Partnership - defined as a contract whereby two or more person bind themselves to contribute

Money, Property, and Industry to a common fund with intention of dividing the profits among
themselves

Partnership - Governed by partnership law

Article 1767 - The Partnership Law

Partners - Owners of the Partnership

Partnership can be form either orally or written

Articles of Co-Partnership - written agreement which will govern the Formation, Operation,
Dissolution, of the partnerships.

SEC - Securities and Exchange Commission.

DTI - Department of Trade and Industry
SSS - Social security system
BIR - Bureau of Internal Revenue
5 years - renewal of business name.

Written Agreement is Required When:

1. Immovable or real rights contributed into the partnership.

2. The Capital of the Partnership is three thousand and more.

Legal Requirements for Partnerships:

1. Securities and Exchange Commission Certificate/SEC Certificate

2. Registration of Business Name in DTI
3. SSS certificate of membership
4. Mayor Business Permit
5. BIR Certificate of Regustration
6. Authority to Print Documents

Partnership Compared with Other Forms of Business Organizations

1. Sole Proprietorship - Owned by only one person and simplest form of organization.
Proprietor - Owner of Sole Proprietorship
 2. Corporation - An artificial Being created by operation of law, having the right of
succession and powers, attributes, and propertiesexpressly authorized by law or incident
to its existence (Section 2 of Corporation Code of the Philippines).
Stockholders - Owners of corporation
Members - Owners of non-stock corporation

One Person Corporation - Corporation with single stockholders

3. Cooperative - another legal form of business organization and operates similar to

corporation.

Characteristics of Partnerships

1. Mutual Agency - In partnership, there are two or more partners and each of them may
act as an agent of the partnerships for the operation of the business

2. Voluntary Association - Any person of leal age can be a partner of partnership

Voluntary Association - No one can be forced against his will to become a partner of a
partnership

3. Based on Contract - In the formation of partnership, it is required the tow or more

person bind themselves to become partners of a partnership.
Based on Contract - Their agreement whether oral or in writing becomes a contract that
binds them. It is preferred that the contract must be in writing to be enforceable. If the
contract is in writing it is called Articles of Co-Partnership.

4. Limited Life - partnership may dissolved any time at will of the partners orby operation
of law.

5. Unlimited liability - The partnership has unlimited liability. It may have limited
partners but there must be, at least, one general partner. The liability of the partners
extends beyond their interest in the partnership.

6. Mutual Participation in Profits - Partners bind themselves to contribute money,

property and industry to a common fund with intention of dividing profits into the selves.
Mutual participation of profits - Each partner has the right to share in the profits of the
partnership

7. Seperate legal entity - A partnership has a legal entity separate and distinct from that of
every partner or owner (Article 1768 of the Partnership Law). Like other
organization, partnership operates under its business name. It can acquire properties
in its own name and can enter into contracts.
 8. Co-Ownerships of Contributed Assets - All the properties contributed by the partners
to partnerships are owned by the partnership by virtue of its separate legal entity.

9. Income tax - Partnership is suited to the practice or exercise of profession.

General professional partnership - Partnership that is Exempted in from income tax.

General Professional Partnership - Partnership formed byprofessional engaging in he

same profession or line of service.

Corporation Tax - Income Tax of Partnership

10. Ease of Formation - he partnership may be created by oral or in written agreement

between two or more individuals. The formation of a partnership is easier than that of
a corporation. It requires lesser legal requirements compared to a corporation.

Partnerships Classification

1. Trading Partnership - one which main activity is buying ad selling of goods or

manufacturing goods
2. Non-Trading partnerships - one which is organized for a specific purpose or project or
rendering services
3. General Partneship - partnership wherein all of the partners are general partners. They
are all personally liable for the debts of the partnership.
4. Limited Parntnership - formed by one or more general partners with one or limited
partners.
LTD - is attached to the name of the partnership to notify the public that it is a limited
partnership.

5. Universal partnership – may refer to all the present property or to all the profits.
Universal Partnership of all present property - the partners contribute their
property into a common fund with the intention of dividing the property
and all the profits they may acquire among themselves.
universal partnership of profits - comprises all that the partners may acquire
by their industry or work during the existence of the partnership.
Universal partnership of profits comprises all that the partners may acquire
by their industry or work during the existence of the partnership.

6. Particular Partnership – one which has for its object determinate things, their
use or fruits, or a specific undertaking, or exercise of a profession or
vocation.
 7. Partnership at will – one which has no time specified and may be terminated at anytime
by the will of either one or all of the partners or by mutual
agreement of the partners.

8. Partnership with a fixed term – one which the term or period of existence of
the partnership is specified.

9. Ordinary Partnership – one which is in reality existing among the partners as

well as to the third parties.

10. De Jure Partnership – one which has complied with all the legal requirements for its
existence

11. De Facto Partnership – one which has not complied with all the legal requirements for
its existence.

12. Secret Partnership – one wherein the existence of certain partners is not made
known to the public by any of the partners.

13. Open Partnership – one whose existence is made known to the public by the
partners of the firm

Characteristic elements of the contract of partnership

Consensual - is perfected by mere consent, that is, upon the express or implied
agreement of two or more persons

Nominate - it has a special name or designation in our law

Bilateral - it is entered into by two or more persons and the rights and obligations
arising there from are always reciprocal

Onerous – each of the parties aspires to procure for himself a benefit through the
giving of something

Commutative – the undertaking of each of the partner is considered as the equivalent

of that of the others.

Principal – it does not depend for its existence or validity upon some other contract.
It can stand alone.

Preparatory it is entered into as a means to an end. Example: to engage in business for

the realization of profits with the view of dividing them among the contracting parties.
General partner – is the one who assumes unlimited liability. He is liable for the
debts of the partnership up to the extent of his personal assets.

Limited partner – is the one whose liability for the debts of the partnership is
only up to the extent of his interest in the partnership. His liability is limited.

Capitalist partner – is the one whose contributions to the partnership are in the
form of money or property.

Industrial partner – is the one whose contribution to the partnership is his labor,
industry, skill, talent or professional services

Managing partner – is designated to manage the affairs or business operations of

the partnership.

Silent partner – has financial interest in the firm but does not take active part in
the business although he may be known to the public as a partner.

Liquidating partner - is in charge of the winding up of the partnership affairs in

case of dissolution.

Ostensible partner – takes active part in the partnership and known to the public
as a partner in the partnership whether or not he has an actual interest in the
firm

Nominal partner – is not really a partner having no financial interest in the

partnership nor a party to the agreement of the partnership, but represented as
being in fact a partner and make liable as a partner.

Secret partner – has financial interest in the firm and takes active part in the
business but he is not known to the public as a partner.

Dormant partner – does not take active part in the management and is not known
to the public as a partne