OTHER CLASSES OF CORPORATIONS

Public and Private Corporations

1. Public Corporation – those formed or organized for the government of a portion

of the State or any of its political subdivisions and which have for their purpose
the general good and welfare. Strictly speaking, a public corporation is one that
is created, formed, or organized for political or governmental purposes with
political powers to be exercised for purposes connected with the public good in
the administration of the civil government.
2. Private Corporations – those formed for some private purpose, benefit, aim or
end. They are created for the immediate benefit and advantage of the individuals
or members composing it and their franchise may be considered as privileges
conferred by the State to be exercised and enjoyed by them in the form of the
corporation.

Ecclesiastical and Lay Corporations

1. ECCLESIASTICAL OR RELIGIOUS CORPORATIONS – corporations exclusively

organized for spiritual purposes or for administering properties held for
religious ones. They are organized to secure public worship or perpetuating the
right of a particular religion.
2. LAY CORPORATIONS – are those organized for purposes other than religion.
They may further be classified as:
1. ELEEMOSYNARY: created for charitable and benevolent purposes such as
those organized for the purpose of maintaining hospitals and houses for
the sick, aged or poor.
2. CIVIL: organized not for the purpose of public charity but for the benefit,
pecuniary or otherwise, of its members.

Aggregate and Sole Corporations

1. AGGREGATE CORPORATIONS – those composed of a number of individuals

vested with corporate powers
2. CORPORATION SOLE – those consist of one person or individual only and who
are made as bodies corporate and politic in order to give them some legal
capacity and advantage which, as natural persons, they cannot have. Under the
Code, a corporation sole may be formed by the chief archbishop, bishop, priest,
minister, rabbi, or other presiding elder or religious denominations, sects, or
churches.
Close and Open Corporations

1. CLOSE CORPORATIONS – those whose shares of stock are held by a limited

number of persons like the family or other closely-knit group. No public investors
and the shareholders are active in the conduct of corporate affairs. (Sec. 95,
Revised Corporation Code)
2. OPEN CORPORATIONS – those formed to openly accept outsiders as
stockholders or investors. They are authorized and empowered to list in the
stock exchange and to offer their shares to the public such that stock ownership
can widely be dispersed.

Domestic and Foreign Corporations

1. DOMESTIC CORPORATIONS – those organized or created under or by virtue of

the Philippine laws, either by legislative act or under the provisions of the
General Corporation Law.
2. FOREIGN CORPORATIONS – those formed, organized or existing under laws
other than the Philippines’ and whose laws allow Filipino citizens and
corporations to do business in its own country or State. It shall have the right to
transact business in the Philippines after obtaining a license for that purpose in
accordance with this Code and a certificate of authority from the appropriate
government agency (Sec. 140, Revised Corporation Code).

Parent/Holding Company, Subsidiary, and Affiliates

1. PARENT OR HOLDING COMPANY – a corporation that controls another

corporation or several other corporations known as its subsidiaries. These
corporations confine their activities to owning stocks and supervising the
management of other companies. A holding company usually owns a controlling
interest (more than 50% of the voting stock) in the companies whose stocks it
holds. Compared with an investment company which is active in the sale or
purchase of shares of stocks or securities, parent or holding companies have
passive portfolio and hold the securities merely for purposes of control and
management.
2. SUBSIDIARY CORPORATIONS – a corporation which is being controlled by a
parent or holding corporation by owning the majority of shares of the subsidiary
corporation. A subsidiary corporation is an independent and separate juridical
entity or personality, distinct from its parent company, hence any claim or suit
against the subsidiary does not bind the parent or vice versa.
3. AFFILIATES – are those corporations that are subject to common control and
operated as part of a system. They are sometimes called sister companies since
the stockholdings of a corporation is not substantial enough to control the
former.
Example: XYZ company is owned by X, Y, and Z where 30% held by X, 30% held
by Y, and 40% by Z. Thus, – X, Y and Z are called affiliates.
Quasi-public Corporations

Otherwise called public service corporations. These are private corporations that have
accepted from the state the grant of a franchise or contract involving the performance of
public duties. The term is sometimes applied to corporations which are not strictly public
in the sense of being organized for governmental purposes, but whose operations
contribute to the convenience or welfare of the general public.
Example: telegraph and telephone companies, water companies, electric companies.

De Jure, De Facto, Corporation by Estoppel

1. DE JURE – juridical entities created or organized in strict or substantial compliance

with statutory requirements of incorporation and whose rights to exist as such
cannot be successfully attacked even by the State in a quo warranto proceeding.
They are, in effect, incorporated by strict adherence to the provisions of the law of
their creation.
2. DE FACTO – are those which exist by the virtue of an irregularity or defect in the
organization or constitution or from some omission to comply with the conditions
precedent by which corporations de jure are created, but there was colorable
compliance with the requirements of the law under which they might be lawfully
incorporated for the purpose and powers assumed, and user of the rights claimed to
be conferred by law. Its existence can only be attacked by the direct action of quo
warranto proceedings.SEC. 19. De facto Corporations. – The due incorporation of
any corporation claiming in good faith to be a corporation under this Code, and its
right to exercise corporate powers, shall not be inquired into collaterally in any private
suit to which such corporation may be a party. Such inquiry may be made by the
Solicitor General in a quo warranto proceeding.
3. CORPORATION BY ESTOPPEL – those which are so defectively formed as not to be
either de jure or de facto corporations but which are considered as corporations in
relation only to those who cannot deny their corporate existence due to their
agreement, admission, or conduct.SEC. 20. Corporation by Estoppel. – 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 its lack of corporate personality as a defense.
Anyone who assumes an obligation to an ostensible corporation as such cannot resist
performance thereof on the ground that there was in fact no corporation.