Property Rights of a

Partner
 Property Rights of a
Partner
Rights in specific
partnership property
Interest in the partnership
To participate in
management (1810)
 Specific Partnership
Property
Partner is co-owner
Equal right to possess
Not assignable
Not subject to attachment
or execution
Not subject to support
(1811)
Interest in the Partnership

1812. A partner’s
interest in the partnership
is his share of the profits
and surplus.
 Management

Conveyance or
assignment of interest
does not dissolve
partnership
Assignee cannot
interfere in management
 Obligations of Partners with
Regard to Third Persons

Partnership by estoppel
All partners liable pro rata
with all their property after
all partnership assets have
been exhausted
 Obligations of Partners with
Regard to Third Persons

Every partner is an agent of

partnership
Unless the person has no
authority and other party
has knowledge
 Obligations of Partners with
Regard to Third Persons

Less than all the partners

have no authority:
Assign the partnership
property in trust for
creditors
Dispose goodwill
Do act that would make it impossible to
carry on ordinary business
Confess a judgment
Enter into compromise
Submit claim or liability to arbitration
Renounce claim of partnership
 New partner

Liable for al the obligations

of the partnership arising
before his admission
Liability shall be satisfied
only out of partnership
property (1826)
 Preferred

Creditors of
partnership preferred
to those of each
partner as regards the
partnership property
 Dissolution and Winding
Up
Dissolution is the change in the
relation of the partners
Winding up is the process of settling
the business of partnership after
dissolution
Termination: all partnership affairs
are completely wound up and
finally settled. (1828)
 Causes of Dissolution

Without violation of agreement With violation

• Termination of definite term or By the express will of any partner
undertaking at any time
• Where there is no definite
period, express will of any
partner who must act in good
faith
• Express will of partners who
have not assigned their interests
• Expulsion of any partner
 Causes of Dissolution

 Any event which makes it unlawful for the

business of partnership to be carried on
 Specific thing perishes before delivery
 Death of any partner
 Insolvency of any partner
 Civil Interdiction
 Decree of Court (1830)
 Court Decree

Insanity or Unsound Mind

Partner becomes incapable
Partner guilty of prejudicial conduct
Partner willfully or persistently
commits a breach
Business can only be carried at a loss
 Limited Partnership

Composed of two classes of partners,

general and limited
Liability limited to the amount of
money he had put up
Same type of liability as stockholder
No prohibition to engage in business
Comply with statutory requirements
(1844)
 Limited Partnership

Surname of a limited partner shall

not appear in a partnership name
Surname also of general partners
Business had been carried on
under that name
Partner whose surname appears
liable as general partner
 Rights of limited partner

To inspect partnership books

To demand information
Have dissolution or winding up by
decree of court
To receive share in the profits
To receive the return of his
contributions (1851)
 Notes

 A person may be a general partner and a limited partner.

 A limited partner shall not receive from a general

partner or out of partnership property any part of his
contribution until all liabilities of the partnership have
been paid or there remains property of the partnership
sufficient to pay them.
 He may rightfully demand the return of his contribution
on the dissolution of a partnership, when the date
specified in the certificate has arrived or after he has
given six months’ notice in writing to all other members.
 Notes

Limited partners are second in

priority in settling accounts of the
partnership.
A limited partner is a mere
contributor. He has no right and
power to participate in the
management and control of the
business (1866)
 Private Corporations

Corporation Code of the Philippines

(BP Blg. 68)
A corporation is an artificial being
created by operation of law, having
the right of succession and the
powers, attributes ad properties
expressly authorized by law or
incident to its existence (Sec. 2)
 Classes

Stock
Capital stock divided into shares and
are authorized to distribute to the
holders of such shares dividends or
allotments of the surplus profits on
the basis of shares
Non-stock
 Terms

 Corporators
 Those who compose a corporation whether as
stockholders or members
 Incorporators
 Mentioned in the Articles of Incorporation as
original formators
 Stockholders or shareholders
 Stock Corporation
 Members
 Non-stock
 Terms

 Capital Stock
 Amount fixed in the articles of incorporation to be
subscribed and paid in by the shareholders
 Synonymous with authorized capital stock

 Subscribed capital stock

 Amount of capital stock subscribed whether fully paid
or not.
 Outstanding capital stock
 Portion of the capital stock which is issued and held
by persons other than the corporation itself.
 Terms

 Paid-up capital stock

 Portion of the subscribed or outstanding capital stock
that is paid (Section 13: at least 25%)

 Unissued capital stock

 Portion of the capital stock that is not issued or
subscribed. It does not vote and draws no dividends.

 Capital
 Used broadly to indicate the entire property or assets
of the corporation
Number and qualifications

Any number of natural

persons not less than five but
not more than 15 (Sec. 10)
Incorporators must own or be
a subscriber to at least one
share of the capital stock
 Corporate Term

Fifty years
Extendible for another fifty
years
 Filipino ownership
requirement
 Exploration, development and utilization of natural resources-
60% of the capital should be owned by Filipinos
 Public service corporations-at least 60%
 Educational corporations-60%
 Banking-60%
 Retail Trade-Wholly owned
 Rural Banks-60%
 Coastwide shipping-60%
 Pawnshop-70%
 Articles of Incorporation

 Section 14 enumerates matters that must be stated in the

Articles of Incorporation
 There must be a name with ‘corporation’ or “inc.” Must
not be identical to the name of an existing corpration.
 Purpose must be lawful

 May be amended by a majority vote of the board of

directors
 Corporate personality starts from the moment SEC
issues a Certificate of Incorporation
 Board of Directors

 Corporate powers, all businesses conducted and all

property controlled and held by Board of Directors
 One year in office

 Must own at least one share of the capital stock

 Non-stock: Trustees

 Every stockholder shall have the right to vote in person

or by proxy the number of shares of stock standing.
 Must not be less than five nor more than 15
 Corporate Officers

 President-must be a director

 Treasurer-need not be a director

 Secretary-resident and citizen of the Philippines

 Concurrent positions may be held except:

 President and secretary
 President and treasurer
 Powers
 To sue and be sued

 Succession

 Use corporate seal

 Amend its articles of incorporation

 Adopt by-laws

 Issue or sell stocks

 Own real or personal property

 Enter into merger or consolidation

 Donate
 Powers

To establish pension, retirement or

other plans
To exercise other authorized powers
(Section 36)
To extend or shorten corporate term
To declare dividends
Portion of profits of a corporation set
aside ratably to the stockholders
 Ultra Vires

Section 45. No corporation under

this Code shall possess or exercise
any corporate powers except those
conferred by this Code or by its
articles of incorporation and
except such as are necessary or
incidental to the exercise of the
powers so concurred.
 By-Laws

Rules of action adopted by

the corporation for its
internal regulations and for
the government of its
officers and of its
stockholders and members.
Merger and Consolidation

Merger
Two or more corporations
unite, one corporation which
remains in being, absorbing or
merging in itself the other
which disappears as a separate
corporation.
Consolidation
Two or more corporations
unite, giving rise to a new
corporate body and dissolving
the constituent corporations as
separate corporations.
 Non-stock

Charitable, religious, educational,

professional, cultural, recreational,
fraternal, literary, scientific, social,
civic service etc.
Profit shall be used in furtherance
of its purpose.
 Close

Stock is held in few hands or

few families
Not exceeding 20
Stock shall not be listed in any
stock exchange or offered to
the public.
 Dissolution

 Voluntary
 Vote of the board of directors
 Judgment of the SEC
 Amendment of the Articles of Incorporation

 Involuntary
 Expiration of the term
 Legislative enactment
 Failure to organize within two years from
incorporation
 Order of the SEC
 Liquidation

Winding up of the affairs of

the corporation by reducing
its assets into money, settling
with creditors and debtors
and apportioning the amount
of profit and loss.
 Foreign corporation

Corporation created by or under

the laws of another State.
Have the right to transact
business in the Philippines after it
shall have obtained a license to
transact business