1. LIMITED PARTNER j.

The right, if given, of a limited partner to substitute an

assignee or contributor in his place and the terms and
A limited partnership is a partnership which has one or
conditions of the substitution.
more general partners and one or more limited partners.
The limited partners as such shall not be bound by the k. The right, if given, of the partners to admit additional
obligations of the partnership, (Art. 1843) except up to the limited partner.
extent of their contribution.
l. The right, if given, of one or more of the limited partners to
priority over the other limited partners, as to contributions
or as to compensation by way of income, and the nature of
The word “LIMITED” shall be added to the name of the
such priority.
partnership.
m. The right, if given, of the remaining general partner or
EFFECT OF OMISSION OF THE TERM LIMITED IN THE
partners to continue the business on the death, retirement,
FIRM NAME: the name cannot be considered as the firm
civil interdiction, insanity or insolvency of a general partner.
name of a limited partnership. (Ltd) The partnership will
therefore for be a general partnership. n. The right, if given, of a limited partner to demand and
receive property other than cash in return for his
contribution.
2. REQUIREMENTS FOR THE FORMATION OF A
LIMITED PARTNERSHIP
2. They must file for record the certificate with the
Two or more persons desiring to form a limited partnership
Securities and Exchange Commission (SEC). (Art.
must comply with the following requirements:
1844)
1. They must subscribe and swear to a certificate,
a. Effect of substantial compliance – A limited partnership
which shall state:
is formed if there has been substantial compliance in good
a. The name of the partnership, adding thereto the word faith of the above requirements.
“Limited”.
b. Effect of failure to register with the SEC – The partnership
b. The character of the business. will be considered a general partnership since the
requirements are intended to protect the public.
c. The location of the principal place of business.

d. The name and place of residence of each member,

general and limited partners being respectively designated. 3. RIGHTS AND LIABILITIES OF A GENERAL
PARTNER IN A LIMITED PARTNERSHIP (Art. 1850)
e. The term for which the partnership is to exist. • RIGHTS
f. The amount of cash and a description of and the agreed
A general partner has all the rights and powers of a general
value of the other property contributed by each limited
partner in a partnership without limited partners.
partner.
• LIABILITIES
NOTE: A limited partner may contribute money or property
but not services A general partner shall be subject to all restrictions and
liabilities of a partner in a partnership without limited
g. The additional contributions, if any, to be made by each
partners.
limited partner and the times at which or events on the
happenings of which they shall be made.

h. The time, if agreed upon, when the contribution of each 4. RESTRICTIONS OF A GENERAL PARTNER
limited partner is to be returned.
A general partner or all of the general partners shall have no
i. The share of the profits or the compensation by way of authority to perform the following acts without written
income which each limited partner shall receive by reason consent or ratification by all the limited partners:
of his contribution.
a. Do any act in contravention of the certificate.
b. Do any act which would make it impossible to carry on a. Specific property stated in the certificate as contributed
the business of the partnership. by him, but which was not contributed.

c. Confess a judgment against the partnership. b. Specific property which has been wrongfully returned to
him.
d. Possess partnership property, or assign their rights in
specific property, for other than a partnership purpose. c. Money or property wrongfully paid or conveyed to him on
account of his contribution. (Art. 1858)
e. Admit a person as a general partner.
Waiver or compromise of limited partner’s liability in nos. 3
f. Admit a person as a limited partner, unless the right to do
and 4
so is given in the certificate.

g. Continue the business with partnership property on the

death, retirement, civil interdiction or insolvency of a The said liabilities may be waived or compromised
general partner unless the right to do so is given in the provided:
certificate.
a. All the partners consent thereto, and

b. The right of a partnership creditor who extended credit or

5. OBLIGATIONS OF A LIMITED PARTNER whose claims arose after the filing and before the
cancellation or amendment of the certificate. Is not
1. Not to allow the inclusion of his surname in the
affected.
partnership name. (Art. 1846)

A. EXCEPTIONS:
5. To be liable to the partnership after he has rightfully
1) If it is also the surname of a general partner.
received the return of his capital contribution, for any sum
2) The business had been carried on under a name in which not in excess of such return with interest, which is
his surname appeared prior to his admission as a limited necessary to discharge its liabilities to all creditors who
partner. extended credit or whose claims arose before such return.
(Art. 1858)
B. EFFECT IF A LIMITED PARTNER ALLOWS THE
INCLUSION OF HIS SURNAME IN THE PARTNERSHIP
NAME
6. Not to receive or hold as collateral security any
He is liable as a general partner to partnership creditors partnership property on account of his claims for loan
who extend credit to the partnership without actual granted to or other business transaction with the
knowledge that he is not a general partner. partnership. (Art. 1854)

To be liable as a general partner if he takes part in the 7. Not to receive from a general partner or the partnership
control of the business. (Art. 1848) on account of such claims any payment, conveyance, or
release from liability, if at the time the assets of the
partnership are not sufficient to discharge partnership
3. To be liable to the partnership for the following: liabilities to persons not claiming as general or limited
partners. (Art. 1854)
a. For the difference between his actual contribution and
that stated in the certificate.

b. For any unpaid contribution which he agreed in the Effect of violation of No. 6 or 7
certificate to make in the future at the time and on the Such violation is considered fraud on the creditors of the
conditions stated in the certificate. (Art. 1858) partnership.

4. To hold as trustee for the partnership the following:

6. RIGHTS OF A LIMITED PARTNER A person may be a general partner and a limited partner at
the same time provided that this fact is stated in the
1. To have the partnership books kept at the principal place
certificate.
of business of the partnership, (Art. 1851)
He shall have all the rights and powers and subject to all
2. To inspect and copy the partnership books or any of them
restrictions of a general partner; except that, in respect to
at a reasonable hour. (Art. 1851)
his contribution, he shall have all the rights of a limited
3. To have on demand true and full information of all things partner. (Art. 1853)
affecting the partnership. (Arts. 1806, 1851)

4. To have on demand a formal account of partnership

8. EFFECT OF ASSIGNMENT OF LIMITED PARTNER’S
affairs whenever circumstances render it just and
INTEREST
equitable. (Arts. 1809, 1851)
NOTE: Limited partners interest is assignable.
5. To have dissolution and winding up by decree of court,
(Arts. 1831, 1851, 1857)

6. To receive a share of the profits or other compensation by a. If the assignee does not become a substituted partner
way of income stipulated in the certificate. (Arts. 1851,
1) The assignee is only entitled to receive the following to
1856)
which the assignor partner would otherwise be entitled:
This right, however, is subject to the condition that after
A) Share of the profits.
such payment, whether from the property of the
partnership or of a general partner, the partnership assets b) Other compensation by way of income.
are in excess of all liabilities of the partnership except
liabilities to limited partners on account of their c) Return of the of the contribution.
contributions and to general partners. (Art. 1856)

7. To receive the return of his contribution provided 2) Assignee has no right to:
partnership assets exceed the liabilities. (Arts. 1851, 1857)
a) Require any information or account of partnership
8. To loan money to the partnership. (Art. 1854) transactions.
9. To transact business with the partnership. (Ibid.) b) Inspect partnership books.
10. To receive, unless he is also a general partner, on
account of resulting claims against the partnership, with
general creditors, a pro rata share of the asset. (Ibid.) b. If the assignee becomes a substituted limited partner

11. To agree with other limited partners that one or more of 1) SUBSTITUTED LIMITED PARTNER, is a person admitted to
them shall have priority over other limited partners as to: all the rights of a limited partner who has died or has
assigned his interest in the partnership.
A. Return of their contributions.
2) REQUISITES in order that assignee may become a
B. Compensation by way of income. substituted limited partner
C. Any other matter. a) All the members of the partnership must consent to the
This agreement, when made, must be stated in the assignee becoming a substituted limited partner, unless
certificate. In the absence thereof, all the limited partners the assignor is empowered by the certificate to give the
shall stand on equal footing. (Art. 1855) assignee such right.

b) The certificate must be amended to reflect the

substitution.
7. GENERAL-LIMITED PARTNER (Art. 1853)
c) The certificate must be registered with the SEC.
3) RIGHTS AND LIABILITIES OF THE SUBSTITUTED LIMITED 1. All the rights of a limited partner for the purpose of
PARTNER settling his estate.

He has all the rights and powers, and is subject to all 2. To have the same power as the deceased had to
restrictions and liabilities of the assignor, except those constitute his assignee as a substituted limited partner.
liabilities of which he is ignorant at the time he became a
Charging of limited partner's interest
limited partner and which could not be ascertained from
the certificate. 1. Creditor's right to charge

The creditor of a limited partner may charge (i.e., subject to

attachment and execution) the latter's interest in the
4) Liabilities of the assignor
partnership. (Art. 1862)
The substitution of the assignee as a limited partner does
2. Redemption
not release the assignor from the following liability:
The interest charged may be redeemed with the separate
a) To persons who rely on a false statement in the
property of any general partner, but not with partnership
certificate. (Art. 1848)
property. (Art. 1862)
b) To creditors who extended credit or whose claims arose
This should be distinguished from the redemption of a
before the assignment. (Art. 1858)
partner's interest in a general partnership which may be
redeemed not only with the property of one or more general
partners but also with partnership property. (See Art. 1814)
9. CAUSES OF DISSOLUTION
ORDER OF PAYMENT OF LIABILITIES (ART. 1863)
• Retirement
• Death 1. In settling accounts after dissolution, the liabilities of
• Civil Interdiction the partnership shall be entitled to payment in the
• Insanity following order:
• Insolvency on one of the General Partner
a. Those to creditors, including limited partners, in the order
1. EFFECT of priority as provided by law, except those to limited
partners on account of their contributions, and to general
a. PARTNER IS A GENERAL PARTNER - Here, the partners.
partnership is dissolved. (Art. 1860)
b. Those to limited partners by way of their share of the
b. PARTNER IS A LIMITED PARTNER - Here, the profits and other compensation by way of income on their
partnership is not dissolved except if there is no more contributions.
limited partner because in such a case, the
requirement that there must be at least one limited c. Those to limited partners in respect to the capital of their
partner in a limited partnership is no longer complied contributions.
with. (See Arts. 1843, 1864.) d. Those to general partners other than for capital and
profits.

2. CONTINUATION OF BUSINESS e. Those to general partners in respect to profits.

The business may be continued by the remaining general f. Those to general partners in respect to capital
partners if:
2. Sharing among limited partners in partnership assets
a. The right to do so is stated in the certificate, or Limited partners share in the partnership assets
respect to their claim for capital, and in respect to the
b. All the member’s consent. (Art. 1860) claims for profits or for compensation by way of income on
their contributions respectively in proportion to the
RIGHTS OF EXECUTOR/ADMINISTRATOR ON THE DEAT H
respective amounts of such claims unless otherwise
OF A LIMITED PARTNER (ART. 1861)
stated:
a. In the certificate; or 10. REQUIREMENTS FOR AMENDMENT OF CERTIFICAT E
OF LIMITED PARTNERSHIP
b. Subsequent agreement.
1. The amendment must be in writing.

2. It must be signed and sworn to by all members including.

CANCELLATION OR AMENDMENT OF CERTIFICATE (ART.
1864) a. The assigning limited partner and the
substituted limited partner, in case of
1. When cancelled
substitution.
a. When the partnership is dissolved.
b. The newly-admitted limited partner or partners.
b. When all limited partners cease to be such.
c. The newly-admitted general partner or
2. When amended partners.

a. When there is a change in the name of the 3. The amended certificate must be filed with the
partnership or in the amount or character of [Link] PARTNER
the contribution of any limited partner.

b. When a person is substituted as a limited

REQUIREMENTS FOR CANCELLATION OF CERTIFICAT E
partner.
(ART. 1865)
c. When an additional limited partner is admitted.
1. The cancellation must be in writing.
d. When a person is admitted as a general
2. It must be signed by all members.
partner.
3. It must be filed with the SEC.
e. When a general partner retires, dies, becomes
insolvent or insane, or is sentenced to civil
interdiction and the business is continued by the
LIMITED PARTNER, NOT A PROPER PARTY TO
remaining general partners:
PROCEEDINGS (ART. 1866)
1) Under a right to do so stated in the
1. A limited partner is not a proper party to proceedings:
certificate; or
a. By a partnership, or
2) With the consent of all the members.
b. Against a partnership.
f. When there is a change in the character of the
business of the partnership. 2. Exceptions:

g. There is a false or erroneous statement in the a. If he is also a general partner.

certificate.
b. Where the object of the proceedings is to
h. There is a change in the time as stated in the enforce a limited partner's right against the
certificate for the dissolution of the partnership.
partnership or for the return of a contribution.
c. Where the object of the proceedings is to
i. When a time is fixed for the dissolution of the enforce a limited partner's liability to the
partnership, or the return of a contribution, no partnership.
time having been specified in the certificate.

j. When the members desire to make a change in

any other statement in the certificate in order
that it shall accurately represent the agreement
among them.