BUSINESS ORGANIZATIONS

Introduction
Origin of Business Organizations
Concept of Business Organizations
Choosing the Form of Business Organizations
Different forms of business organizations
Single Proprietorship
Partnerships
Joint Ventures
Cooperatives
Corporations
Corporations covered by special laws or charters
Law on Micro Small and Medium Enterprises, Republic Act No. 9501

ORIGIN
Trade and exchange of goods, wares and things, to satisfy needs and thus survive.
Choose a neutral place to deal with one another in safety and in good faith.
Babylonia, 2000 BC King Hammurabi; legal and commercial documents showed well-developed organization of
business
Ancient Greece and Rome devised rules on business organizations (ex. partnerships and corporations) to carry on
business ventures for profit.
England and United States where business organizations are well developed
Philippines coming of the Americans at the turn of the 19 th century after the Spaniards, hastened the introduction of
the corporate form of business in the Philippines, such that today almost all big businesses are organized as
corporations.
Concept of B.O.
A group of individuals systematically united for the accomplishment of a common purpose or undertaking for profit in any of the
several ways allowed and regulated by law.
Components of a B.O.
Group of individuals
Systematically united
Common purpose
Profits
Regulated by law

GROUP OF INDIVIDUALS
Systematically united
Partnership
Cooperative
Joint Ventures
Corporation
Common purpose
Sell books
Bake cakes and pastries and cater to UP Cebu employees
Teach English to Koreans
Operate internet cafe
FOR PROFITS:
$$$$$$$$$$$$$$$$$$$$$$
REGULATED BY LAW:
CONSIDERATIONS IN CHOOSING FORM OF B.O.
ALONE OR WITH OTHERS
CHARACTER OF ASSOCIATES
CHARACTERISTIC OF B.O.
LAW & PROCEDURE APPLICABLE
Forms of B.O.
1. SOLE PROPRIETORSHIP
2. PARTNERSHIP
3. COOPERATIVES
4. JOINT VENTURES

5.

CORPORATIONS

Characteristics of SOLE PROPRIETORSHIP:

1. Oldest and simplest and most common way of carrying on a business
2. Business is owned by a single individual
3. Has capacity to enter into contracts and incur obligation
4. Business owner supplies the capital and manages it solely.
5. Profits earned and losses incurred are borne solely by sole proprietor
SOLE PROPRIETORSHIP
Department of Trade and Industry
Local Government Units where your business is located:
Barangay
Mayors Office
Bureau of Internal Revenue
If you have employees, you need to register to the following:
Social Security System
Philippine Health Insurance Corporation
Home Development Mutual Fund
Basic Requirements and Procedure in Registering a Sole Proprietor Business
1. Register a business name at Department of Trade and Industry
Come-up with three (3) business names such as
JULEAN AND JAY INTERNET CAF
DAYMIEL SURF & SHOP
JJs www Gaming Store
Search in the DTIs website if theres an existing name similar to yours
If your business name is available, fill-up Business Name (BN) Application Form.
Submit your completed BN application form to DTIs offices/branch
Wait for your DTI Certificate of Registration
After acquiring a DTI Certificate of Registration, you may now proceed and register with Local Government
Units (LGU), such as Barangay and Mayors Office:
2. Registration with Barangay
Go to the barangay where your business is located to secure and fill-up application form
Submit your completed application form together with the following:
Certificate of Business Registration from DTI
Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Claim your Barangay Certificate of Business Registration
3. Register your business in the Mayors Office
Go to the municipal office where your business is located to secure and fill-up application form
Submit your completed application form together with the following:
Certificate of Business Registration from DTI
Barangay Clearance Certificate
Two (2) valid IDs
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Claim you Mayors Business Permit and Licenses
When you already got all the certificate and permits from DTI and LGUs, you may now register to the Bureau of
Internal Revenue (BIR)

4. Register your business in the Bureau of Internal Revenue (BIR)

Go to the Regional District Office (RDO) where your business is located
Fill-up the BIR Form 1901 Application for Registration (for Sole Proprietor)
Submit completed registration form together with the following:
Certificate of Registration form DTI
Barangay Clearance
Mayors Business Permit
Proof of Address such as Contract of Lease (if rented) or Certificate of Land Title (if owned)
Valid IDs, if applicable.
Pay the Registration Form (BIR Form 0605)
Register your book of accounts and receipts/invoices.

 Claim your Certificate of Registration (BIR Form 2303

Retail Trade Liberalization Act of 2000

"Retail Trade shall mean any act, occupation or calling of habitually selling direct to the general public merchandise,
commodities or goods for consumption.
A Foreign Investment Negative list is a list of economic activity where foreign equity is either prohibited or limited to a
certain percentage.
Under the Retail Trade Liberalization Act of 2000, a foreigner cannot invest into retail business if the paid up capital is
less than $2,500,000 because retail business shall be exclusively for Filipinos and corporations wholly owned by
Filipino Citizens.
Foreigners are only allowed to invest in a retail trade business if the paid up capital of a retail business is at least
$2,500,000.

SINGLE PROPRIETORSHIP
A single individual manages a small business with meager capital and makes business decisions alone.
ADVANTAGES/DISADVANTAGES:
In starting the business, not subjected to so many requirements usually attendant to incorporation of a corporation or
registration of a partnership.
There is unlimited personal liability of the owner for all the debts and obligations of the business.
Inevitable cessation of the business upon death or incapacity of the proprietor, unless somebody in his family will take
over the business.
Cannot use as part of the business name the word Company or Corporation for it will be improper, confusing and deceptive.

It does not acquire a distinct and separate juridical personality.

PARTNERSHIP
Oldest form of business association. It exists where two or more individuals combine their capital, property, skill or
labor, or all of these, for the transaction of a lawful business for gain, upon an understanding that profits or losses shall be
shared or borne by them in certain proportions. Only persons who are legally competent to do business for themselves may
enter into partnership and they are called partners.
A juridical entity created by the contract of two or more persons who bind themselves to contribute money, property or industry to
a common fund for the purpose of dividing the profits among themselves; includes the exercise of a profession

JURIDICAL ENTITY - has a personality of its own recognized under the law and can sue and be sued
CONTRACT -- there is an agreement, and a meeting of the minds , an understanding between the parties, in effect a consent to
enter into the agreement, with a consideration

TWO OR MORE PERSONS BINDING THEMSELVES

CONTRIBUTE MONEY, PROPERTY OR INDUSTRY TO A COMMON FUND

FOR THE PURPOSE OF DIVIDING THE PROFITS OR LOSSES AMONG THEMSELVES

JOINT VENTURES - widely used when a foreign company does business with a local or domestic corporation
In the case of Aurbach et al. vs. Sanitary Wares Manufacturing Corp., 180 SCRA 131-132, December 15, 1989, the Supreme
Court discussed the legal concept of a joint venture as:
"it has no precise legal definition, but generally understood to mean an organization formed for some temporary purpose. Hardly

distinguishable with
partnership, since their elements are similar - community of interest in the business, sharing of profits and losses, and a mutual
right of control. Main distinction with partnership is that in the latter, it contemplates a general business with some degree of
continuity, while the joint venture is formed for the execution of a single transaction, and is thus of temporary nature"
Under Philippine law, a joint venture is a form of partnership and thus governed by the laws of partnership, with a distinction
recognized by the Supreme Court that although a corporation cannot enter into a partnership contract, it may however engage in
a joint venture with others.
COOPERATIVES

An autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined
together to achieve their social, economic and cultural needs and aspirations by making equitable contributions to the capital
required, patronizing their products and services, and accepting a fair share of the risks and benefits of the undertaking in
accordance with universally accepted cooperative principles. (Article 3, R.A. 9520)
*Cooperative Principle (Article 4, R.A. 9520)
-

CONCERN FOR COMMUNITY

CORPORATION
OTHER FORMS OF B.O.'s/ COVERED BY CHARTERS OR SPECIAL LAWS
1. Joint Stock Companies - essentially partnerships with transferable shares. Exist at common law in some of the New
England states, where frequently known as real estate trusts, being used chiefly for the management of office buildings and other
city property. The money subscribed is spent on the purchase of land and the erection of buildings, the legal title to which is held
by a board of trustees, subject to the direction of the stockholders,
2. BUSINESS TRUSTS - are organizations which bear close resemblance to a corporation that they have been frequently
considered as a corporation that they have been frequently considered as corporations. There are trustees or managers that
hold legal title to its property and act as principals for the shareholders-members who have all the legal status of cestui-que trust
or beneficiaries.
3. Syndicates are temporary partnerships organized for a particular transaction, such as to, purchase or subscribe for a large
number of stocks in a corporation to be formed, so as to insure the completion of the proposed scheme. As soon as the special
transaction is completed, the syndicate is terminated. They are substantial partnerships.
4. Unincorporated societies resemble partnerships more nearly than corporations. They are not legal entities, and hence
those who claim to be agents thereof bind only themselves and those who authorize them to act. The members are not
authorized to act for one another as in partnerships.
5. STATE INSTITUTIONS - May consist of state universities, asylums, penitentiaries , managed by boards created by law and
appointed by the governor or elected by electors.

MSMEs R.A. No. 9501

Magna Carta for Micro, Small and Medium Enterprises
Provides national policy to promote, support, strengthen and encourage the growth and development of MSMEs.
MICRO : Not more than P3,000,000
SMALL : P3,000,001 P15,000,000
MEDIUM:P15,000,001-P100,000,000

BMBEs R.A. 9178

Barangay Micro Business Enterprises
Any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including
agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which
the particular business entitys office, plant and equipment are situated, shall not be more than Three Million Pesos
(P3,000,000.00).
BMBEs Incentives and Benefits
Exemption from taxes and fees (income tax for income arising from the operations of the enterprise
Exemption from the Coverage of the Minimum Wage Law . Provided, all employees of BMBEs receive the same
benefits given to any regular employee.

Credit delivery LBP, DBP, SBGFC and PCFC provide a special credit window to service the BMBEs financing needs
Technology Transfer, Production and Management Training and Marketing Assistance - A BMBE Development Fund
set up from PAGCOR funds administered by the SMED Council

REGISTRATION AND OPERATION:

LGUs Treasurer registers the BMBEs and issue a CERTIFICATE OF AUTHORITY, good for 2 years, renewable for a period of 2
years for every renewal, to enable the BMBE to avail of the benefits under the Act.
Administrative costs not more than P1,000.00 can be charged for registering and monitoring the BMBE

BASIC CONSIDERATIONS
1. Nature of business
2. Amount of capital needed
3. Tax liabilities
4. Managerial control
5. Flexibility in financing
6. Governmental control and supervision
7. Stability and flexibility of the organization
8. Legal requirements in creating and terminating the relationship, including the risks involved therein
9. Other decisional aspects in carrying on a business enterprise
PARTNERSHIP
A juridical entity created by the contract of two or more persons who bind themselves to contribute money, property or
industry to a common fund for the purpose of dividing the profits among themselves; includes the exercise of a profession
HISTORY
PARTNERSHIP FORM OF CARRYING ON A BUSINESS dates back to Ancient History
Improved by the Romans
Widely used during the middle ages
Early mercantile courts recognized 2 forms of partnership well known in continental Europe:
a) Societas or general partnership
b) Commenda or Societe en Commandite or limited partnership
COMMENDA:
Most common form of partnership in the early centuries
A partnership in which one of the parties, commendator, supplied the capital either in the shape of money or goods,
without personally taking an active part in the operations of the society, while the other party supplied none or only a
smaller fraction of the capital and conducted the actual trade of the association.
Used in maritime trade and often confined to single ventures.
Popular for it enable the capitalist to turn his money to good account without violating the canonical laws against usury.
Small merchant or shipper secure credit and transfer the risk of the venture to the capitalist.
COLLEGANTIA or COMPAGNIA OR SOCIETAS:
A closer kind of partnership in which the partners were normally coordinate members of the association with the same
privileges and responsibilities.
Generally designated by the name of one of its members with the addition of the phrase et socii.
Partnership wherein both parties to the contract contributed to the capital of the association.
Partners were all responsible individually for the debts of the firm.
Philippine law on Partnership governed now by Articles 1767 to 1867 of the New Civil Code, August 30, 1950
Prior to effectivity of the New Civil Code, there were 2 kinds of partnership in the Philippines, namely: civil and
commercial
Civil governed by the Old Civil Code while the commercial partnership was governed by the Code of Commerce.
Upon passage of the New Civil Code, provisions of the old Civil Code regarding civil partnership and the provisions of
the Code of Commerce relating to commercial partnership were repealed.
All matters now governed by the provisions of the New Civil Code.
ELEMENTS TO CONSTITUTE PARTNERSHIP:
Intent to form a partnership;
Generally participating in both profits and losses;
A community of interest, as far as third persons are concerned as enables each party to make contract, manage the
business, and dispose of the whole property (Pascual vs. CIR, Oct. 18, 1988)
INTENT TO FORM PARTNERSHIP:
It arises out of the voluntary agreement of the parties to carry on the business as partners
A personal relation in which the element of delectus personae exists. Delectus personae (choice of persons) is meant
that a person has the right to select persons with whom he wants to be associated in partnership.

Selection of business partner may depend on many factors like character, integrity, honesty, solvency, reputation, and
importantly, trust and confidence which a person reposes in his associate.

CAPACITY TO BE PARTNERS:
A person who has capacity to bind himself in a contract may enter into a contract of partnership, except when provided otherwise
by law.
Incapable to enter into contracts under the law:
Unemancipated minors
Insane or demented persons; and
Deaf mutes who do not know how to write
CORPORATIONS AS PARTNERS:
Based on SEC rules, only natural persons are considered capable of entering into a contract of partnership, although there have
been cases where SEC has allowed corporations to enter into partnerships, with the presence of the ff:
1. All the corporation-partners must be managing partners.
2. Their charters must expressly allow the corporations to enter into partnerships.
3. The corporation-partners shall embody the terms and conditions of their relationship in the partnership agreement and upon
approval by the SEC, the partnership shall attain a juridical personality separate and distinct from the corporation-partners.
The liability of the corporation-partners, shall not be limited to their contributions and even the dissolution of the corporationpartners does not terminate a joint venture to which it is a party so as to relieve the corporation of obligations incurred by reason
of its entering into the venture.
PARTNERSHIP FOR THE EXERCISE OF A PROFESSION
While ethically, the practice of a profession is not a business, but the law considers it a partnership if practiced by a group, a joint
pursuit for mutual help.
PARTNERSHIP DETERMINED BY SUBSTANCE NOT NAME:
BUSINESS TRUST GROUP OF PERSONS ENTRUST THEIR PROPERTY OR MONEY TO OTHER
PERSONS WHO WILL MANAGE THE SAME FOR THE FORMER.
CESTUI QUE TRUST ARE PERSONS INVESTING
TRUSTEES MANAGERS OF PROPERTIES OR MONEY OF BUSINESS TRUST
CHARACTERISTICS OF PARTNERSHIP CONTRACT:
1. CONSENSUAL perfected by mere consent;
2. BILATERAL formed by 2 or more persons creating reciprocal rights and obligations
3. PREPARATORY because after the contract has been entered into, other contracts necessary in the carrying out of
its purposes have to be entered into.
4. NOMINATE as it has a special designation in the law
5. ONEROUS because certain contributions in money, property or industry has to be made
Limited Partnership, Art. 1843, NCC
Formed by two or more persons under the provisions of the Article 1844, having as members one or more general partners and
one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.
Limited Partnership, Art. 1843, NCC
Formed by two or more persons under the provisions of the Article 1844, having as members one or more general partners and
one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.
Distinguishing Characteristic:
Limited partners are not liable with their separate properties to obligations of the partnership.
Partnership Forms- Articles of Partnership & Certificate of Limited Partnership

Limited Partnership, Art. 1843, NCC

Formed by two or more persons under the provisions of the Article 1844, having as members one or more general partners and
one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.

INVEST CAPITAL
NO MANAGEMENT
NO NOT LIABLE BEYOND THE INVESTMENT
NAME DOES NOT APPEAR IN THE FIRM NAME
NOT AN INDUSTRY PARTNER
NOT A PARTY TO LAWSUITS

Distinguishing Characteristic:
Limited partners are not liable with their separate properties to obligations of the partnership.
Delectus personae principle applies
GENERAL vs. LIMITED PARTNERS
General conduct the business and are personally liable to creditors
Special or limited partners do not participate in the management and are not personally liable to creditors

CHARACTERISTICS of Limited Partnership, Art. 1843, NCC

1. Formed in accordance with the requirements of the law;
2. There must be one or more general partners who control the management of the business;
3.
4.
5.

There must be one or more limited partners contributing to the capital and sharing in the profits but having
nothing to do
with the management or payment of partnership obligations for which they cannot be held liable.
Obligations of the partnership must be paid out of the common fund and the separate properties of the
general partners.

Requirements of a Limited Partnership: (Art. 1844)

Signed and sworn certificate containing
(i)
Name of Partnership, with word Limited
(ii)
Character of Business
(iii)
Principal place of business
(iv)
Name and place of residence of each partner
(v)
Term of existence
(vi)
Amount of cash and a description of and the agreed value of the other property contributed by each limited
partner
(vii)
Additional amount and when it will be contributed by limited partner
(viii)
Time, if agreed upon, when the contribution of each limited partner will be returned
(ix)
(x)
(xi)
(xii)

Share of the profits or other compensation of each limited partner

Right, if given, of a limited partner to (1) substitute an assignee as contributor in his place, and the terms and
conditions of the substitution;
Admit additional limited partners; (3) priority over other limited partners; (4) demand and received property other
than cash in return for his contribution.
The right, if given, of the remaining general partner or partners to continue the business on the death, retirement,
civil interdiction, insanity or insolvency or a general partner;

(2)File for record the certificate in the Office of the Securities and Exchange Commission
PRESUMPTION IN FAVOR OF GENERAL PARTNERSHIP

ART. 1845:
LIMITED PARTNER CANNOT CONTRIBUTE SERVICES.
A LIMITED PARTNER WHOSE SURNAME APPEARS IN A PARTNERSHIP NAME CONTRARY TO THE PROVISIONS IS
LIABLE AS A GENERAL PARTNER TO PARTNERSHIP CREDITORS WHO HAVE NO ACTUAL KNOWLEDGE THAT THE
LIMITED PARTNER IS NOT A GENERAL PARTNER.

FOUR DISTINCT RELATIONSHIPS CREATED IN A CONTRACT OF PARTNERSHIP

1) Among PARTNERS
2) PARTNERS with the PARTNERSHIP
3) PARTNERSHIP with Third Persons with whom it transacted business
4) PARTNERS with third persons
UTMOST GOOD FAITH REQUIRED
OBLIGATIONS OF THE PARTNERS AMONG THEMSELVES

Partnership begins from execution of a contract

Partnership continued beyond fixed term either through express agreement or impliedly by the continuation of the
partnership of those who habitually manage it.
Partnership at will if no time is specified for the continuation of the partnership and formed for a particular transaction or
the completion of a particular enterprise
Partnership at will if no time is specified for the continuation of the partnership and formed for a, particular transaction
or the completion of a particular enterprise, construed as one to last during the mutual consent of the partners a
partnership at will, which may be dissolved my mutual agreement of the parties or by the act of any partner alone either
by own will or pleasure.

FAILURE TO CONTRIBUTE MAKES A PARTNER A DEBTOR TO THE PARTNERSHIP FOR THE INTEREST AND
DAMAGES
OBLIGATIONS OF PARTNERS TO CONTRIBUTE
(1) To deliver the properties he agreed to contribute;
(2) Answer for eviction in cases of specific property partner agreed to contribute;
(3) Answer to the partnership for the fruits of the properties

GOODS AS CONTRIBUTION TO BE APPRAISED

INDUSTRIAL PARTNER CANNOT ENGAGE IN BUSINESS TO AVOID ANY CONFLICT OF INTEREST

Art. 1791.
ANY PARTNER WHO REFUSES TO CONTRIBUTE AN ADDITIONAL SHARE TO THE CAPITAL, EXCEPT AN INDUSTRIAL
PARTNER, TO SAVE THE VENTURE, SHALL BE OBLIGED TO SELL HIS INTEREST TO THE OTHER PARTNERS, IF THERE
IS NO AGREEMENT TO THE CONTRARY, IN CASE OF AN IMMINENT LOSS OF THE BUSINESS OF THE PARTNERSHIP.
PARTNER AUTHORIZED TO MANAGE ANY COLLECTION FOR PERSONAL BUSINESS TO BE DIVIDED AS
COLLECTION FOR BOTH PERSONAL BUSINESS AND PARTNERSHIP.
COLLECTION MADE IN BEHALF OF THE PARTNERSHIP CREDIT, AMOUNT SHALL BE FULLY APPLIED TO THE LATTER.
A partner who received share of a partnership credit, obliged if the debtor becomes insolvent, to bring to the
partnership capital received.
Partner liable for damages caused the partnership.
Liquidation necessary to ascertain damages.
In the absence of an agreement, if only the share of the profits is agreed upon, the share of each in the losses is in the same
proportion as the profits.

ART. 1799.
A STIPULATION WHICH EXCLUDES ONE OR MORE PARTNERS FROM ANY SHARE IN THE PROFITS OR LOSSES IS
VOID.
*PRESUMPTION AS TO AUTHORITY OF PARTNERS.
*CONSENT OF MANAGING PARTNERS NOT NECESSARY IN ROUTINE MATTERS.
*STRANGERS CAN ASSUME THAT PARTNER HAS AUTHORITY.
ART. 1808 :
CAPITALIST PARTNERS CANNOT ENGAGE FOR THEIR OWN ACCOUNT IN AN Y OPERATION WHICH IS OF THE KIND OF
BUSINESS IN WHICH THE PARTNERSHIP IS ENGAGED, UNLESS THERE IS A STIPULATION TO THE CONTRARY.
Art. 1791.
ANY PARTNER WHO REFUSES TO CONTRIBUTE AN ADDITIONAL SHARE TO THE CAPITAL, EXCEPT AN INDUSTRIAL
PARTNER, TO SAVE THE VENTURE, SHALL BE OBLIGED TO SELL HIS INTEREST TO THE OTHER PARTNERS, IF THERE
IS NO AGREEMENT TO THE CONTRARY, IN CASE OF AN IMMINENT LOSS OF THE BUSINESS OF THE PARTNERSHIP.
PROPERTY RIGHTS OF A PARTNER
INCIDENTS OF RIGHT IN SPECIFIC PROPERTY
1) An equal right with his partners to possess specific partnership property for partnership purposes
2) Not assignable
3) Not subject to attachment or execution, except on a claim against the partnership.
4) Not subject to legal support.
An equal right with his partners to possess specific partnership property for partnership purposesBut by agreement, a partner alone may possess and use a specific property.

Partners right is not assignable:

o Unless it has the consent of the co-partners.

Rationale why a partner cannot assign his dissolution and liquidation since it is impossible to
measure the partners beneficial interest.

Not subject to attachment or execution, except on a claim against the partnership, by creditors of the partnership.

Not subject to legal support since the obligation is personal to the partner.
Example: Partners right in specific partnership shall not be answerable for the support of his children
A PARTNERS INTEREST IN THE PARTNERSHIP IS HIS SHARE OF THE PROFITS AND SURPLUS.
SURPLUS is the remaining assets of the partnership after satisfying all debts and liabilities
Partners interest is personal property.
LAW ALLOWS CONVEYANCE OR ASSIGNMENT OF A PARTNERS INTEREST (SHARE OF PROFITS AND SURPLUS)
WITHOUT CAUSING DISSOLUTION, BUT NO RIGHT ACQUIRED TO INTERFERE IN MANAGEMENT.
PARTNERs INTEREST SUBJECT TO CHARGING ORDER, WHICH MAY REFER TO ATTACHMENT OR LEVY OF
PARTNERS INTEREST IN THE PARTNERSHIP.
PARTNERSHIP CREDITORS PREFERRED OVER A PARTNERS CREDITOR.
INTEREST OF A PARTNER CHARGED BY ORDER OF COURT MAY BE REDEEMED WITH THE SEPARATE PROPERTY OF
PARTNERS OR PARTNERSHIP PROPERTY WITH CONSENT OF ALL PARTNERS WHOSE INTERESTS ARE NOT
CHARGED.

Obligations of the Partners with Regard to Third Persons

ESTOPPEL
A PRECLUSION, IN LAW, WHICH PREVENTS A PERSON, FROM ALLEGING OR DENYING A FACT, IN CONSEQUENCE OF
HIS OWN PREVIOUS ACT, ALLEGATIONS OR DENIAL OF A CONTRARY TENOR.
OPERATE UNDER A FIRM NAME which is the name of the collective merchant.
May or may not include the name of one or more of the partners
PERSONS INCLUDING NAMES IN THE FIRM NAME SHALL INCUR THE LIABILITY OF A PARTNER.
Law firm cannot use name of a deceased partner
NAMES IN A FIRM NAME OF A PARTNERSHIP MUST EITHER BE THOSE OF LIVING PARTNERS AND IN CASE OF NONPARTNERS, SHOULD BE LIVING PERSONS WHO CAN BE SUBJECTED TO LIAIBLITY.
PRO RATA LIABILITY OF PARTNERS, EVEN FOR INDUSTRIAL PARTNERS
PARTNER IS AGENT AND PARTNERSHIP IS A MUTUAL AGENCY.
EACH PARTNER ACTS AS AN AGENT FOR HIS CO-PARTNERS OR THE FIRM.

Dissolution and Winding Up

DISSOLUTION CHANGE IN THE RELATION OF THE PARTNERS CAUSED BY ANY PARTNER CEASING TO BE
ASSOCIATED IN THE CARRYING ON OF THE PARTNERSHIP
Differences of dissolution, termination and winding up
DISSOLUTION- PARTNERS CEASE TO CARRY ON THE BUSINESS TOGETHER
TERMINATION ALL PARTNERSHIP AFFAIRS ARE WOUND UP
WINDING UP PROCESS OF SETTLING PARTNERSHIP AFFAIRS AFTER DISSOLUTION
Causes of dissolution:
1. Without violation of the agreement
a. Expiration of term or undertaking
b. Express will of partner
c. Express will of all partners
d. Expulsion of any partner
2. In contravention of the agreement
3. An event which makes the business of the partnership unlawful

4.
5.
6.
7.
8.

Loss of a specific thing which a partner had promised to the partnership

Death of any partner
Insolvency of any partner or of the partnership itself
Civil interdiction of any partner
Judicial decree

PARTNERSHIP LIABILITY NOT EXTINGUISHED BY DISSOLUTION

A PARTNER IS DISCHARGED FROM ANY EXISTING LIABILITY UPON DISSOLUTION OF THE PARTNERSHIP
BY AN AGREEMENT TO THAT EFFECT BETWEEN HIMSELF, THE PARTNERSHIP CREDITOR AND THE
PERSON OR PARTNERSHIP CONTINUING THE BUSINESS.

THE INDIVIDUAL PROPERTY OF A DECEASED PARTNER SHALL BE LIABLE FOR ALL OBLIGATIONS OF
THE PARTNERSHIP INCURRED WHILE HE WAS A PARTNER, BUT SUBJECT TO THE PRIOR PAYMENT OF
HIS SEPARATE DEBTS.

WHO MAY WIND UP PARTNERSHIP AFFAIRS:

1) PARTNER DESIGNATED IN THE AGREEMENT
2) W/O AGREEMENT, THE PARTNER WHO HAS NOT WRONGFULLY DISSOLVED THE FIRM
3) IN CASE ALL PARTNERS ARE DEAD, THE LEGAL REPRESENTATIVE OF THE LAST SURVIIVNG PARTNER
PROVIDED SUCH PARTNER WAS NOT INSOLVENT.
Manner of winding up:
1) EXTRAJUDICALLY BY THE PARTNERS THEMSELVES
2) Or, JUDICIALLY, UNDER THE CONTROL OF A COMPETENT COURT

Cases:
Pascual vs. CIR, October 18, 1988
Alicbusan vs. CA March 7, 1997
Lim Tong Lim vs. Philippine Fishing Gear Industries, Inc., November 3, 1999