Professional Documents
Culture Documents
PARTNERSHIP
a. Concept of Partnership
A. GENERAL PROVISIONS
1. Historical Background
Biblical origins (Gen 13:10-12)
Rome
Contract of societas
o Two or more parties pool their resources for
a common purpose
o Division of profits and losses
Influenced Spanish Civil Code
Western Europe
a. Essential Requisites
Art. 1770, CC. A partnership must have a lawful object or
purpose, and must be established for the common benefit or
interest of the partners.
When an unlawful partnership is dissolved by a judicial decree,
the profits shall be confiscated in favor of the State, without
prejudice to the provisions of the Penal Code governing the
confiscation of the instruments and effects of a crime.
(1666a)
2. Nature of Partnerships
Unless otherwise
stipulated, no one can
become a member without
the consent of all the
other associates
Doctrine of delectus
personae confers the
power, but not necessarily
the right, to dissolve the
partnership
Partnerships
Corporations
Sharing of losses
4.
5.
6.
7.
c. Specific Rules
i. Person not partners to each other not
partners to third persons
ii. Declaration of partner
iii. Co-ownership does not of itself establish a
partnership (De Leon, pp. 30-35)
Clear intent to derive profits from operation of
business
2.
Before New Civil Code came into effect, socalled common-law partnerships were the
basis of an informal civil partnership
With the enactment of the Family Code, property
co-owned under cohabitation is now governed
by rules on co-ownership
Partnership
Creation
Created by
contract
Generally created
by law
Juridical
personality
Separate and
distinct juridical
personality
No separate
personality
Purpose
Profit
Common
enjoyment of a
thing/right
Duration
No limit
10 years (20 if
stipulated by
testator)
Disposal of
interests
No right to
dispose of
individual interest
without consent
of other partners
Co-owner may
freely dispose of
his individual
interest
May be
represented by
any partner
Co-owner cannot
represent the coownership
Effect of death
Dissolves
partnership
Does not
necessarily
dissolve coownership
1.
2.
As to purpose
a. Partnership Pecuniary gain
b. Labor union a) Collective bargaining and
b) dealing with employers
No one may become a partner without the consent of
all the other partners
CPG
Parties
Created by
voluntary
agreement
between two
partners
Arises from
agreement
between future
spouses
Governing laws
Governed by
stipulation of
parties
Governed by law
Juridical
personality
Has juridical
personality
No juridical
personality
Co-ownership
Commencement
Purpose
Distribution of
profits
Management
Disposition of
shares
Commences
precisely on the
date of the
celebration of the
marriage
Profit
Regulates
property relations
during marriage
Profits are
divided either:
a) according to
agreement of
partners or b) in
proportion to
their respective
capital
contribution
Equal division of
shares of
spouses in
profits
Shared equally
by all partners
Husbands
decision prevails
in case of
disagreement
Partners whole
interest may be
disposed of
without other
partners
consent
Share of each
spouse cannot
be disposed of
during the
marriage
Creation
Created by mere
agreement of
parties
Created by law or
by operation of
law
Number of
incorporators
May be
organized by only
two persons
Requires at least
five incorporators
(EXCEPTION:
Corporation sole)
Commencement
of juridical
personality
Execution of
contract of
partnership
Date of issuance
of certificate of
incorporation from
SEC
Powers
Management
Every partner is
an agent of the
partnership
Power of
management is
vested in board of
directors/trustees
Effect of
mismanagement
Suit against
member of board
of
directors/trustees
must be in the
name of the
corporation
Right of
succession
No right of
succession
Has right of
succession
Extent of liability
to third persons
Partners (except
limited partners)
are liable
personally and
subsidiarily for
partnership debts
to third persons
Stockholders are
liable only to
extent of
subscribed shares
Transferability of
interest
Partner cannot
transfer interest
without consent
of all other
partners under
principle of
delectus
personarum
Stockholder can
generally transfer
his shares without
the other
stockholders
consent
Term of
existence
Up to 50 years
Firm name
Limited
partnership
required by law
Voluntary
association
Juridical
personality
Has juridical
personality
No juridical
personality
Purpose
Profit
Not necessarily
for profit
Contributions of
members
Contribution of
capital
No contribution
of capital (though
fees are collected
for maintenance
purposes)
Liability of
members
Partnership is
liable for debts of
firm
Members are
individually liable
Corporation
to add Ltd. to
name
similar to any
registered firm
name
Dissolution
May be dissolved
at any time by
the will of any or
all of the partners
May only be
dissolved with the
States consent
Governing law
Civil Code
Corporation Code
2. Similarities
a.
b.
c.
d.
e.
f.