Partnership (as defined by the following): (Civil code, Art. 1767) - Two or more people bind themselves (money, property, industry to a common fund) Exercise of a profession (Uniform Partnership Act, section 6) - Association of two or more person; carry-on as co-workers, business for profit. (Civil code, Art. 1768) - has juridical personality separate and distinct from that of each of the partners; ex: Lizardo and Flavio build a partnership; 3 person involve – The partnership, Lizardo, and Panday. Partnership - Resembles sole proprietorship but there are 2 or more owners form of business organization where two or more people share ownership and responsibility in managing the business. ➢ Partner - each owner of a partnership bus. - share not only profits, but also costs, risks and responsibilities ➢ General Professional Partnership partnership as an exercise of profession; - e.g., 2 teachers as partners. ➢ Articles of Co-Partnership - written partnership contract; - requisites: capital reaches P 3,000 in money or property. 1. name of the partnership; 2. names, addresses of the partners, and classes of partners: general or limited partners; 3. effective date of the contract; 4. purpose and principal place of the business; 5. capital of the partnership: contributions of each partner; 6. rights and duties each partner; 7. profit or loss sharing; 8. conditions: partner’s withdrawals of assets; 9. manner of keeping the books of accounts; 10. causes of dissolution; 11. provision for arbitration for settlement of disputes. ➢ Government offices: 1. Securities and Exchange Commission–to secure the certificate: license to operate a business. 2. Department of Trade and Industry – to register the partnership’s trade or business name: not be used by others. 3. City or Municipal Mayor’s Office – to secure for mayor’s permit and license to operate in the city or municipality: compliance with their ordinances and standards. 4. Bureau of Internal Revenue – to secure a BIR Certificate of Registration, a Tax Identification Number, authorization to print official receipts, to register the books of accounts and paying the national internal revenue taxes. 5. SSS, Philhealth and Pag-ibig Fund – to register the partnership as an employer and for remitting the employees’ contribution together with the employer’s share. ➢ CHARACTERISTICS OF A PARTNERSHIP 1. Mutual agency o each partner is agent; will act on behalf of the partnership. o limits of authority conferred on him. 2. Unlimited liability o the partner’s personal assets may be used for this purpose. 3. Profit and Loss Sharing o agreement: will share in the profits and losses; o must be stated in the articles of co-partnership. 4. Limited Life o (Partnership) may be dissolved at any time o Causes of dissolution: admission of a new partner, death, withdrawal or death of a partner, and incorporation. 5. Co-ownership of partnership assets o property invested by a partner = property of the partnership; all partners as co-owners. 6. Legal entity o own legal personality separate and distinct from that of each of the partners. 7. Taxable o Partnerships: annual income tax rate of 30% o except general professional partnerships. ➢ ADVANTAGES OF A PARTNERSHIP 1. Easy Formation –may be created by a simple contract; has fewer legal requirements. 2. Larger resources –the more number of partners, larger resources 3. Better management – will be well managed by all the partners: they take interest in the daily operations of the business (ownership, profit, and control) 4. Unlimited liability – point of view of creditors in their decision to grant credit or not. ➢ DISADVANTAGES OF A PARTNERSHIP 1. Instability – does not exist for an indefinite period of time because it is easily dissolved. 2. Unlimited liability –(partners) their personal properties may be called upon to pay the firm’s liabilities. 3. Lack of harmony – differences and disagreements of opinions among the partners in conducting the affairs of their business. 4. Transfer of ownership – it is not easy; consent of each partner is required. ➢ KINDS OF PARTNERSHIPS 1. According to activities: a. Service- main activity is rendering of services to customers/clients b. Merchandising or Trading – main activity is the purchase and sale of goods or products c. Manufacturing – main activity is the production of goods or products 2. According to liability a. General –general partners and are liable to partnership debts to the extent of their personal property after all partnership assets have been exhausted. b. Limited – who is being a limited partner, is liable only up to the extent of his capital interest in the partnership. 3. According to object 3.1. Universal Partnership a. Universal partnership of all present property –partners contribute all the property which actually belongs to them to a common fund; become the common partnership assets. (yung mga naka parenthesis eh wala sa orig definition, mej magulo lang yung definition kaya nagdagdag me ng info, or nag translate or define ng panibago pag malalim masyado yung English) b. Universal partnership of profits - All partners may acquire by (or all profits from) their industry or work during the existence of the partnership (belong to the partnership); - usufruct (or to use or to benefit) of movable or immovable property which each of the partners may possess (belong to the partnership); - The original movable or immovable property contributed do not become common partnership assets; - if hindi specified ang nature ng partnership, matic universal partnership of profits yon. 3.2. Particular partnership – one that has for its objects determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation. (like nilalagay talaga sa papeles kung anong nature or purpose nila; specific sila) 4. According to duration of partnership existence a. Partnership at will – one where no period is fixed by the partners for its duration; - may be terminated at will or at any time by mutual agreement or the will of one alone. b. Partnership with a fixed term – one in which the term or period for the partnership existence is agreed upon 5. According to representation to others a. Ordinary partnership – one which actually exists among the partners as well as to third persons. b. Partnership by estoppel – one which in realty is not a partnership but is considered as one with respect to those who, by reason of their conduct or admission, are precluded from denying its existence. (Guard may assumera dito) 6. According to publicity a. Secret partnership – one wherein the existence of certain persons as partners is not made known to the public by any of the partners. (parang partnership namin nila ano, pa thrill si ano eh) b. Open partnership – one whose existence is made known to the public by the members of the firm. 7. According to legality of existence a. De Jure partnership – one which has complied with all the legal requirements for its establishment. b. De Facto partnership – one which has failed to comply with all the legal requirements for its establishment. ➢ CLASSES OF PARTNERS 1. As to contribution a. Capitalist partner – contributes money or property. b. Industrial partner – contributes only his skills, industry, labor or services. c. Capitalist-industrial partner – contributes money, property and industry. (bee-da2 eh) 2. As to liability to third persons a. General partner – one whose liability to third persons extends to his separate properties. b. Limited partner – one whose liability for partnership obligation is limited to his capital contribution. 3. As to management participation a. Managing partner – one who is appointed: take charge of the partnership business b. Silent partner – one who has no active part in the management but is known to be a partner 4. Other Classes of Partners a. Secret partner – one who takes active part in management affairs but is not known to be a partner. b. Dormant partner – one who has no active part in management affairs and is not known to be a partner; he is both a secret and a silent partner. c. Nominal or Ostensible partner – one who is a partner in name only by allowing the use of his name either for accommodation or for consideration; subject to liability as a partner for the protection of innocent third persons. d. Liquidating partner – one who takes charge of the winding up of partnership affairs upon dissolution.
