A corporation may exercise express, implied, and incidental powers.

Express powers of a corporation refer to those that are expressly provided for under the
Revised Corporation Code of the Philippines (RCCP), applicable laws, administrative rules and
regulations, and the Articles of Incorporation of the corporation.

Implied powers of a corporation refer to those powers that are recognized under paragraph (k)
of Section 35 of the RCCP.

Incidental powers of a corporation refer to those that are deemed conferred on the corporation
by virtue of its existence.

A corporation may exercise express, implied, and incidental powers.

Express powers of a corporation refer to those that are expressly provided for under the
Revised Corporation Code of the Philippines (RCCP), applicable laws, administrative rules and
regulations, and the Articles of Incorporation of the corporation.

Implied powers of a corporation refer to those powers that are recognized under paragraph (k)
of Section 35 of the RCCP, which provides that every corporation incorporated under the RCCP
has the power and capacity:

(k) To exercise such other powers as may be essential or necessary to carry out its purpose or
purposes as stated in the articles of incorporation.

Incidental powers of a corporation refer to those that are deemed conferred on the corporation
by virtue of its existence. Corporations have incidental powers as a consequence of the fact that
they exist as juridical persons. Incidental powers may include the right to succession, the right to
have a corporate name, right to make bylaws, and the right to hold properties for the purposes
that are allowed by its charter.

The law says:

Section 35 of the RCCP provides for the general powers of a corporation, to wit:

Section 35. Corporate Powers and Capacity. – Every corporation incorporated under this Code
has the power and capacity:

(a) To sue and be sued in its corporate name;

(b) To have perpetual existence unless the certificate of incorporation provides otherwise;

(c) To adopt and use a corporate seal;

(d) To amend its articles of incorporation in accordance with the provisions of this Code;

(e) To adopt bylaws, not contrary to law, morals or public policy, and to amend or repeal the
same in accordance with this Code;

(f) In case of stock corporations, to issue or sell stocks to subscribers and to sell treasury stocks
in accordance with the provisions of this Code; and to admit members to the corporation if it be
a nonstock corporation;

(g) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and
otherwise deal with such real and personal property, including securities and bonds of other
corporations, as the transaction of the lawful business of the corporation may reasonably and
necessarily require, subject to the limitations prescribed by law and the constitution;

(h) To enter into a partnership, joint venture, merger, consolidation, or any other commercial
agreement with natural and juridical persons;

(i) To make reasonable donations, including those for the public welfare or for hospital,
charitable, cultural, scientific, civic, or similar purposes: Provided, That no foreign corporation
shall give donations in aid of any political party or candidate or for purpose s of partisan political
activity;

(j) To establish pension, retirement, and other plans for the benefit of its directors, trustees,
officers, and employees; and

(k) To exercise such other powers as may be essential or necessary to carry out its purpose or
purposes as stated in the articles of incorporation.

Below are the specific powers of a corporation:

A corporation has the power to sell, retire, or distribute treasury shares as property dividends by
virtue of the its absolute ownership over such treasury shares.

Section 9. Treasury Shares. – Treasury shares are shares of stock which have been issued and
fully paid for, but subsequently reacquired by the issuing corporation through purchase,
redemption, donation, or some other lawful means. Such shares may again be disposed of for a
reasonable price fixed by the board of directors.

A corporation has the power to amend its Articles of Incorporation. However, it cannot provide
for a different procedure for such amendment than that set out under Section 15 of the RCCP,
which states that:

Section 15. Amendment of Articles of Incorporation. – Unless otherwise prescribed by this Code
or by special law, and for legitimate purposes, any provision or matter stated in the articles of
incorporation may be amended by a majority vote of the board of directors or trustees and the
vote or written assent of the stockholders representing at least two-thirds (2/3) of the
outstanding capital stock, without prejudice to the appraisal right of dissenting stockholders in
accordance with the provisions of this Code. The articles of incorporation of a nonstock
corporation may be amended by the vote or written assent of majority of the trustees and at
least two-thirds (2/3) of the members.

The original and amended articles together shall contain all provisions required by law to be set
out in the articles of incorporation. Amendments to the articles shall be indicated by
underscoring the change or changes made, and a copy thereof duly certified under oath by the
corporate secretary and a majority of the directors or trustees, with a statement that the
amendments have been duly approved by the required vote of the stockholders or members,
shall be submitted to the Commission.

The amendments shall take effect upon their approval by the Commission or from the date of
filing with the said Commission if not acted upon within six (6) months from the date of filing for
a cause not attributable to the corporation.

The Revised Corporation Code of the Philippines also provides for the following powers of a
corporation:

Power to extend or shorten the corporate term (Section 36, RCCP);

Power to increase and decrease capital stock, or to incur, create or increase bonded
indebtedness (Section 37, RCCP);
Power to deny preemptive right (Section 38, RCCP);
Power to sell and dispose assets of the corporation; (Section 39, RCCP);
Power to acquire own shares (Section 40, RCCP);
Power to invest corporate funds in another corporation or business or for any other purpose
(Section 41, RCCP);
Power to declare dividends (Section 42, RCCP); and
Power to enter into management contracts (Section 43, RCCP).

SEC. 3. Classes of Corporations. – Corporations formed or organized under this Code may be
stock or nonstock corporations. Stock corporations are those which have 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 the shares held. All other corporations are
nonstock corporations.

REQUISITES FOR CLASSIFICATION AS STOCK CORPORATION

They have a capital stock dividend into shares; and

That they are authorized to distribute dividends or allotments as surplus profits to its
stockholders on the basis of the shares held by each of them.
SIGNIFICANCE: Profits obtained by a non-stock corporation cannot be distributed as dividends
but are used merely for the furtherance of their purpose or purposes.

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.

Example of corporations under Sec. 4:

Philippine National Oil Company,

National Development Company,
Philippine Export and Foreign Loan Guarantee Corporation
GSIS.
These are government-owned or controlled, operating under a special law or charter. SEC
registration is not required for them to acquire legal and juridical personality because they owe
their own existence not by virtue of their compliance with the requirements of registration under
the Corporation Code but by virtue of the law that specially created them.

Does NLRC have jurisdiction for cases involving employment with GOCC’s?
The test whether a government-owned or controlled corporation is subject to Civil Service Law
is the manner of its creation.

Those created by special charter are subject to its provision

Those created under the General Corporation Law are subject to the provisions of the Labor
Law.
Thus, in the case of PNOC having its special charter, but its subsidiary, PNOC-EDC, having
been incorporated under the General Corporation Law was held to be a GOCC whose
employees are subject to the provisions of the Labor Code.
PNOC-EDC VS. NLRC (201 SCRA 487; Sept. 11, 1991)

OTHER CLASSES OF CORPORATIONS

Public and Private Corporations

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.
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

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.
LAY CORPORATIONS – are those organized for purposes other than religion. They may further
be classified as:
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.
CIVIL: organized not for the purpose of public charity but for the benefit, pecuniary or otherwise,
of its members.
Aggregate and Sole Corporations

AGGREGATE CORPORATIONS – those composed of a number of individuals vested with

corporate powers
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

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)
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

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.
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

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.
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.
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

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.
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.
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.