Fundamentals of Property Ownership

March 4, 2016fundamentals of property ownership

http://realestatelawyer.com.ph/category/real-estate/fundamentals-of-property-ownership/

PROPERTY refers to things which are capable of satisfying human wants and needs and are susceptible of appropriation.

Under Philippine law, specifically Article 414 of the New Civil Code, property is classified into two: immovable or real
property and movable or personal property.

The distinction between the two is very important as there are different laws regarding their acquisition, use, loss, sale,
registration, possession and so on.

IMMOVABLE PROPERTY

What are real properties according to the law?

Art. 415. The following are immovable property:

(1) Land, buildings, roads and constructions of all kinds adhered to the soil;

*These are immovable as they are more or less of a permanent structure independent and forms an integral part of the land.
Land is immovable by nature and by definition.

(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;

*Since trees and plants are annexed to the land, they form part of it and may even be part of the property of the owner of
the land in where they are attached. They are immovable if they are spontaneous products of the soil and incorporated to
the land through cultivation and labor. They may either be immovable by incorporation or by nature.

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object;

*Another thing attached to another principal immovable would also make it immovable if the permanency of attachment of
the thing is almost tantamount to its unification to the principal immovable that their separation would cause damage and
deterioration. This is another example of immovable by incorporation.

(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the
immovable in such a manner that it reveals the intention to attach them permanently to the tenements;

*It must be noted that these objects must be placed by their owners permanently to the land or building even if such land or
building is not owned by him. The intent of the owner of the objects must be looked upon so as to know that he wanted to
incorporate it permanently which would make these objects also immovables.

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which
may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or
works;

*For these objects to become immovable, these must be placed by the owner of the tenement or the property where these
objects would be attached and where the industry or works would be carried. These objects must also be essential to said
industry or works.
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed
them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of
it; the animals in these places are included;

*The constructions mentioned must be intended by the owner to be permanently a part of the land. The animals though can
be transferred from place to place are also included.

(7) Fertilizer actually used on a piece of land;

*These are immovable by destination. If they are used, they form part of the land.

(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;

*While these resources remain unsevered, they are considered immovable.

(9) Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a
river, lake, or coast;

*It can be inferred in the way they are constructed that they are to stay in fixed place and as a permanent fixture to their
location.

(10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)

*These are considered real property just because the law said so. Real property itself, produces real right or real right is
always regarded as real property.

To further understand and better differentiate Real Property from a personal or movable property, real property may be
immovable by:

1. Immovable by nature or those which cannot be moved from one place such as those mentioned in Nos. 1 (with
respect to lands and roads) and 8 in Art. 415 of the Civil Code

2. Immovable by incorporation, or those which are attached to an immovable in a fixed manner as to form an
integral part thereof like buildings, walls or fences, trees, statues, animal houses, it is placed in an immovable for
the utility it gives to the activity carried thereon, such as machinery installed in a building to meet the needs of an
industry in the building, and docks on a river or those mentioned in Nos. 1 (except lands and roads), 2, 3 and 4 of
Art 415.

3. Immovable by destination, or those which are placed in an immovable for the use, exploitation or perfection of
such immovable, such as those mentioned in Nos. 4, 5, 6, 7 and 9 of Art. 415

4. Immovable by analogy, or those which are considered immovable by operation of law because it is regarded as
united to the property such as those mentioned in No. 10 of Art. 415

MOVABLE PROPERTY

PERSONAL PROPERTY

As previously mentioned in this post, property in the Philippines is classified by law also as personal property. To also
distinguish a personal from real property, this test can be employed whether it is personal:
 1. By description if the object can be moved one place to another and this will not cause injury to the immovable to
which it may be attached;

2. By exclusion, if it is not included in the enumeration found in Art. 415 of the Civil Code of the Philippines.

3. By provision of the law, if real property is considered as personalty by special provision of the law

What are personal properties according to the law?

Art. 416. The following things are deemed to be personal property:

(1) Those movables susceptible of appropriation which are not included in the preceding article;

*By appropriability it means that it can be capable of being possessed by men. Therefore all other things which are not
falling under Art. 415 are considered as personal property.

(2) Real property which by any special provision of law is considered as personal property;

*There are properties which by nature are real properties. However, special laws and judicial decisions may define them
in another manner. These will be controlling and will therefore adopt the status of being a personal property instead.

(3) Forces of nature which are brought under control by science; and

*These forces of nature may be for example, electricity, gas, heat, light, oxygen and so forth which, if controlled by man
and became subject of appropriation, will become personal properties.

(4) In general, all things which can be transported from place to place without impairment of the real property to which
they are fixed. (335a)

*By nature these things which can be transported from place to place without causing impairment to where they are
previously attached is movable.

Art. 417. The following are also considered as personal property:

(1) Obligations and actions which have for their object movables or demandable sums; and

*This provision contemplate various contracts which have for their object movable properties or demandable sums or
those amounts which are liquidated or determined. Being so, the subject matter being movable, it makes the right created
therein as likewise personal right.

(2) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. (336a)

*This provision includes all juridical entities although they do not issue shares of stock which may mean participation or
interest in a business. This also recognizes that although real estate are involved, the law still considers them personal
property.

What are the other classification of personal property?

Art. 418 has further classified movables based on its capability to being used repeatedly. It can further be classified
accordingly:
 1. By nature or as to their likelihood of being consumed when it is used according to their nature as mentioned in
Art. 418 of the New Civil Code:

Art. 418. Movable property is either consumable or nonconsumable. To the first class belong those movables which
cannot be used in a manner appropriate to their nature without their being consumed; to the second class belong all the
others. (337).

2. By intention or as to their possibility of being substituted by another property having the same kind or quality can
be either be fungible or being replaceable by an equal quality and quantity, either by the nature of the substitute or
by agreement of the parties. It is also non-fungibles, in opposite, are irreplaceable because identical objects must
be returned.

CLASSIFICATION OF PROPERTIES ACCORDING TO WHOM IT BELONGS

The New Civil Code expressly classified property according to ownership by this article:

Article 419. Property is either of public dominion or of private ownership.

What are properties of public dominion?

Public dominion or property owned by the State (or its political subdivisions) in its public or sovereign capacity and
intended for public use and not for the use of the State as a juridical person.

Article 420. The following things are property of public dominion:

Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks,
shores, roadsteads, and others of similar character;
Those which belong to the State, without being for public use, and are intended for some public service or for the
development of the national wealth;
Art. 424. Property for public use, in the provinces, cities, and municipalities, consist of the provincial roads, city streets,
municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said
provinces, cities, or municipalities.

*These subdivisions, however cannot register as their own any part of the public domain unless it can be proved that the
grant thereof has been made or possessed under the concept of an owner. They have no authority to control or regulate
properties of public domain for they are under the authority of Congress.

What are the kinds of properties of public dominion?

1. Property intended for public use or which can be used by everybody and others of similar character
2. Property which is not for public use but intended for public service or those which can be used only by duly
authorized persons, such as government buildings and vehicles
3. Property intended for the development of national wealth such as minerals, coal, oil, forest, and other natural
resources

Further, under the 1987 Constitution (Section 3 Article XII) Lands of the public domain are classified into:

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks.
Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted.
Alienable lands of the public domain shall be limited to agricultural lands. x x x

1. Agricultural
2. Forest or timber
3. Mineral lands
4. National parks
Examples of public dominion: 1987 Constitution: agricultural, forest, timber, national parks, mineral lands, water,
minerals, oils, coal, petroleum, sources of potential energy, fisheries, wildlife, flora, fauna, roads, canals, rivers, banks,
shores and others similar in character. Agricultural land is the only alienable and disposable land of the government

What are the characteristics of properties of public domain?

1. It is beyond the commerce of man

2. It cannot be acquired by prescription
3. It cannot be registered under the Land Registration Law and be the subject of a Torrens Title
4. It cannot be levied upon by execution nor can be attached.

What are properties of private ownership?

Private ownership or property owned by the State in its private capacity, and is known as patrimonial property. It may also
be owned by private persons, either individually or collectively.

Here are the provisions of the law which point out to this classification:

Article 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial
property.

*Patrimonial property is the property of the State owned by it in its private or proprietary capacity, i.e., the property is not
intended for public use, or for some public service, or for the development of the national wealth.

Article 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of
the patrimonial property of the State.

*Under Article 422 there must be a formal declaration by the executive or possibly legislative department of the government
that the property of the State is no longer needed for public use of for public service; otherwise, the property continues to
be property of public dominion notwithstanding the fact that it is not actually devoted for such use or service.

Art. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial
property. (343)

*The political subdivisions of the national government may also own properties in their private capacity.

Article 425. Property of private ownership, besides the patrimonial property of the State, provinces, cities, and
municipalities, consists of all property belonging to private persons, either individually or collectively.

What are the differences between public domain and patrimonial properties?

 Public dominion cannot be acquired by prescription, even by city or municipality.

 Patrimonial property of the State may be the subject of acquisition through prescription.
 Public lands become patrimonial property upon express government manifestation that the property is already
patrimonial and declaration that these are already alienable and disposable.
 And only when the property has become patrimonial can the prescriptive period for the acquisition of property of
the public domain begin to run.
 113 of the Civil Code: All things that are within the commerce of man are susceptible to prescription, and that the
property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription.

How are lands of public domain reclassified?

A positive act of the Government is necessary to enable such reclassification, and the exclusive prerogative to classify public
lands under existing laws is vested in the Executive Department, not in the courts.
Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be alienated. x x x

*The Constitution places a limit on the type of public land that may be alienated. Under Section 2, Article XII of the 1987
Constitution, only agricultural lands of the public domain may be alienated; all other natural resources may not be.

Article XII, Section 3, of the 1987 Constitution states:

Sec 3. x x x Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations
may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines
may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead
or grant.

*The Constitution has laid down a prohibition for private corporations or associations to own lands of public domain but
may enjoy such only by lease in accordance to the terms expressly provided in the abovementioned section.

Article 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of
the patrimonial property of the State.

*Under Article 422 there must be a formal declaration by the executive or possibly legislative department of the government
that the property of the State is no longer needed for public use of for public service; otherwise, the property continues to
be property of public dominion notwithstanding the fact that it is not actually devoted for such use or service.

What lands may not be declared open to disposition or concession?

 Those which have been reserved for public or quasi-public uses;

 Those which have been appropriated by the government;
 Those which have become private property like the friar lands and the ancestral lands under the IPRA Law
 The Revised Forestry code also provides that no land of the public domain 18% in slope or over shall be classified
as alienable and disposable;
 Submerged lands like the waters (sea or bay) above them are part of the inalienable natural resources.

What are the classification of lands under the Constitution?

 Classification under 1935 Constitution- Agricultural, forest or timber

 Classification under 1973 Constitution- Agricultural, industrial, commercial, residential, resettlement, mineral,
timber and mineral lands
 Classification under 1987 Constitution- Agricultural, forest, timber and national parks
o All others under the 1987 Constitution are patrimonial property
o No public land can be acquired except by a grant from the State

Who can own lands in the Philippines?

As a general rule only Filipino citizens and Corporations/Partnerships where at least 60% of the Authorized Capital Stocks
(ACS) of which is owned by Filipino citizens.

However the following are the cases wherein the abovementioned rule can be excused:

1. Property is acquired prior to the effectivity of the 1935 Constitution;

2. Acquisition by hereditary succession being the legal heir
3. Acquisition of not more than 40% interest in a condominium project pursuant to R.A. 4726;
 4. Former natural born citizen of the Philippines who became a citizen of another country but is now returning to the
Philippines to reside permanently, subject to limitations under BP 185 and RA 8179;
5. Filipina who marries an foreigner but retains her Philippine citizenship can acquire and own land;

From the above enumeration, the 1987 Constitution, Article XII has laid down two sections to justify some of the above
exceptions:

SECTION 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain.
SECTION 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has
lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.

Who are natural and natural born citizens?

Natural citizens of the Philippines are:

 Citizens of the Philippines at the time of the adoption of the 1987 Constitution
 Those whose fathers or mothers are citizens of the Philippines (any parent)
 Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon reaching the age of
majority (18 years old) – born anywhere in the world

Natural born citizens are those:

 Born in the Philippines

 Those born of Filipino mothers and non-Filipino father who elect Philippine citizenship upon reaching the age of
majority
 Naturalized under Naturalization Law
 Citizens of the Philippines who marry aliens but have not renounced their Phil. Citizenship
 Those who acquired dual citizenship
 Those who acquired derivative (origin or descent) citizenship
 The unmarried child, legitimate or not or adopted, below 18 years of age, of those who re-acquire Philippine
citizenship upon effectivity of this Act shall be deemed citizens of the Philippines.
 Section 7 of Art. XII of 1987 Constitution states that a natural born citizen of the Philippines who has lost his Phil.
citizenship may be a transferee of private lands subject to limitations provided by law

Rules regarding former natural born Filipino citizens acquiring lands in the Philippines

Mode of acquisition may be through both voluntary deeds (sale or donation) and involuntary deeds (foreclosure, execution,
tax delinquency sale)

Area allowed (maximum)

1. If the purpose is for residence:

 1,000 square meters of urban land

 1 hectare of rural land

2.If the purpose is for business

(refers to the use of land primarily, directly and actually in the conduct of business or commercial activities in the broad
areas of agriculture, industry and services, including the lease of land but excluding the buying and selling thereof)
  5,000 square meters of urban land
 3 hectares of rural land

A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional
urban or rural land for residential purpose which, when added to that already owned shall not exceed the maximum area
allowed by law. It shall also apply to a transferee who already owns urban or rural land for business purpose while still a
Filipino citizen.

A transferee who has already acquired urban land for residential purpose shall be disqualified to acquire rural land for
residential purpose and vice versa.

A transferee of residential land under BP 185 may still avail of the right to acquire land for business purpose under RA
8179.

*In case of married couples where both are former natural born Filipino citizens, both of them may avail provided that the
total acquisition shall not exceed the maximum area allowed.

Can aliens acquire lands in the Philippines?

General rule: Aliens are not qualified to acquire land in the Philippines.

Exceptions:

 Aliens may acquire private land by inheritance

 PD 713 (May 27, 1975) Allows Americans who were formerly Filipino citizens, Americans who became permanent
residents of the Philippines and Americans who have resided in the Philippines continuously for at least 20 years
and are in good faith had acquired private residential lands for family dwelling purposes in the Philippines prior to
July 3, 1974 to continue holding such lands and transfer ownership over the same to qualified persons or entities.

 BP 8179 (March 16, 1982)Former natural born citizens of the Philippines who has lost his citizenship may be
transferee of a private land up to a maximum area of 1,000sqm in case of urban land and 1 hectare for rural to be
used as his residence; In case of married couples, only one may avail and if both the total area should not exceed
the maximum herein fixed

 RA 8179 (March 28, 1996) 5,000sqm urban land/ 3 hectares rural land for business or other purposes

 RA 9225 (August 29, 2003) Aliens may re-acquire Filipino citizenship

Title IX. - REGISTRY OF PROPERTY

 Art. 708. The Registry of Property has for its object the inscription or annotation of acts and
contracts relating to the ownership and other rights over immovable property. (605)
 Art. 709. The titles of ownership, or of other rights over immovable property, which are not duly
inscribed or annotated in the Registry of Property shall not prejudice third persons. (606)
 Art. 710. The books in the Registry of Property shall be public for those who have a known interest
in ascertaining the status of the immovables or real rights annotated or inscribed therein. (607)
 Art. 711. For determining what titles are subject to inscription or annotation, as well as the form,
effects, and cancellation of inscriptions and annotations, the manner of keeping the books in the
Registry, and the value of the entries contained in said books, the provisions of the Mortgage Law,
the Land Registration Act, and other special laws shall govern. (608a)
NATURAL PERSONS

Art. 40: Commencement of Civil personality

Case Digest Quimiguing vs Icao

Article 40: Birth determines personality; but the conceived child shall be considered born for all purposes that are favorable to it,
provided it be born later with the conditions specified in the following article. (29a)

COMMENCEMENT OF CIVIL PERSONALITY. Article 5 of PD #603, “Child and youth welfare code,” amended article 40 of civil
code

The civil personality of the child shall commence from the time of his conception (the beginning of pregnancy) for all purposes favorable
to him, subject to the requirements of article 41 of the civil code.

Art. 41: conditions to determine when the child is considered conceived.

Case Digest GELUZ v COURT OF APPEALS

Article 41: for civil purposes, the foetus is considered born if it is alive at the time it is completely delivered from the mother’s womb.
However, if the foetus had an intra-uterine life of less than seven months, it is not deemed born if it dies within twenty-four hours after
its complete delivery from the maternal womb. (30a)

Art. 42: Civil personality extinguished at death

Case Digest ANGELA M. BUTTE vs. MANUEL UY

Article 42: Civil personality is extinguished by death. The effect of death upon the rights and obligations of the deceased is determined
by law, by contract and by will. (32a)

 Death puts an end to civil personality

 Dead person continues to have personality only through contract, will, or as determined by law.
 Creditors can still claim from the estate of the deceased any obligation due to them.

No human body shall be buried unless the proper death certificate has been presented and recorded however during an epidemic bodies
may be buried provided that the death certificate be secured within 5 days after the burial.

Art. 43: Doubt between the death of two or more persons

Case Digest JOAQUIN VS. NAVARRO

Article 43: if there is doubt, as between two or more persons who are called to succeed each other, as to which of them who died first,
whoever alleges the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they died at the
same time and there be no transmission of rights from one to the other. (33)

 Applies to persons who are called to succeed each other like mother and child. (Necessary to determine the amount of
inheritance one is to receive, transmission of rights, etc.)
 If there is no proof as to who died first, they are presumed to have died at the same time and thus no transmission of rights from
one to the other.
 Proof of death cannot be established from mere inference or presumptions. It must be established by clear positive
evidence.
JURIDICAL PERSONS

Art. 44. The following are juridical persons:

1. The State and its political subdivisions;

2. Other corporations, institutions and entities fro public interest or purpose, created by law;their personality begins
as soon as they have been constituted according to law;
3. Corporations, partnerships and associations for private or public purpose to which the law grants a juridical
personality, separate and distinct from that of each shareholder,partner or member.

Art 45. Juridical persons mentioned in nos. 1 and 2nof the preceeding article are governed by the laws creating or
recognizing them.

Private corporations are regulated by laws of general application on the subject.

Partnership and associations for private interest or purpose are governed by the provision of this code concerning
partnerships.

Art 46. Juridical persons may acquire and possess proprty of all kinds, as well as incur obligations and bring civil or
criminal actions, in conformity with the laws and regulations of their organization.

STATE. It is the political organization of the society legally supreme within and independent of legal control from without.
Under Article XVI, Section 2 of the 1987 Philippine Constitution, As a fundamental rule, the state cannot be sued without
its consent.This consent will be given by the state if it enters into a contract with a private entity. More so, If the state
exercising the power of eminent domain fails to give just compensation to a property belonging to a private individual or
ordinary citizen, the latter are in cases of progression of the government which inevitably requires properties belonging to
a Citizen.

Further it is not imperative upon suing the state that the State should be liable for its act which causes the State to be sued.
Like any other Individual, the State has also the right to establish its rightful position if there is.

What are Political Subdivision? Basically they are the Municipal Corporation; In the Philippines they are the Provinces,
Municipalities and Cities. The latter has two fold functions. In one it can function as Governmental and political act, and on
the other hand their Fucntion can be Private or propriety .

Case Digest

GR No. L-29993; October 23, 1978

TORIO v. FONTANILLA

FACTS: On October 21, 1978, the Municipal Council of Malasiqui, Pangasinan passed Resolution No. 156 whereby it
resolved to manage the 1959 Malasiqui town fiesta celebration on January 21, 22, and 23, 1959. Resolution No. 182 was
also passed creating the town fiesta committee with Jose Macaraeg as Chairman. The amount of P100.00 was also
appropriated for the construction of two stages, one for the zarzuela and the other for the cancionan. On January 22, while
in the midst of the zarzuela, the stage collapsed, pinning Vicente Fontanilla who died thereafter. The heirs of Fontanilla
filed a petition for recovery of damages. Defendant councilors contend that they are merely acting as agents of the
municipality.

ISSUE: 1) Is the celebration of a town fiesta authorized by a municipal council a governmental or a corporate function of
the municipality? 2) Are the councilors liable for the death of Fontanilla?

HELD: The holding of the town fiesta in 1959 by the municipality was an exercise of a private or proprietary function of
municipality. The provision on Section 2282 of the Revised Administrative Code simply gives authority to the municipality
to celebrate a yearly fiesta but it does not impose upon it a duty to observe one. It follows that under the doctrine of
respondent-superior, the municipality is held liable for damages for the death of Fontanilla. Since it is established that the
municipality was acting a proprietary function, it follows that it stands on the same footing as an ordinary private corporation
where officers are not held liable for the negligence of the corporation merely because of their official relation to it. Thus,
the municipal councilors are absolved from any criminal liability for they did not directly participated in the defective
construction of the stage.

Art. 47

Upon the dissolution of corporations, institutions and other entities for public interest or purpose mentioned in
No. 2 of Article 44, their property and other assets shall be disposed of in pursuance of law or the charter
creating them. If nothing has been specified on this point, the property and other assets shall be applied to
similar purposes for the benefit of the region, province, city or municipality which during the existence of the
institution derived the principal benefits from the same. (39a)

Dissolution Defined

The dissolution of a corporation is the termination of its existence as a legal entity.

No. 2 of Article 44

Other corporations, institutions and entities for public interest or purpose, created by law; their personality
begins as soon as they have been constituted according to law

Corporations, institutions and other entities for public interest or purpose

Examples of these are:

 Bangko Sentral ng Pilipinas (BSP)

 Development Bank of the Philippines (DBP)
 Duty Free Philippines
 Government Service Insurance System (GSIS)
 Home Development Mutual Fund (Pag-IBIG)
 Land Bank of the Philippines (LBP)
 Light Rail Transit Authority (LTRA)
 Philippine Charity Sweepstakes Office (PCSO), etc.

When do Corporations undergo dissolution?

 voluntary filing of the dissolution because the corporation is incapable of continuing the business
 involuntarily filing of the dissolution through government action as a result of failure to pay tax
 surrender or expiration of its charter
 legal proceedings

Dissolution for Private Corporations

According to Section 40 Title IV of the Corporation Code, a corporation may, by a majority vote of its board of
directors sell, lease, exchange, mortgage, pledge, or dispose all its property and assets, including goodwill.