BUSINESS ORGANIZATION

At a Glance
PARTNERSHIP
Partnership, nature:
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. It proceeds from the concept that persons may be
allowed to pool their resources and funds to engage in the pursuit of a common
business objective without necessarily organizing themselves into a
corporation, upon which the law imposes a much higher form of regulation,
limitation and standards. 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. cralaw

Partnership, governing law:

Unlike corporations whose governing law is a special law - the Corporation
Code of the Philippines, partnerships in the Philippines are governed by and
covered under Articles 1767 to 1867 of the Civil Code of the Philippines [circa
1950]. These are the provisions of law which govern all aspects of
partnerships - from their creation, formation, existence, operation and
management to their dissolution and liquidation, including the obligations of
the partners to one another, to the public or third persons and to the
government.
Partnership, how formed; registration requirement:
Partnerships are required to be registered with the Securities and Exchange
Commission [SEC]. Registration is done by filing the Articles of Partnership
with the SEC. The Articles of Partnership set forth all the terms and conditions
mutually agreed by the partners thereto.
More specifically, the documents required are as follows:
[1] Proposed Articles of Partnership;
[2] Name Verification Slip;
[3] Bank Certificate of Deposit;
[4] Alien Certificate of Registration, Special Investors Resident Visa or proof
of other types of visa [in case of foreigner];
[5] Proof of Inward Remittance [in case of non-resident aliens].
It bears noting that corporations are not allowed by law to become partners
in a partnership.
Partners, liability:
As a general rule, the liability of partners in a partnership organization is
unlimited in the sense that the partnership creditors may run after them for
any and all of their assets and property in payment of the partnership debts.
Should one of the partners defray all liabilities of the partnership, he is entitled
to be reimbursed by the other partners for their respective shares therein.
In the case, however, of limited partnerships, the law allows the limitation of
the liability of certain partners to the extent of the amount contributed to the
partnership.
Partnership, dissolution:
Philippine law allows the dissolution of partnership for any reason, provided
such dissolution does not amount to a breach of contract or is prejudicial to
third parties. The death of a partner or the unauthorized transfer of ownership
of his share in the partnership [in case there is a limitation to this effect]
results in the dissolution thereof. In other words, any change in the
composition of the partnership, unless so allowed, will result in the dissolution
thereof. Consequently, the remaining partners may form a new partnership
with less or more partners.