1.

DIFFERENCE BETWEEN A
GENERAL PARTNERSHIP
AND LIMITED
PARTNERSHIP
personally liable liability extends
for
partnership only to his
obligations
capital
contribution
when the manner has no share in
of management the
has
not been management of
agreed upon, all a
limited
general partners partnership.
have equal right His rights are
in
the limited to those
management of enumerated
the
business in Article 1851
whether or not
the
general
partner
has
made any capital
contribution
may
contribute 3.
must
money, property, contribute cash
industry to the or
partnership
property to the
partnership
but not services
4.
a
general 4. not a proper
partners
party
to
interest to the proceedings by
partnership may or against a
not be assigned partnership
as
to
make unless he is
theassignee
a also a
new
partner general partner
without
the or where the
consent of the objects of the
other
partners proceedings is

although he
may associate a
third person with
him in his share

5. the name of
the
general
partner
may
appear in the
firm name
6. prohibited in
engaging
in
business similar
to that of the
partnership
7.
retirement,
death,
insolvency of a
general
partner dissolves
the
partnership

to enforce a
limited
partners
right against or
liability to the
partnership
5.
a
limited
partners
interest
is
freely
assignable
6. the limited
partners name
as a general
rule, must not
appear in the
firm name
7. can engage
in business
since
he
is
considered
merely
as a contributor
to the
partnership
8.
retirement,
death,
insolvency of a
limited
partner
does
not dissolve the
partnership

2. THE RULES TO DETERMINE

THE
EXISTENE
OF
PARTNERSHIP
Art.
1769.
In
determining
whether a partnership exists,
these rules shall apply:

(1) Except as provided by Article

1825, persons
who are not partners as to each
other are not partners as to third
persons;
(2)
Co-ownership
or
copossession does not of itself
establish a partnership, whether
such-co-owners or co-possessors
do or do not share any profits
made by the use of the property;
(3) The sharing of gross returns
does not of
itself establish a partnership,
whether or not
the persons sharing them have
a joint or common right or interest
in any property from
which the returns are derived;
(4) The receipt by a person of
a share of the profits of a
business is prima facie evidence
that he is a partner in the business,
but no such inference shall be
drawn
if
such
profits
were
received in payment:
(a) As a debt by instalments or
otherwise;
(b) As wages of an employee or
rent to a landlord;
(c) As an annuity to a widow or
representative of a deceased
partner;
(d) As interest on a loan,
though the amount of payment
vary
with
the profits of the
business;
(e) As the consideration for the sale
of a goodwill of a business or
other property by instalments or
otherwise.
3. DIFFERENCE
PARTNERSHIP
CORPORATION

TO

OF
A

AS
TO
THE In partnership,
NUMBER
OF it consist of of
MEMBERS
at
least
2
members,
while in Corpo
it should be
consist of at
least
5
members
AS
TO
THE In partnership,
EXTENT
OF liability of the
LIABLIBILTY
partners
are
up
to
their
personal
property,
except
industrial
partner. Corpo,
liability of the
incorporators
are only up to
the extent of
their share in
the
capital
contribution
AS
TO
THE In partnership,
BUSINESS LIFE it depends on
OR EXISTENCE the stipulation
of the parties
or free will but
in
corporations
existence
is
only up to 50
years
&
subject
to
extension
of
another
50
years
AS
TO Partnership
DISSOLUTION
can
be
dissolved
by
the
express
stipulation of
any or all of

the
partners
while
in
corporation it
will
be
dissolved
by
the state
AS
TO
THE Partnership is
GOVERNING
governed
by
LAW
the NCC but
corporation is
governed
by
Corpo Code
AS
TO
ITS Partnership is
CREATION
created by
agreement of
the partners
while
corporation is
created by law
or operation of
law
4. WHAT ARE THE PROPERTY
RIGHTS OF A PARTNER?
Art. 1810. The property
rights of a partner are:
(1) His rights in specific
partnership property;
(2) His interest in the
partnership; and
(3) His right to participate in
the management.
Principal rights:
a.His
rights
in
specific
partnership
property
(Art.
1811)
b.His interest in the partnership
(Art. 1812)
c.His right to participate in
management (Art. 1803)

Related rights

a. Right to reimbursement for

amounts advanced to the
partnership
and
to
indemnification for risks in
consequence of management
(Art. 1796)
b. Right
to
access
and
inspection
of
partnership
books (Art. 1805)
c. Right to true and full
information of all things
affecting the partnership (Art.
1806)
d. Right to a formal account
of partnership affairs under
certain circumstances (Art.
1809)
e. Right to have the partnership
dissolved also under certain
circumstances (Art. 18301831)
5. LIABILITIES OF INCOMING
PARTNER?
Art. 1826. A person 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.
Liability of incoming partners for
partnership obligations:
Limited to
his
share
in
partnership
property
for
existing obligations
when a person is admitted as
a
partner
into
an existing
partnership, he is liable for all
obligations existing at the time of
his admission as though he was

already a partner when such

obligations were incurred.
For
such obligations, his liability is
limited to his share in the
partnership property, unless there
is a stipulation to the contrary
Extends
to
his
separate
property
for
subsequent
obligations
Those who were already partners
at the time when the obligations
were incurred are liable with their
separate property (Art. 1816).
For all the obligations accruing
subsequent to the admission of
the new partner, all the partners
are liable with their separate
properties o
existing
and
subsequent creditors have equal
rights
as
against
partnership
property and separate property
of previously existing members of
the partnership. As to newly
admitted
partners,
only
subsequent
creditors have
rights
against
their
separate
property
Art. 1826 should be read in
conjunction with Art. 1840 which
provides
liability
of
persons
continuing
the
business
in
certain cases. Both sections are
based on the principle that
where there
has
been
one
continuous business the fact that
a new partner has been admitted
or a partner has ceased to be
connected with it, should not
cause confusion as to the claims
of the creditors on the property
employed in the business
Also when an incoming partner
has assumed the obligation of
the retiring partner as one of

the terms of the contract, he is

liable
directly
to
the old
partnership creditors such that the
latter have a right of action against
the incoming partner
Reason for the rule
The rule making an incoming
partner liable even for partnership
obligations contracted before his
admission cannot be considered
harsh because the new partner
partakes of the benefits of the
partnership
property
and
an
established business
6. WHAT IS DISSOLUTION?
WINDING
UP?
TERMINATION?
When a partnership ends, it
involves 3 stages
Dissolution that point in
time when the partners
cease to carry on the
business
together.
It
represents the demise of a
partnership
Winding up process of
settling
the business
or
partnership
affairs
after
dissolution

Termination

all
partnership are completely
wound up and finally settled.
It signifies the end of the
partnership life
Art.
1830.
Dissolution
is
caused:
(1) Without violation of the
agreement
between
the
partners:
(a) By the termination of the
definite term
or
particular

undertaking
specified
in
the
agreement;
(b) By the express will of any
partner, who must act in good
faith, when no definite term or
particular is specified;
(c) By the express will of all the
partners who have not assigned
their interests or suffered them
to be charged for their separate
debts, either before or after the
termination of any specified term
or particular undertaking;
(d) By the expulsion of any
partner from the business bona
fide in accordance with such a
power conferred
by
the
agreement between the partners;
(2)
In
contravention
of
the
agreement between the partners,
where the circumstances do not
permit a dissolution
under any
other provision of this article, by
the express will of any partner at
any time;
(3) By any event which makes
it unlawful for the business of the
partnership to be carried on or for
the members to carry it on in
partnership;
(4) When a specific thing which a
partner
had
promised
to
contribute to the partnership,
perishes before the delivery; in any
case by the loss of the thing,
when
the
partner
who
contributed it having reserved
the ownership thereof, has only
transferred to the partnership the
use or enjoyment of the same;
but the partnership shall not be
dissolved by the loss of the thing
when
it
occurs
after
the
partnership has acquired the
ownership thereof;

(5) By the death of any partner;

(6) By the insolvency of any
partner or of the partnership;
(7) By the civil interdiction of any
partner;
(8) By decree of court under the
following
Article.
7. WHEN A COURT DECREE A
DISSOLUTION?
1. Insanity
2. Incapacity
3. Misconduct and persistent
breach
of
partnership
agreement
4. Business can be carried
on only at a loss
5. other circumstances
examples are
abandonment
of the business, fraud in the
management of the business,
refusal without justifiable
cause to render accounting
of partnership affairs, etc.
8. RIGHTS OF A GENERAL
PARTNER IN A LIMITED
PARTNERSHIP?
Rights, powers and liabilities of
a general partner
1. Right of control/ unlimited
personal liability
o Entire control of business
subject
to
all liabilities and
restrictions
o
In
the
absence
of
an
agreement to the contrary, he is
not entitled to compensation for
his services beyond his
share of the profits
2. Acts of administration/
acts of strict dominion
o No power to do the specific
acts under Art. 1850

o Beyond the scope of the

authority if a general partner
3. Other limitations
o General partners have no
power to bind limited partners
beyond the latters
investment
No power to act beyond
the
purpose
of the
partnership
9. LIABILITIES OF A LIMITED
PARTNER?
Liabilities of a limited partner:
To the partnership liability of
limited partners is to partnership,
not the creditors of the partnership
To partnership creditors and
other partners a
limited partner is liable for
partnership obligations when:
o Contributes services;
o Allows
his
surname
to
appear in the
o name of the firm
o Fails to have false statement
in certificate
o corrected when he knew it to
be false
o Takes part in control of
business
o Receives
partnership
property as
o collateral security, payment,
conveyance,
o or release in fraud of
partnership creditors
o Failure
to
substantially
comply with legal
o requirements of formation
of limited partnership
To separate creditors

creditor of limited partner may also

apply for a charging order
subjecting

the interest in the partnership of

the debtor partner for the payment
of his obligation
Liability
for
unpaid
contribution
Limited partner is liable not
only for the difference between
the
amount
of
his
actual
contributions and that stated in
the certificate as having been
made but also for any unpaid
contribution he agreed to make at
a future time
Liability as trustee limited
partner considered as trustee for
the partnership for:
o Specific property stated in
the
certificate
as
contributed by him but
which
he
had
not
contributed;
o Specific property of the
partnership which had been
wrongfully returned to him;
o Money wrongfully paid or
conveyed
to
him
on
account of his contribution;
and
o Other property wrongfully
paid or conveyed to him on
account of his contribution
Requisites
for
waiver
or
compromise of liabilities
o Waiver or compromise is
made with the consent of
all the partners; and
o The waiver or compromise
does
not
prejudice
partnership creditors who
extend credit or whose
claim
arose
before
the
cancellation or amendment
of the certificate

Liability
for
return
of
contribution lawfully received
The limited partner is liable to
the partnership for the return of
contribution lawfully received by
him to pay creditors who extended
credit or whose claim arose before
such return.
His liability of
course, cannot exceed the sum
received by him with interest.
10.
Order of distribution
of assets and liabilities?
1. Those
due
to
creditors,including
limited
partners, except those on
account
of
their
contributions, in the order of
priority as provided by law.
2. Those due to limited partners
in respect to their share of
the
profits
and
other
compensation by way of
income on their contribution
3. Those due limited partners
for the return of the capital
contributed

4. Those (loans) due to general

partners other than for
capital and profits
5. Those
due
to
general
partners for the return of the
capital contributed
11.
WHEN
CAN
WE
AMEND/CANCEL
THE
CERTIFICATE
OF
PARTNERSHIP?
When certificate shall be cancelled
or amended
The
certificate
shall
be
cancelled, not merely amended:
o
When
the
partnership
is
dissolved other than by reason
of the expiration of the term of
the partnership
o When all the limited partners
cease to be
such. A limited partnership cannot
exist as such if there are no
more limited partners (Art. 1843)
In all other cases, only an
amendment of the
certificate is required (Art. 1864,
Nos. 1-10