The Law on Partnership, RA No.

386,

It was strongly influenced by the Spanish Código Civil, 1889

It was enacted in 1950, and remains in force to date.

Enacted by: Code Commission, with advice and consent of the Philippine Legislature

Enacted: June 18, 1949

Signed: June 18, 1949

Effective: August 30, 1950

Policy

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.

Article 1767

Partnership is:

• a contract

• whereby 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.

Article 1768

The partnership has a juridical personality separate and distinct from that of each of
the partners.
Article 1770

A partnership must have a lawful object or purpose, and must be established for the
common benefit or interest of the partners.

1725 English case, Everett v Williams

A criminal sued another for a fair share of the plunder.

A partnership may be either a:

• General Partnership

• Limited Partnership
General Partnerships

- Only general partners

- The liability of partners is unlimited.

Limited Partnerships

- At least one general partner, and

- At least one limited partner
- Must be SEC-registered
- Must add “Limited” or “LTD” to its name.
Limited Liability Companies (LLC)

- combines characteristics of a corporation and a partnership.

- it has limited liability.
- owners only pay personal income taxes.

An LLC can be the sole general partner while the others are limited partners.
Article 1797

Distribution of losses and profits:

(1) According to agreement

(2) Absence of agreement

· Profit/Loss-sharing shall be in proportion to their contribution.

Article 1799

A stipulation which excludes one or more partners from any share in the profits or
losses is void.
Article 1828

Dissolution of a partnership - change in the relation of the partners caused by any

partner ceasing to be associated in the carrying on of the business.

Article 1829

On dissolution the partnership is not terminated, but continues until the winding up of
partnership affairs is completed.
SEC REGISTRATION

STEP 1 Reserve and verify proposed business name.

STEP 2 Accomplish and present the required documents.

STEP 3 Pay necessary filing fees.

STEP 4 Claim license by presenting the official receipt

Basic Requirements

1. Name Verification Slip

2. Articles of Partnership (notarized); and

3. Joint affidavit of two partners to change partnership name. (not required if already
stated in AP)

Additional requirements

1. Endorsement/clearance from other government agencies, if applicable

2. For partnership with foreign national as partner

a) FIA Form - 105