Business Law
Part 6: Partnership & Dissolution
Dissolution- closing down of the partnership
Winding Up- Taking care of unfinished business
*They still need to perform their obligations (Meralco, Debts, Client’s not paid)
*Reasons of Dissolution
-When there is a change in partners (Art. 1828-1831)
Ex. the partner died, only one left- the partnership needs to dissolve
-When an undertaking is terminated (Art 1830 & 1785, 2nd par)
-By express will of partner (Art. 1830)
Partnership contract are terminated
-When it becomes unlawful to continue
Ex. R.A 11052: Food technologists be licensed (need a permission for them to perform)
-Insolvency (Art 1830) or continued loss (Art. 1831)
Expense is higher than income
Not able to fulfill obligation
-By court (Art. 1931)
“Quo warranto..”
-Violation/ rescission of the partnership (Art 1831)
- if not deliver an obligation
-When the partnership’s fixed term ends (Art 1785, 2nd par.)
*Winding Up happens after the dissolution of partnership
- Distribution of properties (including surplus)
Even to an assignee (recipient of a retiring or dead partner) (Art 1813, 2nd par)
R.A 11232: REVISED CORPORATION CODE
Article 44 (Civil Code)- identifies 3 groups of juridical persons
1. State and Political Subdivisions
Political Subdivisions “public corporations” - not governed by law of Revised Corporation
Code
-they are governed by the law that created them
- also called “government units” RA 7160 (The local government code)
.-identifies 4 types of local government units: provinces, cities, municipalities and
barangays
*Section 15 of the Local Government Code- the provinces, cities, municipalities and
barangays have a juridical personality. It provides the political subdivisions are corporate
entities
-hindi pinapamahalaan ng law, not included revised corporation
2. Corporations created by special law (Sangguniang Panlalawigan, Sangguniang
Panglungsod, & Sangguaniang Bayan may make laws that create corporations
Ex. Bangko Sentral ng Pilipinas created by RA 7663. In 1972, municipal resolution 242
and ordinances 64 created the Makati Polytechnic Community Collge/ UMAK. The BSP
and UMak are corporations created by Special Law- Corporations for Public Interest
*There is no ordinary citizen can establish public corporations or corporations for
public interest -only establish or recognized by law
-institution
3. Individuals may establish partnerships and private corporations- governed by different
(1) laws (created)
Partnership- governed by the Civil Code (RA 386)
-exists for commercial or profit making activity
Private Corporations- governed by the Revised Corporation Code (RA 11232)
*Corporation- juridical personality begins upon registration
-doesn’t have birthday, only has a registration date (register in SEC- they confirm the
date of their registration)
(2) Rights
-to sue
- to sell shares (for stocks corporations)
- to admit members (for non- stock corporations)
- to make reasonable donations
*There are profit and non- profit corporations (special corporations the code applies
special rules for their formation and operation
Private Corporations
Feb 20, Republic Act 11232 (The Revised Corporation Code) was approved
-It became effective after completion of publication in accordance with Art. 2 of the Civil
Code (R.A. 386) (usually 15 days after publication)
Private Corporation
Public Corporation
Public-Interest
Corporation
R.A 11232 Revised
Corporation Code
R.A. 7160 Local
Government Code
Special Laws BSP (R.A.
7653)
Private Corporation
a. Stock Corporation- profit organization
b. Non-Stock Corporation- non- profit corporation
*Special Types:
-Close (Sec. 95) (always “stock” corporation)
-educational (Sec. 105) (may be “stock” or “non-stock”
-religious (Sec. 107) (always non-stock)
-corporation sole (Sec 108) (always non- stock)
-one person corporation (Sec 115)
-foreign (Sec 140) (may be “stock” or “non- stock)
Articles of Incorporation- for registration
*if not register it is not a private corporation
Feb 20, Republic Act 11232 (The Revised Corporation Code) was approved
1. Name
RA 11232 Sec 17& 18
Distinguishable
*Not contrary to law, rules, or regulations
Not
2. Purpose not very long but clear (R.A 11232, Sec 16(b)
-not be patently unconstitutional, illegal, immoral, or country to government rules
&regulations
-R.A 11232, Sec 14 par.3- May have primary and secondary purpose
3. Term- how long
-can have perpetual existence
4. Names of Incorporation- (RA 11232, Sec 10, 1-15)
-different from GPP (general professional partnership- needs to have a degree)
-natural person of legal age
-partnership, or
-corporation / association
5. Name of Treasurer (RA 11232, Sec 24)
-Must be elected by the directors/ trustees
-must be resident
-must not be the same person as the president
-must sign the collection
6. Undertaking to Change Name
7. Number and Names of Directors (Stocks)/ Trustees (Non-stock)
-RA 11232, Sec 13
*Perpetual Existence is applicable in the corporation
Kinds of Partners
1. Capitalist Partners- cannot compete against the partnership (Art. 1808)
Since capitalist partner siya, pede siyang makipagbusiness sa iba na hindi dapat
nacocompete ang existing business nila
2. Controlling Partner (Article 1801)- controlling (substantial) interest (property & surplus)
in the partnership.
-may override the decision of the managing partner/s
-maraming nacontribute
3. Managing Partner (Article 1800)- appropriates personal & partnership debts (Article
1792)
-Act independently of or with the consent of fellow managing partners (Article 1801)
-May be overriden by the partner with controlling interest (Article 1801)
-His/ her associate is not automatically considered a partner (Article 1804)
4. General Partner- shall be liable for any debts of the partnership or any losses beyond
the amount originally contributed to the capital of the partnership
5. Limited Partner (Article 1843)- not bound by the obligation of the partnership
-with one or more general partners
-with a contribution that may be returned after an agreed period (Article 1844) / (Article
1848)
-usually not liable as a general partner (Article 1848)
-is not named in the partnership name (Article 1846)
*Limited Partners shall not take part in the management of business or transact any
business for the partnership, and shall have no power to sign for or bind the partnership
and they shall not be entitled to any salary
Types of Partnership
1. Commercial Partnership- bind themselves to contribute money, property, or industry to
a common find, with the intention of dividing the profits themselves
2. General Professional Partnership- to exercise of a profession
CONTRACT:
Between the partners
REGISTRATION w/ SEC: (Article of
Partnership)
“A partnership begins from the moment of the
execution of the contract, unless it is
otherwise stipulated” (Article 1784)
Between the partnership & the government
Kinds of Partnership
1. Universal Partnership- lahat ng profit mo ay ipapasok sa partnership
-of all present property- properties are commonly used
-of all profits -profits from industry are commonly enjoyed
“A universal partnership of profits comprises all that the partners may acquire by their
industry or work during the existence of the partnership” (Article 1780)
*Universal Partnership must composed of persons who are allowed to partner with each
other
-persons who are prohibited from giving each other any donation or advantage
cannot enter into a universal partnership (1) Those people who are guilty of adultery
or concubinage at the time of the donation (2)Who found guilty of the same criminal
offense, in consideration thereof;
2. Particular Partnership- may determinate na icocontribute
“A particular partnership has for its object determinant things, their use or fruits, or a
specific undertaking, or the exercise of a profession or vocation”
Indeterminate- not specific (main idea,
board)
-shih tzu
Determinate- specific (name)
-thirdy (name of the dog)
STOCKS- a type of security that signifies ownership in a corporation and represents a claim on
the corporation’s assets and earnings
-AUTHORIZED capital stocks is the total value of Investment that a corporation can receive
-total amount of shares
-the total value of investment that a corporation can receive
=total no. of stocks/ shares x price per stock/ share
*Purpose: For your share of profits (dividends) in the corporation
-SUBSCRIBED capital is the total stocks bought although not completely paid
-partial shares
-PAID- UP capital is amount of subscribed shares/ stocks already paid for
Ex. Avengers, Inc. has an authorized capital stock of 300M at P12 per share. The Investors
(stockholders) bought P75M worth of shares.
This means- Avengers, Inc. has 25,000,000 shares. Its Investors bought (subscribed to)
6,250,000 shares
Section 9: treasury
*If fully paid he is more rights
Sec 62- No transfer...
Common Shares ang Preferred Shares
Common- Rights voting ( name, issues, action of corporation)
Sample Problems
Solutions
ABC was allowed to issue 3,000,000 stocks at P9.00
each. How much is the authorized capital stock of
ABC?
Authorized= Available
Monkey Business Corporation sells its stocks for 4
pesos each. It has an authorized capital stock of
800,000,000 / 4 = 200,000,000
3,000,000 x 9= 27,000,000
800,000,000. How many stock/ shares does they have?
Monster University has an authorized capital stock of
200,000,000 with 32,000,000 shares. How much is
each stock?
Divide only
Preferred- have a voting rights (as provided in the Articles/ By-laws)
-when there is a dissolution rhey are the first one who receives dividends and property
-restrictions in voting
Founder's Shares (Sec7)- with voting privileges not found in other stocks ( as provided in the
by-laws) for not more than 5 years (exclusive right to vote for directions, right to be voted for as
director/ officer)
INCORPORATORS- initial stockholders/ members
-enter into pre- incorporation subscription (sec. 60)
-choose temporary officers
Board of Directors/ Trustees