1Partnership and Corporation (GROUP 3) PARTNERSHIP – General Provisions 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. Art. 1770. A partnership must have a lawful object or purpose, and must be established for the common benefit or interest of the partners. When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the instruments and effects of a crime. (1666a) 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) Quick Summary 1. Personal Circumstances of the partners 2. Name of partnership 3. Purposes of partnership 4. Principal Office address 5. Managing partner and duties 6. Term or existence 7. Capital contribution of each partner 8. Division of profits 9. Salary of managing Partner 10. Dissolution of partnership 11. Joint Acknowledgment ARTICLES OF GENERAL PARTNERSHIP Essential Features: • • • There must be a valid contract Legal capacity of partners Mutual contribution of asset and/or industry to a common fund • • • There must be at least one general partner Object must be lawful Primary purpose: to gain profits (Article 1771 in relation to Article 1456. Note: Absence of either formality renders the contract VOID. The right of partners to admit additional limited partners. • • • • • • • • Must be in writing in a public instrument An inventory of the property contributed. and the terms and conditions of the substitution. • • ARTICLES OF LIMITED PARTNERSHIP • Quick summary: Personal Circumstances of partners Name of Limited Partnership – should always be accompanied by LTD after the name Purpose/s of the Limited partnership Principal place of business Term of existence Capital contribution Designation and salary of general partner Division of profits Joint acknowledgment • Other provisions (if agreed upon): Additional contributions to be made by each limited partner and the times at which or events on the happening of which they shall be made. retirement. Where the contract falls within the Statue of Frauds. 7. The right of one or more limited partners to priority over other limited partners. NOTE: Where immovable property or real rights are contributed regardless of the value thereof (Article 1773 NCC) • 1. 6. The right of the remaining general partner to continue business on the death. The right of a limited partner to demand and receive property other than case in return for his contribution.• • Form of contract: • General rule: No specific form is required for its validity or existence. 1772. shall appear in a public instrument. . in money or property (Article 1772): it shall appear in public instrument and must be recorded in the Office of the Securities and Exchange Commission. Every contract of partnership having a capital of three thousand pesos or more. and the nature of such priority. 5. • • (SEE ATTACHED SAMPLE OF ARTICLES OF PARTNERSHIP OF A LIMITED PARTNERSHIP) Art. 8. as to contributions or as to compensation by way of income. civil interdiction or insolvency of a general partner. 9. 3. The time when the contribution of each limited partner is to be returned. NCC) • Exceptions: • Where the contract of partnership has a capital P3. in money or property. The right of a limited partner to substitute an assignee as contributor in his place. 4. signed by the parties is attached to the public instrument. Note: Failure to comply does not prevent the formation of the partnership or affects its liability and that of the partners to third persons but gives the partner the right to compel each other to execute the contract.000 or more. 2. CORPORATE TERM. 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. That 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. A contract of partnership is void. • Any number of natural persons not less than five (5) but not more than fifteen (15). in accordance with this code: provided. may be reduced or extended by AMENDMENT of articles of incorporation by complying with the procedural requirements – approved by majority of vote of Board of Directors or Trustees and ratified at a meeting by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock or by at least two-thirds (2/3) of members • • Limitations in Extension of Corporate Term 1. Title so acquired can be conveyed only in the partnership name. signed by the parties. (1668a) • Art. (n) • Art. if an inventory of said property is not made. • Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons. • NOTES: • Term of Corporate Existence 1. • Section 11. 1773. exist for the term specified in the Articles of Incorporation not exceeding FIFTY (50) YEARS. term shall not exceed 50 years in any one instance . Each of the incorporators of a stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation.NUMBER AND QUALIFICATIONS OF INCORPORATORS. Any immovable property or an interest therein may be acquired in the partnership name. may form a prvate corporation for any lawful purpose or purposes.which must be recorded in the Office of the Securities and Exchange Commission. 1774. (n) • • =oOo= Corporation Code of the Philippines • General Provisions: • SECTION 10 . whenever immovable property is contributed thereto. unless sooner legally dissolved or unless its registration is revoked upon any grounds provided by law 2. all of legal age and a majority of whom are residents of the philippines. • 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. and attached to the public instrument. and subject to the provisions of the following section. during which the SEC may look into the financial structure of the corporation and its past operations or actuations • CORPORATION CODE OF THE PHILIPPINES – Section 12 • Minimum capital stock required of stock corporations • Stock corporations incorporated under this code shall not be required to have any minimum authorized capital stock except as otherwise specifically provided for by special law. foreign investors participation – limited to their . • NOTES: • Capital Stock Requirement • Corp. other than those established by religious orders and mission boards • Corporations engaged in mass media and advertising industry – MASS MEDIA – 100% owned and managed by Filipino citizens ADVERTISING INDUSTRY – at least 70% of the capital stock owned by citizens of the Philippines. term expiration of corporation does not produce its immediate dissolution for all purposes—continued as a body corporate for THREE (3) YEARS after the time when it would dissolve 4. all executive and managing officers are Filipino citizens Educational Corporations .2. 000. and utilization of natural resources – at least 60% of the capital owned by Filipino citizens Public service corporations – at least 60% of the capital owned by Filipino citizens. amendment is effected before the expiration of the corporate term of existence 3. Code does not set a minimum Authorized Capital Stock except otherwise provided by special law as long as the PAID-UP CAPITAL is not less than P5. extension cannot be made earlier than five (5) years prior to expiration date unless there are justifiable reasons as may be determined by the Securities and Exchange Commission • • Effect of Extension/Expiration of Term 1.at least 60% of the capital owned by Filipino citizens. Special laws may require HIGHER PAID-UP CAPITAL for commercial banks. foreign investors participation – limited to their proportionate share in its capital. corporation ceases to exist and is dissolved ipso facto upon expiration of period fixed in articles of incorporation.life of corporation expired may be reincorporated only by complying with REGISTRATION REQUIREMENTS under Corporation Code. in absence of compliance with legal requisites for extension of period 3. extension of corporate term before expiration of original term constitutes continuation of the old corporation 2. REINCORPORATION. development. filing of new AI and BY-LAWS accompanied by supporting documents • • Automatic Extension of Term • Allowed by AMENDMENT of AI within FIVE YEAR period before the expiration date of the existing term. insurance companies and investment houses • • • • • • • • • Filipino percentage ownership requirement regarding corporate capital Corporations for exploration. ( Sec. or corporations. nationalities and residence of the persons who shall act as directors until the first regular ones are duly elected and qualified Paragraph 7: (amount of authorized capital stock. number of shares into which it is divided. nationalities. or cooperatives under Philippine Laws Corporations engaged in coastwise shipping .1948) owned by Filipino citizens Corporations engaged in retail trade – capital is wholly owned by Filipino citizens Rural Banks – capital stock must be fully owned and held directly or indirectly by Filipino citizens.the minimum 25% subscription and 25% paid up capital is required not only during the incorporation period but also in case of increase of the authorized capital stock. 13) • Pre-incorporation. and to domestic entities (75% of capital owned by Filipino citizens) in the purchase of articles for the Government • Minimum Subscription and paid-up capital (Sec. indicate which is the primary purpose and which is/are the secondary purpose or purposes Paragraph 3: place where the principal office of the corporation is to be located (must be within the Philippines) Paragraph 4: term for which the corporation is to exist (not exceeding 50 years) Paragraph 5: names. Corporation Code: • • Paragraph 1: name of the corporation Paragraph 2: primary and specific purpose/s for which the corporation is being incorporated. Paragraph 8: names. where there is more than one stated purpose. In no case shall the paid-up capital be less than 5. nationalities and residences of the original subscribers.38. and residences of the incorporators Paragraph 6: number of directors or trustees [must be at least five (5) but not more than fifteen (15)] and state the name. all executive and managing officers are Filipino citizens Banking Corporations – at least 60% of the capital stock of any bank or banking institution established after General Banking Act (July 24. and in case of par value shares. or security guard agencies – 100% Filipino owned Under the Flag law – preference given to producers or manufacturers of materials and supplies in the Philippines. (if some or all of the shares are without par value. associations. watchman.• • • • • • • • • • proportionate share in its capital.at least 60% of the capital owned by Filipino citizens Corporations engaged in the pawnshop business – at least 70% of the voting capital stock owned by Filipino citizens Corporations engaged in the recruitment and placement of workers. and the amount subscribed by each on his subscription. state such fact) Paragraph 9: names.at least 60% of the capital stock of which or any interest in said capital totally owned by Filipino citizens Financing companies .) • ARTICLES OF INCORPORATION OF STOCK CORPORATION • Basic contents under Section 14 & 15.at least 25% of the amount of the authorized capital stocks has been actually subscribed and that at least 25% of such subscription paid. the par value of each.000 Post-incorporation. par 4. locally or overseas – at least 75% of the authorized and voting capital stock owned and controlled by Filipino citizens Corporations engaged in the operation of a private detective. and the amount paid by each on his subscription • • • • • • • • • . nationalities and residences of the original subscribers. • ARTICLES OF INCORPORATION OF NON STOCK CORPORATION • Note: Same basic contents with that of a stock corporation. instead of subscriptions.) or members (Non-Stock) Must be signed by stockholders or members voting for them • • (b) Prior to incorporation • Requirement: all of them • Approval of all incorporators AND must be signed by Where kept: (1) In the principal office of the corporation . Paragraph 11: Designation of Treasurer • Other requirements: • It must be signed by the incorporators and by at least two witnesses Acknowledged before a notary public. • • Requirement: Affirmative vote of stockholders representing at least majority of outstanding capital stock (Stock Corp. • Please take note of the following differences: • May not include a purpose which would change or contradicts its nature as a non-stock corporation Names.• • • Paragraph 10: other matters which the incorporators may deem necessary and convenient. AND • (2) Securities and Exchange Commission • When effective: Only upon the SEC’s issuance of a certification that the by-laws are not inconsistent with the Corporation Code. Attached with a treasurer’s affidavit. nationalities and residences of the contributors and the amount contributed by each. a management and control of its affairs. • • (SEE SAMPLE ATTACHED ARTICLES OF INCORPORATION and TREASURER’S AFFIDAVIT) • • • • • • Corporation By-laws • Definition: These are rules of action adopted by a corporation for its own government and for the government of its stockholders or members and those having the direction. 46) • When adopted: • (a) No later than one (1) month after receipt from SEC of official notice of issuance of Certificate of Incorporation. • Special corporations: By-laws and/or amendments thereto must be accompanied by a certificate of the appropriate government agency to the effect that such by-laws / amendments are in accordance with law. • Corporation Code – BY LAWS (Sec. banks or banking institutions . nationalities and residence of persons who shall act as trustees until the first regular ones are duly elected and qualified Names. The time and manner of calling and conducting regular or special meetings of the stockholders or members. The manner of election or appointment and the term of office of all officers other than directors or trustees. In the case of stock corporations. The penalties for violation of the by-laws. residing at #7 Recto Ave. the manner of issuing stock certificates..Such other matters as may be necessary for the proper or convenient transaction of its corporate business and affairs. residing at #6 Recto Ave. (21a) • • . The form for proxies of stockholders and members and the manner of voting them. all of • WITNESSETH: • 2. 4. 5. Makati City. The time. • legal age. made and executed by and among: • Juan Tamad.. . 2. The qualifications. residing at #8 Rector Ave. They have formed a partnership among themselves under the name and style of XYZ. and 10. The purposes for which said partnership is formed are: • • (here state purposes of the firm) 4. • 3. Manila. other special laws. (Filipino). 6.Subject to the provisions of the Constitution. duties and compensation of directors or trustees.End • SAMPLE LEGAL FORMS 1. a private corporation may provide in its by-laws for: 1. The principal office of the partnership shall be located at 50th flr. 8. • (and) Maria Makiling. The time for holding the annual election of directors of trustees and the mode or manner of giving notice thereof. The required quorum in meetings of stockholders or members and the manner of voting therein. Rufino St. 3. 7.. place and manner of calling and conducting regular or special meetings of the directors or trustees. Juan dela Cruz. Manila. Contents of by-laws. officers and employees. Manila.. These Articles of Partnership. (Filipino).. (Filipino). this Code. and the articles of incorporation. Articles of Partnership (General Partnership) ARTICLES OF PARTNERSHIP OF XYZ • • KNOW ALL MEN BY THESE PRESENTS: • 1. building and loan associations trust companies insurance companies public utilities educational institutions other special corporations governed by special laws • • Sec. 47. . ABC Bldg.. 9. 2014. to wit: • Juan Tamad • Maria Makiling P100.S. and Driver’s License No. 2014. this 18th day of February. the parties have hereunto set their hands. The profits and loses shall be divided share and share alike among the partners of the partnership (or in proportion to their respective capital).000) per month.• 5. The term of existence of this partnership shall be ten (10) years to commence from and after the execution of these articles. The capital of the partnership as contributed by the partners are as follows. • 8. Philippines. bills of exchange and other negotiable instruments and accept the same for and in the name of the firm. 2012. any of the partners shall die. • 6.000. It is hereby stipulated that Juan Tamad shall be the partner upon whom the management of the firm and the use of its signature shall be entrusted.000. 2014 in the city of Baguio. • 10. N25-0563456 issued by the . If during the term of the partnership. thereby making a TOTAL CAPITAL of P300. and (others). • 9. to appoint and dismiss employees and to fix their tenure and compensation. • P100. and Driver’s License No. 2010 in Manila. withdraw the same for purposes of the partnership.000. that he shall exercise such powers necessary to attain the purposes of this partnership. • Juan dela Cruz P100. • _____________ _______________ (Signature of partners) • • Signed in the Presence of: • __________________________ • ____________ ________________________ (JOINT ACKNOWLEDGMENT) • Republic of the Philippines) • City of Baguio ) S. the partnership shall continue among the surviving partners. • 7. personally appeared: • Juan Tamad with CTC number 1234565 issued at Baguio City On January 08. to deposit money in banks and with the counter-signature of the Treasurer. this 3rd of March. The managing partner is hereby given a salary of thirty thousand PESOS (P30. including the power to draw drafts. • • BEFORE ME. • Maria Makiling with CTC number 2345476 issued at Baguio City On February 08.000. N25-0123456 issued by the Land Transportation Office on July 12. unless one of the latter expressly requests for dissolution • IN WITNESS WHEREOF. Rufino St. 11 Page No.” • • KNOW ALL MEN BY THESE PRESENTS: • • 1. • Maria Makiling. These Articles of Partnership.234 • Until December 31. GADO • Notary Public for Baguio • Rm 202. 22 Book No.. residing at #8 Rector Ave. limited partner. The above-named partners have formed a limited partnership among themselves under the name and style of XYZ. Manila. general manager. and that they respectively acknowledged that the same is their free voluntary act and deed. 2014 • • • • • • • • • • • • BP No. • • 3. V Series of 2014 • 2. • • WITNESS MY HAND AND SEAL . limited partner.. Makati City. The principal office of the partnership shall be at 50th flr. 123456 01/10/14 – Baguio PTR No. and Driver’s License No. II – 876565 09/18/2013 Serial Number of Commission M-234 Doc No. WITNESSETH: • • 2. The purposes for which the said partnership is formed are: • (state the object or character of the business). (Filipino). 2012. 1324567 01/09/2014 – Baguio Roll No. ABC Bldg. 2013. • All known to me to be the same persons who executed the foregoing instrument. • • ATTY. I -03665 09/09/2013 MCLE No.. (Filipino). N25-0563456 issued by the Land Transportation Office on June 11.. (Filipino). • all of legal age. Ltd. 5/05/2009 MCLE No. and • Juan De La Cruz with CTC number 3534565 issued at Baguio City On December 20. 2nd Floor Lopez Bldg. (and) • Juan dela Cruz.Land Transportation Office on August 2. Articles of Partnership (Limited Partnership) • • ARTICLES OF PARTNERSHIP OF “XYZ. ABE O. made and executed by and among: • Juan Tamad.. Session Road. • 4. 123456 .Baguio City Appointment no.. 2011. residing at #6 Recto Ave. at the place and on the date above written. Manila. residing at #7 Recto Ave. LTD. Manila. . nationalities and residences of the incorporators of the corporation are as follows: . have this day voluntarily agreed to form a (stock) (non-stock) corporation under the laws of the Republic of the Philippines. 7. __________________ __________________ _________________ • (Signature of partners) Signed in the Presence of: ______________________________ ______________________________ • (JOINT ACKNOWLEDGMENT) • • 3. 2010 in Manila. Philippines. • SECOND: That the purpose or purposes for which such corporation is incorporated are: (If there is more than one purpose. Articles of Incorporation • ARTICLES OF INCORPORATION OF • __________________________ • KNOW ALL MEN BY THESE PRESENTS: • The undersigned incorporators. 8. general partner.000. The term for which the partnership is to exist shall be ten (10) years to commence from and after the execution of this agreement. Philippine currency. • FOURTH: That the term for which the said corporation is to exist is ___ years from and after the date of issuance of the certificate of incorporation. this 3rd of March. all of legal age and a majority of whom are residents of the Philippines. the parties have hereunto set their hands. • AND WE HEREBY CERTIFY: • FIRST: That the name of said corporation shall be “___________. is hereby designated the manager of the partnership. 6. indicate primary and secondary purposes). IN WITNESS WHEREOF. INC. with a monthly salary of P30. P100. The profits and loses shall be divided share and share alike among the partners of the partnership (State in what proportion they shall share in the profits and in the losses). to wit: • • • Juan Tamad (general partner)………… Maria Makiling (limited partner) ………… P100. and • • • • • • • • • • • • Juan dela Cruz (limited partner)………… P100.• • • 5. Province of _______. • FIFTH: That the names. Juan Tamad. Philippines. • THIRD: That the principal office of the corporation is located in the City/Municipality of _______.000.000. or CORPORATION”.000.000). The capital of this partnership shall be three hundred thousand PESOS (P300. contributed by the partners as follows. 7. and the names. • • • • • • • NAME ______ ______ ______ ______ ______ NAME ______ ______ ______ ______ ______ • (In case all the shares are without par value): • That the capital stock of the corporation is ______________ shares without par value. nationalities • • ______________ _______________ ______________ ______________ _____________ _______________ _____________ _______________ _____________ _______________ Name of Subscriber • ________________ • ________________ • ________________ • ________________ • ________________ . and it is sufficient if the articles state the amount of capital or money contributed or donated by specified persons. and of which _________________ shares are without par value. 8 and 9 if shares are with no par value. nationalities and residences of the first directors or trustees of the corporation are as follows: • • • • • • • NATIONALITY RESIDENCE _____________ __________ _____________ __________ _____________ __________ _____________ __________ _____________ __________ • SEVENTH: That the authorized capital stock of the corporation is ______________________ (P___________) PESOS in lawful money of the Philippines. 8 and 9 of the above articles may be modified accordingly. • EIGHTH: That at least twenty five (25%) percent of the authorized capital stock above stated has been subscribed as follows: • Name of Subscriber Nationality No of Shares Subscribed Amount Subscribed • _______________ ________ • ________________ ________ • ________________ ________ • ________________ ________ • ________________ ________ • • NINTH: That the above-named subscribers have paid at least twenty-five (25%) percent of the total subscription as follows: Amount Subscribed Total Paid-In ________________ ___________ ________________ ___________ ________________ ___________ ________________ ___________ ________________ ___________ • (Modify Nos. stating the names. In case the corporation is non-stock. divided into __________ shares with the par value of ____________________ (P_____________) Pesos per share. Nos.NATIONALITY RESIDENCE _____________ __________ _____________ __________ _____________ __________ _____________ __________ _____________ __________ • SIXTH: That the number of directors or trustees of the corporation shall be _______. (In case some shares have par value and some are without par value): That the capital stock of said corporation consists of _____________ shares of which ______________ shares are of the par value of _________________ (P____________) pesos each. 19 ______ in the City/Municipality of ________. • 4.. Province of ______. _____. _____. • (Names and signatures of the incorporators) • SIGNED IN THE PRESENCE OF: __________________ __________________ • • ACKNOWLEDGMENT • Republic of the Philippines) Makati City. he has been authorized to receive for and in the name and for the benefit of the corporation. Republic of the Philippines. Metro Manila ) • BEFORE ME. this ____ day of _____. and that as such Treasurer.and residences of the contributors or donors and the respective amount given by each.” • IN WITNESS WHEREOF. this ___ day of _______ personally appeared: • Name CTC/Passport No. I have hereunto set my hand and affixed my notarial seal on the date and at the place first above written. Date Place • • all known to me to be the same persons who executed the foregoing Articles of Incorporation and they acknowledged to me that the same is of their free and voluntary act and deed. Page No. Treasurer’s Affidavit • • REPUBLIC OF THE PHILIPPINES ) CITY/MUNICIPALITY OF ) S.) • TENTH: That _____________________ has been elected by the subscribers as Treasurer of the Corporation to act as such until his successor is duly elected and qualified in accordance with the by-laws. we have hereunto signed these Articles of Incorporation. Book No. all subscription (or fees) or contributions or donations paid or given by the subscribers or members./ID No. • ELEVENTH: (Corporations which will engage in any business or activity reserved for Filipino citizens shall provide the following): • “No transfer of stock or interest which will reduce the ownership of Filipino citizens to less than the required percentage of the capital stock as provided by existing laws shall be allowed or permitted to be recorded in the proper books of the corporation and this restriction shall be indicated in all the stock certificates issued by the corporation. No. Series of 2000. .S. • IN WITNESS WHEREOF. a notary public for and in the City of _______ Philippines. _____. • Doc. 20 _____ • • • • • • • • • Doc. _____ Series of 20____ . I. _____. by___ with Res. and that as such Treasurer.000. I hereby certify under oath that at least 25% of the authorized capital stock of the corporation has been subscribed and at least 25% of the total subscription has been paid. in cash or property. for and in the City/Municipality of _____ Province of _________. Cert. ______ issued at ______ on _____. a Notary Public.• • • PROVINCE OF ) • That I have been elected by the subscribers of the corporation as Treasurer thereof. No. in the amount of not less than P5. No. to act as such until my successor has been duly elected and qualified in accordance with the by-laws of the corporation. this ___day of _____. depose and say: • • • ____________________ (Signature of Treasurer) SUBSCRIBED AND SWORN to before me. being duly sworn. in accordance with the Corporation Code. ____________________.00. _____ Page No. _____ Book No. 19_____ • NOTARY PUBLIC • My commission expires on _________. and received by me.