Professional Documents
Culture Documents
SINGLE PROPRIETORSHIP
The oldest, simplest, and most common legal form of business. A single person has the controlling interest and is responsible for the firms policies, owns all its assets, and is personally liable for its debts.
SINGLE PROPRIETORSHIPADVANTAGES
Ease of formation, control, and the manner in which it is taxed. Few legal and organizational requirements associated with setting up a proprietorship organizational costs are very low.
SINGLE PROPRIETORSHIPADVANTAGES
Owner has total control of the business Earnings of the business are taxed at individual income tax rates which are lower than corporate tax rates
SINGLE PROPRIETORSHIPDISADVANTAGES
PARTNERSHIP - ADVANTAGES
Low cost and ease of formation Ability to raise a larger amount of capital Greater creditworthiness
PARTNERSHIP - DISADVANTGES
CORPORATION
PARTNERSHIP DEFINED
Contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing profits among themselves (Art. 1767)
CHARACTERISTICS
ELEMENTS
Contribution of money, property or industry to a common fund Object must be lawful Intention of dividing the profit among the partners Desire to form an active union New personality must arise, distinct from each partner.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP How created Voluntary agreement How long it exists No time limit except upon agreement of parties. CORPORATION Operation of law Not more than 50 years.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP Liability to May be liable strangers with their private property beyond the contribution to the firm. CORPORATION Liable only for payment of their subscribed capital stock.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP Transferability of No person can interest become a partner without the consent of all other partners.
delectus personarum or the principle of mutual trust and confidence.
CORPORATION Transfer of interest makes the transferee a stockholder, even without the consent of the others.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP Generally, Ability to bind the partners acting firm CORPORATION Generally, the stockholders on behalf of the cannot bind partnership are the corporation agents thereof; since they are consequently, not agents they can bind both the firm and thereof.
the partners.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP A partner can Mismanagement
sue a partner who mismanages.
CORPORATION
A stockholder cannot sue a member of the board of directors who mismanages: the action must be in the name of the corporation.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP A partnership is Nationality
a national of the country it was created.
CORPORATION
A corporation is a national of the country under whose laws it was incorporated, except for wartime purposes.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP Attainment of legal The firm becomes a personality CORPORATION
The firm becomes a juridical person juridical person from the time the from the time it is contract begins. registered with SEC and all requisites have been complied with.
PARTNERSHIP V. CORPORATION
DISTINGUISHING PARTNERFACTOR SHIP Death, Dissolution
retirement, insolvency, civil interdiction, or insanity of a partner dissolves the firm.
CORPORATION
Such causes do not dissolve a corporation.
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING PARTNERFACTOR SHIP Created by CREATION
contract only (express or implied)
COOWNERSHIP
Created by contract, law, and other things
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING PARTNERFACTOR SHIP Has legal or JURIDICAL
juridical personality
COOWNERSHIP
Has no juridical personality (hence, it cannot sue or be sued as such).
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING PARTNERFACTOR SHIP For profit PURPOSE COOWNERSHIP
Collective enjoyment; (hence, not necessarily for profit)
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING PARTNERCOFACTOR SHIP OWNERSHIP As a rule, there As a rule, there is AGENCY OR no mutual REPRESENTATION is mutual
representation
representation (although it is enough for one co-owner to bring an action for ejectment against a stranger.
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING FACTOR TRANSFER OF INTEREST PARTNERSHIP
Cannot substitute another as partner in this place, without unanimous consent.
COOWNERSHIP
Can dispose of his share without the consent of the others.
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING FACTOR LENGTH OF EXISTENCE IF CREATED BY CONTRACT PARTNERSHIP COOWNERSHIP
years (although agreement, after termination may be renewed) (hence, if more than 10 years the excess is void)
No term limit is Must not be for set by the law. more than 10
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING FACTOR PROFITS PARTNERSHIP COOWNERSHIP
proportionate shares (any stipulation to the contrary is VOID)
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING FACTOR DISSOLUTION PARTNERSHIP
Dissolved by death or incapacity of a partner
COOWNERSHIP
Not dissolved by the death or incapacity of coowner.
PARTNERSHIP V. COOWNERSHIP
DISTINGUISHING FACTOR FORM PARTNERSHIP
May be made in any form except when real property is contributed (Here public instrument is required).
COOWNERSHIP
No public instrument needed even if real property is the object of the coownership.
A unemancipated minor cannot become a partner unless his parent or guardian consents. Without such consent, the partnership contract is voidable, unless other partners are in the same situation, in which case the contract is unenforceable.
A partnership being a juridical person by itself can, it is believed, form another partnership, either with private individuals or with other partnerships, there being no prohibition on the matter.
The majority view is that a corporation cannot become a partner on grounds of public policy, otherwise people other than its officers may be liable to bind it.
ABCD Partnership
Persons who are not partners as to each other are not partners as to third persons (exception: Partners by estoppel, Art. 1825)
Co-ownership or co-possession does not itself establish a partnership, whether such co-owners or copossessors do or do not share any profits made by the use of the property;
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;
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;
LAWFUL OBJECT
ART. 1770 A partnership must have a lawful object or purpose. Otherwise, it will be VOID.
LAWFUL OBJECT
ART. 1770
When an unlawful partnership is dissolved by a judicial decree, the PROFITS shall be confiscated in favor of the State, without prejudice to the provisions of the Penal Code governing the confiscation of the INSTRUMENTS and EFFECTS of a crime.
LAWFUL OBJECT
ART. 1770 Partnership is still VOID, if the subject matter is outside the commerce of man or is impossible thing or service.
LAWFUL OBJECT
ARBES VS. POLISTICO, 53 Phil 489
Turnuhan Polistico and Co, is a private organization engaged in conducting a lottery among its partnersmembers every weekend. Contributions are made every week, except for certain , the contributions were distributed to the lottery winners. The court declared the partnership unlawful. May the partners retrieve their capital and profits?
LAWFUL OBJECT
ARBES VS. POLISTICO, 53 Phil 489
The partners can get their capital and but not the profits. The law authorizes only the confiscation of profits and not capital. Capital may be recovered, unless it constitutes instruments and effects of the crime.
Any immovable property or an interest therein may be acquired in the partnership name. Title so acquired can be conveyed only in the partnership name.
Associations and societies whose articles are kept secret among the members, wherein any one of the members may contract in his own name with third persons
ART. 1775 is applicable to: These associations and societies shall have:
CLASSIFICATION OF PARTNERSHIP
As to object (1) Universal Partnership a. of all present property, or b. of all profits (2) Particular Partnership
CLASSIFICATION OF PARTNERSHIP
As to liability of partners (1) General Partnership one where all the partners are general partners. (2) Limited Partnership one where there is one or more general partners, and one or more limited partners.
CLASSIFICATION OF PARTNERSHIP
As to manner of creation (1) orally constituted; (2) constituted in a private instrument; (3) constituted in a public instrument; (4) registered in the Office of the SEC;
CLASSIFICATION OF PARTNERSHIP
CLASSIFICATION OF PARTNERSHIP
As to duration (1) for a specific period or till the purpose is accomplished; (2) partnership at will.
CLASSIFICATION OF PARTNERSHIP
CLASSIFICATION OF PARTNERSHIP
As to liability of partners (1) General Partnership one where all the partners are general partners. (2) Limited Partnership one where there is one or more general partners, and one or more limited partners.
UNIVERSAL PARTNERSHIP
TWO TYPES:
Comprises all that the partners may acquire by their industry or work during the existence of the partnership.
Movable or immovable property which each of the partners may possess at the time of the celebration of the contract shall continue to pertain EXCLUSIVELY to each, only the USUFRUCT passing to the partnership.
3)
Husband and wife (Art. 133) Those guilty of adultery or concubinage (Art. 739) Those guilty of the same criminal offense, if the partnership was entered into in consideration of the same.
PARTICULAR PARTNERSHIP
ART. 1783
It has for its object determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation. Husband and wife may enter into a particular partnership.