MOM (November 11)

Classes of Corporation organized under the RCC:

1. As to the number of components:
a. Aggregate corporation – a corporation consisting of more than one member;
b. Corporation sole – a corporation consisting of only one person or member; one formed
by the archbishop, bishop, priest or minister for the purpose of administering and
managing, as trustee, the affairs, property and temporalities of such religious
denomination.
c. One person corporation – a corporation with a single stockholder
2. As to existence of stocks:
a. Stock corporations – a corporation with capital stock that is divided into shares and is
authorized to distribute to holders of such shares, dividends or allotments of the surplus
profits on the basis of the shares held.
b. Non-stock corporations – a corporation that has NO capital stock, does not issue stocks
and does not distribute dividends to its members (ex. corporations organized for social,
cultural or charitable purposes.)
i. Sources of capital of non-stock corporations are the contributions of the
members therein, donations etc.
3. As to the manner of creation:
a. Corporation created by special law – a corporation directly created by Congress
through a special law; such corporation must be a GOCC
b. Corporation created under a general law – a corporation created under the RCCP
c. Corporations by prescription – a corporation that was not formally organized as such
but has duly recognized by immemorial usage as a corporation, with rights and duties
enforceable under the law; has juridical personality
4. As to the legal status:
a. De jure corporation – organized in accordance with law; has juridical personality
b. De facto corporation – where there exist a flaw in its incorporation but there is
colorable compliance with the requirements of law; has juridical personality
c. Corporation by estoppel – a group of persons which holds itself out as a corporation
and enters into a contract with a 3 rd person on the strength of such appearance; NO
juridical personality, thus the person composing it will be the ones liable
5. As to functions:
a. Public Corporation – a corporation organized for the government of a portion of a State
for the purpose of serving general good and welfare (ex. Provinces, municipalities, cities)
b. Private Corporation – organized for some private purpose, benefit, aim or end. They
may be stock or non-stock corporations.

 Quasi-public corporations – engaged in private business affected with public interest; they are
private corporations (ex. telephone or transportation businesses)

 GOCC – may either be with original charter or created by special law OR incorporated under a
general law;
o Requisites of a GOCC:
1. There must be an agency organized as a stock or non-stock corporation;
2. Corporation must be vested with functions relating to public needs whether
governmental or proprietary in nature; and
 3. Must be owned directly by the government or through instrumentalities either
wholly or where applicable as in the case of stock corporations, to the extent of
51% of its capital stock

A special law can only create a GOCC – TRUE

A GOCC can only be created under a special law – FALSE

 Government instrumentalities – are not corporations at all; neither a stock or a non-stock

corporation
 Public company – any corporation with a class of equity securities listed on an exchange or with
assets in excess of 50M and having 200 or more holders, at least 200 of which are holding at
least 100 shares of a class of its equity securities.
 Corporations vested with public interest – determined by the NEDA which considers the type
and nature of the industry, size of the enterprise, or other factors which are germane to the
realization and promotion of business and industry; not the same as a public corporation and
public company

6. Ecclesiastical Corporation – corporations composing entirely of spiritual persons

7. Lay Corporations – all corporations other than ecclesiastical
8. Eleemosynary or Charitable Corporation – created not for private gain or profit but for
charitable purposes for the administration of charitable trust
9. Civil Corporation – not for the purpose of charity but for the benefit, pecuniary or otherwise its
members
10. Subsidiary – a corporation more than 50% of the voting stock of which is owned or controlled
directly or indirectly through one or more intermediaries by another corporation, which thereby
become a parent company
11. Affiliate – a corporation that directly or indirectly, through one or more intermediaries, is
controlled by or is under the control of another corporation, which becomes it parent company;
companies related to one another by owning or being owned by common management
12. Parent Corporation – has control over another corporation; a corporation that owns all or
substantially all of the controlling shares in the subsidiary

A parent corporation is an affiliate of a subsidiary

A subsidiary is an affiliate of a parent corporation
2 subsidiaries of the same parent are affiliates of each other

13. Close corporations – a corporation whose articles of incorporation provides that:

a. All the corporation’s issued stock of all classes, exclusive of treasury shares, shall be held
of record by not more than a specified number of persons, not more than 20;
b. All the issued stock of classes shall be subject to one or more specified restrictions on
transfer permitted by the RCCP; and
c. The corporation shall not list in any stock exchange
14. Special Corporations under the RCC – include educational and religious corporations
 15. As to the laws of incorporation:
a. Domestic corporation – formed under PH laws;
b. Foreign corporation – formed under laws other than those of the PH; AND whose laws
allow Filipino citizens and corporations to do business in its own country or State

 Domestic vs. Foreign corporation – the determining factor is the place of incorporation;
 The Nationality of the stockholders DOES NOT affect the classification whether domestic or
foreign corporation
o Place of incorporation test – test to be used to determine whether domestic or foreign
corporation

Classification of corporations according to nationality of stockholders:

1. Philippine national
2. Foreign national

 Nationalized activities – activities that are those reserved for PH nationals (ex. mass media;
private recruitment)
 PH nationals:
1) Filipino citizens;
2) Partnership or associations wholly-owned by Filipino citizens;
3) Trustee of funds for pension or other employee retirement benefits where a trustee is
a PH national and at least 60% of the fund will accrue to the benefit of PH nationals;
4) Foreign corporations wholly-owned by Filipino citizens;
5) Domestic corporations at least 60% of the outstanding capital stock entitled to vote is
owned by Filipino citizens;
6) Where a domestic corporation has a corporate stockholder (corporate layering):
i. At least 60% of the outstanding capital stock entitled to vote of both
corporations must be owned by PH nationals;
ii. At least 60% of the members of the BOD of both corporations must be citizens
of the PH

 2 tests to determine nationality in corporate layering:

o Control test – look at the controlling stockholders only; if at least 60% owned by PH
nationals, then it is a 100% PH national
o Grandfather rule – applicable when there is doubt in the 60-40 filipino equity ownership
in the corporation; supplement to the control test
 Doubt exists when:
 The foreign investors provide practically all the funds for the investment
jointly undertaken with Filipinos;
 Foreign investors undertake to provide all technological support for the
venture; and
 Foreign investors manage the company, and prepare all economic
viability studies. (Narra Nickel Mining vs. Redmont)