Professional Documents
Culture Documents
Partnership
By: Marian Jane Alumbro
Nilda Vicente
8 seconds starts
now
Contract of Partnership
SEC
Valid contract
juridical person
Articles of Partnership
immovable
property
Legal capacity
secret partnerships
Lawful
object
universal
partnership
Capital
particular
partnership
Property
common fund
Money
sharing of profits
Industry
sharing of losses
Mechanics
1. The class will be divided into two groups.
2. Each group will choose a representative.
3. The representative will act out the word. (no
mouthing)
4. The group will guess the right term/s.
5. Each group will be given one (1) minute to guess
the right term/s.
6. After one minute and the group did not able to
guess the right term, the representative will reveal
the term. Thereafter, the representative will choose
one member of the group to say something of
substance about the term/s.
However, if the group is able to guess the right
term/s, it will choose a member from the other
group to say something of substance about the
term/s.
Nature of Partnership
Within the context of Philippine law,
a"partnership"is treated as an artificial
being created by operation of law with a
legal personality separate and distinct
from the partners thereof.
Philippine partnerships operate under the
concept of unlimited liability and unless
otherwise agreed upon by the partners,
each one of them acts as manager and
agent of the partnership and
consequently, their acts bind the
partnership.
Definition by law
Art. 1767. By the contract of
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.
Two or more persons may also form a
partnership for the exercise of a
profession.
Essential Features/Charactersitic
Elements of Partnership(De
leon/Agbayani)
Fiduciary in Nature
Partnership is a form of voluntary
association entered into by the
association. It is a personal relation
in which the element of delectus
personae exists.
What does Delectus personae mean?
It involves trust and confidence
between partners.
Cases
In Ortega v. Ca G.R. No. 109248 July 3, 1995, a
partnership that does not fix its term is a
partnership at will.
The birth and life of a partnership at will is
predicated on the mutual desire and consent of
the partners. The right to choose with whom a
person wishes to associate himself is the very
foundation and essence of that partnership. Its
continued existence dependent on the constancy
of the mutual resolve, along with each partners
capability to give it, and the absence of a cause
for dissolution provided by the law itself.
Answer:
Yes, in Mervyn v. Bieber, (184 CA 637)
corporations which are expressly authorized
by statute, or there is an express grant of
such authority in the charter, a corporation
has authority to enter into a contract of
partnership.
Also, there is no prohibition against a
partnership being a partner in another
partnership. When two or more partnerships
combine with each (or with natural person or
persons) other creating a distinct partnership.
Sharing of profits
Sharing of gross profits is not
partnership when the agreement is to
divide the gross earning or receipts of a
venture, will not for itself constitute a
partnership as to third persons. It does
not amount to an agreement to share
profits and losses.
Sharing of profits is a prima facie
evidence of partnership because it is an
essential element of the relationship.
Consensual
Nominate
Bilateral
Onerous
Commutative
Principal
Preparatory
Juridicial Personality of
Partnerships
Art. 1768. The partnership has a judicial
personality separate and distinct from
that of each of the partners, even in case
of failure to comply with the requirements
of Article 1772, first paragraph.
Trivia Question: If A and B decide to form a
partnership. How many persons are
involved?
3. A, B and the Partnership of A and B.
Trivia Question
If Juan and Pedro are merely co-owners
but Juan represents to Padring that
he and Pedro are partners, can they
be partners as to Padring, a third
person?
Answer
The general rule is, no, they cannot be
partners as to Padring, who is a third
person if they are not partners as to
eachother.
The exception is, where there is estoppel
in Art. 1825 of the Code. So, as to
Padring, Juan and Pedro are partners
even if they are not real partners.
Trivia Question:
Juan and Pedro agree to buy a piece of
land under the condition that each
should pay one-half of the price
thereof, and that the property should
be divided between them. Is there
partnership in the case? (Gallemit v.
Tagbiliran, 20 Phil 241)
No.
Partnership v. Co-ownership
As a general rule, an agreement between
joint-owners of property to carry common
trade or business and to share the profits
and losses thereof will constitute a
partnership.
A mere community if interest, such as exists
between tenants in common or joint
tenants of real or personal property, does
not make such owners partners or raise a
presumption that partnership exists.
Trivia Case
Juana died leaving heirs, her husband Pedro and her
children. After the partition, the properties were not
distributed to Pedro and the other heirs. Instead Pedro,
as administrator, used such properties in business by
leasing or selling them and investing the income
derived therefrom and the proceeds from the sales
thereof in real properties and securities. Every Year
the heirs returned from income tax purposes their
shares in the net income derived from the properties
and investments, and paid the corresponding income
taxes. However, the heirs did not actually receive their
shares which were left in the hands of Pedro, the
administrator. The BIR decided that the heirs had
formed an unregistered partnership and therefore
subject to the corporate income tax pursuant to
Section 24 and 84 (b) of the Tax Code.
Yes, the BIR is correct in contending that the heirs had formed an
unregistered partnership from the partition of the properties
of the deceased Juana was approved by the court. From the
moment the petitioners allowed not only the incomes from
their respective shares from the inheritance but even
inherited properties themselves to be used by Pedro as a
common fund in undertaking several transactions or in
business, with the intention of deriving profit to be shared by
them proportionally, such act was tantamount to actually
contributing such income to a common fund, and in effect,
they thereby formed an unregistered partnership within the
purview of the above-mentioned provisions of the Tax Code.
However, up until the time the partition was approved by the
court, the heirs are not considered to have formed an
unregistered partnership. Before the partition and distribution
of the estate of the deceased, all the income thereof does
belong commonly to all the heirs, obviously, without them
becoming thereby unregistered co-partners.
Partnership V. Conjugal
Partnership
1) An ordinary partnership is created by the will of the
parties whereas a conjugal partnership arises from the
mere celebration of marriage, that is, by operation of law;
2) In an ordinary partnership, it is the agreement of the
parties that determines its object, duration, etc. whereas
in a conjugal partnership, it is the law that regulates such
matters.
3) In an ordinary partnership, the profits are distributed in
accordance with the agreement of the the parties, and in
the absence thereof, in accordance with the provisions of
law, whereas in a conjugal partnership, the profits are
always divided equally between the spouses.
4) In an ordinary partnership, all partners are, in the absence
of an express agreement vested with the rights of
management, whereas in a conjugal partnership it is
almost always the husband who manages the same.
CLASSIFICATIONS
OF PARTNERSHIP
Facts:
A, B and C formed a limited partnership to
engage in the importation, marketing and
operation of radios, television sets and
amusement machines, their parts and
accessories, with B and C as limited
partners. Subsequently, A and B got
married and thereafter, C sold his share to A
and B. So, A and B filed a separate income
return for the limited partnership and a
consolidated return for them as spouses.
Issue
Whether or not the partnership
was dissolved after the marriage
of A and B and the subsequent
sale to them by C of the latters
share.
Ruling
The firm was not a universal partnership, but
a particular one. It follows that the
partnership was not one that A and B were
forbidden to enter under Art. 1782. Nor could
the subsequent marriage of the partners
operate to dissolve it, such marriage not
being one of the causes provided for that
purpose by law.
Note:
Article 1782 Persons who are prohibited
from giving each other any donation or
advantage cannot enter into a universal
partnership.
As to LIABILITY OF PARTNERS
a. GENERAL PARTNERSHIP - consists of general
partners who are liable pro rata and
subsidiarily and sometimes solidarily with
their separate property for partnership debts.
b. LIMITED PARTNERSHIP - one formed by 2 or
more persons having as members one or
more general partners and one or more
limited partners, the latter not being
personally liable for the obligations of the
partnership.
As to DURATION
a. PARTNERSHIP AT WILL - one in which
no time is specified and is not formed
for a particular undertaking or
venture which may be terminated
anytime by mutual agreement.
b. PARTNERSHIP WITH A FIXED TERM the term for which the partnership is
to exist is fixed or agreed upon or one
formed for a particular undertaking.
As to LEGALITY OF EXISTENCE
a. DE JURE PARTNERSHIP - one which
has complied with all the legal
requirements for its establishment.
b. DE FACTO - one which has failed to
comply
with
all
the
legal
requirements for its establishment.
As to REPRESENTATION TO
OTHERS
a. ORDINARY OR REAL PARTNERSHIP one which actually exists among the
partners and also as to 3rd persons.
b. PARTNERSHIP BY ESTOPPEL - one
which in reality is not a partnership
but is considered a partnership only
in relation to those who, by their
conduct or omission, are precluded
to deny or disprove its existence.
As to PUBLICITY
a. SECRET PARTNERSHIP - one wherein
the existence of certain persons as
partners is not avowed or made
known to the public by any of the
partners.
b. OPEN OR NOTORIOUS PARTNERSHIP one whose existence is avowed or
made known to the public by the
members of the firm.
As to PURPOSE
a.
COMMERCIAL
OR
TRADING
PARTNERSHIP - one formed for the
transaction of business.
b. PROFESSIONAL OR NON TRADING
PARTNERSHIP - one formed for the
exercise of a profession.
BUSINESS
PARTNERSHIPS
Warner Brothers
Sam, Jack, Albert, and Harry Warner
Founded in 1923
The sons of Polish-born Jewish immigrants, Sam,
Jack, Albert, and Harry Warner co-founded what
would become Warner Bros. Studios. They got their
start in the early 1900s working in film production
and distribution. They ran a traveling movie
business, established their own movie house, and
began producing their own films when the cost of
rentals became too steep. Sam Warner is credited
with ending the silent film era after he obtained the
technology that allowed his studio to produce the
first feature-length talkie, The Jazz Singer, which
the studio released in 1927. The blockbuster film
(which grossed some $3 million) established
Warner Bros. as a major player and revolutionized
the film industry.
McDonalds (MCD)
Richard and Maurice McDonald
Founded in 1948
The New Hampshire-born brothers moved to
southern California in the late 1920s with the
goal of opening their own business and
earning $1 million before they hit 50. After an
unsuccessful attempt to break into the movie
business, they opened and ran a hot dog stand
and a barbecue restaurant, gaining experience
they would later use to pioneer the fast-food
industry. In 1948, the brothers reinvented their
McDonald's Famous BBQ, firing their car hops,
slashing the number of items on the menu,
getting rid of utensils and plates, and turning
the kitchen into a mechanized assembly line.
Hewlett-Packard (HP)
Bill Hewlett and David Packard
Founded in 1939
After graduating with degrees in electrical engineering from
Stanford in 1934, Bill Hewlett and David Packard forged a
friendship during a two-week camping and fishing trip in
Colorado. Four years later, the pair began working part-time
on a product based on Hewlett's study of negative feedback in
a rented Palo Alto garage with $538 in cash and a used drill
press. The result was the HP200A, an audio oscillator designed
to test sound equipment. One of their first customers was Walt
Disney Studios (DIS), which purchased eight of the devices to
test a new sound system for the movie Fantasia.
In 1939, the men formalized their partnership, flipping a coin
to decide their startup's name. Hewlett-Packard continued to
create innovative technology products throughout the 1940s.
It also become known for its equally innovative open
corporate culture and management style. By 1942, HP had
eight employees and $522,803 in yearly revenue. In 1961, the
company was earning $87.9 million and was listed on the New
York Stock Exchange. Today, the company that introduced
laser jet printers, touch screens, and personal computers is a
global behemoth with $104.3 billion in annual sales.
Hewlett-Packard (HP)
Microsoft (MSFT)
Bill Gates and Paul Allen
Founded in 1975
Back in 1968, a computer club meeting about BASIC
programming at Seattle's private Lakeside School
brought Gates and Allen together. The two students
soon became obsessed with programming a
mainframe of a local computer and quickly saw the
future of micro-processing. However, it was an article
in Popular Mechanics about personal computers that
triggered their realization that writing and selling
software was the new frontier. Fast forward to the
early 1970s. Allen, who was three years older than
Gates, went to work for Honeywell (HON) in Boston,
and Gates enrolled at Harvard. In 1974, the pair
devised a BASIC platform for the Altair 8800 in Gates'
dorm room and sold it, earning Gates disciplinary
charges from the university for running a business in
his dorm. A year later, Gates (who dropped out of
Harvard) and Allen formed Microsoft, which today is
the world's largest software company.
Apple (AAPL)
Steve Jobs and Steve Wozniak
Founded in 1976
College dropouts, Steve Jobs and Steve Wozniak met in the
early 1970s when Jobs was attending lectures at HewlettPackard, where Wozniak worked. The two were also involved
in the Homebrew Computer Club in Silicon Valley, where they
experimented with hardware and software. Soon they
developed an idea for a new kind of personal computer. To
raise money for their new venture, they sold off some of their
belongings,
including
a
Volkswagen
minibus
and
programmable HP calculator.
The pair blended Wozniak's computer and software prowess
and Jobs' marketing genius to build the first Apple computer
in Jobs' family garage in 1976. The first single-board
computer with onboard ROM and a video interface,
revolutionized computer functionality, and design. They sold
their first 50 computers to the Byte Shop in Mountain View,
Calif. In 1980, the company went public, making both
multimillionaires. Today, Apple is a $32.4 billion company
known for its innovative products, ranging from the
Macintosh to the iPod to the iPhone.
Google (GOOG)
Larry Page and Sergey Brin
Founded in 1998
Page and Brin (both the sons of academics, economists, and
mathematicians) met working on their doctorates in computer
science at Stanford University in 1995. Together, they created
a proprietary algorithm for a search engine, with the goal of
organizing the vast amount of information available on the
Net. Initially called BackRub, the software catalogued search
results according to the popularity of pages. Fairly quickly it
became apparent that in most cases the most popular results
were also the most useful. Presto, another game changer was
born.
In 1998, the pair dropped out of Stanford, changed their
startups name to Google, set up shop in a friend's garage,
and raised about $1 million in capital from friends, family, and
other investors. Initially, Google received 10,000 queries a
day (today that number is estimated at 235 million) and in
1999 the pair received $25 million in venture-capital funding.
Five years later, Google went public, opening at $85 a share.
Arguably the world's No. 1 Internet search engine, last year
the company earned $16.5 billion in salesmost of which was
generated through ad sales.
Is a Business Partnership
the Right Choice for You?
Starting a business with a partner
offers many benefits, not the least of
which is having someone to share
the many responsibilities of running
a business. But partnerships can
quickly go bad if you don't give it
ample forethought and planning.
Patricia Schaefer
Thought to Ponder
This real-life scenario is just one
testament to the fact that a business
partnership formed without necessary
forethought is likely to be doomed to
failure. With the proper planning and
consideration, though, a partnership
can be an unequivocal success. It is
the simplest and least expensive coowned business arrangement.
Dating Period
Do we have the same motivation, values
and similar work habits?
Do we have a similar vision, ideas and
objectives about how to run the business?
Is each of our strong points and skills
complementary to one another?
Are we both able to communicate well
with one another in a pleasant, respectful
and comfortable manner?
Do you trust this individual?
Cons
All owners are subject to unlimited personal
liability for the debts, losses and liabilities of
the business (except in cases of limited
partnerships and limited liablity partnerships).
Individual partners bear responsibility for the
actions of other partners.
Poorly organized partnerships and oral
partnerships can lead to disputes among
owners.
Verifyand reserve the proposed partnership name. You could do this the hard
way, at the SEC Verification Unit, located at the SEC Building, EDSA, Greenhills,
Mandaluyong City (right across the Philippine Overseas Employment
Administration [POEA] and the EDSA Shrine). If you want to make your life a bit
easier, you could do the verification and registration online, through the
SEC-iRegister, a 24-7 portal. After paying the reservation fee, you will get a Name
Verification Slip, which is submitted together with the other requirements.
2.
3.
Prepare the: (i) Written Undertaking to Change Partnership Name by any Partner;
and (ii) Registration Data Sheet. There are additional requirements for certain
partnerships, like customs brokerages, which are required to submit the customs
broker licenses and professional tax receipts (PTR) of at least two partners.
4.
File the complete documents with the SEC, upon payment of the requisite filing
fees. The SEC website, http://www.sec.gov.ph/, offers an on-line calculator for
your estimated registration fees to pay.
Should need a more detailed process you can always check out the
Securities and Exchange Commission .
Articles of Partnership
While the partnership relation may be
informally created and its existence proved
by the manifestation of the parties, it is
customary to embody the terms of the
association in a written document. The
Articles of Partnership states the name,
nature or purpose and location of the firm,
and defining, among others, the powers,
rights, duties, and liabilities of the partners
among themselves, their contributions, the
manner by which the profits and losses are
to be shared, and the procedure for
dissolving the partnership.
Activity
Look for your report partner
Get a bondpaper from the reporter
You want to make form a business partnership and establish
the following establishment: (choose)
-Ukay2x
-Bakeshop
-Fishball Vendor
-Balot Business
-Sarisari Store
-Internet Caf
-Load Station
-Barbeque Station
-Ice Cream Shop
-Carenderia
Make your own Articles of Partnership and present your
business and AOP to the class. Use your imagination. Act as
if you are truly making a business to make it more realistic.
(Sample is in .PDF form)