BUSINESS LAW

PARTNERSHIP

LAW ON
OUTLINE OF I FOTURE IN LAW ON PARTNERSHIP
(Limited Partnership)

1. Limited Partnership
A limited partnership is one formed by two or more persons under the
provisions of the Civil Code, 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.
2. Characteristics of a limited partner
a. The partnership must be organized in compliance with the requirements of
the law.
b. There must be one or more general partners.
c. There must be one or more limited partners contributing capital and
sharing in the profits.
d. The limited partners do not participate in the control of the business of the
partnership.
e. The limited partners are not bound by the obligation of the partnership.
3. Requisites in the formation of a limited partnership
a. The certificate must be signed and sworn to by all the partners.
b. The certificate must be registered with the SEC.
4. Limited partner liable as general partner
a. Non-compliance with the above requisites (substantial)
b. When the word limited of lid is omitted in the firm name
c. When the surname of a limited partner appears in the partnership name.
Exceptions to letter of
1. When the surname of the limited partner is the same as the surname of a
general partner;
2. When before the limited partner became as such, the business had been
carried on under a name in which his surname appeared;
3. When the person extended credit to the partnership with the knowledge
that he is a limited partner.
5. Rights of a limited partner
a. To require that the partnership books be kept at the principal place of
business of the partnership, and to inspect and to copy any of them at any
reasonable hour on business day;
b. To demand time and full information of all things affecting the partnership;

c. To demand formal accounting of the affairs of the partnership whenever it

is just and reasonable;
d. To ask for dissolution and winding up by court decree;
e. To receive the share of the profits or other compensation by way of
income;
f. To ask for the return of his capital contribution.
A limited partner may demand as it matter the right to return of the capital
contribution:
1. On dissolution of the partnership;
2. Upon arrival of the date specified in the certificate of its return;
3. If no time is fixed, after six months notice in writing is given to all other
partners.
6. Rights and liabilities of general limited partner
A general-limited partner has all the rights and powers and is subject to all
the liabilities of a general partner. He has the right to participate in the
management of the business of the partnership, his separate properties are
liable for the payment of partnership debts. With respect to his contribution,
like the right to have it returned on the proper occasion, he is considered as a
limited partner.
7. Substitute limited partner
A substitute limited partner is a person admitted to all the rights of a limited
partner who has assigned his interest in a partnership.
Requisites of substitution:
a. With the consent of all the partners.
b. Certificate of amendment must be signed and sworn to by all the
partners including the substituted limited partner.
c. Amended certificate must be filed with the SEC.]
8. Death or retirement of a limited partner
The death of a limited partner will not dissolve the partnership, except when
there is only one limited partner.
Upon the death of a limited partner, his executor or administrator shall be
admitted as a limited partner for the purpose of setting the estate of the
deceased partner.
9. Order of preference in case of liquidation of limited partnership
1. Outside creditors and limited partners unless the partnership is insolvent
2. Limited partners share in the profit
3. Limited partners return of capital contribution
4. General partners aside from profits and capital
5. General partners profit
2

6. General partners return of capital contribution

10. Limited partners contribution
The contributions of a limited partner may be cash or other property, but not
services.
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