You are on page 1of 5

DISSOLUTION AND WINDING UP

1. Define dissolution of a partnership.


- Dissolution of a partnership is the change in the relation of the partners caused by any
partner ceasing to be associated in the carrying on as distinguished from the winding up of
the business. (Art. 1828)

2. Does dissolution terminate the partnership?


- No, dissolution does not terminate the partnership. (Art. 1829)

3. What are the causes of dissolution of a partnership?


- Dissolution is caused (Art. 1830):
(1) Without violation of the agreement between the partners:
(a) By the termination of the definite term or particular undertaking specified in the
agreement;
(b) By the express will of any partner, who must act in good faith, when no definite
term or particular is specified;
(c) By the express will of all the partners who have not assigned their interests or
suffered them to be charged for their separate debts, either before or after the termination
of any specified term or particular undertaking;
(d) By the expulsion of any partner from the business bona fide in accordance with
such a power conferred by the agreement between the partners;
(2) In contravention of the agreement between the partners, where the circumstances do not
permit a dissolution under any other provision of this article, by the express will of any
partner at any time;
(3) By any event which makes it unlawful for the business of the partnership to be carried on
or for the members to carry it on in partnership;
(4) When a specific thing which a partner had promised to contribute to the partnership,
perishes before the delivery; in any case by the loss of the thing, when the partner who
contributed it having reserved the ownership thereof, has only transferred to the partnership
the use or enjoyment of the same; but the partnership shall not be dissolved by the loss of
the thing when it occurs after the partnership has acquired the ownership thereof;
(5) By the death of any partner;
(6) By the insolvency of any partner or of the partnership;
(7) By the civil interdiction of any partner;
(8) By decree of court under the following article.

4. Does the death of a partner always dissolve the partnership?


-Yes.
5. Who may apply for a judicial dissolution of a partnership?
- Dissolution of a partnership may be decreed judicially on application either by a partner or
by the purchaser or assignee of a partner’s interest (Art. 1831)

6. What are the grounds for a judicial dissolution of partnership upon the application of
partner?
- (1) A partner has been declared insane in any judicial proceeding or is shown to be of
unsound mind; (INSANITY)
(2) A partner becomes in any other way incapable of performing his part of the partnership
contract; (INCAPACITY)
(3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of
the business;
(4) A partner willfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership business that it is not
reasonably practicable to carry on the business in partnership with him;
(5) The business of the partnership can only be carried on at a loss;

LIMITED PARTNERSHIP

1. Define a Limited Partnership.

-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. (Art. 1843)

2. What are the characteristic features of a limited partnership?


-Characteristics of limited partnership

 A limited partnership is formed by compliance with the statutory requirements (1844)


 One or more general partners control the business and are personally liable to the
creditors (1848,1850)
 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
partnership obligations beyond the amount of their capital contributions (1845, 1848,
1856)
 The limited partners may ask for the return of their capital contributions under the
conditions prescribed by law (1844h,1857)
 The partnership debts are paid out of common fund and the individual propertied of
the general partners

3. What are the requirements to form a limited partnership?

-Article 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.

4. Must the certificate of limited partnership contain all the requisites enumerated above?

-YES

5. What is the effect of non-compliance with the statutory provisions governing the formation
of a limited partnership?

-The partnership becomes a general partnership in which case all the members become liable
as general partners.

6. What may be the contribution of a limited partner?

- The contribution of a limited partner may be cash or other property, but not services. (Art.
1845)

7. Why is it that a limited partner cannot contribute service?

- Because he shall be considered an industrial and general partner, in which case, he shall not
be exempted from personal liability.

8. Can an industrial partner be at the same time a limited partner?

-NO, a limited partner must be a capital contributor.


9. Must a surname of a limited partner appear in the partnership name?

-NO

10. Under what cases shall a limited partner be not liable as a general partner although his
surname appears in the partnership name?

-(1) It is also the surname of a general partner, or

(2) Prior to the time when the limited partner became such, the business has been carried on
under a name in which his surname appeared.