General Provisions of 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
Public Instrument
intention to divide profits

Mechanics
1.
2.
3.
4.
5.

6.

The class will be divided into two groups.

Each group will choose a representative.
The representative will act out the word. (no mouthing)
The group will guess the right term/s.
Each group will be given one (1) minute to guess the right
term/s.
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.

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.

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)
1) There must be a contract
2) The partners must have legal capacity to enter
into a contract.
3) There must be mutual contribution of money,
property or industry to a common fund.
4) The purpose must be to obtain pecuniary profits
and to share the same.
5) The purpose must be lawful, and
6) The articles of co-partnership must not be kept
secret.

1) There must be a Contract

The three essential requisites of a contract must be
complied with: consent, object and cause.
As in other cases of contracts, in order to make an
agreement for partnership valid, there must be a valid
consideration existing between the partners. Each
partner must surrender to the partnership an interest
in his property, labor, skill, or energy, in accordance
with the express or implied stipulations of their mutual
agreement.
The contract can be entered into orally or written.

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.

2) The parties must have legal capacity

Only those person with legal capacity to give consent may
enter into a contract of partnership.
Trivia Question: Who cannot give consent to a contract of
partnership?

They are: 1)Unemancipated Minors 2)Insane or demented

persons 3)Deaf mutes who do not know how to write
4)persons who are suffering from civil interdiction
5)incompetents who are under guardianship (Art. 1327,
1329 of the NCC)
Trivia Question: May a juridical person enter into a contract of
partnership?

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.

3) There must be mutual Contribution

of money, property or industry
Both real and personal property can be contributed.
Money-Legal Tender of the Philippines not checks, drafts or
other representatives of money.(they must be cashed first)

Property-License to construct and operate a cock pit may be

given as a contribution to a partnership.
Industry-active cooperation, the work of the party associated,
which may be either personal, manual efforts or
intellectual, and for which he receives share in the profits
of the business, not just salary.

4) The purpose must be to obtain

profits etc.
The purpose must be to obtain profits and to
divide the same among the partners and that
it is necessary that such profits or benefits
shall be common to all partners.

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.

When sharing profits not prima facie

evidence of partnership?

One who merely makes a loan or money or credit to the owner of a

business in consideration of a share of its profits in repayment of
such loan or in lieu of, or in addition to interest for its use does not
thereby become a partner in the business.
Where an employee receives 35% of the net profits, instead, of a
salary, there is no partnership in the absence of any contract showing
the same.
In Navarro v. CA, 222 SCRA 675-679 (1993), a cursory examination of
the evidence presented no proof that a partnership, whether oral or
written had been constituted at the inception of this transaction.
While there may have been co-ownership or co-possession of some
items and/or sharing of proceeds by way of advances received by
both plaintiff and the defendant, there is no indicative and
supportive of the existence of partnership between them.
The court held in Muasque v.CA, 139 SCRA 533 (1985), even if there
was a falling out or misunderstanding between the partners such
does not convert it into a sham organization.

5) The purpose must be lawful

A partnership cannot be formed for an illegal
purpose and where the thing to be done is
illegal, the contract of partnership for the
purpose of doing such is equally illegal.
Art. 1770 of the New Civil Code states, When
an unlawful partnership is dissolved by judicial
decree, the profits shall be confiscated in favor
of the State.

Effect of unlawful purpose of

partnership
The Court will refuse to recognize its existance
and will not lend their aid to assist either of the
parties thereto in an action against the other.
The profits shall be confiscated in favor of the
State.
The instruments and effects of the crime, if the
purpose is a criminal act, may be confiscated
under the provisions of the RPC.
The contributions of the partners shall not be
confiscated.

6) The Articles of Partnership must not

be kept secret
Art. 1775 provides that, associations and
societies, whose articles are kept secret
among the members, and wherein any one of
the members may contract in his own name
with third persons, shall have no juridical
personality, and shall be governed by the
provisions relating to co-ownership.

De Leon: What are the characteristic

elements of partnership? Explain.

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.

Art. 1772. Every contract of partnership having

a capital of three thousand pesos or more, in
money or property, shall appear in a public
instrument, which must be recorded in the
Office of the Securities and Exchange
Commission.

What is referred to in Art. 1772?

What is referred to here is that registration in
SEC is not necessary for the acquisition of
juridical personality.
The contract of partnership is a consensual
contract. Hence it is perfected from the
moment of consent, and its juridical
personality begins therefrom.

Partnerships like corporations are subject to

absolute jurisdiction, supervision and control
of the SEC

Art. 1769. In determining whether a

partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other are not
partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-coowners or co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the
persons sharing them have a joint or common right or interest in any property from which
the returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence that he
is a partner in the business, but no such inference shall be drawn if such profits were
received in payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the
business;
(e) As the consideration for the sale of a goodwill of a business or other property by
installments or otherwise. (n)

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 onehalf 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 jointowners 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.

 Partnership, once established, has juridical personality,

while a co-ownership as none.
A Partnership is created always by contract, while coownership may exist by operation of law.
A co-owner may dispose of his individual interest in the
common property as an incident inherent in
ownership, a partner has no such power.
The object of partnership is gain, a co-ownership does
not necessarily exist for profit.
The right of a co-owner descent to his heir; those of a
partner (as partner in partnership) do not, unless
expressly stipulated in the contract of partnership.

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.

Question 1: Is the BIR correct in contending that the

heirs had formed an unregistered partnership? When
did the unregistered partnership begin?
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.

Question 2: Are the heirs, as

unregistered partnership liable to pay
corporate income tax?

Yes, the heirs, as constituting an unregistered

partnership, are liable to the corporate income tax. The
Court differentiated the concept of partnership under
the civil code from that of unregistered partnership
and held that, such unregistered partnership are
considered as corporations under Sec. 24 and 84 (b)
of the NIRC.
For purpose of tax on corporations, our NIRC, includes
these partnerships- with the exception only for duly
registered general co-partnership-within the purview
of the term corporation.

Question 3: May the heirs deduct from the income tax due their
unregistered partnership the income tax they paid on their
individual incomes of which the share in the net profit of their
unregistered partnership is a part?

No, the heirs may not deduct the individual

income taxes they paid from the income tax
due their unregistered partnership. The
partnership profits distributable to the
partners should be deduced by the amounts
of income tax assessed against the
partnership.
For more details. Read the case: Ooa v. CIR, May
25, 1972, 45 SCRA 74, 81-82.

Partnership V. Joint Venture

Joint account exists when one person (called silent partner)
contributes capital to another who is in business (called ostensible
partner) who acts in his own name.
1) A partnership has a firm name, while a joint account has none and
it is conducted in the name of the ostensible partner;
2) A partnership has a juridical personality. While a joint account has
no juridical personality, and that action must be brought against
the ostensible partner only;
3) A partnership is a common fund, while a joint account has no
common fund;
4) Liquidation of a partnership may be entrusted to other persons,
the ostensible partner always liquidates the joint account.

Partnership V. Conjugal Partnership

1)
2)

3)

4)

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;
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.
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.
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.

Joint Venture, A form of Partnership

The legal concept of a join venture is of common law
origin. It is no precise legal definition, but it has been
generally understood to mean an organization formed
for some temporary purpose.
The main distinction cited by most opinions in common
law jurisdications is that the partnership contemplates
a general business with some degree of continuity,
while the joint venture is formed for the execution of a
single transaction, and thus of a temporary nature.
A corporation though cannot enter into a partnership
contract, may enter into a joint venture with others.

Example of Joint Venture

Hypor Partnership Strong in Philippines
NETHERLANDS - Just two and a half years ago, what began as a development project, is now a prime example
of how business to business co-operation can lead to long-term sustainable development - with
additional benefits to environmental initiatives and animal welfare.
Hypig was formed through the signing of a joint venture agreement in June 2005 between Hypor B.V. (a
Hendrix Genetics company, Holland) and Holly Farms Inc. (Bounty Fresh Food group, the Philippines).
This joint venture was precipitated by a contract Hypor signed in late 2004 with the International Business and
Cooperation Agency of the Dutch government (EVD) to set up a Bio-Hypor breeding farm on Mindanao.
The agreement was made through the agency's Programme for Cooperation with Emerging Markets
(PSOM). A piece of land complying with the Hypor's bio-security requirements was found in barrio
Lantapan, Malaybalay, Bukidnon province.
The Kelsey farm lies amid banana and pineapple plantations, with no other animal farms in the vicinity. The
barns were constructed by December 2005, and 270 nucleus sows and boars from Hypor Canada arrived
in February 2006. By this time Hypig felt the demand was greater than originally forecast and another
shipment of pure line Hypor pigs was delivered.

Art. 1771. A partnership may be constituted in any form, except where immovable
property or real rights are contributed thereto, in which case a public instrument
shall be necessary. (1667a)
Art. 1772. Every contract of partnership having a capital of three thousand pesos or
more, in money or property, shall appear in a public instrument, which must be
recorded in the Office of the Securities and Exchange Commission.
Failure to comply with the requirements of the preceding paragraph shall not
affect the liability of the partnership and the members thereof to third persons.
(n)
Art. 1773. A contract of partnership is void, whenever immovable property is
contributed thereto, if an inventory of said property is not made, signed by the
parties, and attached to the public instrument. (1668a)
Art. 1774. Any immovable property or an interest therein may be acquired in the
partnership name. Title so acquired can be conveyed only in the partnership
name. (n)
Art. 1775. Associations and societies, whose articles are kept secret among the
members, and wherein any one of the members may contract in his own name
with third persons, shall have no juridical personality, and shall be governed by
the provisions relating to co-ownership.

 The requirement of a public instrument were immovable property

or real rights are contributed is only in order that the contract of
partnership may be effective with respect to third persons, but as
far as the partners themselves are concerned, said contract is valid
and effective, not only could they compel each other to reciprocally
comply with the required formalities from the moment the contract
is entered into, but the partners can also mutually require each
other to fulfill all the obligations they have incurred.
Art. 1773 complements the provisions of Art. 1771, because the
execution of public instrument would serve no purpose if the
inventory of the real property contributed is omitted. With out said
inventory, the contract could not be registered in the register of
property, and such contributions to the partnerships would no way
prejudice third persons who, moreover, might evidently defrauded
in their transactions with the partnership, because of their belief in
the efficacy of the guaranty which said property might constitute. It
will be noted that where the inventory is not made or signed by the
parties and attached to the public instrument the contract of
partnership is void.

The most important single central fact about

a free market is that no exchange takes place
unless
both
parties
benefit.
Milton Friedman

CLASSIFICATIONS
OF PARTNERSHIP

As to extent of its SUBJECT MATTER

a. UNIVERSAL PARTNERSHIP
i. UNIVERSAL PARTNERSHIP OF ALL
PRESENT PROPERTY - comprises the following:
a) Property which belonged to each
of the partners at the time of the constitution
of the partnership
b) Profits which they may acquire
from all property contributed

ii. UNIVERSAL PARTNERSHIP OF PROFITS comprises all that the partners may acquire by
their industry or work during the existence of
the partnership

Note: Persons who are prohibited from giving

donations or advantage to each other cannot
enter into a universal partnership (Art. 1782).

Commissioner of Internal Revenue v. Suter

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.

b. PARTICULAR PARTNERSHIP - has for its

objects:
i. Determinate things
ii. Their use or fruits
iii. Specific undertaking
iv. Exercise of profession or vocation

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

Edison Electric Light Co.

Thomas Edison and J.P. Morgan and the Vanderbilts
Founded in 1880
The electric light bulb catapulted Thomas Edison to fame and
fortune. But Edison, like many entrepreneurs with more ideas
than capital, needed financial partners to fund his inventions.
Throughout the 1870s and 1880s, Edison received funding
from a group of wealthy investors, including J.P. Morgan and
the Vanderbilt family, helping lay the groundwork for what
eventually became the Edison Electric Light Co. In 1879,
Edison demonstrated the incandescent electric light bulb to
his backers and launched it publicly shortly thereafter. Three
years later, Edison watched as the first commercial central
power system was installed in Manhattan. By 1887, 121
Edison central power stations spanned the country.

Thomas Edison and J.P. Morgan and the Vanderbilts

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 fastfood 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 twoweek 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.

Bill Gates and Paul Allen

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 Hewlett-Packard, 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.

Steve Jobs and Steve Wozniak

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.

Larry Page and Sergey Brin

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

The Sam-Rachel Partnership Story

Ten years ago, Samantha was sitting in her best friend
Rachel's kitchen, and an idea was born for them to
start a business together. Their only consideration was
the excitement they felt. They soon had their first
client, and agreed they would each work an equal
amount of hours and split their profits 50/50. Within a
year, their client base increased to the point that it
allowed them to each work their goal of 30 hours per
week.

After a few years, Rachel's time on the job and

quality of work suffered. For every hour of
work Rachel performed, Samantha was
putting in two. Clients commented to
Samantha about their dissatisfaction with
Rachel's job performance. Rachel was
sensitive by nature and exploded in teary
screams when Samantha tried to gently tell
her that the quality of her work had
deteriorated.

Instead of performing client services together,

Samantha slowly transitioned the business
whereby each was independently attending to
client needs. A few years later, Rachel was
down to one client while Samantha's client
base was teeming. Their partnership soon
dissolved, and so did their friendship.

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 co-owned business
arrangement.

Some possible pros:

Shared cost of start-up.

Shared responsibilities and work.
Shared business risks and expenses.
Complementary skills and additional contacts
of each partner can lead to the achievement
of greater financial results together than
would be possible apart.
Mutual support and motivation.

Some possible cons:

Partners in a general partnership are jointly and individually liable
for the business activities of the other. If your partner skips town,
you'll be liable for all the debts, not just half of them.
Shared profits.
You do not have total control over the business. Decisions are
shared, and differences of opinion can lead to disagreements, a
"falling out," or even one partner buying out the other.
A friendship may not survive a partnership. Keep in mind John D.
Rockefeller's famous words: "A friendship founded on business is a
good deal better than a business founded on friendship."

Are you the business partner type?

A business match is much like a marriage, and
just as one would normally take great care,
time and consideration in the selection of a
mate, so it should be in the selection of a
business partner.

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?

It is rare to find a business partner who is

selfless. If you are lucky it happens once in a
lifetime.
Michael Eisner

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.

How to register a PARTNERSHIP with

the Philippine SEC
1.

Verify and 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 SECiRegister, 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.

Prepare the Articles of Partnership. This is equivalent to the Articles of Incorporation, which is one
of the required documents for corporations.

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.

Video Conference from Atty. Zachery

Mc Nathan Alvarado

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)