Other kinds or
classes of corporations—
Corporations may be:
(1) De jure
corporation, one which has been regularly created in
compliance with all legal requirements and the right
of which to exercise a corporate franchise is
invulnerable against attack by the state in quo
warranto proceedings.
(2) De facto
corporation, one organized as a corporation but
lacking in compliance with certain requirements, now
governed by Section 20 of the Corporation Code,
infra..
(3)
Corporation by estoppel, one in which the parties in
a given transaction are estopped to deny corporate
existence to protect innocent third persons, now
governed by Section 21 of this Corporation Code,
infra..
(4) Corporation
by prescription, one which, without formal
incorporation, has claimed to be a corporation,
exercising corporate powers for a long period of
time, with the tolerance of the State, example of
which is the Roman Catholic Church.
(5) Corporation
aggregate, one composed of several natural persons.
(6)
Corporation sole, which exists when a religious
elder or leader incorporates himself to manage the
properties of his Church, governed by Sections 110
to 115 of this Corporation Code, infra.
(7)
Eleemosynary corporation, one organized for public
charity.
(8)
Civil corporation, one organized on matters or for
purposes other than religious or ecclesiastical.
(9)
Religious corporations, those organized for
ecclesiastical or religious purposes.
(10)
Close corporation, which have either of two
meanings:
(a)
one in which the stock is held in few hands, or in
few families and wherein it is not at all, or only
rarely, dealt in;
(b) one where
vacancies in the board of directors are filled only
by the remaining members of the board.
(11) Open
corporation, one which may have either of two
meanings:
(a) one where the stock is available for
subscription or purchase by any person; or
(b) one where
the members of the board are elected or the
vacancies thereof are filled by the stockholders.
(12) Domestic
corporation, one organized according to the laws of
a particular State.
(13) Foreign
corporation, one organized in one State and licensed
to do business in another State.
(14) Subsidiary
corporation, one the stocks of which are controlled
by another corporation known as a parent or holding
corporation.
(15) Condominium
corporation, one which may be stock or non- stock
organized by owners of definite portions of a
building for effective management thereof.
There is a large class of private corporations which
on account of special franchise conferred on them
owe a duty to the public which they may be compelled
to perform. They are known as quasi- public
corporations. A quasi-public corporation may be said
to be a private corporation which has been given
certain powers of a pub.. lie nature such as the
power of eminent domain in order to enable it to
discharge its duties for the public benefit in which
respect it differs from an ordinary private
corporation the powers of which are given, and
exercised exclusively for the profit and advantage
of shareholders. Quasi public corporations are not
public corporations.
Quasi corporations are public bodies which resemble
corporations to undertake public or state work for
the general welfare. They are, in a limited sense,
public corporations. They are public agencies of the
State like municipal corporations.
When Government does
business through
a corporation—
It is well-settled doctrine that when the government
enters into commercial business, it abandons its
sovereign capacity and is to be treated like any
other corporation. By engaging in a particular
business through the instrumentality of a
corporation, the government divests itself pro hac
vice of its sovereign character, so as to render the
corporation subject to the rules of law governing
private corporations. (See Philippine National
Railways vs. Union de Maquinistas, Fogoneros y
Motormen, L-31948, July 25, 1978.)
Corporation distinguished
from a cooperative—
Membership in a cooperative is not the same as
ownership of stocks in ordinary corporations. While
cooperatives may exercise some of the rights and
privileges given to ordinary corporations pro..
vided under existing laws, such cooperatives enjoy
other privileges not granted to the latter.
Similarly, members of cooperatives have rights and
obligations different from those of stockholders of
ordinary corporations. Because of the special nature
of cooperatives, its members-employees cannot form
or join a labor union for purposes of collective
bargaining. (Ben guet Electric Cooperative, Inc. vs.
Callejai, et al., G.R. No. 79025, Dec. 29, 1989) A
cooperative is by its nature different from an
ordinary business concern being run either by
persons, partnerships, or corporations. Its owners
or members are the ones who run and operate the
business while the others are its employees.
Irrespective of the number of shares owned by each
member, they are entitled to cast one vote each in
deciding upon the affairs of the cooperative. Their
share capital earn limited interest. An employee of
a cooperative who is a member and co-owner thereof
cannot invoke the right to collective bargaining for
an owner cannot bargain with himself or his
co-owners.
Concept of joint ventures;
dangers of foreign control in violation of constitutional nd
legal requirements—
Participants in a joint venture in organizing the
joint venture, deviate from the traditional pattern
of corporation management. Just as in close
corporations,
shareholders' agreements in joint venture
corporations contain certain provisions which do one
or more of the following:
(1) require
greater than majority vote for shareholder and
director action;
(2) give certain
shareholders or group of shareholders power to
select a specified number of directors;
(3) give to the
shazjho1ders control over the selection and
retention )f employees; and
(4) set up a
procedure for settlement of disputes by arbitration.
(Aurbach us. Sanitary Wares Mfg. Corp., G.R. ,NO•
75875, Dec. 15, 1989). The legal concept of a joint
venture is of common law origin. It has no precise
definition but it has been generally understood to
mean an organization formed for some temporary
purpose. It is hardly distinguishable from the
partnership, since their elements are similar —
community of interest in the business, sharing of
profits and losses, and a mutual right of control.
The main distinction cited by most opinions in
common law jurisdictions is that the partnership
contemplates a general business with some degree of
continuity while the joint venture is formed for the
execution of the single transaction, and is thus of
a temporary nature. This observation is not entirely
accurate in this jurisdiction, since under the Civil
Code, a partnership may be particular or universal
and a particular partnership may have for its object
a specific undertaking. It would seem therefore that
under Philippine law, a joint venture is a form of
partnership and should thus be governed by the law
of partnership. The Supreme Court had however
recognized a distinction between these two business
firms and has held that although a corporation
cannot enter into a partnership contract, it may
however engage in a joint venture with others.
Quite often, Filipino entrepreneurs in their desire
to develop ;he industrial and manufacturing
capacities of a local firm are constrained to seek
the technology and marketing assistance of huge
multinational corporations of the developed world.
Arrangements are formalized where a foreign group
becomes a minority owner of a firm in exchange for
its manufacturing expertise, use f its brand names
and other such assistance. However, there is always
a danger from such arrangements. The foreign group
may, from the start, intend to establish its own
sole or monopolistic operations and merely uses the
joint venture arrangement to gain a foothold or test
the Philippine waters, so to speak. Or the
covetousness may come later. As the Philippine firm
enlarges its operations and becomes profitable, the
foreign group undermines the local majority
ownership and actively tries to completely arid
predominantly take over the entire company. This
undermining of joint ventures is not consistent with
fair dealing to say the least. To the extent that
such subversive actions can be lawfully prevented,
the courts should extend protection especially in
industries where constitutional and legal
requirements reserve controlling ownership to
Filipino citizens.
Sec. 4. Corporations created by special laws or
charters.—Corporations created by special laws or
charters shall be governed primarily by the
provisions of the special law or charter creating
them or applicable to them, supplemented by the
provisions of this Code, insofar as they are
applicable.
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