1.
Distinguish partnership with (a) corporation, (b) co-ownership, (c) broker, and (d)
agency.
(a)
Partnership
Manner of Creation Under Article 1767 and 1787 of the
Civil Code, a partnership is created by
mere consent or by mere agreement of
the parties.
Number of Article 1767 provides that a contract of
Organizers partnership exists when two or more
persons bind themselves to engage in a
partnership.
Commencement of According to Article 1784 of the Civil
juridical Code, a partnership begins from the
personality moment of the execution of the
contract, unless it is otherwise
stipulated. Thus being a contract
perfected by mere consent, its juridical
personality and capacity attaches
instantly, the moment it is created.
Powers A partnership may exercise any powers
as the partners may agree upon. This is
based on the principle under Article
1306 NCC that allows contracting
parties to establish such stipulations,
terms, and conditions as they deem
convenient so long as it is not contrary
to laws, morals, good conduct, public
policy, and public good.
Managment A partnership, being a commutative
contract may be managed by each
partner. Therefore, a partner is deemed
as an agent of the partnership and any
act done by one is also the act of the
other/s However, in the event that the
acts or omissions of a partner amounts
Corporation
Under Section 2 of the
Revised Corporation Code, a
corporation is an artificial
being created by operation of
law.
Under Section 10 of the
Revised Corporation Code, a
corporation may have as
many incorporators as it
wants so long as it does not
exceed 15 incorporators..
With respect to corporations,
however, since they may only
be created by operation of
law, their juridical personality
attached only upon the
issuance of their certificate of
incoportation by the Securities
and Exchange Commision as
required under Section 18 of
the RCC.
A corporation, however, being
an artifical being created by
operation of law may only
exercise the powers, rights,
and attributes as expressly
authorized by the law of
incidental to its existence.
(Sec. 2 RCC)
A corporation, on the other
hand, acts through its board of
directors who is vested with
the power to manage the
affairs of the same. Therefore,
in case of mismanagment, the
corporation having juridical
 to mismanagment then a partner may
sue his co-partner who mismanages
under Articles 1794, 1806, and 1809
Tranferrability of Under the doctrine of delectus
interest personae, a partner in a partnership may
not tranfer his intrest in the same so as
to make a 3rd party a partner without
prior consent from all existing partners.
This is because of the consensual
nature of a contract of partnership, a
persson shall have the power to choose
to whom he shall associate with.
(b)
Partnership
Manner of Creation As previously discussed, a partnership
is created by mere consent or mere
agreement between two or more
contracting parties
Juridical According to Article 1784 of the Civil Co-ownership does not have
Personality Code, a partnership begins from the a
moment of the execution of the personality.
contract, unless it is otherwise
stipulated. Thus being a contract
perfected by mere consent, its juridical
personality and capacity attaches
instantly, the moment it is created.
Such personality is separate and distinct
from that of the partners establishing the
same.
Purpose The purpose of a partnership as
established under Article 1767, is for
the engaging into a business venture for
profit.
(c)
Partnership
capacity may sue the board
who errs in its management
under Section 22 RCC.
Section 62 RCC provides that
a stockholder in a corporation
may sell or transfer his rights
to 3rd persons without prior
consent of the other
stockholders.
Co-ownership
A co-ownership is generally
created by operation of law
even without the execution of
a contract. A co-ownership
may be created by virtue of
succession as when the
property left is to be inherited
by two or more persons.
separate juridical
While in co-ownership, it is
merely the enjoyment of a
thing or right and does not
necessarily involve, though
not prohibited from, making
profit. (Article 486 NCC)
Agency
Manner of Creation As previously discussed, a partnership
is created by mere consent or mere
agreement between two or more
contracting parties
Juridical According to Article 1784 of the Civil
Personality Code, a partnership begins from the
moment of the execution of the
contract, unless it is otherwise
stipulated. Thus being a contract
perfected by mere consent, its juridical
personality and capacity attaches
instantly, the moment it is created.
Such personality is separate and distinct
from that of the partners establishing the
same.
Control by the A partnership being a commultative
principal contract differs from agency as the
power of partner to bind its co-partner is
not subject to the right to control the
latter unless there is agreement to that
effect. (Article 1767, 1604 NCC)
Representation of In a contract of partnership, each
the principal partner acts as an agent of each other in
(Article 1910, the engagement in the business. It is in
1803, 1818) effect a contract of mutual agency.
Sharing of Profits A partnership exists when the profits
earned belong to all the parties as
common proprietors in agreed
proportions. (Article 1767)
An Agency is defined as a
business or organization that
is established to provide a
particular service, often
organizing the transactiosn
between two other parties. An
agencyis created by manner
of a contract between two
parties whereby one engages
in the services of another to
act for him. Under the law of
agency, it is a consensual
relationship created by virtue
of a contract or by law.
An agency does not have a
separate juridical personality
as an agency merely refers to
the engaging of the services
of an agent by a person to
represent him.
One essrntial charactartistic
of agency under the law of
agency is that there must be
control by the principal; an
agent must submit to the
principal’s right to control the
agent’s conduct in regard to
the subject of agency.
In pure agency, however,
only one person acts as an
agent in representation of the
principal.
A pure agency exists when
the alleged owner takes his
agreed share of profits, not as
an owner but as an agreed
measure of compensation for
his services.(Sevilla vs CA)
(d)

Partnership
Manner of Creation Under Article 1767 and 1787 of the
Civil Code, a partnership is created by
mere consent or by mere agreement of
the parties.
Purpose The purpose of a partnership as
established under Article 1767, is for
the engaging into a business venture for
profit.
Parties Article 1767 provides that a contract of
partnership exists when two or more
persons bind themselves to engage in a
partnership.
Broker
Under the Securities
Regulation Code, a broker is
defined as a person engaged
in the business of buying and
selling securities for the
account of others. The
relationship is created by
virtue of a contract between
parties thus engaged.
The purpose of a brokerage is
for the purchase or sale of a
broker of the securities ofor
the account of another
The parties here are the
principal and the broker, who
buys or sells in his behalf.

2. Different kinds of partners.

Kind of Partner Definition Provision

Capitalist Partner One who contributes money or property Article 1767 of the Civil
to the common fund of the partnership Code by a contract of
partnership, two or more
persons bind themselves to
contribute money, property,
or industry to a common
fund, with the intention of
dividing the profits among
themselves. Two or more
persons may also form a
partnership for the exercise of
a profession
Industrial Partner One who contributes only his industry Article 1789. An industrial
or personal service in the partnership. partner cannot engage in
business for himself, unless
the partnership expressly
permits him to do so; and if
he should do so, the capitalist
partners may either exclude
him from the firm or avail

General Partner One whose liability to 3rd persons
extends to his separate property,
whether a capitalist or industrial.
Limited Partner One whose liability to 3rd persons is
limited only to his capital contribution.
Managing Partner One who is appointed for the
management of the affairs of the
partnership. He may be appointed in the
articles of partnership or after the
constituion of the same.
themselves of the benefits
which he may have obtained
in violation of this provision,
with a right to damages in
either case.
Article 1816. All partners,
including industrial ones,
shall be liable pro rata with
all their property and after all
the partnership assets have
been exhausted, for the
contracts which may be
entered into in the name and
for the account of the
partnership, under its
signature and by a person
authorized to act for the
partnership. However, any
partner may enter into a
separate obligation to perform
a partnership contract.
Article 1843. A limited
partnership is one formed by
two or more persons under
the provisions of the
following article, having as
members one or more general
partners and one or more
limited partners. The limited
partners as such shall not be
bound by the obligations of
the partnership.
Article 1800. The partner
who has been appointed
manager in the articles of
partnership may execute all
acts of administration despite
the opposition of his partners,
unless he should act in bad
faith; and his power is
irrevocable without just or
lawful cause. The vote of the
partners representing the
controlling interest shall be
necessary for such revocation
of power.

Liquidating Partner One who takes charge of the winding up
of the partnership affairs upon its
cession.
Partner by estoppel One who is not a party to a partnership
but is nonetheless liable as a partner for
the protection of innocent 3rd persons.
This happens when one falsely
represents himself as a partner when in
fact he was not.
A power granted after the
partnership has been
constituted may be revoked at
any time.
Article 1836. Unless
otherwise agreed, the partners
who have not wrongfully
dissolved the partnership or
the legal representative of the
last surviving partner, not
insolvent, has the right to
wind up the partnership
affairs, provided, however,
that any partner, his legal
representative or his assignee,
upon cause shown, may
obtain winding up by the
court.
Article 1825. When a person,
by words spoken or written or
by conduct, represents
himself, or consents to
another representing him to
anyone, as a partner in an
existing partnership or with
one or more persons not
actual partners, he is liable to
any such persons to whom
such representation has been
made, who has, on the faith
of such representation, given
credit to the actual or
apparent partnership, and if
he has made such
representation or consented to
its being made in a public
manner he is liable to such
person, whether the
representation has or has not
been made or communicated
to such person so giving
credit by or with the
knowledge of the apparent
partner making the

Continuing partner One who continues the business of
partnership upon the dissolution of the
same by reason of the admission of a
new partner, or retirement, death, or
expulsion of one or more partners.
representation or consenting
to its being made:
(1) When a partnership
liability results, he is liable as
though he were an actual
member of the partnership;
(2) When no partnership
liability results, he is liable
pro rata with the other
persons, if any, so consenting
to the contract or
representation as to incur
liability, otherwise separately.
When a person has been thus
represented to be a partner in
an existing partnership, or
with one or more persons not
actual partners, he is an agent
of the persons consenting to
such representation to bind
them to the same extent and
in the same manner as though
he were a partner in fact, with
respect to persons who rely
upon the representation.
When all the members of the
existing partnership consent
to the representation, a
partnership act or obligation
results; but in all other cases
it is the joint act or obligation
of the person acting and the
persons consenting to the
representation.
Article 1840. In the following
cases creditors of the
dissolved partnership are also
creditors of the person or
partnership continuing the
business:
(1) When any new partner is
admitted into an existing
partnership, or when any
partner retires and assigns (or
the representative of the
deceased partner assigns) his
rights in partnership property
to two or more of the
partners, or to one or more of
the partners and

one or more third persons, if

the business is continued
without liquidation of the
partnership affairs;
(2) When all but one partner
retire and assign (or the
representative of a deceased
partner assigns) their rights in
partnership property to the
remaining partner, who
continues the business
without liquidation of
partnership affairs, either
alone or with others;
(3) When any partner retires
or dies and the business of the
dissolved partnership is
continued as set forth in Nos.
1 and 2 of this article, with
the consent of the retired
partners or the representative
of the deceased partner, but
without any assignment of his
right in partnership property;
(4) When all the partners or
their representatives assign
their rights in partnership
property to one or more third
persons who promise to pay
the debts and who continue
the business of the dissolved
partnership;
(5) When any partner
wrongfully causes a
dissolution and the remaining
partners continue the business
under the provisions of article
1837, second paragraph, No.
2, either alone or with others,
and without liquidation of the
partnership affairs;
(6) When a partner is
expelled and the remaining
partners continue the business
either alone or with others
without liquidation of the
partnership affairs.
The liability of a third person
becoming a partner in the
partnership continuing the
business, under this article, to
the creditors of the dissolved
partnership shall be satisfied
out of the partnership
property only, unless there is
a stipulation to the contrary.
When the business of a
partnership after dissolution
is continued under any
conditions set forth in this
article the creditors of the
dissolved partnership, as
against the separate creditors
of the retiring or deceased
partner or the representative
of the deceased partner, have
a prior right to any claim of
the retired partner or the
representative of the deceased
partner against the person or
partnership continuing the
business, on account of the
retired or deceased partner’s
interest in the dissolved
partnership or on account of
any consideration promised
for such interest or for his
right in partnership property.
Nothing in this article shall be
held to modify any right of
creditors to set aside any
assignment on the ground of
fraud.

The use by the person or

partnership continuing the

Surviving partner One who remains as a partner even after
the partnership has been dissolved by
the death of any partner.
Subpartner One who, not being a member of the
partneship, contracts with a partner with
reference to the latter’s share in the
partnership.
Ostensible partner One who takes active part in the
partnership and is known to the public
as a partner even if he does not have
actuak interest in the firm. The liability
of such partner shall be satisfied out of
partnership assets alone when such
partner had been prior to dissolution
Dormant Partner One who does not take active part in the
business or partnership and is not
known as a partner. This kind of partner
may retire from the partnership without
priod notice to the others and cannot be
held liable for obligations to the
partnership after his withdrawal.
business of the partnership
name, or the name of a
deceased partner as part
thereof, shall not of itself
make the individual property
of the deceased partner liable
for any debts contracted by
such person or partnership
Artcile 1842. The right to an
account of his interest shall
accrue to any partner, or his
legal representative as against
the winding up partners or the
surviving partners or the
person or partnership
continuing the business, at the
date of dissolution, in the
absence of any agreement to
the contrary.
Article 1804. Every partner
may associate another person
with him in his share, but the
associate shall not be
admitted into the partnership
without the consent of all the
other partners, even if the
partner having an associate
should be a manager.
Article 1834. After
dissolution, a partner can bind
the partnership, except as
provided in the third
paragraph of this article:
(2) By any transaction which
would bind the partnership if
dissolution had not taken
place, provided the other
party to the transaction:
(a) Had extended credit to the
partnership prior to
dissolution and had no
knowledge or notice of the
dissolution; or
(b) Though he had not so
extended credit, had
 nevertheless known of the
partnership prior to
dissolution, and, having no
knowledge or notice of
dissolution, the fact of
dissolution had not been
advertised in a newspaper of
general circulation in the
place (or in each place if
more than one) at which the
partnership business was
regularly carried on.

Incoming Partner One who is invomming or about to take Article 1826. A person
part in an existing partnership admitted as a partner into an
existing partnership is liable
for all the obligations of the
partnership arising before his
admission as though he had
been a partner when such
obligations were incurred,
except that this liability shall
be satisfied only out of
partnership property, unless
there is a stipulation to the
contrary.
Retiring Partner One who is withrawing from the Article 1841. When any
partnershsip partner retires or dies, and the
business is continued under
any of the conditions set forth
in the preceding article, or in
article 1837, second
paragraph, No. 2, without any
settlement of accounts as
between him or his estate and
the person or partnership
continuing the business,
unless otherwise agreed, he or
his legal representative as
against such person or
partnership may have the
value of his interest at the
date of dissolution
ascertained, and shall receive
as an ordinary creditor an
amount equal to the value of
his interest in the dissolved
partnership with interest, or,
at his option or at the option
of his legal representative, in
lieu of interest, the profits
attributable to the use of his
right in the property of the
dissolved partnership;
provided that the creditors of
the dissolved partnership as
against the separate creditors,
or the representative of the
retired or deceased partner,
shall have priority on any
claim arising under this
article, as provided by article
1840, third paragraph.