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THE CHAN ROBLES VIRTUAL LAW LIBRARY - QUICK GLANCE

Philippines | Worldwide | The Business Page

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

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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.

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.

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