Mr. Antonio B. Betito

February 22, 1983 Mr. Antonio B. Betito 643 Araneta Avenue Quezon City Sir : This has reference to your letter dated February 11, 1983 requesting opinion on the queries posed therein. prcd In response to your first question as to whether or not a certificate of incorporation has any retroactive effect, please be informed that Section 19 of the Corporation Code provides that: "A private corporation formed and organized under this Code commences to have a corporate existence and juridical personality and is deemed incorporated from the date the Securities and Exchange Commission issues a certificate of incorporation under its official seal ...." From the foregoing provision, it is therefore clear that the corporate existence or juridical personality of a corporation, separate and distinct from that of the members composing it, begins only upon the issuance of the certificate of incorporation. The Supreme Court thus held in Recreation and Amusement Association of the Philippines v. City of Manila, G.R. L-7922, February 22, 1957, (100 Phil. 950) that "the right to be and act as a corporation is not a natural or civil right of any person, such right as well as the right to enjoy the immunities and privileges resulting from incorporation constitute a franchise and a corporation, therefore cannot be created except by or under a special authority from the state". Anent your second query, please be informed that persons composing the organization prior to its incorporation, may be held personally and individually liable to the extent of their entire obligation vis-a-vis third persons by virtue of the provisions of Section 21 of the Corporation Code which deals with corporation by estoppel. Said provision provides thus: "All persons who assume to act as a corporation knowing it to be without authority to do so shall be liable as general partners for all debts, liabilities and damages incurred or arising as a result, thereof: Provided, however, that when any such ostensible corporation is sued on any transaction entered by it as a corporation or on any tort committed by it as such, it shall not be allowed to use as a defense its lack of corporate personality. One who assumes an obligation to an ostensible corporation as such, cannot resist performance; thereof on the ground that there was in fact no corporation." LibLex Please be guided accordingly. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner