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. Management Firm of Professional Review and Training Center (PRTC) • ~

(LUZON) Manila 7339344 * Santiago City,lsabela(0918)2807_~30 * Angeles City,Pampanga(0917)5103332 ~.. ,i

Calambll City, Laguna (049) 5453807 .. Dasmannas City, cav1te (0917) 8852769 ~ ~
( VISAYAS) Bacolod City (034) 4346214 * Cebu City (032) 2537900 loc. 218 - • ..,
(MINDANAO) Cagayan De Oro City (0995) 0570499 * Davao City (082) 22 50049 Since 1977

BUSINESS LAW CPA REVIEW ATTY. ONG/LOPEZ

BL.2802- Partnership, Corporation, SRC, Code of Corporate Governance and Cooperative MAY 2020
LECTURE NOTES

PARTNERSHIP paragraph shall not affect the liability of the partnership and
the members thereof to third persons. ( 1772)
PARTNERSHIP Requis ites
By the contract of partnership two or more persons bind I. Valid Contract
themselves to contribute money, property, or industry to a T_he_ partnership has a judicial personality separate and
common fund, with the intention of divid ing the profit s d1 stmct from that of each of the partners, even in case of
among themselves. Two or more persons may also form a failure to comply with the requirements of article 1772 fi rst
partnership for the exercise of a profession. ( I 767). paragraph ( 1768). However, Associations and societies
whose articles are kept secret among the members and
: ✓ote: Since a partnership is a contract, all agreement between the -
wherein any one of the members may contract in hii own
parties has the force of law between the contracting parties name with third persons, shall have no juridical personality .
( I 159) provided it is not contrary to law, moral. good custom ,
(1775 )
r,ub!ic order and public policy. (1306) A partnership begins from the moment of the execution of
J::'•istinction between partnership and Co- ownership the contract, unless it is otherwise stipulated. ( 1784)
I. Creation 2. Lawful object or purpose ( 1770). Any event which makes
2. Juridical personality it unlawful for the business of the partnership to be carried
3. Purpose on or for the members to carry it on in partnership caused for
4. Duration automatic dissolution of the partnership. (1.830)
5. Disposal of interest
6. Power to act with third person
EFFECTS OF UNLAWFUL PARTNERSHIP
7. Effect of death - ·
I. The contract is-void ab initio and the partnership never
Distinction between Partnership and conjugal partnership of gain
2 existed in the eyes of the law
I. Parties
2. · The profits shall be confiscated in favor of the
2. Laws which govern
government
3. Juridical personality
3. The instrwnents or tools and proceeds of the crime shall
D 4. Commencement
also be forfeited in favor of the government
pr; 5. Purpose
4. The contributions of the partners shall not be confiscated
liv1 6. Distribution of profits
Wh unless they fall under no. 3 -
7. Management
wh 3. Contribution of money, property or industry to a common
8. Dispositfon of shares fund. .
Distinction between partnership and voluntary association
Obligations with respect to contribution to partnership
I. Juridical perso'nality
capital · ·
2. Purpose
I. Partners must contribute equal shares to the capital of the
3. Contribution of members
partnership unless there ·is stipulation to contrary. (Arl
4. Liability of members
1790}.
2. Partners (capitalist) must contribute additional capital In
Characteristics
I . Consensual case of imminent loss to the business of the partnership
2. Nominate and there is no stipulation otherwi~e; refusal to do s0
3. Bilateral shall create an, obligation on his part to sell his interest 10
4. Onerous the other partners. (Art. 1791)
5. Commutative Requisites:
6. Principal a. There is an · imminent loss of the business of the
7. Preparatory partnership
b. The majority of the capitalist partners are of the opinion
that an additional contribution to the common fun(\
• ~ partnership may be constituted in any form, except where
would save the business
~mmo_vab/e propertv or real rights are contributed thereto,
c. The capitalist partner refuses deliberately to contribute
m which case a public instrument shall be necessary. (1771)
(not due to financial inability)
• A contract of partnership is void whe11ever immovable
property . is contributed thereto, if
an inventorv of said
d. There is no agreement to the contrary ·
property 1s not made, signed by the parties and attached to
the public instrument. ( 1773) ' . RISK OF LOSS OF THINGS CONTRIBUTED
Contributed property Loss to be borne bL ~
Every contract of partnership having a capital of three
~housan~ ~esos or more, in money or property, shall appear Pnrtnershin Partner *
m a public instrument, which must be recorded in the O ffice Specific and determinate things ~
. ~f _the Securities and ~xchange Commission . . which are not fu ngible where
allure to comply with the requirements of the preceding onl y the use is contri buted
~-
Specific and detem1innte thinus ✓ --~... ~
 EXCEL PROFESSIONAL SERVICES , INC.
ATTY. JOHNSON A.H. ONG (MAY 202G)
z
the ownership of which is
transferred to the artnershi into in the name and for the account of the parmership, under its
signature and by a person authorized to act for the partnership.
Fun >ible thin s consumable However, any partner may enter into a separate obligation to
Cannot be kept without perform a partnership contract. ( 1816) Any stipulation exempting
dcterioratin any partner against the liability shall be void as far as .3rd person
Thin s contributed to be sold is concerned. But the stipulation is valid among the partners.
Things brought and appraised in ( 1817)
the inventory (limited to value
a raised 5. Estab lished for the common benefit or interest of the
• If one of the Partners refused to give contribution, the partners. ( 1770) Hence, A stipulation which excludes one or
other partner may com~I him to deliver (Specific more partners from any share in the profits or losses is void.
( 1799).
performance) what he has promised. . .
• The partnership is dissolved when a specific thing wh1~h Note: Only the agreement as to profit and loss is void not the
a partner had promised to contribute to the partnership, partnership itself. In such case, as if there is no agreement as
perishes before the delivery. ( 1830,4) to profit and loss and the profit and loss are distributed in
accordance with capital contribution.
Intent to divide the profit among the partners. ( 1767).
RULES FOR DISTRIBUTION -O F PROFITS AND Test to determine whether partnership exists:
LOSSES I. Persons who are not partners as to each other are not partners
DISTRIBUTION OF DISTRIBUTION OF
as to third persons; except estoppels (1825).
PROFITS LOSSES 2. Co-ownership or co-possession does not of itself establish a
I~ :r..,tI1 According to · According to agreement partnership. whether such-co-owners or co-possessors do or
a •reemenl a ement do not share any profits made by the use of the property;
3. The sharing of gross returns does not of itself establish a
Without I. Share of capitalist I. If sharing of profits
partnership, whether or not the persons sharing them have a
agreement partner . is in is stipulated - apply joint or common right or interest in any property from which
proportion to his to sharing of losses the returns are derived;
capital 2. If no profit sharing
4 . The receipt by a person of a share of the profits of a business
contribution stipulated - losses
is prima facie evidence that he is a partner in the business,
2. Share of industrial shall be borne
but no such inference shall be drawn if such profits were
partner is not according to capital
received in payment: (DRA WlnG)
fixed - as may be contribution
a. - Debt by installments or otherwise;
just and equitable 3. Purely industrial
b. As Rent to a landlord or
under the partner not liable for
c. As ~ Annuity to a widow or representative of a
circumstances losses
deceased partner;
d_. Wages ofan employee
Distribution of profit and losses: ( 1797)
e. As Interest on a loan, though the amount of payment
a. Profit or losses shall be distributed in conformity
vary with the profits of the business; .
with the agreement: ·
f. As the· consideration for the sale of a Goodwill of a
b. If only· the share of each partner in the profits has
business or other property by installments or otherwise.
been agreed upon, the share of each in the losses
shall be in the same proportion.
Reason: It s not merely the sharing of profits, but rather the·
c. In the absence of stipulation, the share of each
sharing of them as a co-owner of the business that makes.one ~-
partner . in the proOts and losses . shall. be in
partner. Hence, the test is "Does the recipient of profit rcce1~ed _it
proportion to what he may have contributed. but the
as co-owner/proprietor of the business", if the answer 1s m
industrial partner shall not be liable for the losses.
affirmative a partnership exists.
d. As for the profits, the industrial partner shall receive
such share as may be ·just and equitable under the
Classifications of Partnership
circumstances. If besides his services he has
As to liability of partners
contributed capital, he shall also receive a -share in
1. General pattnership - consists of gene~I partne~ ~ho ~re
the profits in proportion to his capital.
liable pro rata and subsidiarity and sometimes sohdanly w1th
their separate property for partnership debts .
Designittion of proflt and losses
2. Limited partnership - one formed by 2 or more persons
I. The designation of losses and profits cannot be entrusted to
having as members one or more ·genera~ partners and o,~e or
one of the partners. · ,
more limited partners, the latter not being personally hable
2. .If the par:tners have agreed to entrust to a third person the
for the obligations of the partnership
designation of the share of each one in the profits and losses,
-such designation , may be impugned only when it is As to duration · . . .
J• Partnership at will ·• one in wflich ~ time 1s specttie~ and 1s
manifestly _inequitable. In no case may a partner who has
not formed for a particular undertakmg or venture wh1ch may
begun to execute the decision of the third person, or who has
not impugned the same within a period of three months from be terminated anytime-by mutual agreement
t he time he , had knowledge thereof, complain of such· 2. Partnership with a fixed term or .particular ur:idertaking • thde
decision. ( 1798) term for which the partnership is to exist is fixed or agree
upon o'f one formed for a particular undertaking
Nota Bene: . . . . - As to extent of its subject matter
All partners, including industrial ones, shall be liable pro rata I. Universal pnrtnership·is either
•th 11 their property and after all the partnership assets a. Universal partnership of all present property • th•,
have ab ee n exhausted
wi , . .- for the contracts which may be entered property which ~elongs to each of the partners at the
 ROFESSIONAL SERVICES , INC .
ATTY . JOHNSON A .H. ONG (MAY 2020)
time of the constitution of th .
common property of alt e partnership, becomes the contribution. Not allowed to contribute industry .
profits w.hi h th e partners, as well as all the 6. Silent partner - do not participate in the management.
stipulati ~ th~Y may acquire therewith. ( 1779) A 7. Continuing Partner - one who continues the business of a
fi on or t e c:ommon enjoyment of any other partnership after it has been dissolved by reason of the
pro its may also be rnade (There must be a stipulati on. admi ssion of a new partner, retirement, death or expulsion of
e.g. salary that may be earn by the partner); bu t the one of the partners
~rop~rty which the partners may acquire subsequent ly by 8. Surviving Partner - one who remains after a partnership has
mhentance, legacy, or donation cannot be included in been dissolved by death of any partner
such stipulation, except the fruits thereof. Arti cles of 9. Sub partner - one who is not a member of the partnership
universal partnership, entered into without spec ification who contracts with a partner with reference to the latter's
of its nature, only constitute a universal partnership of share in the partnership
profits. ( 1781) 10. Secret partner - not known by third person
b. Universal partnership of all profits - all that the partners 11 . Dorm ant partner - silent and secret
may acquire by their industry or work during the 12. Ostensible partner - participate in the management and
existence of the partnership. Movable or immovable known by third person
property which each of the partners may possess at the 13. Partners by estoppels or nomin~l partner - not really partners
time of the celebration of the contract shall continue to but only as a result of misrepresentation to 3rd person
pertain exclusiVely to each, only the usufruct passing to 14. Managing partner - one manage the partnership
the partnership. ( 1780) 15. Liquidating partner - one who wind-up the affair of the
partnership
Note: Persons who are prohibited from giving each other any 16. Retiring partner - one who retire in the partnership
donation or advantage can~ot enter into universal partnership 17. Incoming partner - One who is admitted to the partnership
The following cannot enter in a universal partnership:
a. Between those who were guilty of adulten· or RELATIONS CREATED BY A CONTRACT OF
concubinage; PARTNERSHIP
b. , Between those persons found guilty of the same criminal I . Relations among the partners themselves
offense (adultery or ·concubinage), in consideration ' 2. Relations of the partners with the partnership
thereof; 3. Relations of the partnership with ~rd persons with whom it
c. Between a person and Public officer or his . wife, contracts ·
. descendants and ascendants, by reason of his otlice. 4 . . Relations· of the partners with _such 3rd persons
(739)
2. Particular partnership - object determinate things, their use OBLIGATIONS. OF PARTNERS
or fruits, or specific undertaking, or the (?Xercise of a ► A partnership begins from the moment of the execution of
profession or vocation (1783) the contract, unless it is otherwise stipulated. ( \ 784)
2
As to representation to others ► When a partnership for a fixed term or particular undertakinf
1. Ordinary or real partnership - orie which actually exists is continued after the termin!\tion of such term or particular
among the partners and also as to 3rd persons undertaking without any express agreement, the .rights and
D 2. Ostensible or partnership by estoppel - one which in reality is duties of the partners remain .the same as they. were at such
pr not a partnership but is considered a partnership only in termjnation, so far as is consistent with a partners~ip at will .
/Iv relation to those who, by their conduct or omission, are A continuation of the business by the partners or such of
wh
wh precluded to deny or disprove its existence them as habitually acted therein during .the tertJl, mthout any
As t9 legality of elistence settlement or liquidation of the partnership affairs, is prima
Fo I . , De jure partnership - comply all requirement 'o f the law facie evidence of a continuation of the partnership. (1785)
Firs 2. De facto partnership - do not comply all requirement of the Obligations with respect to contribution of property:
Gr law I. To contribute at the begin~ing 'of the partnership or at.
Le · As to publicity the stipulated time· the money, property or industry
Net
xT -1. Secret partnership - one wherein the e.xisterice of certain which he may have promised to contribute ·
Don persons as partners is · not avowed or made known to the 2. To answer for eviction in case the partnership is
Succ· public by any of the p~rtncrs deprived of the detenninate property contributed
G~ 2. Open or notorious ,partnership - one whose existence is 3. To ai;iswer to the partnership for the ~its of the property
Les avowed or made known to the public by the members of the the ,C9ntribution of which he delayed, from the date thev
Net fi~ . should have -been contributed ~p to the tim~ of actu~l
Add As to purpose delivery ·
Tot
x Ta 1. Commercial or trading partnership - one formed for the 4. To preserve said property with the diligence of a goot;
Don transaction of business . ' fathe,r of a family pending delivery to pannership
Less 2. Professional or non-trading partnership - one formed for. the 5. To indemnify partnership for any damage caused to il by
Jon
exercise ~fa profession . · . the retention of the same or by the delay in its
mp
contribut.ion
3t/o Kinds of partners
pe I. Capital!st partner - One who contribute money or property ► Every partner is a debtor of the partnership for whatever he
1e 2. Industrial partner - One contribute industry. He is not liable may have promised to contribute thereto.
,1 for loss as between the partners but liable pro rata as to 3rd · He shall also be ~ound for watTanty in case of eviction wit h
person. ·
Ara regard to specific and determinate things which .he may have
,s 0 3. Capitalist-industrial partner - One who contribute ·money con!ributed to the partnership. in the same cases and in thL
property or industry. •
;ea 4 · G_en~ral partner - liable to the extent of his separate property same manner as. the vendor i~ bound with ·respect to the
tme 5 vendee. He shall also be liable for the fruits thereof from th\.•
· Lunited partner - liable only to the extent_of his capital time they should have been delivered, without the need 11i
 EXCEL PROFESSIONAL SERVICES, INC.
any demand . ( 1786)
Effect of Failure to contribute property promised:
I . Partners becomes ipso jure a debtor of the partnership
even in the absence of any demand
2. Remedy of the other partner is not rescission but specific
performance with damages from defaulting partner
Obligations "'.ith respect to contribution of money and
money converted to personal use
I. To co'ntribute on the date fixed the amount he has
undertaken to contribute to the partnership
2. To reimburse any amount he may have taken from the
partnership coffers and converted to his own use
J. To pay for the agreed or legal interest, if he fails to pay
his contribution on time or in case he takes any amount
from the common fund and converts it to his own use
4. • To indemnify the partnership for the damages caused to
it by delay in the contribution or conversion of any sum
for his personal benefits
:,. A partner who has undertaken to contribute a sum of money
and fails to do so becomes a debtor for the interest and
damages from the time he should have complied with his
obligation. ( 1788)
The same rule·appliesto any amount he may have taken from
the partnership coffers, and his liability shall begin from the
time he converted the amount to his own use.
► Unless tnere is a stipulation to the contrary, the partners shall
contribute equal shares to the capital of the partnership.
(1790)
► Art. 179 I - lfthere is no agreement to the contrary. in case of
an imminent Joss of the business of the partnership. any
partner who refuses to contribute an additional share to the
capital, except an industrial partner, to save the venture,
2
shall he obliged to sell his interest to the other partners.
► Art. 1792 - If a partner authorized to manage collects a
demandable sum which was owed to him in· his own name.
D_ from a person who owed the partnership another sum also
pr: demandable, the sum thus collected shall be applied to the
I/vi two credits in proportion to tneir amourits, even though he
Wh
wh may have given a receipt for his own credit only: but shou.ld
he have given it for the account of the partnership credit, the
Fo ·
amount shall be fully applied to the latter.
Firs The provisions of this article are understood to be without
Gr prejudice to the right granted to the other debtor by article
Les 1252 (Ap,plication for payment), but only if the personal
Net·
)( T. credit of the partner should be more onerous to him.
Don
ucc· Obligation of managing partners who collects debt from
person who also owed the partnership
Gr
Les I. Apply sum collec·ted to 2 credits in proportion to their
\Jet
amounts
\dd
2. If he received it for the account of partnership, the whole
ota
Ta suin shall be applied to partnership credit
m transaction connected with the formation, conduct, o•·
Requisites: .
ss /. The partner who collects is authorized to manage and
~ctually manages the partnership .
2. The person owed him an~ ~e p~rtnersh1p , partnership affairs: ( 1809)
3. The partn,er issues a receipt m his own name on 1)b· th d
4. The claim of the partnership and the partner are o ue
and demandable.
Art . 1793 - A partner who has received, in whole or in part,
his share of a partnership credit, when the ot~er partners have
not collected theirs, shall be obliged, if the debtor shou!d
~ f'ter become insolvent, to bring to the partnership
ATTY. JOHNSON A.H. Ol'IG (MAY 2020)
capital what he received even though he may have given
receipt for his share only.
Ohlil(alion of partner who receives share of partnership
.:redu
I. Obli_ged to bring to the partnership capital what he has
received even though he may have given receipt for his
share only
Requisites:
a. A partner ha~ received in whole or in part. his share of
the partnership credit .
b. ~he other partners have not collected their shares
c. l he partnership debtor has become insolvent
► ~:.very partne_r is responsible to the partnership for damages
.,uffere~ by 1t through his fault, and he cannot compensate
•~em with the profits and benefits which ht! may have earned
1or ~he pannership by his industry. However, the courts may
cqmtabl~ lessen this responsibility if through the partner's
extraordinary efforts in other activities of the partnership.
unusual profits have been realized. -(1794) ,
► The risk of specific and determinate things, which are not
fungible, contributed to the partnership so that only their use
and fruits may be for the common benefit, shall be borne by
the partner who owns them .
If the thiDgs contribute are fungible, or cannot be kept
without deteriorating, or if they were contributed to be sold.
the risk shall be borne by the partnership. ln the absence of
stipulation, the risk of the things brought and appraised in the
inventory, shall also be borne by the partnership, and in such
case the claim shall be limited to the value at which the:,,
were appraised. ( 1795)
► ;rhe partnership shall be responsible to every partner for the
amounts he may have disbursed on behalf of the partnership
and for the corresponding interest, from the time the expense
are made; it shall also answer to each partner for the
obligations he may have contracted in good faith ii} th:::.
interest of the partnership business, and for risks in ·
consequence of its Management. ( 1796)
► Every partner may associate another person with him in his
~hare, but the associate shall not be admitted into the
partnership without the consent of all the other partners, ever
if the partner having an associate should be a manager.
(1804)
► The partnership books shall be kept, subject to an·,
agreement between the partners, at the principal place of_
business of the partnership, and every partner shall at any
reasonable hour have access to and may inspect and coµy
any of them. (1805)
► Partners shall render on demand true and full information of
all things affecting the partnership to any partner or the legal
representative of any deceased partner or of any · partner
under legal disability. (1806)
► Every partner must account to the partnership for any
benefit, and hold as trustee for it any profits derived by him
without the consent of the other partners from any
liquidation of the partnership or from any use by him of its
property. ( 1807)
► Any partner shall have the right to a fonnal account as tc
.
a. If he • is wrongfully excluded from the partnership
business or possession of its property by his.co-partners;
b. If the right exists under the terms of any agreement:
c. When any partner must account to the partnership from
profit derived by him without the consent of other
partner., ( 1807); . .
d. Whenever other c ircumstances render 11 Just nnd
 ATTY. JOHNSON A .H. ONG (MAY 2020)
reasonable.
► When the ·manner I of management has not been agreed upon,
i\1ANAGEMENT OF THE p th e tioII owmg ru es shall be observed: ( 1803)
OBLIGATIONS WITH RE ARTNERSHIP RIGHTS AND a. All the partners shall be considered agents and whatever
j Partner · SPECT TO MANAGEMENT
ts Power of ma • a~y pne of ~he~ may do alone shall bind the partnership,
, ,1ppointed nagmg Vote of partners ~•thout preJud1ce to the provisions of article 180 I .
partner is .
I manager in th . representing b. one of the partners may, without the consent of th1:
: articles o~ ~rrevocable . without controlling
i
others, make any important alteration in the immovable
I partnership JUSt/lawful . cause; interest necessary property of the partnership, even if it may be useful to
I Revocab le only- to revoke power the partn~rship. ~ut if the refusal of consent by the other
when in bad faith . partners ,_s manifestly prejudicial to the interest of the
:'artner is Power is revocable
1
ppointed
·
partnership, the court's intervention may be sought.
any time for any
j : .11anager after cause General Rule:

l
1
-:onstitution of When the manner of management has not been agreed upon,
l _µ artnershio all the partners shall be considered agents and whatever any
i 2 or more persons Each may execute In case of one_o~ them may d~ _alone shall bind the partnership, without
' ; entru, ted with · all acts of oppo$ition, preJud1ce to the prov1s1ons of article 1801. However none of the
1 : : anagement of administration deci sion of ~artners may, ':ith?ut th_e consent of the othe~, make any
1 ; :iartnership majority shall 1mpo~a~t alteration m the immovable property of the partnership,
! without prevail ; In case even 1f 1t may be useful to the partnership. But if the refusal of
•• , p,:cification of of tie, decision of consent by the other partners is manifestly prejudicial to the
1
I I duties/stipulation partners own ing interest of the partnership, the·court's intervention may be sought.
1
: ,hat each shall not controlling (f 803)
, ' ·1c t w/o the' other's interest shall An act of a partner which is not apparently for the carrying on of
1
I • onsent
: 1-ipulated
1,one of
that
the
prevail
Concurrence of all Absence
necessary for the disability of any
or
business of the partnership in the usual way does not bind the
partnership unless authorized by the other partners.
Except when authorized by the other partners or unless they have
managing partners validity of acts one cannot be abandoned the business, one or more but less than all the partners
1
shal I act w/o the alleged unless have no authority to (GARCI CA)
I consent of otners · there is imminent I . Assign the partnership property in trust for creditors or
danger of. grave · on the assign,ee's promise to pay the debts of the partnership;
2 or irreparable 2. Dispose of the goodwill of the business;
injury to 3. Do an.y other act which would make it impossible to carrv
I partnershi p· on the ordinary business of a partnership;
! Manner of I. A 11 partners are If refusal of 4. · Confess a judgment;
; management not agents of the partn{:r is 5. Enter into a compromise concerning a partnership claim or
/ ' ~reed upon partnership manifestly liability; .
2. Unanimous prejudicial . to 6. Submit a partnership claim or liability to arbitration:
consent required interesi of 7. Renounce a claim of the partnership . .
for alteration of partnership, No act ofa partner in contravention of a restriction on authority
immovable court's shall bind the partnership to persons having kn!)wledge of the
property intervention may restriction. ( 1818) .
be-sought
Appointment of managing partner
► The. partnel'. who has been appointed manager in the articles I. Appointment in the article of incorporation ( 1800)
of partnership may execute all acts of administration despite a. Execute all act of administration de~pite opposition of
the opposition of his partners, unless he should act in bad his partners except he acted in bad faith.
faith; and his power is irrevocable without just or ·1awful b. His power is irrevocable without just or lawful cause.
caus7. The vote of the partners representing the controlling c. Partners representing controlling -interest . shall bl!
interest shall be:
necessary for such revocation of power. necessary for revocation of power. ·
·A power granted after the partnership has been constituted
may be revoked at any time. ( 1800) 2. Other appointment
a. Revocable at any time, with or without just or law ful
\i\
► If two or more partners have been intrusted with the I

management of the partnership wit~out specification of their cause.

respective duties, or without a stipulation that one of them
shall not act without the consent of all the others, each one Two . or more partners have been in trusted with the
may separately execute all acts of administration, but if any m.ana~ement
of them should oppose the acts of the others, the decision of A~. 1801 Artlde 1802 l
Without specification o( their
I

the majority shall prevail. In case of a tie, the matter shall be

decided by the partners owning the controlling interest. . respective duties
(1801) There is stipulated that
Without a stipulation that one of
In case it should have been stipulated that none of the none of the managing
them shall not act without the
managing partners shall act without the consent of the others, conse_nt of all the otherspartners shall act without
the concurrence of all shall be necessary for the validity of the consent of the others
the acts, and the absence or disability of any one of them Rule: Rule:
ca~not be alleged, unless there is imminent danger of grave u. Each one may separately a. The concurrence of
or irreparable injury to the partnership. ( 1802) execute all acts of all shall be necessary
 :C XCEL PROFESSIONAL SERVICES, INC. ATTY . JOHNSON A .H. ONG (MAY 20 2 0)

ad ministration. for the validity of the 3. His right to participate in the management (n)
But if any of them should acts. Right of partner's creditor (1814)
oppose the acts of the b. The absence or Wit11out prejudice to the preferred rights of partnership creditors.
ot hers, the decision of the disability of any one on due application to a competent court by any judgment creditor
maiority sl,all prevail of them cannot be of u partner, the court may charge the interest of the debtor
,:. In case of a tie, the matter alleged, unless there partner with payment of the unsatisfied amount of such judgment
shall be dt.-cided by the is imminent danger debr_ with int~rcst thereon; and may then or · later appoint a
partners owning the af gra,-e or rec~ivcr nf hi s share of the profits, and of any other money due or
controlling inJerest. irreparable iniur11 to to full due_to him in respect of the partnership, and make all other
the )artnershi ordt:rs, d1rcct lons, uccounts and inquiries which the debtor
pnrtner m_ight have made, or which the circumstances of the case
rrohibition in business muy require.
·/ Ca italist lndustrh1I 1irtncr 1789 The
• interest charo"'e•d muy be re deemed at any tune . before
, ( armot engage 111 same · 111 of Industrial partner cannot force 1osure • or in
. case of u sa Ie '-·,
u,.:mg d'irectecl by the court, may
1
h11siness in which the engage in business for be pur_~hased without thereby causing a dissolution:
/ p:-trtnership is engaged except himself (any business) I. W1th ~rate property. by any one or more of the partners·
; i ft here is stipulation except if there is or · ·
2- With l?!!!tnershlp property. by any one or more of the
' -------:--:----;;::--:- ::-t-;;s~ ti=ul:-=ac:.ti-=:o:-'
: n--;---:-:--;-::--:-:=-::-::::-1
-
, 1· t~t'ason: To avoid conflict of Reason : Industrial partners ~artners with the consent of all the partners whose
111 terest must devote his entire interests 11re not so charged or sold .
industr to the artnershi
' : Violation Violation: Rule on conveyance of re~I property (by any partner or all
, I 1. Bring to the common I. Exclude him from the partners)
I funds any profits accruing firm Conveye Title of Execu Passing of title/Right of
to him from his 2. Avail themselves of d by' real ted in the partnership
I transactions
I 2. Shall personally bear all
the benefits which he
may have obtained
property the
name
i the losses 3. Damages, in either of
I case. Any Partners hi Partne Title passes to the buyer
partner p rship but the Partnership may
Property Rights ora Partner ( 1810) recover \
Exception: ·
The property rights of a partner are:
I. l;-lis rights in specific partnership property
A partner is co-owner with his partners of specific .
\. Conveyance was
the usual way of
in\
partnership property. ( 1811) business, except
• Equal right with his partners to possess specific when the buyer has \
partnership property for partnership purposes but not for knowledge of the
any other purpose without the consent of his partners. partner lack of
• Not assignable except in connection with the assignment authority .
2
of rights of all the partners in the same property . ·2. Real property was
rd
• Not subject to attachment or execution, except on a transferred to 3 \
claim against the partnership. But partnership property person in good faith .
D can be attached for partnership debt. · Any Partnershi Partne Passes the equitable I
pn partner p interest of the i
livi • Not subject to legal supoort ·
partnership provided the
Wh 2. His interest in the partnership - A partner's 'interest in the
conveyance was in the
Wh partnership is his share of the profits and surplus. ( 1812)
usual way .of business.
Fo • A conveyance by a partner of his whole interest in tre
By . One ·. or One or Title passes to the buyer \
partnership does not of itself diss_olve the partnership, or,
F~rs partners more but more but the Partnership may
Gi
Les
Jet'
T.
as against the other partners in the absence of agreement.

Right of the assignee: Entitles the ass'ignee to receive in

accordance with his contract the profits to which the
whose
_name title
stands
not . , all
partner
(no right
but not recover
all
partne
Exception:
l. Conveyance was in .
1

I
of rs the ·· usual way of \
m assigning partner would otherwise be entitled.
p~rtnershi business;- except
C'
p when the buyer has i
Assignee has no right: disclose) knowledge of the \
a. To interfere in the management or administration of the . partner lack of ;
partnership business or affairs; authority .
b. To require any information · or account of partnership 2. Real property was
rd
transactions, tra.t)sferred to 3
c. To inspect the partnership books; · oerson in good faith
• fn case of fraud in the management of the partnership, Partner One or Partne Passes the equitable
the assignee may avail himself of the usual remedies. more or rship/p interest of the 1\
• Jn case of a 'dissolution of the partnership, the assignee is all the artner partnership, provided the
entitled to receive his _a ssignor's interest and may require partners, own act. is one within the \
an account from the date only of the last account agreed or in a name authorit)' of the partner. \
to by all the partners. ( I 813) third (usual way of business)

Bl.2802
www.prtc.com.ph
 OFESSIONAL SERVICES, INC .
ATTY. JOHNSON A .H . ONG (MA'!' 2020\

r person in
trust for
the
No existing partnership & all
those represented consented;
Not all partners of existing
Person who represented
himself & all those who
made representation liabl e
partnershi part_nership consents to pro-rata/jointly
p representation
All All All Passes all their rights in No ex isting partnership & not all Person who represented
L ai-tner pa11ner partne such property represented consented; himself liable & those who
rs None of partners in existing made/consented to
partnership consented representation separately
Obligation •of the partners with regards to third person . liable
" An admission or representation made by any partner
concerning partnership affairs within the scope of hi s A person admitted as a partner into an existing partnership is
authority is evidence against the partnership. ( 1820) liable for all the obligations · of the partnership arising
• Notice to -any partner of any matter relat ing to partnership before his admission as though he had been a partner when
affairs, and the knowledge of the partner acting in the such obligations were incurred, except that this liability shall
particular matter, acquired while a partner or then present to be satisfied only out of partnership property unless there
his mind, and the knowledge of any other partner who is a stipulation to the contrary. ( 1826)
reasonably could and should have coinmunicated it to · the The creditors of the partnership shall be preferred to
acting partner, operate as notice to or knowledge of the those of each partner as regards the partnership property.
partnership. ( 182 I) Without prejudice to this right, the private creditors of each
Exception: In case of fraud on the partnership, committed by partner may ask the attachment and public sale of the share
or with the consent of that partner. of the latter in the partnership assets. ( 1827)
,. All partners and the partnership are solida ry liability for
everything chargeable to the partnership. ( 1824) DISSSOLUTION
a. Any wrongful act or omission of any partner acting in Dissolution ·is change in the relation of the partners caused by
the ordinary course of the business of the partnership or any partner ceasing to be associated in the_ carrying on as ·
with the authority of co-partners, loss or injury is distinguished from the winding · up o~ the busmess. ~ 1828) O~
caused to any person, not being a partner in the dissolution the partnership is not tennmated, but contmues until
partnersh ip, or any penalty is incurred, the partnership the winding up of partnership affairs is completed. ( 1829)
is liable therefor to the same extent as the partner so
acting or omitting to act. ( 1822) . Automatic dissolution (1830) Judicial dissolution
b. Where one partner acting within the scope of his (1831) · \ ·
apparent authority receives money or property of a third I. Without violation of the 1. A partner has been
person and misapplies it; ( 1823, I) agreement between the declared insane ' in

\
c. Where the partnership in the course of its business partners: any 3udicial
2
receives money or property of a third person and the a. By the termination of the proceeding or is
money or property so received is misapplied by a~y definite term or shown to be of
partner while it is in the custody of the partnership. particular undertaking unsound mind;
(1823,2) specified in the 2. A partner becomes
• Partnership by estoppels · agreement; incapable of \
When a person represents himself or cons~nt to another to .b. By the express will of . performing his part
another representing him to anyone_(he 1s an agent o_fthe any partner, who must of the partnershiQ
• persons consenting to such representation) as a partner in an · act in good faith, when contract;
·I
existing partnership, he is liable to · no definite term or 3. A partner has bee11 I
a. Any _such persons to whom _such representation has been partjcular is specified; guilty
conduc.t
of sue\ \
as
'.
tends tO '
made. C. By the express will of all
b. The representation was made in a public manner, he is the gartners who have affect prejudicial\
liable to such person, whether the repre5entation has or their the carQ'.'.ing on of
"
not assigned
has not been made or communicated to such person. interests or suffered the business;
Partnership liability result them to be charged for 4. A partner wi\lfu\ ly
I. When all the members of the existing partnership their separate debts, or persiste nt I)
consent to the representation. · either before or after. the commits a -9l brea
2. Liable as though he were an actual member o f the termination of any of the Qartners\,ip
partnership specified term or agreement, or
No partnership liability result particular undertaking; otherwise so
I. He is liable pro rata with the other persons, if any, so d. By the expulsion of an::i conducts himsel f \n
consenting to the contract or representation as to incur partner from the matters relating tn
liability, otherwise separately. business bona fide in the punncrsh\ p
accordance with such a business thnt it is
Liabilities tn esto eJ power conferred by the not reasonobly
A II partners consented to Partnership is liable agreement between the prncticable tQ
representation cnn:~ \'
pa rtners on the b t1sin ess- m
2. In s;ontravcntjQn or \hi.) partntrship with \
agreement bctwc~n 1b~ him: '
Qartners, where the s. The buslnc!-s (
c irc umstances do not nermit ni1rtnor~hi11
 ATTY . JOHNSON A.H. ONG (MAY 2020)
fXCEL PROFESSIONAL SERVICES. INC .

only be carri.-d on I.The dissolution being by acl of any partner, the

a dissolution under any 0th er
provision of this article. by
the express will of any
·partner at any time; . render a dissolution
J. Any event which makes it
unlawful for the business of
~ership to be carried
ot a loss; pa11ncr acting for the partnership had knowledge or
the- dissolution: or
6. Other
circumstances 2. The di ssolution being by the death or insolvency ot'
a partner, the partner acting for the partnership ha,1
knowledge or notice of the death or insolvency.
equitable.
On the application of 2. With respect 10 persons not partners, the partnership is in no
case bound by any act of a partner aner dissolution:
the purchaser of a

I
on or for the members IO
carry it on in partnership .
4 . When a specific thing wdluch
I 8 partner had promise _w
contribute to the partn<!rslup.
/ perishes before the delivery ;
,1. Where the partnership is dissolved because it is unlawful
partner's interest under
article l81J or 1814: to carry on the business, unless ·the act is appropriate for
winding up partnership affairs; or
J. Airer the
1ermirution of the b. Where the partner has become insolvent; or
c. Where the partner has no authority to wind up
~ c d term or
particular partnership affairs; except by a transaction with one who

I
in any case by the loss of the
thing, when the partner \~ho undertaking;
2· At any time if the I. Had extended credit to the partnership prior to
contributed it having dissolution and had no knowledge or notice of his
reserved the ownership partnership was a
partnership at will want of authority; or
thereof, has only transferred
when the interest 2. Had not extended credit to the partnership prior to
to the partnership the use or
was assigned or dissolution, and, having no knowledge or notice of
enjoyment of the same; but
when the charging his want of authority, the fact of his want of
the partnership shall not be
·order was issued . authority has not been advertised in the manner
dissolved by the loss of the
thing when it occurs after the provided for advertising the fact of dissolution.
partnership has acquired the
ownership thereof; • The dissolution of the partnership does not of itself discharge
5. Death of.any partner; the existing liability of any partner ( 1835)
6. Insolvency of any partner or Exception:
of the partnership; A partner is discharged from any existing liability upon
7. Civil ~ interdiction of any dissolution of the partnership by an agreement to that effect
artner; between hi.mself, the partnership creditor and the person or
partnership continuing the business; and such agreement ma)
Effect of dissolution · be inferred from the course of dealing between the creditor
General Rule: Dissolution terminates all authority of any partner having knowledge of the dissolution and the person or
10 act for the partnership: ( 1832) partnership continuing the business.
Exception: • The individual property of a dece~d partner shall be liable
I. By any act .appropriate for winding up partnership affairs or for all obligations of the partnership incurred while he was a
completing transactions unfinished at dissolution; partner, but subject . to the . prior . payment of his separate
2. By any transaction which would bind the partnership if debts. (Ibid)
I dissolution had not taken place, provided the other party to • Where a partnership contract is rescinded on the·ground or
,: the transaction: the fraud or misrepresentation of one of the parties thereto,
II a. Had extended credit to the partnership prior to the party entitled to rescind is\ without prejudice to any other
M
. dissolution.and had no knowledge or notice of the right, entitled: ( 1838)
w
dissolution; or I. To
a lien on, -or right pf retention of, the surplus of the
b. Though he had not so extended credit, had nevertheless partnership property after satisfying the partnership
known of the partnership prior to dissolution, and, liabilities to third persons for any sum of money paid by
having no knowledge or notice of dissolution, the fact of him for the purchase of an interest in the partnership and
dissolution had not been advertised in a newspaper of for any capital or advances contributed by him;
general circulation in the place (or in each place if more 2. To stand, after all liabilities .to third persons have been
than one) at which the partnership business was satisfied, in the place of the creditors of the partnership
regularly carried on. , for any payments made by him In respect of Iii?
Liability of a partner shalJ be satisfied out of .partnership partnership liabilities; and ·
assets alone when such partner had been prior to dissolution 3. To be indemnified by the person guilty of the fraud or
J. .Unknown as a partner to the person with whom tlie making the representation against all debts and liabililic,
contract is made; and of the partnership.
2. So far unknown and inactive in partnership affairs that
the business reputation of the partnership could not be LIMITED PARTNERSHIP
said to have been in any degree due to his connection Members one or more general partners and one or more limited
with it. partners:
)I
~;
I. With respect to the partners, Ge~eral Partner/partnership Limited
a: When the dissolution is not by the act, insolvency or mutnu/11artnershlp
death of a partner; or I. General partner is l. limited partner' s \
b. When the dissolution is by such act, insolvency or death personally liable for the liability extends onl)
of a partner, each partner is liable to his co-partners for partnership obligation to his ca.µitcl \
his share of any liability created by any partner acting
for the partnership as if the partnership had not been 2. When management has not
,, Limited partner \
contribution
has \
dissolved unless: ( 1833) been aureed uoon, ull no share in the
 ATTY . JOHNSON A.H. ONG (MAY 2020)
general partner have equal
right in the management of managemerit of a 1848
the partners.hip. limited partnership Right of General partner Right of limited
I J. General part ner may J . Limited partner must
artner Art'. '1851
L The partnership books shall A limited partner
contribute money contribute money or be kept, subject to any shall have the same
property or industry ' property but not agreement between the rights as a general
industr partners, at the principal place partner to:
,i _ General partner is a proper 4. Limited partner is not of business of the partnership, (1) Have the
pa~ to proceeding by or a proper party to and every partner shall at any partnership, books
agamst a partnership proceedings by or reasonable hour have access kept at the principal
a ainst a Jartnershi . to and may inspect and copy place of business of
General partner may 5. Limited partner name any of them. ( I 805) the partnership, and
appear in the firm name must not appear in the 2. Partners shall render on at a reasonable hour
firm name demand true and full to inspect and copy
General partner cannot 6. No prohibition in information of all things any of them;
engage in a business which case of Limited affecting the partnership to (2) Have on
is of the kind of business partner any partner or the legal demand true and full
in which -the partnership is representative of any deceased information of all ·
en a e. . partner or of any partner things affecting the
7. Retirement, death, insanity 7. Do not the same under legal disability. ( 1806) partnership, and a
or insolvency of general effect, executor or 3. Any partner shall have the formal account of
partner dissolves the administrator shall right' to a formal account as to partnership affairs
·I partnership have all the rights of partnership affairs: whenever
./ a limited partner for a. lfhe is wrongfully circumstances render
I the purpose of setting excluded from the it just and reasonable;
partnership business or and
'--:--:::----,------------1---=hc:.:i.::..s..:;.es::.:ta~t::..:e.:....- - --- -1 Have
II 8. Can be constituted in 8. Must follow all the possession of its property (3)
' dissolution and
I whatever form requirement of the by his co-partners;
1 law for limited· b; If the right exists under winding up by decree
·1
I the terms of any of court.
9. Composed of all general 9. Composed of at least agreement; A limited · partner
partner one general partner c. As provided by article shall have the right to
and at least one 1807; receive a share· of the
limited artner d. Whenever other profits or other
/ I0. No need to include in the 10. Must include in the circumstances render it compensation by way
Ii partnership name the word partnership name the just and reasonable. of income, and to the-
p "LTD" word "LIMITED" or A general partner shall have all return of his
Iii the rights and powers and be contribution, (1851)
w "LTD"
w,· I I . When the interest of one I I. When the interest of subject to all the restrictions arid provided that after
of the general partner is the limited partner is liabilities of · a partner in a - such ' ·payrpent . is
Ffl charged, the interest partnership ·· without limited made, whether from '
charged, his interest may
Fir, be _redeemed with separate may · be redeemed partners. However, withoQt the property of the
GI property of one or more with the separate written consent or ratification of' partnership or that of
Le · partners or; partnership property of any the .specific act by all the limited a general pJlrtner, the
Ne partners, a general partner or all of partnership assets .a re
lC TJ property with the consent general partner, ,b ut
Do) of all · partners whose may not be redeemed the general partners have no in excess of all
suJ . interest is not so charged with partnership authority to: liabilities of the
Gr, or sold. 1814 .(1862 (1) Do any act \n partnership except
Lei contravention of the liabilities to limited
N . partners on account
General Rule: certificate;
A~
Tot. The limited partners as such shall not be bound by the obligations
(2) Do any act which would of th~ir contributions
X T;, of the partnership.(1843) ' .. make it impossible to and to general
Don carry on the ·ordinary partners ( 1856).
Les! Exception:
Don;
business of the
" The name of the partnership failed to add the word '!Limited" partnership;
Comp1 or "Ltd". (3) Confess a judgment
taxatio
• Failure to file the article of co-partnership to the SEC. against the partnership;
Proper. ., The contributions of a limited partner mav be cash or (4) Possess partnership
(same~
property, but not services. (1845) • property, or assign their
Prob 1 • The surname of a limited partner appear in the partnership rights in specific
Ara - n,ame unless: · • . partnership property, for
donees 0 (I) It !s also the surname of a general partner, or other than a partnership
House a (2) Prr?r to the time when the limited partner became such, purpose; '
Apartme th e business has been carried on under a name in which his (5) Admit a person as a
surname appeared. ( 1846) general partner;
A limited partner takes part in the control of the business. (6) Admit a person as a
limited artner, unless the·

,r:Jage 9 of 54
 EXCEL PROFESSIONAL SERVICES , INC . ATTY, JOHNSON A.H. ONG (MAY 2020)

ril!ht so to do is given in ret urn ~

th~ certificate; c. Afk r he h~s six months' notice in writing to nil other
Continue the business •~•embe·rs, i f no time is spec ified in the certificate, either
with partnership property tor the ,..,turn of the contri bution or for the dissolution of
on the death. retirement, the partnership.
insanity. civil interdiction • l. iabi!ity of limited partner to the partnership ( 1858)
or insolvency ofa general " · l·or the d11Tercnce between his contribution as actuully
partner. unless the right made and that stated in the certificat\;_ as having been
so to do is given in the made, and
certificate. <1850} b . For . ~ny unpaid contribut ion which he agreed in the
cert1t_1~atc to make in the future at the time and on the
• A person may be a general partn~r and a l_imited part'.1er_i'.1 cond1t1 011s stated in the ccniticatc
the same partnership at the same time, provided that this ta1.:t Liab!lity limited partner as trnstee - A limited partner is
shall be stated in the certificate. cons1dere_d as trustee for the pa1tnership.
• A person who is a general, and also at the same time a a. Spec ific property stated in the certificate as contributed
limited partner, shall have all the rights and powers and be by hi m. but which was not contributed or which has
subject to all the restrictions of a genera l partner;_ except t~iat. been wrongfully returned . and
in respect to hi s contribution, he shall have the_ rights against b. Mo~ey or other property wrongfully paid or sonveyed
the other members which he would have had 1f he were not to him on account of his contribution.
also a general partner. ( 1853) Requisites fo r waiver or compromise
• Allowable transaction of limited partner (not also general a. Consent of all members;
partner) b . It docs not affect the right of a c:reditor of a partnership
a. Loan money to the partnership who extended credit or whose claim arose after the
b. Transact other business with the partnership, filing and before a cancellation or amendment of the
c. Received a pro rata share of the assets wi th the general certificate, to enforce such liabilities.
creditors (ifhe is not also a general partner) • I\ limited partner's interest is assignable. ( 18S9)
Prohibited transactions , • /\n assignee, who does not become a substituted limited
a.
Receive or holc,l as collateral security and partnership partner, has no right to require any information or account of
property, or the partnership transactions or to inspect the partnership
b. Receive ti-om a general partner or the partnership any books; he is only entitled to receive the share of the profits o
payment, conveyance, or release from liability if at the other compensation by way of income, or the return of hi~;
time the assets of the partnership are not sufficient to contribution, to which his assignor would otherwise be
discharge partnership liabilities to persons not claiming enti_tled . (Right are similar to those of a person to whom a
as general or limited partners · partner conveyed his whole interest in the partnership)
The receiving of collateral security, or payment, conveyance,
2 or release in violation of the foregoing prohibition is a fraud A substituted limited partner - is a person admitted to all the
on the creditors of the partnership. (Reason ~rd persons enjoy rights of a limited partner who has died or has assigned his
preferential rights insofar as a partnership ass·ets are interest in a partnership
concemed)(l854) Requisites when assignee become substituted limited partner
• A limited partner may receive from the partnership the share a. All the members consent thereto or if the assignor, being
of the profits or . the 9ompensation by way of income thereunto empowered by the certificate, gives the
stipulated for . in the certificate. (provided that Partnership assignee that right. ·
, assets > All outside liabilities) ( I 856) b. An assignee becomes a substituted limited partner when
Where there are several limit~ partners the members may the certificate is appropriately amended in accordance
agree that one or more of the , limited partners shall have a with article 1865.
Grc priority over other limited partners as to the return of their c. The certificate as amended must be registered in the
Les contributions; as to their compensation by way of income, or SEC.
Net
)C rt
as to any other matter. If such an agreement is made it shail
Dog be stated in the · certi·ficate, and in the absence of such a • The · retirement, death, insolveney, insanity or civil
Suj statement all the limited partners shall stand upon equal
footing. ( 1·855)
· interdiction of a general partner dissolves the partnership,
unless the business is continued by the remaining general
G9 partners:
LeJ • Requisites for return of contribution of limit~d partner.
N~ (1857) (I) Under a right so to do stated in .t he certificate, or
Adi a. All liabilities of the partnership, except liabilities to (2)' With the consent of all members. ( 1860)
Tot • On the death of a limited partner his executor or
xlJ general partners and to limited partners on account of
Doi their contributions, have been paid or there remains administrator shall ·have all the rights of a limited partner fr, r
. L~i property of the partnership sufficient to pay'them; the purpose of setting his estate, and such power as th~
. . Dj b. The consent of all .members is had, unless the return of deceased had to constitute his assignee a substituted limited
~ome the contribution may be rightfully demanded under the partner.
:axatO
' ' ~j provisions of the second paragraph; and . • t he estate of a deceased limited partner shall be liable for all
'ro" c. The certificate is cancelled or so amended as to set forth his liabilities as a limited partner. ( 1861')
,ame
the withdrawal or reduction,
ob 1 • Return of contribution of limited partner as a matter of Liabilitie shill rink i ment
right - Lirpited partnet may rightfully demand the return of General Limited 1863) _1
his contribution: (J 857) a. Those owing to creditors , a. Those to creditors, in the I
On the dissolution of a partnership: or other than 1artners; order of riorit , as \
rriva l of the date s ecified in the cert ifica e for its

www.prtc.com.ph SL.2802
 P OFESSIONAL SERVICES. INC.
ATTY. JOHNSON A.H . ONG (MAY 2020)
Those owing to partn~rs
other than for capital and provided by law, except Special law can create only
profits; those to limited partners on I. Public corporation
Those owing to partners in account of their 2. Government owned or controlled corporations provided:
respect of capital; contributions, and to a. In the interest of common goods
Those owing to partners in b. general partners; b. Subject to test of economic viability.
respect of ruofits. , Those to limited partners in Corporation not entitled to moral damages
respect to th-eir share of the A corporation, being an artificial person and having existence
profits and other only in legal contemplation, has no feeling, no emotions, no
compensation by way of senses; therefore, it cannot experience physical suffering, mental
income on their anguish, fright , serious anxiety, wounded feelings, etc. ·
contributions;
c. Those to limited partners in Distinction between partnership And Corporation
respect to the capital..,Qf I . Manner of creation ·
their contributions; 2. Number of incorporators
d. Those to general partners 3. Commenc_ement of juridical personality
other than for capital and 4. Powers
profits; 5. Management
e. Those to general partners 6. Effect ofmis111anagement
in respect to profits; 7. Right of succession
f. Those to general partners 8. Transferahility of interest
in respect to capital. 9. Term of existence
I 0. Firm name
11. Dissolution
Note: In general partnership, the payment of capital is preferred 12. Laws which govern
,h,m with respect to profits. In limited partnership, the payme~t
of profit has preference over capital. Classification of corporation · .
J. Stock corporation - Corporations which have capital stock
Revised Corporation Code of the Philippines . divided into shares anq are authorized to distribute to the
holders of such shares dividends or .allotments ofthe surplus
· (R.A. 112.3 2) profits on the basi~ of the shares held. (Sec~• BP 68)
2. Non-sto9k corpor'.3-tion - All other corporat1~ms are n~n-stock
Element of Corporation coTP,orations.
2
I . It is an artificial being
2. Created by operation of law Other classification of Corporations
1
3. Having the right of succession · . 1. Number of persons
D ,( The powers, attributes and
properties expressly \lOthorized by a. . Corporation aggregate - more t.h an one member
pr: law or incident to its existence. (Sec 2; R.A. 1123,2) b. Corporation sole - one member or corporator
/iv
Wh c. On~-person corporation (OPC)
Doctrine of separate juridical personality . . 2. Religious purpose or not .
Wh
Corporation has juridical pers<;>n~lity separate and distinct from a. Ecclesiastical corporation - Relig~ous
the stockholders composing the corporation. b.
' Lay co-i-poration - other than religious purpose. (Eithe r
, eleemosynary or civil)
Piercing the vell of corporate entity . . 3. Charitable or not · ,
When the veil of corporate fiction is used · as a sh1el.d .. to ~- Eleemosynary co_rporation - Charital;ile
perpetuate fraud, to defeat public convenience, justif~ w.r~ng !)r b. Civil corporation-Business of profit
defend crim¢, this fiction shall be disregardeq and the md1v1duals 4. Country of creation
composing it 'will 'be treated identically.
a. Domfstic corporation .:. incorporated under Philippine
law · ·
· Doctrine of limited capa~ty ,
b. Foreign corporation - Incorporated under foreign law
Corporation may exercise only powers expressly authorized by 5: Legal right to corporate exisience
law or incident to its existence.
a. De jure corporation - exist in fact and in law
b. De 'facto corporation - exist in fact but.not in law
Theory of Corporation ., 6. Public or .not . . ·
I. Theory of concession - Exist by grant of the state (Philippine
a. Close corporation - limited to selected persons
Setting)
b. Ope~ C!)rporation·- open to a~ person
2. Gennosenshaft theory - It exist because the parties want it to 7. Relation to others corporation
exist · ·
a. Parent corporation - Owner of more than 50% of anot h
corporation ·
Private Corporation can only be created by corporation code
(jl.P. 68) b. Subsidiary corporation - acquire of parent company
8. True or limited,sense
Under Art. Xll, Sec 16 of the 1987 Constitution whicli provides .
a.· · True corporation
as follows: ·
b. corporation
Quasi
''The Congress shall not, except by general. law, Arovide for the
formation, organization, or regulation of private ·corporations.
I . Corporation by pr~scnptton - exercise power
Government-owned or controlled corporations may be created or
indefinite period without interference fr
sov ereign power. (Roman Catholic C hurch )
established by special charters in the interest c,f the common
gc>od and subject to the test of economic viability." 2. Corporation by estoppels
9. Public or private purpose