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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Starlinea Enterprises, Inc. is a domestic corporation formed by four incorporators who filed the articles of incorporation and held an organization meeting. No formal by-laws were adopted or filed with the SEC. Starlinea subsequently signs a standing contract with Quantum Supplies for ongoing deliveries. Quantum demands payment, contending that Starlinea has no valid by-laws and that the officers lacked authority. Which statement best captures the controlling doctrine and its practical implications for the situation under Philippine law?

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The absence of by-laws means the corporation has no civic personality at all and cannot transact with third parties, regardless of organization actions. Agency by estoppel applies, so Quantum may enforce the contract if it reasonably relied on Starlinea's officers presenting themselves as corporate agents. The de facto corporation doctrine governs; despite the absence of properly adopted or filed by-laws, Starlinea's officers may bind the company if there was colorable incorporation and an organization meeting. If Starlinea later adopts and files by-laws, those by-laws retroactively validate all previously entered contracts.

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