CONFIDENTIAL

Decmber xx, xxxx

Mr. John Doe

123 Merchan Street
Lucena City, Quezon

Attention : John Doe

Executive Trustee of Doe Family Trust
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Re : Establishing an investment vehicle

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Sir:

We refer to your request for our opinion on your intention on establishing

an investment vehicle where several participants can come in and out
virtually at anytime without any added hassle and retaining almost absolute
control over everything. With the inclusion of the other entities you control
as potential participants aside from other interested parties.

What is an investment vehicle?

An investment vehicle is a product used by investors with the
intention of gaining positive returns. Investment vehicles can be low
risk, such as certificates of deposit (CDs) or bonds, or carry a greater
degree of risk such as with stocks, options and futures. Other types of
investment vehicles include annuities; collectibles, such as art or
coins; mutual funds; and exchange-traded funds (ETFs).
Regarding on your intention on establishing an investment vehicle aside
from a corporation, our legal opinion is for you to be engaged in a limited
partnership.
What is a limited partnership?
The Philippine Civil Code provides for a definition of a limited partnership
as follows:
 Art. 1843. A limited partnership is one formed by two or more persons
under the provisions of the following article, 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.
As a general rule, the characteristics of a limited partner are as follows:
1. A limited partnership is formed by compliance with the statutory
requirements (Art. 1844);
2. One or more general partners control the business and are
personally liable to creditors (Art. 1848, 1850)
3. One or more limited partners contribute to the capital and share in
the profits but do not participate in the management of the business and are
not personally liable for the partnership obligations beyond the amount of
their capital contributions (1845, 1848, 1856);
4. The limited partners may ask for the return of their capital
contributions under the conditions prescribed by law (Art. 1844(b), 1857);
and
5. The partnership debts are paid out of common fund and the
individual properties of the general partners.
The general partners are treated by the law much like a partner in an
ordinary partnership. They are typically those who know how to manage the
business. The limited partners are usually those who put money for the
business. They are only investors. Thus, a limited partner has the same type
of liability as stockholder in a corporation.
The business reason and purpose of statutes authorizing limited
partnerships are:
1. To secure capital from others for ones business and still retain
control.
2. Share in profits of a business without risk of personal liability.
3. Associate as partners with those having business skill.
Based on the cited provisions, what we suggest is for you to form a limited
partnership, you being the general and limited partner at the same time. In
this kind of partnership, several participants can come in and out virtually
at anytime and you will also be retaining almost absolute control on
everything. According to Art. 1854 of the Civil Code of the Philippines:
 Art. 1854. A person may be a general partner and a limited partner in
the same partnership at the same time, provided that this fact shall be
stated in the certificate provided for in Art. 1844.
A person who is a general partner, and also at the same time a limited
partner, shall have all the rights and powers and be subject to all the
restrictions of a general partner, except that, in respect to his
contribution, he shall have the rights against the other members
which he would have had if he were not also a general partner.
In the limited partnership that you would be establishing, you as the owner
of several entities will be the general partner and as the same time a limited
partner as a trustee of the Doe Family Trust.
As the trustee of a trust, the trustee is obliged to deal with the property for
the benefit of another. The person holding, in view of his equitable title, is
allowed to exercise certain powers belonging to the another of legal title.
(DPB vs. COA, 422 Scra 459)
Therefore, there will be no legal impediment in entering in a limited
partnership as the trustee of the Doe Family Trust.
Here are the following requirements on establishing a limited partnership:
Art. 1844. Two or more persons desiring to form a limited partnership
shall:
(1) Sign and swear to a certificate, which shall state -

(a) The name of the partnership, adding thereto the

word "Limited";
(b) The character of the business;
(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;
(e) The term for which the partnership is to exist;
(f) The amount of cash and a description of and the agreed value
of the other property contributed by each limited partner;
(g) The additional contributions, if any, to be made by each
limited partner and the times at which or events on the
happening of which they shall be made;
 (h) The time, if agreed upon, when the contribution of each
limited partner is to be returned;
(i) The share of the profits or the other compensation by way of
income which each limited partner shall receive by reason of his
contribution;
(j) The right, if given, of a limited partner to substitute an
assignee as contributor in his place, and the terms and
conditions of the substitution;
(k) The right, if given, of the partners to admit additional limited
partners;
(l) The right, if given, of one or more of the limited partners to
priority over other limited partners, as to contributions or as to
compensation by way of income, and the nature of such priority;
(m) The right, if given, of the remaining general partner or
partners to continue the business on the death, retirement, civil
interdiction, insanity or insolvency of a general partner; and
(n) The right, if given, of a limited partner to demand and
receive property other than cash in return for his contribution.
(2) File for record the certificate in the Office of the Securities
and Exchange Commission.
A limited partnership is formed if there has been substantial
compliance in good faith with the foregoing requirements.
The following requirements in registering a limited partnership provided in
the Securities and Exchange Commission are:
Basic Requirements
1. Name Verification Slip
2. Articles of Partnership (AP); 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
Note: For limited partnership, the word Limited or Ltd should form part
of the partnership name.
Please note the following:
1. All applications and supporting documents must be in four (4) copies
and in A4 size bond paper with a cover sheets.
2. Documents signed abroad must be authenticated by the Philippine
Embassy or Consulate in the country where signed.
3. Audited Financial Statements and Special Audit Reports must be
certified by an independent Certified Public Accountant (CPA), with
Statement of Representation filed with the SEC. Said statement must
indicate the CPA Cert. No., PRC/BOA No. and the PTR No. of the CPA
and SEC accreditation of External Auditor if applicable.
4. All applications must indicate the Tax Identification Number (TIN) of
the incorporators, directors/trustees, stockholders/members for
corporations, and partners for partnerships.
Procedure
1. Verify/reserve proposed name (on-line or at the Name Verification
Unit, 2nd floor, SEC Bldg.)
2. Draw up the Articles of Incorporation and ByLaws in accordance with
the Corporation Code. (Blank forms are also available at SECCU, 3rd
floor, SEC Bldg.)
3. If applicable, get endorsements from other government agencies. In
addition, the CRMD obtains clearances from other SEC departments
whenever these are deemed appropriate.
4. Deposit paid-up capital / contribution (for foundations only) in the
bank.
5. Present six (6) sets of the accomplished forms and documents for pre-
processing at the CRMD. Only complete application documents are
accepted for processing. All documents executed outside the
Philippines must be authenticated by the appropriate Philippine
embassy or consulate in the area concerned.
6. Pay the filing fees to Cashiers counter. (located at G/F SEC Bldg.)
7. Claim the Certificate/License from the Releasing Unit, Records
Division upon presentation of the official receipt issued for payment of
filing fee.
REMINDER: Applicants must buy and register their Stock & Transfer Book
or Membership Book immediately after the issuance of the Certificate of
incorporation or within 30 days upon issuance thereof.
All registered corporations are required to submit a yearly General
Information Sheet (GIS) and Audited Financial Statement (AFS) in the
appropriate formats specified by the Commission.

How to Avail of the Service?

STEP
APPLICANT/CLIEN SERVICE
DURATIO GUIDELINES FEES
T PROVIDER
N

1 Verify or reserve If proposed P40.00 -

10 mins. proposed name name is reservation
allowed by for 30 days;
the system, P80.00 -
the reservation
reservation for 60 days;
and
confirmation 120.00 -
notice is reservation
printed and for 90 days
given to the
applicant;

10-15 Present Articles of Check the Requirements Filing fee:

mins. Incorporation and By- document of the Civil 1/5 of 1% of
Laws at Green Lane presented. If Code of the the
Unit 2nd Floor, SEC complete, Philippines Partnership
Bldg. advise the and other `s capital
registrant to existing laws but not less
pay the filing M.C. No. 21 s. than
fee. If not, of 2013 on P1,000.00
advise Omnibus plus 1% of
applicant to Guidelines the amount
comply with and as legal
requirements Procedures on research
the use of fee
Corporate and
Partnership
names

M.C. No, 8 s.
of 2013 on
Filipino-
foreign
ownership on
 nationalized
and partly
nationalized
activities

M.C. No. 3 s
of 2006 on
principal
office and
SEC MC No. 6
s. of 2014 on
amendment of
the principal
office address

E.O. 98 dated
April 28, 1999
on Tax
Identification
Number (TIN)

MC No. 1 s. of
2013 on
mandatory
TIN of foreign
investors

3 Pay filing fee at the After receipt None

1 min Cashier located at the of the
2nd Floor and file application,
application with the CPRD staff
Receiving Unit, generates
CRMD located at the the
2/F, SEC Bldg. Certificate of
Recording of
the Articles
of
Partnership
bearing
applicant`s
SEC
registration
no. and
 Unified
Registration
Report (URR)

4 Present Official The Asst. None

5 mins. Receipt to Releasing Director
Unit, CRMD, 2/F, SEC reviews the
Bldg. to get the application
Certificate of and forward
Recording of the it for
Articles of approval of
Partnership the CRMD
Director.

Note : Duration of activity under normal circumstances

: Attached here is the list of the business activity which requires clearances
from other SEC departments and endorsements from other government agencies.
We hope that we have sufficiently advised you on the matter. Should you have
other questions or need further clariffications, please do not hesitate to wirte or
call us.

Very truly yours,

Cano and Associates

By:

____________________________

____________________________

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