Partnership Corporation

Created by mere agreement of the parties; Created by operation of law

May be organized by only two persons
Juridical personality commences from the moment of
execution of the contract of partnership
May exercise any power authorized by the partners as long as
it is not contrary to law, etc.
If no agreement as to mgt. - every partner is an agent of the
partnership
A partner as such may sue a copartner who mismanages
Has no right of succession
The partners are liable personally and subsidiarily for
partnership debts
Based on delectus personame
May be established for any period of time stipulated
May be dissolved at anytime by the will of any or all partners
Governed by the Civil Code
Requires at least 5 incorporators;
Personality commences from SECs issuance of the certificate
of incorporation
Can exercise such powers expressly granted by law or incident
to its existence
Power to do business is vested in the board of directors/
trustees
Suit against the board/director who mismanages must be
brought in the corp.s name
Has right of succession
The stockholders are liable to the extent of the shares
subscribed by them
Not based on delectus personae
May not be formed for a period exceeding 50 years
May be dissolved only with the consent of the state
Governed by the Corporation Code

General Partner Limited Partner

Extent of liability
Right to participate in management
Contribution
Proper party to proceedings by or
against the partnership
Name in firm name
Prohibition to engage in other business
Effect of retirement death insanity or
insolvency
Assignability of interest in partnership
Personally liable for partnership
obligations
If manner of mgt. not agreed upon, all
general partners have an equal right in
business mgt
Cash, property or industry
Proper party to proceedings by/against
partnership
Name may appear in firm name
Prohibited
Dissolves the partnership
Not assignable
Only to the extent of his capital
contributions
No participation in management
Cash or property only, not industry
Not proper party to proceedings
by/against partnership unless: 1. he is
also a general partner 2. where the
object of the proceedings is to enforce a
limited partner's right against or liability
to the partnership
Name must not appear in firm name
No prohibition only for the same kind
of business
Different effect; rights transferred to
legal rep.
Assignable

Causes for Dissolution

Voluntary
1. without violation of the agreement between the partners (Art. 1830, CC)
a. termination of the term or particular undertaking
b. express will of any partner in good faith, when the partnership is at will
c. express will of all partners who have not assigned their interests or suffered them to be charged
d. bona fide expulsion of any partner in accordance with the agreement
2. in contravention of the agreement, by express will of one partner effects partner is liable for damages; other partners
may continue the business
Involuntary (Grounds)
1. business becomes unlawful
2. specific thing promised perishes before delivery to the partnership, the use and enjoyment of which has been transferred to
the partnership
3. death of a partner
4. insolvency of any partner or the partnership
5. civil interdiction of any partner Judicial
1. Decree of court upon application (Art. 1831, CC)
a. application by partner (grounds)
insanity of any partner
incapacity of any partner to perform his part of the contract
partner guilty of conduct prejudicial to the partnership business
wilfull breach of agreement by any partner
partner business can only be carried out with loss
b. application by purchaser of partnership interest may be allowed in the following cases:
termination of term or undertaking
partnership is at will and interest of partnership is assigned

Partnership is not bound by any act of a partner when

1. dissolution is not by the act, insolvency or death of a partner
2. dissolution is by such act, insolvency or death and the partners acting have knowledge thereof
3. acts not connected with winding up P
artnership is not bound with respect to third persons (Art. 1834, CC)
1. business becomes unlawful 2. partner dealing with third party becomes insolvent
3. partner has no authority to wind up
Partner can bind the partnership even after dissolution (Art. 1834, CC)
1. acts appropriate to winding up
2. third person is in good faith and without knowledge of dissolution:
a. third person who extended credit to the partnership
b. third person who knew the existence of the partnership

Doctrine of Marshalling of Assets If there are claims over both partnership assets and partners individual properties, both in
custody of the court for distribution:
1. Partnership creditors are preferred with regard to partnership property
2. Individual creditors are preferred with respect to individual properties of partners.
3. Anything left from either goes to the other.