DE FACTO

CORPORATIONS
SECTION 19 OF THE REVISED CORPORATION CODE
• SEC. 19. De facto Corporations. – 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.
 DE JURE CORPORATION DE FACTO CORPORATION
CORPORATION BY LAW CORPORATION BY FACT

created in strict compliance of the requirement for exists as a corporation

incorporation
has NOT complied with all the requirements to be a
de jure corporation but has complied sufficiently to
be given corporate status.

the right to exist as a corporation cannot be but has no legal right to corporate existence against
questioned by any party the state
REQUISITES
• 1. There must be a VALID LAW in which a corporation with
powers assumed to be incorporated;
• 2. BONA FIDE ATTEMPT to organize a corporation under such
law
• 3. exercises the corporate powers in GOOD FAITH conferred upon
it by law.
VALID LAW
• Incorporation must be based on a valid law.

• Must have a lawful purpose.

• Incorporation permitted by law.

BONA FIDE ATTEMPT TO
INCORPOORATE
• There is an attempt to incorporate in GOOD FAITH.

• Mere attempt is not enough.

• There is a bona fide attempt to comply with the requirements.

Defects that preclude the creation of
De facto corp
• Absence of articles of incorporation.

• Failed to file articles of incorporation with the SEC.

• No certificate of incorporation from the SEC.

Defects that created a de facto corp.
• The articles of incorporation fail to state all the matters required by
the RCC to be stated, or state some incorrectly
• The name of the corporation resembles another existing
corporation.
• Incorporators more than 15
Defects that created a de facto corp.
• An Incorporator who is a natural person is not of legal age
• Filipino Ownership of the capital stock is less than that prescribed
by law.
• Failed to submit by laws on time
QUESTIONING VALIDITY DE FACTO
CORP EXISTENCE
Must be through direct proceeding:

-Instituted by the Government

-QUO WARRANTO thru SOL GEN
-and to have it dissolved.
Powers and Liabilities
• Same powers, liabilities, duties and responsibilities as a corporation
de jure.

• A transfer of property to or by a corporation de facto is valid and

binding to all except the State.