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Handout No. 1P: Points of Distinction Partnership Corporation

This document compares and contrasts partnerships and corporations under Philippine law based on key points of distinction. [1] Partnerships can be formed by just two people and governed by the Civil Code, while corporations require at least five incorporators and are governed by the Corporation Code. [2] Partnerships commence as soon as the contract is executed, while corporations commence once the SEC issues a certificate of incorporation. [3] Partnerships have more flexible management and liability structures than corporations.

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45 views2 pages

Handout No. 1P: Points of Distinction Partnership Corporation

This document compares and contrasts partnerships and corporations under Philippine law based on key points of distinction. [1] Partnerships can be formed by just two people and governed by the Civil Code, while corporations require at least five incorporators and are governed by the Corporation Code. [2] Partnerships commence as soon as the contract is executed, while corporations commence once the SEC issues a certificate of incorporation. [3] Partnerships have more flexible management and liability structures than corporations.

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gem
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HANDOUT NO.

1P

POINTS OF PARTNERSHIP CORPORATION


DISTINCTION
Governing Law Civil Code (RA 386) Corporation Code
(BP Blg.68)
Manner of Creation Mere agreement of the Created by law or by
parties (Art. 1767) operation of law (Sec. 2)
Number of May be organized by only Requires at least five
Incorporators two persons (Art. 1767) incorporators (except a
corporation sole) (Sec. 10)
Commencement of From the moment of the From the date of issuance
Juridical Personality execution of the contract of of the certificate of
partnership, unless it is incorporation by SEC
otherwise stipulated (Art. (Sec.19)
1784)
Powers Any power authorized by Only the powers expressly
the partners provided it is in granted by law or implied
consonance with Art. 1306 from those granted or
CC incident to its existence
(Secs. 2/36)
Binding Acts A partner may bind his co- Stockholders, not being
partners for acts within the agents of the corporation
scope of the business cannot bind the
corporation, except when
authorized by the
Corporation Code in the
case of close family
corporations.
Management When the management is Vested in the board of
not agreed upon, every directors or trustees elected
partner is an agent of the by the stockholders or
partnership (Art. 1803) members, respectively
(Sec.23)
Effect of A partner can sue a co- A suit against a member of
Mismanagement partner who mismanages the board of directors or
(Art.1794) trustees who mismanages
must be in the name of the
corporation (Sec.23)
Right of Succession No right of succession (Arts. Has such right (Sec. 2)
1828-1831, 1860)
Page 2/Handout No. 1

Extent of Liability to The partners (except limited Stockholders are liable only
third persons partners) are liable to the extent of the shares
personally and subsidiarily subscribed by them (Secs.
(sometimes solidarily) for 64, 37)
partnership debts to third
persons even to the extent
of their private property
(Arts. 1816,1822-1824)
Transferability of A partner cannot transfer his A stockholder has generally
Interest interest in the partnership the right to transfer his
so as to make the shares without the prior
transferee a partner without consent of the other
the consent of all the other stockholders (Sec. 63)
existing partners because of
the principle of delectus
personarum (Art. 1767,
1804)
Term of existence Any period of time agreed May not be formed for a
by the partners (Arts. 1767, term in excess of 50 years
1785) extendible to not more than
50 years in any one
instance (Sec. 11)
Firm name A limited partnership is May adopt any firm name
required by the law to add provided it is not the same
the word Ltd to its name or as similar to any
(Art.1844) registered firm name.
(Sec. 18)
Death or Bankruptcy Usually causes the Does not result in such
of members dissolution of the firm dissolution
Dissolution At any time by the will of Can only be dissolved with
any or all of the partners the consent of the State
(Art.1830) (Secs. 117-122)

Sources: Civil Law Reviewer, Desiderio P. Jurado, 2012 Edition


Comments and Cases on Partnership, Agency and Trusts
Hector S. De Leon, 2011 Edition

A. Villegas

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