A.

Differences and Similarities of Partnership and Corporation

With respect to:
Manner of Creation
Number of Organizers
Rights of Succession
Powers
Management
Liability of members for debts
Commencement of Existence
Transferability of Interest
Term of Existence
Dissolution
Name
PARTNERSHIP
(Civil Code of the Philippines)
DIFFERENCES
Agreement of the parties (Art. Operation of law (Sec. 18)
1767)
At least 2 persons (Art. 1767)
No right of succession (Art. 1828)
May exercise any power
authorized by partners not
contrary to law, morals, good
customs, public order or public
policy (Art. 1306)
Through all general partners
each one of whom is considered
an agent of the partnership
unless otherwise agreed (Art.
1803)
General partners are liable with
their separate assets for
partnership debts (Art 1816)
Upon execution of partnership
contract unless a different date
is set by the partners. (Art.
1784)
A partner cannot transfer
interest to a third person
without the consent of other
partners (delectus personae)
(Art. 1813)
Indefinite period (Art. 1785)
May be dissolved by partners
(Art. 1830)
Shall bear the word “Company”
or “Co.” and if it is a limited
partnership, the word “Limited”
or “Ltd.”. A professional
partnership name may bear the
word “Company,” “Associates,”
or “Partners,” or other similar
descriptions  (SEC
Memorandum Circular No. 13,
CORPORATION
(Revised Corporation Code RA 11232)
At least 1 but not more than 15
(Sec. 10)
Has the right of succession (Sec.2)
Can only exercise powers
expressly authorized by law or
incidental to its existence (Sec.2)
Through its Board of Directors
or Trustees (Sec. 22)
Stockholders or members are
not liable for the obligations of
a corporation
On the date of the issuance of
its certificate of incorporation
(Sec. 18)
A stockholder can transfer his
shares to another without the
consent of other stockholders
(Sec 62)
Perpetual existence unless
articles of incorporation
provides otherwise (Sec. 11)
Cannot be dissolved without the
consent of the state (Sec. 133-
139)
Must be distinguishable from a
name that is already reserved or
registered for the use of
another corporation, or is not
protected by law; or is not
contrary to existing law, rules
and regulations (Sec 17)
 series of 2019)
Withdrawal of Interest Partners can do so anytime Stockholders cannot because of
the Trust Fund Doctrine
Taxation For general professional Corporation and stockholders
partnership, only its partners are both subject to tax
are subject to tax
SIMILARITIES
Personality Both have a separate juridical personality
Acts Both are artificial persons, i.e they have no bodily existence and
can only act through agents.
Number of Organizers Both are composed of group of persons with the exception of a
corporate sole and a one-person corporation
Taxation A partnership with the exception of a general professional
partnership, is taxed as a corporation.

B. Attributes and important principles of a Corporation

Attributes Important Principles General Rule Exceptions

Artificial being Its stockholders have no
legal right to its
corporate properties. It
enjoys some rights of a
natural person, but,
generally, can’t recover
moral damages because
it physically exists only
on a paper.
Created by law or by A corporation does not
operation of law come into existence by
mere agreement of the
parties. Persons desiring
to form a private
corporation must
comply with the
It has a legal Doctrine of Piercing
personality separate the Veil of Corporate
and distinct from its Fiction- Its separate
members/stockholders legal personality is
and from other disregarded if used as
corporation to which it a cloak or cover for
may be connected fraud or illegality or
to defeat public
convenience, justify
wrong, protect fraud
or defend crime. The
corporate character
is not necessarily
abrogated. It
continues for
legitimate objectives.
However, it is pierced
in order to remedy
injustice (Reynoso IV vs
CA, 345 SCRA 335 [2000])
By Law: Congress Quasi-Corporation-
passes law for its exist without formal
creation legislative grant
(LGU,GOCCs,public 1. Corporation by
utilities) prescription-
Operation of Law: SEC exercises powers for
issues certificate of an idefinite period
 requirements of the law incorporation after without state
governing its creation. compliance with the interference
Corporation Code 2. Corporation by
estoppell- members
assume to act as a
corporation
It has the right of Its existence is not A corporation, as a None
succession affected by the death, rule, continues to exist
insolvency, or incapacity for the period for
of the individual which it has been
stockholder or members formed regardless of
the changes in the
ownership of its stocks
or in its membership.
It has the powers, Any act exercised A corporation can Mere ultra vires acts,
attributes, and outside such powers are exercise only the on the other hand, or
properties as expressly unauthorized and powers expressly those which are not
authorized by law or considered ultra vires conferred upon it by illegal and void ab
incident to its existence (beyond the powers) law and its articles of initio, but are not
incorporation, those merely within the
implied from such scope of the articles
powers expressly of incorporation, are
granted and those that merely voidable and
are incident to its may become binding
existence. and enforceable
when ratified by the
stockholders.
(Pirovano, et al. v. De
la Rama Steamship
Co., 96 Phil. 335, 360
(1954))
C.  Kinds of Corporation 
As to existence of shares of
stock
As to place of incorporation
As to organizers
Kinds of Corporation Examples
Stock corporation A corporation (1) whose capital
stock is divided into shares and
(2) which is authorized to
distribute to shareholders
dividends or allotments of the
surplus profits on the basis of
the shares held. (Sec. 3)
e.g. ABS-CBN Corporation (a
corporation listed in the
Philippine Stock Exchange)
Non-stock corporation One that does not issue stocks
nor distribute dividends to their
members
e.g. Gokongwei Brothers
Foundation (Non-stock
corporations may be formed for
charitable, religious,
educational, professional,
cultural, fraternal, literary,
scientific, social, civic service, or
similar purposes, such as trade,
industry, agricultural and similar
chambers, or any combination
thereof, Sec. 87)
a. Domestic corporation A corporation formed,
organized, or existing under
Philippine laws
e.g. Bank of The Philippine
Islands (
b. Foreign corporation A corporation formed,
organized, or existing under any
laws other than those of the
Philippines. (Sec. 123)
e.g. Nestle (a
multinational corporation
where headquarter is located
in Switzerland but operates
businesses in the many other
countries over the world )
a. Public One organized for the
government or a portion of the
state
 e.g. Local Government Units
b. Private One formed for private purpose
or in some cases with the State

e.g. Jollibee Foods Corporation

GSIS (GOCCs created by
special laws), MERALCO (Quasi-
public corporations organized
for profit which are granted a
franchise by the State to
perform public service)
As to number of person a. Corporation aggregate One that is composed of more
composing them than one incorporator

e.g. SM Prime Holdings

(composed of several
incorporators including Henry
Sy and Felicidad Sy among
others)
b. Corporation Sole Composed of only one person

e.g. Archbishop (For the

purpose of administering and
managing, as trustee, the
affairs, property and
temporalities of any religious
denomination, sect or church, a
corporation sole may be formed
by the chief archbishop, bishop,
priest, minister, rabbi or other
presiding elder of such religious
denomination, sect or church,
Sec. 108)
As to legal status a. De jure corporation Organized in accordance with
the requirements of law.
b. De facto corporation Organized with a colorable
compliance with the
requirements of a valid law. Its
existence cannot be inquired
collaterally. Such inquiry may be
made by the Solicitor General in
a quo warranto proceeding.
(Sec. 20)  Requisites: 1. The
existence of a valid law under
which it may be incorporated;
2. A bona fide attempt in good

As to whether its purpose is
religious or not
As to whether its purpose is
charitable or not
As to relation to another
corporation
c. Corporation by estoppel
d. Corporation by prescription
Ecclesiastical or religious
corporation
Lay Corporation
Eleemosynary corporation
Civil corporation
Parent or holding corporation
faith to incorporate under such
law; 3. Actual use or exercise in
good faith of corporate powers;
and 4. Issuance of a certificate
of incorporation by the SEC as a
minimum requirement of
continued good faith. The only
difference between a de facto
corporation and a de jure
corporation is that a de jure
corporation can successfully
resist a suit by a state brought
to challenge its existence; a de
facto corporation cannot
sustain its right to exist
Group of persons that assumes
to act as a corporation knowing
it to be without authority to do
so, and enters into a transaction
with a third person on the
strength of such appearance. It
cannot be permitted to deny its
existence in an action under
said transaction. (Sec. 20) It is
neither de jure nor de facto.
One which has exercised
corporate powers for an
indefinite period without
interference on the part of the
sovereign power,
e.g., Roman Catholic Church.
One formed for a religious
purpose
One formed for purposes other
than ecclesiastical or religious
One organized for public charity
One organized for business or
profit
One which owns the shares of
another corporation and having
power, directly or indirectly
over the latter including the
election of the directors
e.g., Ayala Corporation holding
effective interest of 48.6

As to whether its shares may be
held by the public or not
percent in BPI
Subsidiary corporation One whose shares of stock are
owned by another corporation,
called the parent corporation,
which has the power to elect its
directors
e.g., BPI owned by Ayala
Corporation
Close Corporation One whose shares are limited to
a few, restricted as to their
transfer and not listed in any
stock exchange
e.g., Deloitte and S. C. Johnson
& Son, are other well-known
U.S. closed corporations
Open Corporation One whose shares are open to
the public such as those whose
shares are listed in the stock
exchange
e.g., Ford Motors