Short answer. Under Article 45 of the Civil Code, private corporations are regulated by laws of general application on the subject — principally the Revised Corporation Code — while partnerships and private associations are governed by the Civil Code's provisions on partnerships. State corporations and other public juridical persons follow their own special laws.
What the law says
Private corporations are regulated by laws of general application on the subject. Partnerships and associations for private interest or purpose are governed by the provisions of this Code concerning partnerships.
Civil Code, Article 45 — Laws Governing Juridical Persons. Read the full provision →
State and public entities: governed by their own laws
Article 45 opens by addressing juridical persons of a public character — the State and its political subdivisions, and other public entities created by law. These are governed by the laws that created or recognized them: the Constitution, organic acts, charters, and special legislation that define each entity's powers, structure, and limitations. The Civil Code steps aside for these entities entirely. Their governance framework comes from public law, not from the general rules the Civil Code establishes for private legal persons.
Private corporations: governed by laws of general application
For private corporations, Article 45 states that they are regulated by laws of general application on the subject. In the Philippine context, this points to the Revised Corporation Code (RA 11232), which governs the organization, powers, duties, and dissolution of private stock and non-stock corporations. The Civil Code does not itself regulate corporation formation or management — it delegates that function to the specialized corporation statute. This means corporate organizers, directors, and shareholders look to the Revised Corporation Code for the rules that shape the life of a private corporation from incorporation to dissolution.
Partnerships and private associations: governed by the Civil Code
Partnerships and associations organized for a private interest or purpose occupy a different category. Article 45 keeps these entities within the Civil Code itself, providing that they are governed by the provisions of this Code concerning partnerships. The Civil Code's partnership provisions set out the essential elements of a partnership — the contribution of money, property, or industry, and the sharing of profits — along with the rights and obligations of partners, the causes of dissolution, and the process of winding up. A private association formed for mutual benefit, rather than incorporated under the corporation law, follows this same body of rules.
Why the distinction matters
The choice between organizing as a corporation or as a partnership has real legal consequences that flow directly from Article 45's framework. A corporation is a juridical person with limited liability for shareholders and a governance structure defined by the Revised Corporation Code; its formation requires specific registration formalities under that law. A partnership is also a juridical person once properly constituted, but its internal rules, partner liability, and dissolution are shaped by the Civil Code. Businesses organized without complying with corporate formalities but where partners intend to share profits may find themselves treated as partnerships — and their rights and liabilities assessed under Civil Code partnership rules rather than corporate law.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Eliseo N. Hao vs. Emerlinda S. Galang, G.R. No. 247472, October 6, 2021 — read the decision on LawPhil →
- Boy Scouts of the Philippines vs. Commssion on Audit, G.R. No. 177131, June 7, 2011 — read the decision on LawPhil →