Should a partnership be REGISTERED with the Securities and Exchange

Commission (SEC)?

- If the capital is P3000 and above, it is REQUIRED

When is partnership rendered VOID?

- Whenever immovable properties are contributed and the partnership DID

NOT SUBMIT TO SEC a public instrument containing signed inventory of the
said properties

What may be CONTRIBUTED by a partner to a partnership?

- money

- tangible assets

- services/industry

- existing business of the partner

What is “Articles of Partnership”?

- written contract of the partnership which specifies all the rights, duties and
obligations of the partners among themselves and/or in relation to the
partnership

- to be able to be protected individually

CLASSIFICATION OF PARTNERSHIP

a. As to Object

i. UNIVERSAL PARTNERSHIP

1. Universal partnership of all present property

- assets becomes the property of the partners as soon as invested

as well as the profits w/c they may acquire from it

2. Universal partnership of profits

-individual properties of the partner remain as their personal

properties

ii. PARTICULAR PATNERSHIP

- parties combine to pursue a single individual transaction and

divide among themselves the benefits thereof

- it may be formed to exercise a profession or vocation

b. As to Activities of the Partnership

i. Service

ii. Trading/Merchandise

iii. Manufacturing
 c. As to Liability

i. General Partnership

- ALL partners are general partners

ii. Limited Partnership

- at least 1 of the partners is a general partner and the rest may be

all be limited partners

- the business name always carries the world “limited or Ltd. Or LLP
(limited liability partnership”

CHARACTERISTICS OF PARTNERSHIP

1. Limited Life

- dissolved by the death, incapacity, withdrawal of bankruptcy of any

partner; mutual agreement; admission of a new partner; or court order

2. Mutual Agency

- each partner has the authority to act for the partnership and to enter
into contract binding

3. Unlimited Liability

- liable to creditors for debts incurred by the partnership

4. Co-ownership of property

- property invested becomes the property of all partners.

- Each partner’s claim against the asset is measured by his capital balance

5. Participation in profits and losses

- net income and net loss in accordance with partnership agreement.

Absence of partnership agreement = original capital contribution

- Industrial Partner shares in net income but not in net loss

KINDS OF PARTNERS

1. According to Liability

a. General Partner – liability extends up to his personal properties

b. Limited Partner – liability only up to his capital

2. According to Nature of their capital formation/contribution

a. Capitalist – capital in form of cash, property or both

b. Industrial – offers his services

 c. Capitalist-Industrial – money, property, or both in addition to his
services

3. According to Participation in their partnership operation

a. Managing Partner – lead in steering the business to profitable level

b. Liquidating Partner – takes charge when business is being dissolved

and liquidated

c. Secret Partner – takes active participation but not known in the

public

d. Silent Partner – does not take active participation but known to the
public as partner

e. Dormant Partner – not active and not known

f. Nominal Partner – not active, no investment, but permits his name

to be used by the partnership

PARTNERSHIP VS SOLE PROPRIETORSHIP

Advantage - better management

- greater source of capital Disadvantage

- possibility of dispute

PARTNERSHIP VS CORPORATION

Advantage
- easier and less expensive
- less government intervention
- less preparation of reports
Disadvantage
- easily dissolved
- unlimited liability of partners
is risky on the part of 3rd
parties
- less capacity to raise capital

PARTNERSHIP FORMATION

Ways of forming a partnership

1. By at least 2 individual persons

2. Sole proprietorship and an individual

3. Combination or merge of 2 or more sole proprietorship business.