Law on

Partnerships
 GENERAL PROVISIONS
2 or more persons agree to
Art 1767 contribute their money, property or
industry (labor or skill) to a
common fund for profit
2 or more persons may form a
partnership for the exercise of a
profession

Partnership has a juridical

Art 1768 personality separate and distinct
from the partners

Immovable property or any interest

Art 1774 therein may be acquired in the
partnership name and ownership
can be conveyed only in the
partnership name
 PARTIES
Any person with a legal capacity to enter into
a contract may enter into a contract of
partnership

Persons with no legal capacity to enter into a

contract:

1. Unemancipated minors (Art 1327)

2. Insane or demented persons (Art 1327)
3. Deaf-mutes who do not know how to
write (Art 1327)
4. Those suffering from civil interdiction
(Art 34, Revised Penal Code)
5. Incompetents under guardianship (Rule
92, Revised Rules of Court)
 OBJECT

Partnership must have lawful object

and established for the common
benefit or interest of the partners
(Art 1770)

As to its object, a partnership may

either be universal or particular (Art
1776)
 UNIVERSAL PARTNERSHIP
Refers to all present
property or all the
profits (Art 1777)
Properties contributed
include all those owned by
the partners at the time of
the constitution of the
partnership (Art 1779)
In a universal partnership of
all property, the partners
contribute all the properties
that belong to them in a
common fund together with
the profits from said
properties (Art 1778)
May also agree to include
all subsequent properties
but cannot include
properties subsequently
acquired by inheritance,
legacy or donation, except
fruits thereof (Art 1779)
 UNIVERSAL PARTNERSHIP
In a universal partnership
of profits, the partners
contribute all that they may
acquire by their industry or
work during the existence
of the partnership (Art
1780)
When the articles of
partnership do not specify
the nature of the
partnership, the
presumption is
UNIVERSAL
PARTNERSHIP OF
PROFITS (Art 1781)
Only the usufruct over the
property of the partners
passes to the partners (Art
1780)
Usufruct is the right to enjoy
the property of another with
the obligation of preserving
its form and substance (Art
562)
Persons who are prohibited
by law from giving
donations to each other
cannot form a universal
partnership (Art 1782)
 PARTICULAR PARTNERSHIP

Particular partnership has for its object determinate things,

their use or fruits or a specific undertaking or the exercise
of a practice of profession or vocation (Art 1783)
As to liability of its partners, a
partnership may either be general
or limited (Art 1776)

General partnership consists of

general partners who are liable pro
rata and subsidiarily or at times
solidarily with their separate
property for the partnership
obligations

Limited partnership is formed by 1

or more general partners and 1 or
more limited partners who are not
personally liable for the partnership
obligations.
 FORM
A contract of partnership may be
constituted in any form unless immovable
property or real rights are contributed, in
which case it should be in a public
instrument (Art 1771)

If the cash or property contributed as

capital is worth Php3,000.00 or more, the
articles of partnership shall be in writing
and registered with the Securities and
Exchange Commission (SEC)
Non-compliance with the requirements will
not affect the liability of the partnership
and the partners to third parties (Art 1772)
If immovable property is contributed by any
of the partners, the contract of partnership
must be in a public instrument and
attached to it should be an inventory of the
property contributed and duly signed by the
parties (Art 1773)

Associations and societies whose articles

are kept secret among the members and
where they contract in their own name
with third persons are not partnerships
because they have no juridical personality
and are governed by the provisions on
co-ownership (Art 1775)
RULES TO DETERMINE EXISTENCE
(Art 1769)

Persons who are not partners as to each

other are not partners as to third persons
except under Art 1825

Co-ownership or co-possession does not

establish partnership even when there is
sharing of profits in the use of the property

Sharing of gross returns does not establish

a partnership even when the parties have a
joint or common interest in any property
from which the returns are derived
The receipt by a person of a share in the
profits of a business is prima facie evidence
that he/she is a partner, unless there is
proof that such profits were received in
payment of a debt, wages, rents, annuity,
interest on a loan or as a consideration for
the sale of a goodwill of a business.
 DURATION
A contract of partnership exists from the
moment of the execution of the contract,
unless the parties stipulate otherwise (Art
1784)

As to duration, a partnership may either be for

a fixed term or a particular undertaking or at
will

When a partnership is for a fixed term or

particular undertaking, the partnership may be
extended if it is continued after the
termination of the fixed term or particular
undertaking without any express agreement
(Art 1785)
 KINDS OF PARTNERS
liability to third persons designated to manage the
contributes money or affairs or business of the
extends to his separate
property partnership
property
GENERAL MANAGING
CAPITALIST
PARTNER PARTNER
PARTNER

INDUSTRIAL LIMITED
PARTNER PARTNER
liability to third persons is
contributes industry,
limited to capital
skills or services
contribution
 RIGHTS AND OBLIGATIONS OF THE
PARTNERSHIP
Right to
Contribution
Partnership has the right to the
contribution from the partners
Every partner is a debtor of the
partnership for his promised
contribution (Art 1786)
If the contribution consists of
goods, there should be an
appraisal of the value (Art 1787)
Delay in the contribution means
liability for interest and
damages (Art 1788)
Presumption is that
contributions are in equal
shares (Art 1790)
Industrial partners cannot
engage in any business for
themselves unless with
partnership’s permission (Art
1789)
Capitalist partners cannot
engage in the same kind of
business as the partnership,
unless partners agree otherwise
(Art 1808)
 RIGHTS AND OBLIGATIONS OF THE
PARTNERSHIP
Right to
Additional
Contribution
In case of an imminent loss of
the business of the partnership,
partners are obliged to make
an additional contribution to
the common fund to save the
business. Otherwise, the
partner shall be obliged to sell
share to other partners (Art
1791)
Right to Apply
Payment Received to
Partnership Credit
Managing partners who collect a
sum owed to from a person who
also owes the partnership shall
apply the sum collected to both
credits pro rata; if they issue a
receipt in the name of the
partnership, the sum shall be
applied to the partnership credit
alone (Art 1792)
Right to Return of
Credit Received
Partners who received their
share of the partnership credit
shall bring to the partnership
capital what they received
when the other partners have
not collected their shares and
the debtor has become
insolvent (Art 1793)
 RIGHTS AND OBLIGATIONS OF THE
PARTNERSHIP

Right to
Responsibility to
Indemnity for
Partners
Damages
The partnership is obliged to The partnership shall also
refund to the partners the answer for the obligations
Every partner is liable to the
amounts disbursed by them on which the partners may have
partnership for damages
behalf of the partnership contracted in good faith and
suffered by it through his/her
together with interest from the to answer for risks in
fault (Art 1794)
time the expenses were consequence of its
incurred. managements (Art 1796)
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES

Right to Associate Right to Inspect Right to Formal

Another in Share Partnership Books Account

Partners have the right
to associate themselves
with another person in
their share of the profits
coming from the
partnership even without
the consent of the other
partners (Art 1804)
Partners shall have, at Partners shall have the
reasonable hours, access right to formal account
to and may inspect and as to the partnership
copy any of the affairs:
partnership books, which
shall be kept at the (1) if they are wrongfully
principal place of excluded from the
business of the partnership business
partnership (Art 1805)
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
(2) if the right exists under
their agreement
(3) if without the consent
of the other partners, a
partner has derived profits
from any transactions
connected with the
formation, conduct or
Property Rights
of Partners
liquidation of the The property rights of
partnership or from any partners are: rights in
use of partnership specific partnership
property (Art 807) property, interest in the
partnership and right to
(4) whenever other participate in the
circumstances render it management (Art 1810)
just and reasonable (Art
1809)
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES

Rights in Specific
Partnership
Properties

Partners are co-owners but for other purposes, Right is not subject to
with the other partners the consent of the other attachment or execution
of specific partnership partners is necessary except on a claim
properties against the partnership
Right is not assignable (Art 1811)
They have equal rights to except when all the
possess partnership partners assign their
properties for rights in the same
partnership purposes, property
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
Interest in
Partnership
Interest in the partnership
consists of share in profits
(during existence of
partnership) and surplus
(after dissolution) (Art 1812)
Assignment does not
dissolve partnership but
entitles assignee to receive
the profits (Art 1813)
Right to
Participate in
Management
Managing partner is
appointed in the articles of
partnership and powers may
be revoked when there is
just or lawful cause for the
revocation by the partners
representing the controlling
interest (Art 1800)
When 2 or more managing
partners are appointed,
without specification of
their duties or without
agreement on how each
one will act, each may
separately execute all acts
of administration.
RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES

If there are more than 1 When there is no

If any of the managing
partner opposes, managing partner appointed
and it is agreed that none
decision of the majority
prevails and in case of a of the managing partner
shall act without the
tie, partners owning
controlling interest will consent of the other
managing partners, all of
decide (Art 1801)
them must concur for their
acts to be valid (Art 1802)
agreement as to the
manner of management, all
the partners are considered
agents
Any important alteration to
immovable property of the
partnership requires
unanimity; but the consent
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES

Right to Profits
and Obligations
for Losses
Profits and losses shall Share of industrial
of others is not required be distributed in
if the alteration is partners in the profits is
conformity with the that share as may be just
necessary for the agreement
preservation of the and equitable but
property (Art 1803) industrial partners shall
In the absence of any not be liable for losses
stipulation, share of the (Art 1797)
profits and losses shall
be in proportion to their
contributions
 RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
Exclusion of Partner
from Share
Any stipulation that
excludes 1 or more partners
from any share in the
profits and losses is void
(Art 1799)
But a stipulation exempting
industrial partners is valid
because it is provided by
law (Art 1797)
Obligation to
Obligation to
Account and Act as
Render Information
Trustee
Partners have the Partners must account to
obligation to disclose all the partnership for any
information affecting the benefit and hold as trustee
partnership to any for the partnership any
partner, the legal profits they derived without
representative of any the consent of the other
deceased partner or of partners from any
any partner under legal transaction connected with
disability (Art 1806) the partnership and use of
its property (Art 1807)
 RIGHTS AND OBLIGATIONS OF
PARTNERSHIP/PARTNERS TO THIRD
PERSONS
Obligation to
Operate under a Any act of partners which is
Firm Name not apparently for the carrying
Every partnership must on of the usual business of the
operate under a firm partnership does not bind the
name partnership unless authorized
Liability of by the other partners
Liability for
If name is included, Partnership
Partnership Without authority from other
person is liable as partner All partners shall be liable pro
even if not (Art 1815) Contracts partners or unless they have
rata with all their property and abandoned the business, 1 or
Any act of partners which
after all the partnership assets more partners have no
is apparently for the
have been exhausted, for authority to do acts of
carrying on of the usual
contracts entered into in its ownership (Art 1818)
business of the
name and for its account, under
partnership binds the
its signature and by a person
partnership unless the
authorized to act for it (Art 1816)
partner has no authority
to act and the third
person knows such fact
 RIGHTS AND OBLIGATIONS OF
PARTNERSHIP/PARTNERS TO THIRD
PERSONS
Conveyance of
Persons, who by words
Partnership
spoken or written or by
Real Property conduct, represents
Any partner may themselves as a partner or
convey real property consents to another
in the name of the representing themselves to
partnership (Art 1819)
Liability of anyone as a partner in an
Partners existing partnership, is liable
Partnership is liable for as though they are partners
An admission or representation
losses suffered by a third if a partnershership liability
by any partner may be used as
person whose money or results; when no partnership
evidence against the partnership
property was received by liability results, they are
when it concerns partnership
partners who acted within liable jointly and pro rata
affairs within the scope of
their scope of authority (Art 1825)
partner’s authority (Art 1820)
and misapplied it or
received by the
partnership in the course
of its business and
misapplied by a partner
(Art 1823)
 RIGHTS AND OBLIGATIONS OF
PARTNERSHIP/PARTNERS TO THIRD
PERSONS

Liability of an
Incoming Partner
Liability of incoming partners is limited to
their share in the partnership property for
existing obligations and his separate
property for subsequent obligations (Art
1826)
Notice to or Knowledge
of the Partnership
The following operates as notice to or knowledge
of the partnership: notice to any partner of any
matter relating to partnership affairs; knowledge of
the partner acting in the particular matter acquired
while a partner; knowledge of the partner acting in
the particular matter then present to his/her mind;
knowledge of any other partner who reasonably
could and should have communicated it to the
acting partner (Art 1821)
DISSOLUTION AND WINDING UP

Dissolution is the change in the

relation of the partners caused by
Art 1828 any partner ceasing to be
associated in the carrying on of the
business

Partnership is not terminated but

Art 1829 continues until the winding up of
partnership affairs is completed
 CAUSES OF
DISSOLUTION
(Art 1830)

1. Without violation of the agreement:

a. termination of the definite term or

particular undertaking

b. express will of any partner acting in

good faith

c. express will of all the partners who

have not assigned their interest or
charged them for their specific debt

d. bona fide expulsion of any partner

from the business
 CAUSES OF
DISSOLUTION
(Art 1830)

2. In contravention of the agreement,

where circumstances do not permit
dissolution under any other provision of Art
1830, by the express will of any partner

3. By any event which makes it unlawful

for the business of the partnership to be
carried on or for members to carry it on in
partnership
 CAUSES OF
DISSOLUTION
(Art 1830)
4. When a specific thing which a partner
had promised to contribute, perishes before
delivery, or by the loss of the thing, only the
use or enjoyment of which has been
contributed

5. Death of any partner

6. Insolvency of any partner or the

partnership

7. Civil interdiction of any partner

8. By decree of court under Art 1831

 JUDICIAL DECREE
OF DISSOLUTION
(Art 1831)
A partner may apply for dissolution in case:

1. A partner is declared insane in any

judicial proceeding or shown to be of unsound
mind

2. Incapacity of a partner to perform his/her

part of the partnership contract

3. A partner is guilty of conduct prejudicial

to the business of the partnership
 JUDICIAL DECREE
OF DISSOLUTION
(Art 1831)

4. A partner’s willful or persistent breach of

the partnership agreement or conduct which
makes it reasonably impracticable to carry on
the business of the partnership

5. Business can only be carried on at a loss

6. Other circumstances which render

dissolution equitable
 JUDICIAL DECREE
OF DISSOLUTION
(Art 1831)

7. Upon application by the purchaser of a

partner’s interest - (a) after the termination of
a specified term or particular undertaking or
(b) anytime if partnership at will when interest
was assigned or charging order was issued
 WINDING UP
PARTNER
(Art 1836)

Unless otherwise agreed, the partners who

have not wrongfully dissolved the partnership
or th legal representative of the last surviving
partner, not insolvent, has the right to wind up
the partnership affairs
EFFECTS OF DISSOLUTION
Dissolution terminates all authority of any
partner to act for the partnership: with
respect to the partners - when dissolution is
not due to the act, insolvency or death or a
partner, or when the dissolution is due to
the act, insolvency or death of a partner;
with respect to persons, not partners (Art
1832)

If the dissolution is due to the act, death or

insolvency of partner, each partner is liable
to his/her partners for his/her share of any
liability created by any partner acting for
the partnership as if the partnership had not
been dissolved unless if due to the act of
the partner, the partner acting for the
partnership had knowledge of the
dissolution and if due to the death or
insolvency of a partner, the partner acting
for the partnership had knowledge or notice
of the death or insolvency (Art 1833)
EFFECTS OF DISSOLUTION
A partner can still bind partnership even after
dissolution in:

(1) Any act appropriate for winding up

partnership affairs or completing
transactions unfinished at dissolution;

(2) Any transaction which would bind the

partnership if dissolution had not taken
place when the other party had extended
credit prior to dissolution and no
knowledge or notice of the dissolution or
had not extended credit but had known
the partnership prior to dissolution, had
no knowledge or notice of dissolution,
fact of dissolution was not advertised in a
newspaper of general circulation in the
place where the partnership business is
regularly carried on (Art 1834)
EFFECTS OF DISSOLUTION

Dissolution of the partnership does not of itself

discharge the existing liability of any partner except
when there is an agreement to that effect between
the partner, the partnership creditor and the person
or partnership continuing the business

The individual property of a deceased partner shall

be liable for all obligations of the partnership
incurred while he/she was a partner but subject to
prior payment of his/her separate debts (Art 1835)
 RIGHTS OF PARTNERS IN CASE OF
DISSOLUTION (Art 1837)

Dissolution not in contravention of agreement - each partner may have the partnership property
applied to discharge its liabilities and the surplus applied to pay in cash the net amount owing to the
respective partners

Dissolution in contravention of agreement -

(1) The partners who did not cause the dissolution wrongfully shall have the right to apply the
partnership property to discharge the liabilities of the partnership and to apply the surplus to pay in
cash the amount owing to the respective partners, the right as against each partner who has caused
the dissolution wrongfully, to damages for breach of agreement

(2) They also have the right to continue the business in the same name either by themselves or
jointly with others during the agreed term of the partnership. In which case, they have the right to
possess the partnership property provided they secure the payment bya bond approved by the court
or they pay any partner who has caused the dissolution wrongfully the value of his/her interest in the
partnership less any damages recoverable, and indemnity against all present or future partnership
liabilities
 RIGHTS OF PARTNERS IN CASE OF
DISSOLUTION (Art 1837)

(3) The partners who caused the dissolution wrongfully shall have the right, if the business is not
continued by the others, to apply partnership property, to discharge the liabilities of partnership and
received in cash their share of surplus less damages caused by their wrongful dissolution. If the
business is continued by others, they have the right to have the value of their interest at the time of
the dissolution ascertained and paid in cash or secured in bond approved by the court and be
released from all existing or future partnership liabilities
 RIGHTS OF PARTNERS IN CASE OF
RESCISSION (Art 1838)

Partners who were induced by fraud or misrepresentation to become partners may rescind the
partnership contract. Such partners are entitled to:

(1) to a lien on, or right of retention of, the surplus of the partnership property after satisfying the
partnership liabilities to third persons for any sum of money paid by them for the purchase of an
interest in the partnership or for any capital or advances contributed by them;

(2) to stand, after all liabilities to third persons have been satisfied, in the place of the creditors of
the partnership for the partnership liabilities they paid; and

(3) to be indemnified by the person guilty of the fraud or making the misrepresentation against all
the obligations of the partnership
 SETTLING OF ACCOUNTS BETWEEN
PARTNERS (Art 1839)

The following are the rules in settling account between the partners after dissolution:

(1) The assets of the partnership are: (a) the partnership property; and (b) contributions of the
partners needed to pay all the liabilities

(2) The liabilities of the partnership shall rank in the following order of payment:

(a) those due to creditors other than partners;

(b) those due to partners other than for capital and profits;
(c) those due to partners in respect of capital; and
(d) those due to partners in respect of profits

(3) The partnership property shall be applied first to satisfy any liability of the partnership

(4) The partners shall contribute the amount necessary to satisfy the liabilities

(5) An assignee for the benefit of the creditors or any person appointed by the court shall have the
right to enforce the contributions specified
 SETTLING OF ACCOUNTS BETWEEN
PARTNERS (Art 1839)

(6) Any partner or his/her legal representative shall have the right to enforce the contributions up
to the amount he/she has paid more than his/her share of the liability

(7) The individual property of the deceased partner shall be liable for the contributions necessary
to satisfy the liabilities

(8) When partnership property and the individual properties of the partners are in possession of a
court for distribution, partnership creditors shall have priority on the partnership property and
separate creditors on individual property, subject to the rights of lien or of secured creditors

(9) When a partner has become insolvent or his/her estate is insolvent, the claims against his/her
separate property shall rank in the following order: (a) those due to separate creditors; (b) those due to
partnership creditors; and (c) those due to partners by way of contribution
 RIGHTS OF CREDITORS OF A DISSOLVED
PARTNERSHIP (Art 1840)
Creditors of the dissolved partnership are also creditors of the person or partnership continuing the
business under the following cases:

(1) when any new partner is admitted or when any partner retires and assigns his/her rights in
partnership property to 2 or more of the partners, or to 1 or more of the partners and 1 or more third
persons, if the business is continued without liquidation

(2) when all but 1 partner retire and assign their rights in partnership property to the remaining
partner, who continues the business without liquidation, either alone or with others

(3) when any partner retires or dies the business is continued without liquidation with the consent
of the retired partners or the representative of the deceased partner, but without any assignment of
his/her right in the partnership property

(4) when all the partners or their representatives assign their rights in partnership property to 1 or
more third persons who promise to pay the debts and who continue the business

(5) when any partner wrongfully causes a dissolution and the remaining partners continue the
business without liquidation, either alone or with others
 RIGHTS OF CREDITORS OF A DISSOLVED
PARTNERSHIP (Art 1840)

(6) when a partner is expelled and the remaining partners continue the business without liquidation,
either alone or with others

The liability of third persons, who become partners in the partnership continuing the business, to the
creditors of the dissolved partnership shall be satisfied out of the partnership property only, unless
there is a stipulation to the contrary

Creditors of the dissolved partnership have a prior right to any claim of the retired partner or the
representative of the deceased partner against the person or partnership continuing the business. This
is without prejudice to the right of the creditors to set aside any assignment on the ground of fraud.
 RIGHTS OF A RETIRED PARTNER OR A
REPRESENTATIVE OF DECEASED PARTNER
(Art 1841)
Unless otherwise agreed upon, when any partner retires or dies, and the business is continued without
any settlement of accounts, he/she or his/her legal representative may have the value of his/her
interest ascertained at the date of dissolution and receive, as an ordinary creditor, an amount equal to
the value of his/her interest in the dissolved partnership with interest, or in lieu of interest, the profits
attributable to the use of his/her right in the property of the dissolved partnership

RIGHT TO AN ACCOUNT (Art 1842)

In the absence of any agreement to the contrary, the right to an account of his/her interest shall
accrue to any partner or his/legal representative at the date of the dissolution, as against the
winding-up partner or the surviving partners or the person or partnership continuing the business
 LIMITED PARTNERSHIP
A limited partnership is one formed
Art 1843 by 2 or more persons, having as
members 1 or more general
partners and 1 or more limited
partners

The limited partner may contribute

Art 1845 cash or other property but not
services

A limited partner shall not become

Art 1848 liable as a general partner unless
he/she takes part in the control of
the business
 LIMITED PARTNERSHIP
A general partner shall have the
Art 1850 rights and powers and be subject
to all the restrictions and liabilities
of a partnership without any
limited partners. But the written
consent or ratification of all limited
partners is needed to:

(1) Do any act in contravention of

the certificate
(2) Do any act which would make
it impossible to carry on the
ordinary business of the
partnership
(3) Confess a judgment against
the partnership
 LIMITED PARTNERSHIP

Art 1850
(4) Possess partnership property
or assign rights in specific property
for other than partnership purpose
(5) Admit a person as a general
partner
(6) Admit a person as a limited
partner, unless right to do so is in
the certificate
(7) Continue the business with
partnership property on the death,
retirement, insanity, civil
interdiction or insolvency of a
general partner, unless the right to
do so is in the certificate
 FORMATION OF LIMITED PARTNERSHIP
If a person is both a
The surname of the general and limited partner
Sign and swear to a in the same partnership at
limited partner shall not
certificate stating the the same time, this fact
appear in the partnership
items in Art 1844 must be stated in the
name (Art 1846)
certificate (Art 1853)

If the certificate contains a

false statement, one who suffers
File for the record of loss by reliance on such
the certificate in the statement may hold liable any
SEC (Art 1844) party to the certificate who
knew that the statement is false
at the time he/she signed the
certificate or subsequently,
such person had enough time to
cancel or amend it but failed to
do so (Art 1847)
 RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS

(4) receive a share of the

A limited partner shall have
(2) demand true and full profits and other compensation
the same rights as a general
information of all things by way of income
partner to:
affecting the partnership and a
formal account of partnership (5) return of his/her
(1) require that partnership
affairs whenever circumstances contribution provided the
books be kept at the
render it just and reasonable partnership assets are in
principal place of business of
excess of its liabilities (refer to
the partnership and to
(3) ask for dissolution and Arts 1856 and 1857)
inspect and copy any of them
at a reasonable hour winding up by decree of court
(Art 1851)
 RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS
A limited partner is liable to
the partnership for:
(1) the difference between
his/her contribution as
having been made; and
(2) any unpaid contribution
which he/she agreed to make
in the future at the time and
on the conditions stated in
the certificate
A limited partner holds as
trustee for the partnership:
(1) property stated in the
certificate as contributed by
him/her but which was not
contributed or which was
wrongfully returned
(2) money or other property
wrongfully paid or conveyed to
him/her on account of his
contribution
These liabilities can be waived
or compromised only with the
consent of all partners but
shall not affect rights of
creditors who extended credit
 RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS
or whose claim arose after
the filing or before the
cancellation and amendment
of the certificate
Even if he/she rightfully
received the return in whole
or part of his/her
contribution, he/she is still
liable to the partnership
for any sum not exceeding
said return with interest,
necessary to discharge its
liabilities to all creditors who
extended credit or whose
claim arose before such
return
(Art 1858)
A limited partner’s interest is
assignable. The assignee may
become a substituted limited
partner or a mere assignee
(Art 1859)
 DISSOLUTION OF LIMITED PARTNERSHIP
The retirement, death, insolvency, insanity or civil interdiction of a general partner dissolves the
partnership unless the business is continued by the remaining general partners under a right to do so in
the certificate or with the consent of all members (Art 1860)

On the death of a limited partner, his/her executor or the administrator shall have all the rights of a
limited partner for purpose of settling the estate and the power to constitute an assignee as a substituted
limited partner. The estate of the deceased limited partner shall be liable for all his/her liabilities as a
limited partner (Art 1861)

In settling accounts after dissolution, the liabilities of the partnership shall be paid in the following order:

(1) those to creditors, in the order of priority as provided by law, except those to limited partners on
account of their contributions and to general partners;
(2) those to limited partners in respect to their share of the profits and other compensation by way
of income on their contributions;
(3) those to limited partners in respect to the capital of their contributions;
(4) those to general partners other than for capital and profits;
(5) those to general partners in respect to profits; and
(6) those to general partners in respect to capital (Art 1863)
 AMENDMENT OR CANCELLATION OF
CERTIFICATE
The certificate shall be cancelled when the partnership is dissolved or all limited partners cease to be
such

A certificate shall be amended when:

(1) there is a change in the name of the partnership or in the amount or character of the contribution of
any limited partner

(2) a person is substituted as a limited partner

(3) an additional limited partner is admitted

(4) a person is admitted as a general partner

(5) a general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and the
business is continued

(6) there is a change in the character of the business of the partnership

 AMENDMENT OR CANCELLATION OF
CERTIFICATE

(7) there is a false or erroneous statement in the certificate

(8) there is a change in the time as stated in the certificate for the dissolution of the partnership or for the
return of the contribution

(9) 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

(10) 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 (Art 1864)

To amend or cancel a certificate, the amendment or cancellation must be in writing and must be signed
and sworn to by all the partners, including the new partners and the assigning limited partner in case of
substitution or addition of a limited or general partner. The writing to amend or to cancel must be filed
with the SEC. If a partner designated to execute the writing refuses to do so, a partner who desires the
amendment or cancellation may petition the court to order the amendment or cancellation. The court shall
order the SEC to record the amendment or cancellation if it finds that the petitioner has a right to have
the writing executed (Art 1865)
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