CIVIL CODE OF THE PHILIPPINES

Art. 1767. By the contract of partnership two or more persons bind themselves to contribute
money, property, or industry to a common fund, with the intention of dividing the profits
among themselves.

Two or more persons may also form a partnership for the exercise of a profession. (1665a)

rt. 1768. The partnership has a judicial personality separate and distinct from that of each of
the partners, even in case of failure to comply with the requirements of Article 1772, first
paragraph. (n)

Art. 1771. A partnership may be constituted in any form, except where immovable property
or real rights are contributed thereto, in which case a public instrument shall be necessary.
(1667a)

Art. 1772. Every contract of partnership having a capital of three thousand pesos or more, in
money or property, shall appear in a public instrument, which must be recorded in the Office
of the Securities and Exchange Commission.

Art. 1776. As to its object, a partnership is either universal or particular.As regards the
liability of the partners, a partnership may be general or limited. (1671a)

Art. 1784. A partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated. (1679)

Art. 1789. An industrial partner cannot engage in business for himself, unless the partnership
expressly permits him to do so; and if he should do so, the capitalist partners may either
exclude him from the firm or avail themselves of the benefits which he may have obtained in
violation of this provision, with a right to damages in either case. (n)

Art. 1790. Unless there is a stipulation to the contrary, the partners shall contribute equal
shares to the capital of the partnership. (n)

Art. 1797. The losses and profits shall be distributed in conformity with the agreement. If only
the share of each partner in the profits has been agreed upon, the share of each in the losses
shall be in the same proportion.

In the absence of stipulation, the share of each partner in the profits and losses shall be in
proportion to what he may have contributed, but the industrial partner shall not be liable for
the losses. As for the profits, the industrial partner shall receive such share as may be just
and equitable under the circumstances. If besides his services he has contributed capital, he
shall also receive a share in the profits in proportion to his capital. (1689a)
Art. 1810. The property rights of a partner are:

(1) His rights in specific partnership property;

(2) His interest in the partnership; and

(3) His right to participate in the management. (n)

Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused
by any partner ceasing to be associated in the carrying on as distinguished from the winding
up of the business. (n)

Art. 1829. On dissolution the partnership is not terminated, but continues until the winding
up of partnership affairs is completed. (n)

Art. 1830. Dissolution is caused:

(1) Without violation of the agreement between the partners:

(a) By the termination of the definite term or particular undertaking specified

in the agreement;

(b) By the express will of any partner, who must act in good faith, when no
definite term or particular is specified;

(c) By the express will of all the partners who have not assigned their
interests or suffered them to be charged for their separate debts, either
before or after the termination of any specified term or particular
undertaking;

(d) By the expulsion of any partner from the business bona fide in accordance
with such a power conferred by the agreement between the partners;

(2) In contravention of the agreement between the partners, where the

circumstances do not permit a dissolution under any other provision of this article, by
the express will of any partner at any time;

(3) By any event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in partnership;

(4) When a specific thing which a partner had promised to contribute to the
partnership, perishes before the delivery; in any case by the loss of the thing, when
the partner who contributed it having reserved the ownership thereof, has only
transferred to the partnership the use or enjoyment of the same; but the partnership
shall not be dissolved by the loss of the thing when it occurs after the partnership has
acquired the ownership thereof;

(5) By the death of any partner;

(6) By the insolvency of any partner or of the partnership;

 (7) By the civil interdiction of any partner;

(8) By decree of court under the following article. (1700a and 1701a)

Art. 1831. On application by or for a partner the court shall decree a dissolution whenever:

(1) A partner has been declared insane in any judicial proceeding or is shown to be of
unsound mind;

(2) A partner becomes in any other way incapable of performing his part of the
partnership contract;

(3) A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business;

(4) A partner wilfully or persistently commits a breach of the partnership agreement,

or otherwise so conducts himself in matters relating to the partnership business that
it is not reasonably practicable to carry on the business in partnership with him;

(5) The business of the partnership can only be carried on at a loss;

(6) Other circumstances render a dissolution equitable.

On the application of the purchaser of a partner's interest under Article 1813 or 1814:

(1) After the termination of the specified term or particular undertaking;

(2) At any time if the partnership was a partnership at will when the interest was
assigned or when the charging order was issued. (n)

Art. 1839. In settling accounts between the partners after dissolution, the following rules
shall be observed, subject to any agreement to the contrary:

(1) The assets of the partnership are:

(a) The partnership property,

(b) The contributions of the partners necessary for the payment of all the
liabilities specified in No. 2.

(2) The liabilities of the partnership shall rank in order of payment, as follows:

(a) Those owing to creditors other than partners,

(b) Those owing to partners other than for capital and profits,

(c) Those owing to partners in respect of capital,

(d) Those owing to partners in respect of profits.

 (3) The assets shall be applied in the order of their declaration in No. 1 of this article
to the satisfaction of the liabilities.

(4) The partners shall contribute, as provided by article 1797, the amount necessary
to satisfy the liabilities.

(5) An assignee for the benefit of creditors or any person appointed by the court shall
have the right to enforce the contributions specified in the preceding number.

(6) Any partner or his legal representative shall have the right to enforce the
contributions specified in No. 4, to the extent of the amount which he has paid in
excess of his share of the liability.

(7) The individual property of a deceased partner shall be liable for the contributions
specified in No. 4.

(8) When partnership property and the individual properties of the partners are in
possession of a court for distribution, partnership creditors shall have priority on
partnership property and separate creditors on individual property, saving the rights
of lien or secured creditors.

(9) Where a partner has become insolvent or his estate is insolvent, the claims against
his separate property shall rank in the following order:

(a) Those owing to separate creditors;

(b) Those owing to partnership creditors;

(c) Those owing to partners by way of contribution. (n)

SECTIONS TO CORPORATION

Section 2. Corporation defined. - A corporation is an artificial being

created by operation of law, having the right of succession and the powers,
attributes and properties expressly authorized by law or incident to its
existence. (2)

Section 3. Classes of corporations. - Corporations formed or organized

under this Code may be stock or non-stock corporations. Corporations 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 are stock corporations. All other
corporations are non-stock corporations. (3a)

Section 5. Corporators and incorporators, stockholders and members. -

Corporators are those who compose a corporation, whether as stockholders
or as members. Incorporators are those stockholders or members mentioned
in the articles of incorporation as originally forming and composing the
corporation and who are signatories thereof.

Section 10. Number and qualifications of incorporators. - Any number of

natural persons not less than five (5) but not more than fifteen (15),
all of legal age and a majority of whom are residents of the Philippines,
may form a private corporation for any lawful purpose or purposes. Each
of the incorporators of s stock corporation must own or be a subscriber
to at least one (1) share of the capital stock of the corporation. (6a)

Section 11. Corporate term. - A corporation shall exist for a period not
exceeding fifty (50) years from the date of incorporation unless sooner
dissolved or unless said period is extended. The corporate term as
originally stated in the articles of incorporation may be extended for
periods not exceeding fifty (50) years in any single instance by an
amendment of the articles of incorporation, in accordance with this Code;
Provided, That no extension can be made earlier than five (5) years prior
to the original or subsequent expiry date(s) unless there are justifiable
reasons for an earlier extension as may be determined by the Securities
and Exchange Commission. (6)

Section 14. Contents of the articles of incorporation. - All corporations

organized under this code shall file with the Securities and Exchange
Commission articles of incorporation in any of the official languages duly
signed and acknowledged by all of the incorporators, containing
substantially the following matters, except as otherwise prescribed by
this Code or by special law: 1. The name of the corporation; 2. The specific
purpose or purposes for which the corporation is being incorporated. Where
a corporation has more than one stated purpose, the articles of
incorporation shall state which is the primary purpose and which is/are
the secondary purpose or purposes: Provided, That a non-stock corporation
may not include a purpose which would change or contradict its nature as
such; 3. The place where the principal office of the corporation is to
be located, which must be within the Philippines; 4. The term for which
the corporation is to exist; 5. The names, nationalities and residences
of the incorporators; 6. The number of directors or trustees, which shall
not be less than five (5) nor more than fifteen (15); 7. The names,
nationalities and residences of persons who shall act as directors or
trustees until the first regular directors or trustees are duly elected
and qualified in accordance with this Code; 8. If it be a stock corporation,
the amount of its authorized capital stock in lawful money of the
Philippines, the number of shares into which it is divided, and in case
the share are par value shares, the par value of each, the names,
nationalities and residences of the original subscribers, and the amount
subscribed and paid by each on his subscription, and if some or all of
the shares are without par value, such fact must be stated; 9. If it be
a non-stock corporation, the amount of its capital, the names,
nationalities and residences of the contributors and the amount
contributed by each; and 10. Such other matters as are not inconsistent
with law and which the incorporators may deem necessary and convenient.
The Securities and Exchange Commission shall not accept the articles of
incorporation of any stock corporation unless accompanied by a sworn
statement of the Treasurer elected by the subscribers showing that at
least twenty-five (25%) percent of the authorized capital stock of the
corporation has been subscribed, and at least twenty-five (25%) of the
total subscription has been fully paid to him in actual cash and/or in
property the fair valuation of which is equal to at least twenty-five (25%)
percent of the said subscription, such paid-up capital being not less than
five thousand (P5,000.00) pesos.

Section 15. Forms of Articles of Incorporation. - Unless otherwise

prescribed by special law, articles of incorporation of all domestic
corporations shall comply substantially with the following form:

Section 18. Corporate name. - No corporate name may be allowed by the

Securities and Exchange Commission if the proposed name is identical or
deceptively or confusingly similar to that of any existing corporation
or to any other name already protected by law or is patently deceptive,
confusing or contrary to existing laws. When a change in the corporate
name is approved, the Commission shall issue an amended certificate of
incorporation under the amended name. (n)

Section 23. The board of directors or trustees. - Unless otherwise

provided in this Code, the corporate powers of all corporations formed
under this Code shall be exercised, all business conducted and all
property of such corporations controlled and held by the board of
directors or trustees to be elected from among the holders of stocks, or
where there is no stock, from among the members of the corporation, who
shall hold office for one (1) year until their successors are elected and
qualified. (28a) Every director must own at least one (1) share of the
capital stock of the corporation of which he is a director, which share
shall stand in his name on the books of the corporation. Any director who
ceases to be the owner of at least one (1) share of the capital stock of
the corporation of which he is a director shall thereby cease to be a
director. Trustees of non-stock corporations must be members thereof. A
majority of the directors or trustees of all corporations organized under
this Code must be residents of the Philippines.

Section 47. Contents of by-laws. - Subject to the provisions of the

Constitution, this Code, other special laws, and the articles of
incorporation, a private corporation may provide in its by-laws for: 1.
The time, place and manner of calling and conducting regular or special
meetings of the directors or trustees; 2. The time and manner of calling
and conducting regular or special meetings of the stockholders or members;
3. The required quorum in meetings of stockholders or members and the
manner of voting therein; 4. The form for proxies of stockholders and
members and the manner of voting them; 5. The qualifications, duties and
compensation of directors or trustees, officers and employees; 6. The time
for holding the annual election of directors of trustees and the mode or
manner of giving notice thereof; 7. The manner of election or appointment
and the term of office of all officers other than directors or trustees;
8. The penalties for violation of the by-laws; 9. In the case of stock
corporations, the manner of issuing stock certificates; and 10. Such other
matters as may be necessary for the proper or convenient transaction of
its corporate business and affairs. (21a)

Section 62. Consideration for stocks. - Stocks shall not be issued for
a consideration less than the par or issued price thereof. Consideration
for the issuance of stock may be any or a combination of any two or more
of the following: 1. Actual cash paid to the corporation; 2. Property,
tangible or intangible, actually received by the corporation and
necessary or convenient for its use and lawful purposes at a fair valuation
equal to the par or issued value of the stock issued; 3. Labor performed
for or services actually rendered to the corporation; 4. Previously
incurred indebtedness of the corporation; 5. Amounts transferred from
unrestricted retained earnings to stated capital; and 6. Outstanding
shares exchanged for stocks in the event of reclassification or conversion.
Where the consideration is other than actual cash, or consists of
intangible property such as patents of copyrights, the valuation thereof
shall initially be determined by the incorporators or the board of
directors, subject to approval by the Securities and Exchange Commission.
Shares of stock shall not be issued in exchange for promissory notes or
future service. The same considerations provided for in this section,
insofar as they may be applicable, may be used for the issuance of bonds
by the corporation. The issued price of no-par value shares may be fixed
in the articles of incorporation or by the board of directors pursuant
to authority conferred upon it by the articles of incorporation or the
by-laws, or in the absence thereof, by the stockholders representing at
least a majority of the outstanding capital stock at a meeting duly called
for the purpose. (5 and 16) Section 63. Certificate of stock and transfer
of shares. - The capital stock of stock corporations shall be divided into
shares for which certificates signed by the president or vice president,
countersigned by the secretary or assistant secretary, and sealed with
the seal of the corporation shall be issued in accordance with the by-laws.
Shares of stock so issued are personal property and may be transferred
by delivery of the certificate or certificates indorsed by the owner or
his attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the corporation
showing the names of the parties to the transaction, the date of the
transfer, the number of the certificate or certificates and the number
of shares transferred. No shares of stock against which the corporation
holds any unpaid claim shall be transferable in the books of the
corporation. (35)