Corporation Law
Business Law
Advantages of a Corporation
Capacity to act as a legal entity
Continuity of life
The liability of the stockholders for the debts of the corporation is
limited to their fully paid investment in the corporation
There is better management as the best service may be extracted
from the bigger membership of a corporation
There is more unified form of control which is reposed in the Board
of Directors
Transferability of shares even without the consent of the other
stockholders
There is a greater source of capital
Disadvantages of a
Corporation
A corporation is subject to greater governmental control
Frequent and varied reports are required of corporations
A corporation may not engage in any other business other
than the business specified in the Articles of Incorporation
Minority stockholders may be at the mercy of majority
stockholders
A corporation cannot transact business in another state
unless it obtains a license for that purpose
It involves double taxation
Disadvantages of a
Corporation
Outstanding stock cannot be more than the authorized capital
stock
Credit of corporation is limited on account of limited liability
of sockholders
There is a greatest possibility of abuse of power
Different kinds of corporation
A. Aggregate and sole
1. Corporation aggregate- one which is or may be composed of
more than one member
2. Corporation sole- one which is composed of a single member
and his successors in office. Thus, for the administration of
the temporalities of any religious domination, society, or
church, and the management of the state and properties
thereof, it shall be lawful for the bishop, chief priest, or
presiding elder of any such religious denomination, society or
church to become a corporation sole, unless inconsistent
with the rules, regulations or discipline of his religious
denomination, society, or church or forbidden by competent
Different kinds of corporation
B. Ecclesiastical corporation and
lay
1. Ecclesiastical corporation- one created to
secure the public worship of God.
2.
Lay corporation- one established for
temporal purposes and is comprised of
laumen.
Different kinds of corporation
C. Stock and Non-stock
1. Stock corporations- those which have a capital stock
divided into shares and are authorized to distribute
to the holders of such shares dividends or
allotments of the surplus profits on the basis of
shares held.
2. Non-stock corporation- one in which there is no
such stock, but the membership therein is otherwise
represented.
Different kinds of corporation
D. De jure and De facto
1. De jure Corporation- one created in strict or substantial
conformity to the governing corporation statutes, and whose
right to exist and act as such cannot be successfully attacked
in a direct proceeding for that purpose by the state.
2. De facto corporation- one so defectively created as not to be
a de jure corporation, but nevertheless the result of a bona
fide attempt to incorporate under existing statutory
authority, coupled with the exercise of corporate powers.
Different kinds of corporation
E. Eleemosynary and civil
1. Eleemosynary corporation- those which are created
for purposes of charities, such as hospitals, schools,
and the like.
2.
Civil corporations- those which are created to
facilitate the transaction of business.
Different kinds of corporation
F. Public and Private
1. Public corporation- those formed or organized for
the government of a portion of the state.
2. Private corporation- those which are created wholly
or in part, for purposes of private emolument.
Different kinds of corporation
G. Domestic and Foreign
1. Domestic corporation- a domestic corporation with respect to
a particular state or country is one created by or existing
under the laws of that state or country
2. Foreign corporation- one created by or existing under the
laws of some other state or country.
Different kinds of corporation
H. Open and Close
1. Open corporation- one in which the general public
may become stockholders or members thereof.
2. Close corporation- one in which the stockholders or
members are limited to a few persons such as
members of a family
Different kinds of corporation
I. Parent and Subsidiary
1. Parent or holding corporation- one which is so
related to another corporation that it has the power
either directly or indirectly through another
corporation to elect a majority of the directors of
such other corporation.
2. Subsidiary corporation- one which is so related to
another that a majority of its directors can be
elected directly or indirectly, by such other
corporation.
Different kinds of corporation
J. Wasting Assets Corporation- one the sole purpose of which is
to invest its capital in a specific property and afterward to
consume that property or extract its value at a profit, such as
mining property, oil, or gas well.
K. Affiliated corporation- one related to another by owning or
being owned by common management or by a long-term lease
of its properties or other control device. An affiliation exists
between a holding or parent company and its subsidiary , or
between two corporations owned or controlled by a third.
Different kinds of corporation
L. Government owned or controlled corporations- those organized
by the government or corporations of which the government is the
majority stockholder, such as the Philippine Aie Lines, PNB,
Philippine National Railways, Metro Manila Transit Corporation,
National Power Corporation, etc.
M. Corporation by prescription- one where corporation powers
have been exercised by a body of men for such a length of time as
to raise a presumption of the grant of an ancient charter to their
predecessors,
N. Corporation by estoppel- one, which really is not a corporation,
but which has represented itself to the public as a real corporation,
and which cannot now be permitted to deny such representation.
Different kinds of corporation
O. Quasi-public corporations- private corporation which have
accepted from the state the grant of a franchise or contract
involving the performance of a public duty.
P. Quasi corporation- associations and government or political
institution s or officers which are not corporations in the full
sense, but which invested by law with some of the attributes of
a corporation, as the capacity to sue or to be sued as a
corporate body, to have a continued existence unaffected by
death or disability of members, or to make particular contracts
or hold particular property or rights as a corporate body, such
as the board of accountancy.
Different kinds of corporation
Q. Trading corporation- A corporation engaged
in the business of buying and selling.
R. Tramp corporation- A corporation organized
in one state without any intention of doing
business in that state, but instead it will carry
its business operations in other states.
Effect of ownership of stock by
government
The fact that the government happens to
be a stockholder of a corporation does not
make it a public corporation. As private
corporation, they have no greater powers,
rights or privileges than any other
corporation which might be organized for
the same purpose under the Corporation
Law.
Effect of public nature or character
of corporate undertaking
The mere fact that the undertaking of the corporation
is one which the state itself might enter as part of its
public works, does not make the corporation a public
one. Education is a public or governmental function.
Article II, section 17 of the Philippine Constitution of
1986 provides that the State shall give priority to
education, science and technology, arts, culture, and
sports to foster patriotism and nationalism,
accelerate social progress and promote total human
liberation and development.
Prepared by:
Johanna Marie B.
Corpuz
