Partnership Distinguished from a Corporation
(1) Manner of creation. — A partnership is created by mere agreement of the parties (Art. 1787.), while a
corporation is created by law or by operation of law (Sec. 2, B.P. Blg. 68.);
(2) Number of incorporators. — A partnership may be organized by only two persons (Art. 1767.), while
a corporation (except a corporation sole) requires at least five incorporators (Sec. 10, Ibid.);
(3) Commencement of juridical personality. — A partnership commences to acquire juridical personality
from the moment of the execution of the contract of partnership (Art. 1784.), while a corporation begins
to have juridical personality only from the date of issuance of the certificate of incorporation by the
Securities and Exchange Commission (Sec. 19, Ibid.);
(4) Powers. — A partnership may exercise any power authorized by the partners provided it is not
contrary to law, morals, good customs, public order, or public policy (Art. 1306.), while a corporation can
exercise only the powers expressly granted by law or implied from those granted or incident to its
existence (Secs. 2, 36, Ibid.);
(5) Management. — In a partnership, when the management is not agreed upon, every partner is an agent
of the partnership (Art. 1803.), while in a corporation, the power to do business and manage its affairs is
vested in the board of directors or trustees (Sec. 23, Ibid.);
(6) Effect of mismanagement. — In a partnership, a partner as such can sue a co-partner who mismanages
(see Arts. 1794, 1806, 1809.), while in a corporation, the suit against a member of the board of directors
or trustees who mismanages must be in the name of the corporation (see Sec. 23, Ibid.);
(7) Right of succession. — A partnership has no right of succession (see Arts. 1828-1831, 1860.), while a
corporation has such right (Sec. 2, Ibid.);
(8) Extent of liability to third persons. — In a partnership, the partners (except limited partners) are liable
personally and subsidiarily (sometimes solidarily) for partnership debts to third persons (see Arts. 1816,
1822-1824.), while in a corporation, the stockholders are liable only to the extent of the shares subscribed
by them (see Secs. 64, 37, Ibid.);
(9) Transferability of interest. — In a partnership, a partner cannot transfer his interest in the partnership
so as to make the transferee a partner without the consent of all the other existing partners because the
partnership is based on the principle of delectus personarum (see Arts. 1767, 1804.), while in a
corporation, a stockholder has generally the right to transfer his shares without the prior consent of the
other stockholders because a corporation is not based on this principle (Sec. 63, Ibid.);
(10) Term of existence. — A partnership may be established for any period of time stipulated by the
partners (see Arts. 1767, 1785.), while a corporation may not be formed for a term in excess of 50 years
extendible to not more than 50 years in any one instance (Sec. 11, Ibid.);
(11) Firm name. — A limited partnership is required by the law to add the word “Ltd.” to its name (Art.
1844[1, a].), while a corporation may adopt any fi rm name provided it is not the same as or similar to any
registered fi rm name (see Sec. 18, Ibid.);
(12) Dissolution. — A partnership may be dissolved at any time by the will of any or all of the partners
(Art. 1830[1, 2].), while a corporation can only be dissolved with the consent of the State (Secs. 117-122,
Ibid.); and
(13) Governing law. — A partnership is governed by the Civil Code, while a corporation is governed by
the Corporation Code.
