Limited Partnership
became as such, the partnership name had been
- One formed by 2 or more persons under the
provision of the following article (Art. 1844),
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)
A limited partnership may be formed by two or
more persons by complying with the following
requirements:
- They must sign and swear to a certificate
stating the matters set forth in Art. 1844, para.
1; and
- They must file for record the certificate in the
Office of the SEC.
A limited partnership is formed if there has been a
substantial compliance in good faith with the above-
requirements.
Effect of failure to comply with requisites
 Effect of failure on part of members to comply
with the requirements set forth by law: the
partnership formed is DEEMED A GENERAL
PARTNERSHIP since the purpose of the requirement
is to protect the public.
What a limited partner may contribute
He may contribute CASH OR PROPERTY but NOT
SERVICES (Art. 1845). In short, he must be a
capitalist partner.
Effect if he contributes services: He shall be liable
as a general partner because in such a case he
becomes an industrial partner.
Limited partner’s surname in the partnership
name (Art. 1846)
A limited partner’s surname SHALL NOT APPEAR in
the partnership name unless:
 It is also the surname of a general partner;
OR
 Prior to the time when the limited partner
carrying his surname in the business name.
A limited partner who shall knowingly allow his
surname to be included in the firm name shall be
liable as a GENERAL PARTNER to creditors who
extended credit without knowledge that he is only a
limited partner.
Liability for false statement in the certificate (Art.
1847)
Any person who suffers loss by reason of his reliance
on such false statement may hold liable ANY PARTY
to the certificate who knew the statement to be false:
 At the time he signed the certificate; OR
 Subsequently but within a sufficient time
before the statement was relied upon to enable
him to cancel or amend the certificate, or to file a
petition for its cancellation or amendment.
 
Effect of taking part in the control or management
of the business: limited partners shall be liable as a
general partner, however, reference must be made to
the nature and regularity of his participation in the
partnership activities. (Art. 1848)
Requisites for admission of additional limited
partners
 The original certificate must be amended to
reflect the admission of the additional limited
partners; and
 The amended certificate must be signed by all
the partners, including those newly admitted
limited partners.
Limited Partnership distinguished from General
Partnership
Major points of difference:
 In a limited partnership, there should be at
least ONE GENERAL PARTNER and at least
ONE LIMITED PARTNER while in a general
partnership, ALL PARTNERS ARE GENERAL
PARTNERS.
 For a limited partnership to exist, there should
be a certificate signed by the parties and
recorded with SEC while in a general partnership,
 the contract may be made ORALLY OR IN
WRITING by the partners, even without the
recording with SEC.
Advantages of a limited partnership
To the general partner: he can generate additional
capital without admitting another general partner who
would otherwise be entitled to management rights.
To the limited partner: he is entitled to return of his
investments without risking his separate assets for
the partnership liabilities after exhaustion of all the
partnership assets.
 Limited partner’s return of his contribution (Art.
1857)
A limited partner shall not receive from a general
partner or out of partnership property any part of his
contributions until:
 All liabilities of the partnership have been paid
or there remains property of the partnership
sufficient to pay them, except liabilities to general
partners and to limited partners for their
contributions;
 All of the partners consented thereto, unless
return of contribution may be rightfully demanded;
and
 The certificate is cancelled or so amended to
reflect the withdrawal or reduction.
When limited partner may rightfully demand
return of his contribution:
 On the dissolution of the partnership
 When the date specified in the certificate has
arrived
 After he has given 6 months’ notice in writing
to all members (if without agreement as to time)
either for the return of his contribution OR the
dissolution of the partnership.
The substituted limited partner (Art. 1859)
Substitute Limited Partner
- Is a partner admitted to all rights of a limited
partner who has assigned his interest in the
partnership.
Rights and liabilities of the substituted limited
partner: all the rights and powers subject to all
restrictions and liabilities of the assignor, except
those liabilities he was IGNORANT of at the time
he became a limited partner and those which could
not be ascertained from the certificate.
Requisites in order that an assignee may become
a substituted limited partner:
 All partners must consent OR the ASIGNOR
IS EMPOWERED in the certificate to give the
assignee such right;
 Amendment of the certificate; and
 Registration of amended certificate with the
SEC.
Rights and restrictions of an assignee who does
not become a substituted limited partner: he is
only entitled to receive the following: share of the
profits, other compensation by way of income,
and return of the contribution, and he is NOT entitled
to require any information or account of partnership
transactions or to inspect partnership books.
 
Effect of retirement, death, insolvency, insanity,
or civil interdiction of a general partner (Art.
1860)
It dissolves the partnership UNLESS the business is
continued by the remaining general partners
(1) under a right to do so stated in the certificate, OR
(2) with the consent of all the members.
 
Order and manner of settling accounts after
dissolution (Art. 1863)
The liabilities of the partnership shall be paid
according to the following order:
Cancellation and Amendment of the Certificate
When certificate may be cancelled:
 When the partnership is dissolved
 When ALL the limited partners cease to be
limited partners
Requirements for cancellation of certificate (Art
1865):
 Must be in writing;
 Signed by ALL partners; and
 Filed with the SEC.
When certificate shall be amended:
 Change in the name of the partnership
 Change in the amount or character of the
contribution of any limited partner
 A person is substituted as a limited partner
 A person is admitted as a general partner
 A general partner retires, dies, becomes
insolvent or insane, or is sentenced to civil
interdiction and the business is continued under
article 1860;
 There is a change in the character of the
business of the partnership;
 There is a false or erroneous statement in the
certificate;
 There is a change in the time as stated in the
certificate for the dissolution of the partnership or
for the return of a contribution;
 A time is fixed for the dissolution of the
partnership, or the return of a contribution, no
time having been specified in the certificate, or
 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.
Requirements for amendment of certificate (Art
1865):
 Must be in writing, conform to
the requirements on the certificate of a
limited partnership, and shall set forth
clearly the change in the certificate which
it desired to make;
 It must be SIGNED AND
SWORN TO by ALL the partners
including:
1. The assigning
limited partner and the substituted
limited partner in case of
substitution
2. The newly
admitted limited partner
3. The newly
admitted general partner; and
 It must be filed with the SEC.
Rights, Powers, Liabilities, and Restrictions of a
Partner
Rights, powers, liabilities, and restrictions of a
general partner in a limited partnership (Art.
1850)
Rights and powers: The general partner in a limited
partnership shall have all the rights and powers of a
general partner in a general partnership, hence, he is
entitled to management and acts of administration.
Liabilities and restrictions: The general partner
shall be subject to all restrictions and liabilities of a
partner in a general partnership.
 
Without WRITTEN CONSENT OR RATIFICATION
by ALL THE LIMITED PARTNERS, the general
partner(s) have no authority to perform the
following acts:
4. To be liable to the partnership for the
following:
 For the difference between his
actual contribution and that stated in the
certificate;
 For any contribution which he
agreed in the certificate to make in the
future and on the conditions stated in the
certificate (Art. 1858)
5. To hold as trustee for the partnership the
following:

 Do any act in contravention of the certificate;  Specific property stated in the

 Do any act which would make it impossible to
carry on the ordinary business of the partnership;
 Confess a judgment against the partnership;
 Possess partnership property, or assign their
rights in specific partnership property, for other
than a partnership purpose;
 Admit a person as a general partner;
 Admit a person as a limited partner, unless
the right so to do is given in the certificate;
6.
 Continue the business with partnership
property on the death, retirement, insanity, civil
interdiction or insolvency of a general partner,
unless the right so to do is given in the certificate.
Liabilities or restrictions of a limited partner
certificate as contributed by him, but
which was not contributed
 Specific property which has
been wrongfully returned to him
 Money or property wrongfully
paid or conveyed to him on account of his
contribution (Art. 1858)
To be liable to the partnership after he has
rightfully received the return of his capital
contribution, for any sum not in excess of such
return with interest, which is necessary to
discharge liabilities to all creditors who extended
credit or whose claim arose before such return
(Art 1858).

1. To be liable as a general partner in the

following cases:

 If he allows inclusion of his

surname in the partnership name (Art.
1846)
 If he takes part in the control of
the business (Art. 1848)
 If he is also a general partner
at the same time as stated in the
certificate (Art. 1853)

2. Not to receive or hold as collateral security

any partnership property on account of his claims
for loan granted or transaction undertaken for the
partnership (Art. 1854);
3. Not to receive from a general partner or the
partnership on account of loans or other business
transactions any payment, conveyance, or
release from liability, if at the time the assets of
the partnership are not sufficient to discharge
partnership liabilities to persons not claiming as
general or limited partners (Art. 1854)
 
Rights, liabilities, and restrictions of a limited
partner