principal Office Address – The address within the Philippines where the corporation’s main office is located.
Term of Existence – The corporation may have a perpetual or fixed term, as decided by its incorporators. A corporation may now exist perpetually, as allowed under the Revised Corporation Code.
Incorporators – Individuals or entities involved in forming the corporation, who must meet specific residency or citizenship requirements based on the nature of the corporation.
Directors or Trustees – Names, nationalities, and residences of the initial board of directors or trustees.
Capital Structure – Details of authorized capital stock, number and par value of shares, and classifications if there are different types of shares (for stock corporations).
Subscription and Payment – Information on initial subscriptions and any payments made by incorporators or subscribers for their shares, if applicable.

B. Filing and Approval

The Articles of Incorporation must be filed with the SEC, along with other required documents such as by-laws, treasurer’s affidavit, and proof of subscription. The SEC’s role is to examine and ensure that the Articles of Incorporation comply with the law. Upon approval, the SEC issues a Certificate of Incorporation, officially recognizing the corporation as a juridical entity.

2. Corporate Name

The corporate name is essential for the corporation’s identity and branding. However, the name must comply with specific requirements to avoid duplication and public confusion.

A. Requirements for Corporate Name

Uniqueness and Distinctiveness – The SEC requires that a corporate name is unique and not similar or confusingly similar to an existing registered corporation.
Prohibited Names – The name must not be misleading or suggest that the corporation is related to a government agency, unless authorized.
Reserved Names – The Revised Corporation Code allows corporations to reserve a name before incorporation, subject to SEC guidelines.

B. Approval and Reservation

The SEC maintains the authority to approve or deny proposed corporate names. If a proposed name conflicts with an existing one or fails to meet the SEC’s criteria, the applicant must propose an alternative name. The name reservation may be requested during the incorporation process to prevent other entities from registering the same or a similar name.

3. Commencement of Corporate Existence

A corporation’s existence begins from the moment the SEC issues its Certificate of Incorporation. This certificate signifies that the corporation has complied with all necessary legal requirements for incorporation.

A. Juridical Personality

Once registered, the corporation is granted juridical personality, meaning it can exercise legal rights and obligations independently from its incorporators, directors, and shareholders. The corporation can sue and be sued, own property, and enter contracts in its name.

B. Legal Effects of Incorporation

Perpetual Succession – Unless the corporation has a fixed term, it enjoys perpetual existence, meaning it continues its existence until formally dissolved, regardless of changes in ownership or membership.
Limited Liability – Shareholders’ liability is limited to the extent of their capital contributions, protecting personal assets from corporate obligations.
Corporate Powers – The corporation can exercise the powers specified under Section 35 of the Revised Corporation Code, including entering contracts, acquiring assets, and issuing stock (for stock corporations).

C. Commencement of Business Operations

While a corporation’s existence commences upon issuance of its Certificate of Incorporation, it must comply with additional legal requirements before it can begin business operations, such as securing local government permits, registering with the Bureau of Internal Revenue (BIR), and obtaining necessary industry-specific permits.

Summary of Key Considerations

The incorporation process in the Philippines emphasizes strict compliance with statutory requirements to ensure that a corporation operates within legal boundaries. These requirements establish a corporation’s identity, purpose, and legal personality. Key documents like the Articles of Incorporation and the Certificate of Incorporation are foundational to these processes, while SEC oversight provides regulatory guidance to protect public interest and maintain order in business registrations.