RCCP Week Four over that corporate name, you should have priority

Documents that should be filed with the SEC for the of adoption.
purpose of securing a Certificate of Incorporation of
a stock corporation. Priority Adoption Rule
The first to adopt the name has better right.
 Reservation of the Corporate Name (Sec. 18)
 Cover Sheet The Corporate name is not distinguishable
 AOI and BL (Sec. 13-14; 45) even if it contains one or more of the
 Certificate of authority or favorable following:
recommendation from proper government 1. the word “corporation”, “company”,
agency. “Incorporated”, “limited”, “limited
*COI is the document which will be issued by the liability”, or any abbreviation of such words
SEC to signify or to show that a corporation is 2. Punctuations, articles, conjunctions,
existing. contradictions, prepositions, abbreviations,
different tenses, spacing, or number of the
*When registering in the online application of SEC same word or phrase.
(aka ESPARC) the corporate name must be stated
already so that SEC can check if there is a name that Other PROHIBITED Names
resembles the name that you are intending to use for - the name or the nature of business itself is illegal,
your corporation. offensive, scandalous or contrary to propriety;
(ESPARC - Electronic Simplified Processing of - names which are identical or resemble a BN
Application for Registration of Company.) already registered.

Reservation of Corporate Name - names composed of purely generic or geographical

No corporate name shall be allowed if: words.

1. It is not DISTINGUISHABLE from that - names which law or regulation cannot be

already reserved or registered for the use of appropriated.
another corporation - names, words, or terms or expressions used to
2. It is already protected by law; or designate or distinguish or suggestive of quality of
3. Its use is contrary to existing law, rules and any class of goods, articles, merchandise or service;
regulations. (Sec. 17)
- names or abbreviation of names used by the
Sec. 17. A corporate in order to be reserved or government.
registered later on must pass a distinguishable test
so no corporate name should be allowed by the SEC - names or abbreviation of names of any nation,
if it’s not distinguishable from that already reserved intergovernmental or international organization.
or registered for the use of another corporation. If it - names which are deceptive, misleading
is already protected by law, it will not be reserved
for the corporation. The corporate name will also *There must be a separate registration of a BN for a
not be allowed if its use is contrary to existing law, branch or satellite office.
rules and regulations.
SEC Guidelines on the use of Corporate
Requisites of Distinguishable Test Partnership or Names
1. the complainant corporation acquired prior  Corporate names should contain the word
right over the use of such corporate name; “Corporation” or “Incorporated” or its
and abbreviation “Cor.” Or “Inc.”
2. the proposed name is either, (a) identical, or  Partnership names should contain the word
(b) deceptively or confusingly similar to that “Company” except a partnership organized
of any existing corporation or to any other to practice a profession. A limited
name already protected by law; or (c) partnership should add the word “limited”
patently deceptive, conf using or contrary to  If the name or surname of a person is used
existing law. as a part of a corporate name, the
*If you will be complaining for the usage of another incorporators must have a basis for such
corporation of a corporate name, then you being the name or surname.
complainant must have acquired a prior right of use  If the corporate name contains initials, an
explanation must accompany the articles
 stating the meaning of the same and the - the supreme court said that “lyceum” is a generic
relevance or reason for the use thereof. word which has not been exclusively used by the
 The use of words, “State” and “Barangay” petitioner because there are 12 schools that already
are prohibited since the same are reserved use the word “lyceum”.
for the exclusive use of the government.
*kapag generic ang name ng corporation, pwede
 The word “National” cannot be used as part
siya gamitin ng kahit sino.
of the corporate or partnership name

Power of SEC
 If a name cannot be used by a corporation, the
SEC can: Article of Incorporation
1. Reject the AOI
Section 13 – Contents of AOI
2. Summarily order the corporation to cease
and desist from using such name; All corporations shall file with the SEC AOI in any
3. Summarily order the corporation to register of the official languages, duly signed and
a new name and amend its AOI bearing the acknowledged or authenticated, in such form and
new name; manner as may be allowed by the Commission,
4. Cause the removal of all visible signages, containing substantially the following matters,
marks, advertisements, labels, prints and except as otherwise prescribed by this Code or by
other effects bearing such corporate name special law:
(Sec. 17)
a) The name of corporation;
What will be the effect if the name of the
b) The specific purpose or purposes for which the
corporation is changed?
corporation is being formed. Where a corporation
- the corporation upon a change in its name is has more than one stated purpose, the articles of
in no sense a new corporation or the successor incorporation shall indicate the primary purpose and
of the original corporation. the secondary purpose or purposes: Provided, that a
non-stock corporation may not include a purpose
*a change in a new corporate name doesn’t
which would change or contradict its nature as such;
make a new corporation. So, it has no effect on
the identity of the corporation, its properties, c) The place where the principal office of the
rights, and liabilities. corporation is to be located, which must be within
the Philippines;
Doctrine of Secondary Meaning
d) The term for which the corporation is to exist, if
A word or phrase originally incapable of exclusive
the corporation has not elected perpetual existence;
appropriation with reference to an article on the
market because geographically or otherwise e) The names, nationalities, and residence addresses
descriptive might nevertheless have been used so of the incorporators;
long and so exclusively by one producer with
reference to the article that said order phrase has f) The number of directors, which shall not be more
come to mean that the article was his product. than fifteen (15) or the number of trustees which
may be more than fifteen (15);
e.g., LPU vs. Lyceum Aparri Case Digest
g) The names, nationalities, and residence addresses
LPU filed an action against Lyceum of Aparri of persons who shall act as directors or trustees until
Incorporated and other six educational corporation the first regular directors or trustees are duly elected
using the word “lyceum”. LPU had been using and qualified in accordance with this Code;
“lyceum” in its name for more than five years but it
was not exclusive because other schools are also h) If it be a stock corporation, the amount of its
using the word “lyceum” in their name, in fact there authorized capital stock, number of shares into
are 12 educational institutions throughout the which it is divided, the par value of each, names,
Philippines which use the word “lyceum” as part of nationalities, and subscribers, amount subscribed
their corporate names. and paid by each on the subscription, and a
statement that some or all of the shares are without
Did the word “lyceum” acquire a secondary par value, if applicable;
meaning so as to entitle the petitioner LPU to the
exclusive right to use the word “lyceum” in its i) If it be a nonstock corporation, the amount of its
name? capital, the names, nationalities, and residence
addresses of the
contributors, and amount contributed by each; and corporation which require that 60% of the
capital must be owned by Filipinos and 40%
j) Such other matters consistent with law and which
will be owned by foreigners)
the incorporators may deem necessary and
4. Grandfather Rule – traces the nationality of the
convenient.
stockholder of investor corporations so as to
An arbitration agreement may be provided in the ascertain the nationality of the corporation
AOI pursuant to Sec. 181 of the RCCP. where the investment is made. used if there is
doubt
The AOI and applications for amendments thereto
may be filed with the Commission in the form of an When do we apply grandfather rule?
electronic document, in accordance with the
Shall be applied only when there is a problem on
Commission's rule and regulations on electronic
the nationality of the investor corporation.
filing.
Applicable only when the 60-40 Filipino-foreign
*the arbitration agreement refers to an alternative equity is in doubt.
dispute resolution which is another means of
Control Test – is there is a requirement as to the
settling disputes or conflicts. You must exhaust the
number of Filipinos to compose the or to own the
arbitration agreement first before going to the court
capital stock.
Grandfather Rule – if there is a doubt as to the
*We should know that we have the contents of the
citizenship of the stockholder.
articles incorporation and it can be in any official
languages Corporate Term
*on letter b we have to indicate which one is the Maximum term of a corporation:
primary purpose and the secondary purpose (kasi
A corporation shall have perpetual existence unless
pag nagkaroon ng investment in another corporation
its AOI provides otherwise (Sec. 11, 13 (d) and 14)
which is not engaged or which is not related to the
primary purpose of the corporation (nasa secondary Corporations incorporated before RCCP and
purpose siya) kailangan ang vote or ratification ng
which continues to exist
stockholders to exercise the corporate power)
Shall have perpetual existence, unless upon a vote
of its stockholders representing a majority of its
capital stock, notifies the SEC that it elects to retain
Domicile of a Corporation its corporate term.
Why is it important to indicate the principal place of
May the corporate term for a specific period be
business stated in the AOI?
extended or shortened?
It may determine the venue of court cases involving
Yes, by amending the AOI.
the corporations if the arbitration agreement proves
a few times. Requirements:

Nationality of the Corporation 1. Approval of majority vote of BOD/T

Tests: 2. Ratification at a meeting by SH/M representing at
1. Incorporation Test – the nationality of the least 2/3 of the OCS or its members
corporation is determined by the state of 3. No extension may be made earlier than 3 years
incorporation regardless of the nationality of prior to the original or subsequent expiry date
the stockholders unless there are justifiable reasons for an earlier
2. Domicile Test - the nationality of the extension as may be determined by the
corporation is determined by the state where it Commission.
is domicile. where is the principal of business
located. 4. Such extension of the corporate term shall take
3. Control Test – we do not care about the laws effect only on the day following the original or
used to incorporate and the principal place of subsequent expiry date
business. what we care about is the nationality 5. In case of extension, a dissenting SH may
of the controlling stockholder or members to exercise the right of appraisal
determine the nationality of the corporation. It
is used in the Philippines but for the purposes
only of determining the compliance with the
citizenship requirements of law. (there are