204 PARINERSHE: AGENCY AND Trg to a demand for accounting before disso the circumstances mentioned in the arnt" by ty %, Chapter 4 LIMITED PARTNERSinp j_A limited partnership , Persons under the pre’, Re Pro >. Taving. as memper ny, ne ty g and one or more-timiteg S-0r » thy fitted as such shall 3 Pata ee eR Source: This ts a new provision baseq on ‘the Uniform Partnership Act. Sect Ty COMMENT: : A limited partnership that has ni of its creation is not considered all, but a general partnership in tne which all the (3) As provided by Article 1807; (2) Whenever other circumstances render i Just ard re, sonable, (n)PARTNERSHIP 205 sous Cang vs: Pacifle Commercial og 4 ‘ 5 38)" nership As Limited Does A Parte rhe legal intentio Not Neces. Pine intention of the persons ‘mal . "Ltd. was to establish a sw ee purpose: all subterfe a Finis 8 ability f0F possible losses, white assum, gr 1 Serpent of te advantages to be derived on sot enka be lsregarded. The partners who have spe tion: Sr jgentity under a designation distinct from ie Faed WF jye members of the frm should be peneh geetgr ary o, the creditors who presumably have dealt fiat nd BOL ship in good faith” (Jo Chung Cang vs. ae pa a tne Prinercial CO- supra). Cor sie Cy Note—Chapter 4 (Arts. 1843 to rn ee Omg 0 we 8 Fa ed nena ons on limited partnership in the Code of Prove 145 to 150) were considered too meage see (ie to govern this Juridical institution (Report a Gommission. P. 140) teristics Of Limited Partnership, Which ‘ From A General Partnership.—A limited pisngtith Gparcteried by the follwing conser artery carcumstances ons 2" there must bf w under Which is mandatory, rine iness is under the control of t who ar (arts. 1848 and 1850); ao" ois™~ 206 Parowenstar. AGENCY AND Trusry (3) pe who share in the pre lace parti the management of the business. ) (4) The limited partner/s are (Arts. 1845, lity is Ti aD ang} ‘-alipganlaneiineoomme 2 (5) The of the and the (SeParat (6) The i c 1844 (h); 1857). lang Significance Of The Combination of Limited Partners.—Generally, the Generay those wl i The comb; expertise and adequate financing creates goog ties for business success and advancement, Advantages Of A Limited Partnersh: (a) On the part of the general partners, secure capital from others (limited or spect arin for supervision of the partnership business. A limiteq sc! 2d ake part in. the nent. busines? Nati, n PPortun ty (40. Am. Jur. 474). Primary Purpose Of The Statute Authorizing Lim ited Partnership—The primary purpose of the statute authorizing the formation of limited partnerships is tgPARTNERSHIP li Fie is personally able ‘oF parIneToRTG mmership Pligations (Art B16). ‘Limited Partner His liability is only to the extent of his capital “contribution (arts. 1845, 1848 and 1856). general partners tae ech the nese when agement had Eoin (hts. 1803 181013). He cannot_particr pate in the_mamg- ‘gement if he“wants ‘oTemain as limited pariner (Aris. 1851 “and 1848) ie contributes 109- ney. property or Je i He can contribute money or pyapesty but wy ee oe ig ane ‘of general pariner ithe. panmership name (Art. T Its_of the“limite Seger rao eaae (Art. 1859). Same of Cin er wusL_not nexship_name (Art. ieiyfomern becomes liable as a208 Parwerstte, AGENCY AND Trusrg, | me bow — ; [Eo ranibtion | He beat a iN . to engage in | gage in husiness sirni- | business | lato the business of lec sip Theis | a partner | ur is acon tran. stipulation (Art. 1808), or marie | | distraD partner (Art 1789). 7 [As panna | He er BAD pe oF aginst apa | toy [eel nership (Art. 1853) Distinctions Between A General Partn, _ | A Limited Partnership Insofar As Creation, ship sa tion And Names Are Concerned.— Compest Basis General Th Partnership painitea (| Constitution [Asa rule, it may or Creation | constituted in (any form) unless ima able property is con- | tributed (Art. 1771), 1 | Composition | It is composed of only @ereral_part- fers) @ | Firm Name | It must operate un- fer nays cna | th ineltide_the“na- | or abbreviati@es cian me of partner/s.ParINERSHIP 08 or more persons desiring to f sp shall: ie as ig 4 (wes? to a certificate, which shall name of the partnership, ad The od “Limited”: aaa ‘ W “ rhe onaracter of the business; a he jocation of the principal place of Vo 9080 ne name and place of residence of each p & ri al and imited partners being re er NF poettively 3 i wid ‘the te .signated: ‘rm for which the partnership is to agne amount of cash and a description of 4 7 greed value of the other property con- gd OE oy each limited partner; gaitional contributions, if any, to te The #, © Jih limited partner and the times at ye B08 “events on the happening of which they cb hitpe made: 1 sb or Te time, if agreed upon, when the con- G7" of each limited partner it to be returned; tributio? ‘qhe share of the profits or the other way of income which each lim- receive by reason of his contri- ‘phe right, if given, of a limited partner to cian assignee as contributor in nis place, santas and conditions of the substitution fh) The right, ifiven,)of pariners to admit sasitional limited partners: {) The right, if given, of one,or more of the limited. to over other limited furiners, a8 to contributions or as to compenst- riner meres210 ParINERsHtr. AGENCY AND Trusrs, tion by way of ico way of income, and the nat, of 8u, eeea ve if given, of te = ers to contin, te hag ME on the death, retirement, he parc hey, ity or insolvency of a general vont et (a) The right, if given, of a limi ia demand and receive property other th; Lama ty for his contribution. a By for record the certificate jn th ty the Sec: sand ission, oe A limited partnership is formed if ty, substantial compliance in good faith with ae hag requirements. me et Source: This is a new provision taken fro of the Uniform Partnership Act. Sect, 2 COMMENT: Presumption In Transacting Of B, Partnership—A partnership tr ae coran, 127 of the privilege of limited liability sci, eer rater =e partnership. F: ‘ ship will be considered ene th Patines partner as general partner with general liability, PAM the Requisites In The Establishment of 4 y;-, Partnership—There are two (2) essential requisite oaionrs ofa limited partnership— qa) te must be signed:andsworn by all (2) Pa. 255). Those who desire to avai) them, Sites in the211 Substantial Compli Ke ipliance.—If of saad compliance with the legal require gusta ation of 4 limited partnership, cases str Gost not oneof the general partners men oe Weis not considered a Timited is ine eral artnership (Jo Chung Cang vs. we put 2 phil. 142). Seo » 3 uires that the contribution of each Co. , w 1 ea re Gaicai! the aggregate sum given by yer De partners is giver id of the spe- as) gb, Oe Te a sepencer Optical Mfg. Co. vs. Johnson. oi Fp ot s the addition of the we “Lim- requires ord Lim ar eon, “ius provision Is violated, the 10 the (re considered the firm name of a limited i can magma YOC VS. Kiefi-Chiong-Seng, 6 Phil. sb me Fs) ntailp> of a limited partnership to extend its a on it expued. and to register it anew’ he ye wh and_ Exchange. Commission, has“the @ffect of sgqcuritics the Timited_partners of the privilege_of Timy a ie yp third persons are concerned, The aw sa the, ‘as a general partnership (McDonald Vs. ae age si- 499. prom May 21, 1956, SEC Opinion, Mork. vay 1968)212 Parrnersip, AGENCY AND Trusts Restriction.—A limited ated orally, It require: When Partnership Creditor Is Un, attaching creditors reco limited partnershi (40 Am. Jur. 476). Effect Of Filing False Certificate (art. 1847), Art) 1845!) The contributions of dtiiteg may be cash or other property, but not Services te, Sr i Tat services: Source: This is a new provision taken from, of the Uniform Partnership Act. Sec : COMMENT: Contributions Of Limited Partners: Restrict, limited partner on, not allowed to contribute services still remain Heig ited partner. 8 lim. becomes liable Reason Why A Limited Partner May Not Be dustrial Partner—A limited partner may not i industrial partner without being a general partner bee A limited partner who contributes a[PARTNERSHIP 213 ted Partner Also Contributes His mt article states that the limited ‘9 contribute services in addition to x of money or propert or whose surname appears in a BE ioe id rs aed to the provislonaxelaths fiable/as 8 general parine jartner to(partne Lee (een crait to the P ip he is not a general f- pe mis 1s a. new provision taken from Section 5 Cee partnership Act. pei" ff Partner (art. 1815, Art. 1844 a)). In a His liability is limited, that is214 Partwensitr, AGENCY AXD Trusry ement 5 may_hold liable to the ce; a satement to BET! ate “fff At the time he signed the certificate . + Or Subsequently, but within a sufficient fore the statement was relied upon to nang! a cancel or amend the certificate, oF to file a poy, im, its cancellation or amendment as provided ja i 1865. (n) Attigg Source: This is a new provision taken Srom of the Uniform Partnership Act. Section 4 COMMENT: Liability Of Partners For False Statement jy Certificate; Timing Is Considered—Any p, The certificate ‘who knew the falsity of a statemen, the The party's knowledge of the fase statement muy fa) of the signing of the certificate, or ) , but. icient time the statement was relied upon to enable him to cane nable him to canger amend the certificate, or to file a petition for its cancel tigh or amendment as provided in rticle 18% be—PARINERSHIP case: vartnes Whose capital contri par ecihed in the cerca ees jor making”a Talbe~statemes™ i ated Partnership Ag haat" Ho ere is ROTDITY wise yes Se can, be established oflly by sta which Kless.)ot greater! Thar fee aS aint and Varish'CO. WS Legum Tot enLR 'g” 286; 40 Am. Jur., Supp. (1960) 51), ghts-aAth po limited partne ee a Pee Gonusfot te bsneen = Partner, inne ie of limited is @ new provision taken from Section 7 yor: sd Partnership Act. sour Limite’ nil «ia yun Ho vo. Balrodgan Co.,Ltd CA-GR. No. 27123-R November 29, 1965 reid: ‘The limited Lability of a limited partner fs defense which appellants Ganzon, Rodri- uyot should have set up in their answer the trial. Their failure to so set up this a matter of jez and Bal fand proved at216 PARTNERSHIP. AGENCY AND Thigny defense and prove the same at the trial liable as general partners. Makes, “ “eral or its limited character (Howard house, 46, S.W. 2d, 787), NS: Grays re Besides, insofar as appellant cemed, even conceding that he ee 18 ey bout the fact that he isthe general managhst™ aa= Balrogan Co., Ltd., and therefore takec = Paring conv fhe sien, under Are eng et Code, he becomes Hable as a general partner e che “A limited partner shall not become 4, general partner unless, in addition to the C22 ay his rights and powers as a timted partneg e° part in the@onitolN6Mtheo USTs, take : 3 Cot. ‘Stone Illustrations Of Active Participation _ UU) when einen pe articipates lection of the_man: iets of thes,” the (Stranger vs. Thomas, 114 Wis. 699), arte i When the limited partner exercises 4 QU puyuye ey.” a_superintendent of the business of So, HeShip (Richardson vs. Hogs. 38 me the RY ACAD (3) When the limited partner purchases pu pro] of the fim, taking! in tinsel amg ee Sat, a eon tia own ama Gad for tae exclusion bop (Silvola vs. Reulett, 272 P.d. 287). --. © bey When the business is carried on by a, LLP qffeciop. chosen by the limited partners (way “Caray Instances Which Are Not Considered Ao, tive Management In The Business Of The Firm. % 4. (1) Simple giving of @dvise}o general partner the latter may or may not ler; 8 WhiParrNeRsiir 217 ane imited partner merely show 1 wee pactnership Pusiness Gierey A) yoos8° ine iumited partner express opin Dj pee whe” yey _of certaln_transactions Ts; non) as pa isa nso as 9) i BEG. 287) ea P we 32 earl, ne partner oye merCZererell, 33 La Ann. 812) a a) arme Ulpayme | ne mad jon on one occas; men De ers (Ulman vs. Buggs. 32 Ann. 813}, oer or 8) general igh ap te formati wv e) jon of a limit. A SAR ok Uglied partners. ma SEaaiea tee fo the original cerifiemtess ag aD si the requirements of Arti ei i a cle 1865,/, oe a sis is a new provision taken from Section 8 erm Larmited Partnership Act. Admission Of Additional Limited Taw allows the admission of limited part- ne : formation of the firm. It is, howeve as Gace pa _ 1950. AG per shall have the right: ast. 1) and be subject tola ‘the restriste et partnership without limited partners. 4 pose sae Snot a nt or ratification ve or ratificat of - he limited partners, 2General it Hower cific act by or {aiff the general partners have i fs po any act in contravention of the certificate; “gf Do any act which would make it impossible to cari on the ordinary business of the partnership;218 PARTNERSHIP, AGENCY AND Trusts AS Confess a judgment against the p, Possess partnership property, a era, rigitts in specific partnership property, for goSlan jt partnership purpose; e ‘Admit a person as a general partne,. Admit a person as a limited pare, the right so to do is given in the certificat, an ma, 47 Continue the business with partners, n erty on the death, retirement, insanity, ciyit NP br, tion or insolveney of a general partner, unlegg ;¢€rai> 16 re, ras : s0 to do is given in the certificate. ee Source: This ts a new provision based on Seq, the Uniform Partnership Act. on 9, COMMENT: Certain Acts Which A General Or All The Partners €a Do.—: Genera, In such kind of partnership, i Ie the partnership is a Hiiied partnersMp (ary eneral partner or all the general artners Cannio 843) Gop tie WHEE concert on AMER FAUST SEY. Giftc ac gra ei altthe limited partners Gy Suthority ,.& BE Do any act in contravention of the certificate, Do any act which would make it impossity, carry on the ordinary business of the partnership; ble to ZA Confess a judgment against the partnership, Possess partnership property, of assign. tho righ in specific partnership property, for other tha partnership purpose; a 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;PARTNERSHIP 219 ye the business with partners) continue rement, Insanity, ciil inter erePeFY ath. TOUT partner, unk Tdletion or death jeneral partner, unless the right i te of cate (Gee also: Art. 1860), °°! dois oF ge ene pe gle ie tion si ee fe partnership books kept at the prin. 1 ee tthe paRneiie ead a ce aspect and copy any of them; : ‘man’s true and full information of mership, and a formal ac- affect ee ship affairs whenever circumstances ee amt jue gi Aissolution and winding up by decree Ff, Bate ery pera gt secrer, of se “ost partner shall have the right to receive a B SOF other Compensation by_wr ition _by way of ae ‘ythe retum of his contribution as pro- 7. a ti (pone. petioles 185: This is @ new provision based on Section 10 source: partnership Act.220 PaRrwersttr. AGENCY AND Tusrs (a) To demand that the arnership pe at the prineipaf place of business eae Roo be (2) “To inspet and copy any of the 1,,.” ‘80S ke content thereof (See also: Art 1806); Pooks 4) or (3) To demand trucand full information, hae affecting the partnership: also to demand a fa of partnership affairs (See also: Art. 1809), “Mal aera, (a) Resort to thcoup) for the deta ee é n ing up of The Business OF the partnership (gee 1828; 1830 [No.8]; 1831 and 1836); sg Yg, (5) To receive a_share of th ite ns, pensation by Way of income; also to share in. * er (See also: Art, 1812); CH. (6) To demand the return of his cont Uy Ned b vided the assets are more’than all the Hiab etion partnership (See also: Arts. 1856 and 1857), AS oh " Without prejudice to the pr, article 1848, a person who has contribute \ny capital of a business conducted by a person oy ° th ship erroneously believing that he has beeoy,P*tnee ited partner in a limited partnership, is not, is, 8 tin, of his exercise of the rights of a limite 5” Tsg, general partner with the person or in the parqt™*r, 5 carrying on the business, or bound by the one ershis of such person or partnership, provided that gi@*tiony taining the mistake he promptly renounces his jn *°tr. in the profits of the business, or other compent*?tst by way of income. Sation Source: This is a new provision taken from Seo of the Uniform Limited Partnership Act. ton 1) COMMENT: Erroneous Belief Of A Contributor That He Become A Limited Partner; Effect © HasPARTNERSHIP 221 Mion from Kability, i is requtred that 2 istake, the coneemed contributor Js interest in the profits pf “ x e Seema a Byway oF tome, WG, Bee a0 as afgeneral partner, so dol Foourse, that if the @ntributOhis a let = actively partici in the man- a " of the firm, h¢waives his camp Easiness we uty Spevond fis contribution and Tie ge i, se 25.8 pire zi Ee (art. 1848) ae yerson may be a general partner and 2 the 8 ne partnership at the same tpat th stated in the anal oop 1844, gor “e set aed fo ‘oi sens She js a Gener, and also at the same ee ae ane fall have all the rights and ss (sitet Ti ject ¢o-all the restrictions 0 @ gen- eet? P that, in_respect to his contribu- eo exe the rights against the other mem- Seal Poul have Ba Hf Be were not als s nists anew provision taken from Section 12 Partnership Act ‘a person Be Both A General Partner And Lim- Pein The Same Partnership At The Same ws Pane answer is in ‘heCafirmatiey subject to thewaa Paacnanonar Amamce Ho Tesco tights Of Such Person. —Swe! person ms, Source: This is a new provision taken from of the Uniform Limited Partnership Act. ‘Section 13PARTNERSHIP om on i ‘a wimited Partner Io Al : a a WG To meact Business ts Allow to ¢ relationship between a Fort which is based mainly on kG). General partners. however, are ig 00 in’ Eke ehsence of @ atipulation 108 ro Rata With General Cr a, nari yess he is also 8 ee Oe ons Pronibited of Limited Partners; Pre ‘rransoe eraud.—with regard to claims against the ion OF FY orrieed partner is prohibited from doing sane owing 3oa 224 Parnes. AGENCY AND Tyg Reason Behind The Prohibited Acts with which to disefe, a abilities to non-partner creditors arg , however, 15 % Ilustration: he med peel Ret ted partner Se the limited _patiner extended tothe aT which is s Goat sa creditor ofthe partnership for tho mguonag Tt 0 assets of the partnershy UN og will be Seaman Coy be pal ist. W there is noth, i qari any claim because (D) bain; | ea the-partnership iS given preferential rights. PocuN remember is that the’G of the partnership. "We ty be prejudiced by ams of partners, eee ug ® Where there are several tet ners the members may 1 OF more ¢ limited partners shall over otha Seed partner 9 pot thelr contributions BD by way of income see az of income, or ete en EET ade stated in the ¢rtifiate, and in the abs nn statement, all The limited partners shall(stamyc! equal footing. “ Source: This isa new provision taken jrom Section 14 of the Uniform Limited Partnership Act.PARTNERSHIP 225 of Article—The article applies only It finds novappli- the Return Of Limited Partners’ aa pre article provides & phon, of limited»part. pone yased on an agreemient™of the Tere must be b ren Further, the agreement to ePr more hmited partners over other , to oF vie rity “must be St ane eee 7 mn eed i, In which case, B Se gece preference covers (a) the compensation by way of in- co? P y ean : ae per may receive. from a S ASiiare of the profits or the compen- tipulated for in the’ certifi- 4 a iti, trom the FE arinership assets are jt excess oo oF the partnexsnipcexcept liabilities to 36 "on account of their contributions and ss a new provision taken from Section 15 Sa mite Partersiip Ae cH226 PARTNERSHIP. AGENCY AND Tris, ‘“Arteyr887. A limited partner gp, all from a general partner or out of partner, °t any part of his contributiongunti) ‘ship ‘All liabilities of the partnershj, tiesto general_partners and to limiteg 8p, of their contributions, have been P&ttn, a remins property of the partnership surp?%@ or foe REESE Suftleien “si (2) The Geared of all members is h, Oy return of the eontribution may be righeruits “le, under the pi second ara se — ‘ph; (3) The is gancelled or g5 4, "dt to set forth uel wal r reduction, Arend Subject to the provisions of the first p, te imited partner may rightfully demand the “Sty h ontribution: —— (1) On the dissolution of a Bip, op (2) When the date specified in the certis its return has arrived, or feat, (3)_Alter he has given six MARE noteg ing ti ther members, if no time is specireg’ etificate, either for the return of the contribyy = the tnership, “lon, for the di P- es In the absence of any statement in the to ti trary or the consent of all member tals ited partnet, irrespective of the nature of his oon Se: tion, has only the right to demand and receive oti. return for his contribution. cath iy i I paitopr may have the partners) solved and its affairs wound up when: | ~~? dh. He rightfully but unsuccessfully demands return of his contribution, or fe AG The other Uabilities of the partnership ha not been paid, or the partnership property is insu’PARTNERSHIP 247 ayment as required by the fh not Phe limited partner would Nitherie of 4 o* ae ret ob ed Vo Hee gis a new provision taken from Section 1 4 Partnership Act. ig ‘urn of his contribution. (2) ot ms gg) THe en of vcr nen Return Of Contribution May Be De ime Wismited partner may rightfully demand the ibution— eaten conte i) ee 2 (posrsessuholaliidalesiilicdeasthecsens- Cor tribution Of Limited P ireturn of contriDutio artner I “erm eas Bxcepton Regarlss oe ‘ited Fie contribution. whether property, rights or otherwise, a