Sole proprietorship a person personally conducts business under his name or a business name.

the business is an organization

composed of the proprietor himself and his employees but it has no personality separate and distinct from the proprietor.
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 (CC Art. 1767)
Joint Accounts (cuentas en participcion) an arrangement whereby merchants may interest themselves in the transactions of
other merchants, contributing thereto the amount of capital they may agree upon, and participating in favorable and
unfavorable results thereof in the proportion they may determine (Code of Commerce, Art. 239). This is commonly called an
accidental partnership and there is no indication in the public that there is an existing arrangement because only the
ostensible partner is conducting the business.
Joint Venture an association of persons or companies jointly undertaking some commercial enterprise; generally, all contribute
assets and share risk. It requires a community interest in the performance of the subject, a right to direct and govern the policy
connected therewith, and duty, which may be altered by agreement to share both in profits and losses. (Kilosbayan vs
Guingona)
Business trust it is a legal relation whereby one person, called the trustor, conveys a property to another for the benefit of a
person called the beneficiary. The person in whom the confidence is reposed is called the trustee. (CC Art. 1440)
Cooperative duly registered association of persons, with common bond of interest, who have voluntarily joined together to
achieve lawful, common social or economic end, making equitable contributions to the capital required and accepting a fair
share of the risk and benefits of the undertaking in accordance with the universally accepted cooperative principles (RA 6938,
Sec. 3)
Corporation an artificial being created by operation of law, having the right of succession and the powers, attributes and
properties expressly authorized by law or incident to its existence (Corpo Code, Sec, 2)
Sole Proprietorships the sole proprietorships, where the business enterprise is not endowed with a separate juridical
personality, (Excellent Quality Apparel, Inc. vs. Win Multiple-Rich Builders, Inc., 578 SCRA 272) is less saddled with the many
requirement and regulations. The owner is in command of his whole business and he stands to lose as much as he puts in and
even more to the extent of all his personal holdings, in the event the business venture goes bankrupt. Consequently, the
doctrine of limited liability does not apply in the sole proprietorship setting that will limit the claims of business creditors to the
assets of the business enterprise.
This is in contrast to a corporation where control of the corporate enterprise is vested in the Board of Directors, and there is
limited liability on the part of the shareholders. Consequently, sole proprietorships work well only for carrying-on simple or small

business endeavors, and do not function well in cases of large enterprises which require huge capital investments and
specialized management skills.
Yet, the sole proprietorship remains the basic structure upon which many of the theories on liability draw their basis. The sole
proprietor, who exercises both the prerogatives of control and management and the main beneficiary of the income and fruits of
operation that flow from full ownership of the business enterprise, remains personally liable for all debts and liabilities of the
enterprise with all his assets and properties, whether they be intended for business or those for personal consumption or
enjoyment. The business creditors of the sole proprietor can claim satisfaction from both the business and personal assets of the
sole proprietor, in the same manner the non-business or personal creditors of the sole proprietor can claim satisfaction from
both the business and personal assets of the sole proprietor. Perhaps this sate of things happen in a sole proprietorship because
the income coming from the business enterprise may also be flowed out from the business into personal enjoyment or
satisfaction of the sole proprietor, and vice versa.
In other words, sole proprietorship represents the highest form of unlimited liability when it comes to the sole proprietor (i.e.,
a sole proprietor is liable for assets, but for all his assets not exempt from execution), because he has in his person not only the
prerogatives of management but also the benefits of ownership, and the flow of transactions and income is not limited within
the confines of the business.
Partnerships Article 1768 of the CC provides that the partnership has a juridical personality separate and distinct from that of
each of the partners, even in case of failure to comply with the registration requirements of the said Code.
The most important distinction between the corporation and the partnership is in their legal capacities, with the right of
succession, a corporation has a stronger legal personality, enabling it to continue despite the death, incapacity, withdrawal or
insolvency of any of its stockholders or members. In a partnership, the withdrawal, death, incapacity or insolvency of any
partner would automatically bring about the dissolution of the partnership.
Limited liability is a main feature in a corporate setting, whereas partners are liable personally for partnership debts not only to
what they have invested in the partnership but even as to their other properties.
Generally, every partner is an agent of the partnership and by his sole act, he can bind the partnership, whereas in a
corporation, only the Board of Directors or its agents can bind the corporation.
In a partnership setting, although a partner has the power to sell or dispose of his capital interest or propriety interest, the buyer
or transferee does not assume transferors position as partner, but merely has a right to demand for accounting or distribution
of the profits pertaining thereto. The principle of delectus personae prevails in the partnership setting. In a corporate setting,
every stockholder has the right to transfer his shares in the corporation, and the buyer or transferee assumes the role of

stockholder of said shares when the transfer has been duly registered in the corporate books. Free transferability of the units of
ownership is a hallmark feature in the corporate setting.
Does a defective incorporation process result into a partnership?
The clear distinctions between the corporation and partnership can best be illustrated by discussing the issue of whether a
defective incorporation which does not result in the grant of a charter to a corporate being, would at least result into a
partnership.
The legal principle is that when parties come together and all the elements of a particular contract are present, although the
parties may have dominated it otherwise, the law will impose such contractual relationship upon them. In other words, the
contract or legal relationship is what the law say it is, not how the parties wish to call it. Therefore, if 5 or more persons agree to
contribute money or property to a common venture to be pursued in corporate medium, with the intention of dividing the profits
among themselves through their agreed distribution of shares of stocks, but the business venture is pursued without a
corporation being duly incorporated and registered, would there have arisen at least among the parties a contract of
partnership?
Negative. Both corporate and partnership relationships are fundamentally contractual relationships created by co-venturers who
consent to e together under said relationships. If the parties had intended to create an association in the form of a corporation,
a partnership cannot be created in its stead since such is not within their intent, and therefore does not constitute a part of their
consent to the contractual relationship.
In addition, the important differences between the corporation and the partnership cannot lead one to the conclusion that in the
absence of the first, the contracting parties would have gone along with the latter. Limited liability centralized management and
easy transferability of the units of ownership in a corporate setting are by themselves strong factors for parties intention to be
bound in the corporate relationship, and one cannot presume that if these features were not met that the parties would in the
alternative wish to be covered by a partnership relationship, which generally would involve unlimited liability, mutual agency
among the partners, and the delectus personae feature.
The essence of what constitutes the contractual relationship of partnership under article 1767 is the coming together or what is
known as delectus personae and not just the joint venture. The essence of partnership is the personal relationship we chose
the other co-venturer/s and would not want to do the business with anybody else. On the other hand, an investor who seeks to
enter into a corporate relationship perhaps does not even care about the personality of the other co-venturers, and is most likely
aware that he himself and others have the ability to transfer their investments to third parties.

On the other hand, there are contrary views. Under section 21 of the corporation code, when parties act and pretend to be a
corporation, when in fact none exist, the law would impute to them a juridical personality to validate the contract under the
corporation by estoppel doctrine; however, it would treat the parties as partners since it expressly makes them liable as
general partners.
Under such a view, the main issue would be the priority between the personal creditors of the partners in a corporation by
estoppel doctrine, and the corporate creditors of the CBE, as to the assets invested into the venture. It would presume that it
would be the corporate creditors that would have priority over the corporate assets as this seems to be the moving spirit of
the CBE doctrine.
The Court took the position that such partnership relationship does not exist, for ordinarily persons cannot be made to assume
the relation of partners, as between themselves, when their purpose is that no partnership shall existand it should be implied
only when necessary to do justice between the parties; thus, one who takes no part except to subscribe for stock in a proposed
corporation which is never legally formed does not become a partner with other subscribers who engage in business under the
name of the pretended corporation, so as to be liable as such in an action for settlement of the alleged partnership and
contributions A partnership relation between certain stockholders and other stockholders, who were also directors, will not be
implied in the absence of an agreement so as to make the former liable to contribute for payment of debts illegally contracted
by the latter. Nor will it make the investor to a would-be corporation liable for losses sustained from its operations under a
partnership inter se theory. The key elements in resolving the issue seem to have been in Pioneer Insurance those of intent and
participation in business activities.
The doctrinal pronouncement in Pioneer Insurance can be summarized as follows: When parties come together intending to form
a corporation but no corporation is formed due to some legal cause, then:
a. Parties who had intended to participate or actually participate in the business affairs of the proposed corporation would
be considered as partners under a de facto partnership, and would be liable as such in an action for settlement of
partnership obligations;
b. Parties who took no part except to subscribe to shares of stock in the intended corporation, do not become partners with
other subscribers who engaged in business under the name of the pretended corporation, and are not liable for action for
settlement of the alleged partnership contribution.
The doctrinal pronouncements in Pioneer Insurance are inconsistent with the distinctions between an investor in a partnership
venture, where there is a clear intent to participate in the management of the partnership business and for which limited liability
is not afforded by law; and an investor in a corporation, where under the principal of centralized management, there is not
intent to participate in the corporate operations, and for which limited is afforded by law.

In the case of Lim Tong v Philippine Fishing Gear, the findings were contrasted as the Supreme Court said that where the
liabilities of the parties were adjudged under the corporation by estoppel doctrine.
In a limited partnership setting, the prerogatives of management of the business enterprise are divorced from a person who
thereby is made to assume the passive role of being a mere beneficiary of the profits flowing from the business enterprise, he is
thereby accorded limited liability status, and that a person so classified as having limited liability, the moment he exercises
the prerogatives of management, he thereby becomes unlimitedly liable for all debts and obligation of the business enterprise.
Bataan Shipping
Held: the Court held that the right against self-incrimination has no application to corporations. Every corporation is a direct
creature of the law and receives an individual franchise from the State, but a partnership, although is deemed to be a juridical
person by the grant of the State becomes a juridical person through a private contract of partnership between and among the
partners, without needing to register its existence with the state or any or its organs. More importantly, the partnership person
is a fiction of law given more for the convenience of the partners, and thus can be dissolved by the will of the partners or by the
happening of an event that would constitute the termination of the contractual relationship, whereas, no corporation can =be
dissolved without the consent of the State, and only after due notice and hearing. Likewise, the other features of the
partnership, mainly mutual agency, delectus personae and unlimited liability on the part of the partners, that places a close
identity between the persons of the partners and that of the partnership. This is unlike in corporate setting, where the
stockholders do not own the corporate properties, have no participation in management of corporate affairs and enjoy personal
immunity from the debts and liabilities of the corporation, and where basically the corporation is its own person, and acts
through a professional group of managers and agents called the Board of Directors.
While therefore it is understandable that a corporation, that has no heart, feels no pain, and has no soul that can be damned,
cannot be expected to be entitled to the constitutional right against self-incrimination, it is quite different in the case of
partnership, since its person is merely an extension of the group of partners, who having come together in business, and acting
still for such business enterprise, could not be presumed to have waived their individual rights against self-incrimination.
Corporation Sole: Iglesia Ni Cristo

Sec. 110.Corporation sole. - For the purpose of administering and managing, as trustee, the affairs, property and
temporalities of any religious denomination, sect or church, a corporation sole may be formed by the chief archbishop, bishop,
priest, minister, rabbi or other presiding elder of such religious denomination, sect or church.
Limited Liability: DEFINITION of 'Limited Liability'
A type of liability that does not exceed the amount invested in a partnership or limited liability company. The limited liability
feature is one of the biggest advantages of investing in publicly listed companies. While a shareholder can participate wholly in
the growth of a company, his or her liability is restricted to the amount of the investment in the company, even if it
subsequently goes bankrupt and racks up millions or billions in liabilities.
In a partnership, the limited partners have limited liability, while the general partner has unlimited liability. The limited liability
feature protects the investor's or partner's personal assets from the risk of being seized to satisfy creditor claims in the event of
the company's or partnership's insolvency.