Rosel Joy A.

Provido March 2, 2019

Law on Partnership, Agency, and Trusts

Proposed Amendment of Article 1848 of the New Civil Code:

Inclusion of Limited Partnership Safe Harbors

ABSTRACT

Under Article 1848 of the New Civil Code, limited partners are generally not liable for

the obligations of the limited partnership unless they take part in the control of the business.

However, the aforementioned law is silent as to the meaning of “taking part in the control of the

business”. Easily put, no adequate standard of "control" has been enunciated, and no definition of

the "rights and powers" of a limited partner has been provided.  This predicament attaches with it

the necessity to supplement a detailed parameter of the limited partner’s liability when he or she

does participate in the control of the business of the limited partnership.

The proposed amendment aims to address the instant issues by offering a non-exclusive

list of activities that can be undertaken by a limited partner without such limited partner being

deemed to be "taking part in the control of the business" of a limited partnership. These list of

activities are often called as “safe harbors” or “safe harbor activities” which is widely adopted in

some states of the United States of America as taken from the Uniform Limited Partnership Act

and in the country of New Zealand. Also, an additional provision will be supplied, clarifying the

scope of limited partnership liability when found to be “taking part in the control of the business”

of a limited partnership.