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Article 1860. GN: The following circumstances affecting the 3.

To limited partners for the return of their capital


general partner dissolves the partnership: contributed;
4. To general partners (not for capital and profits);
1. Retirement 5. To general partners for their profits;
2. Death 6. To general partners for the return of the capital contributed.
3. Insolvency
4. Insanity Note: For claims arising from individual loans to, or other business
5. Civil interdiction transactions with, the partnership, other than for capital contributions,
the limited partner is placed in the same category as a non-member
XPN: Unless the business is continued by the remaining general creditor.
partners:
Note: In the event of insolvency of the partnership, its creditors are
1. Under the right so to do stated in the certificate preferred over both general and limited partners.
2. With the consent of all the members
Note: In general partnership, the capital of general partners enjoys
Note: In case it is continued, the certificate must be amended to more preference than their profits.
reflect the change in order that the limited partners may avail of the
protection granted by law (Article 1864, par. 2, No. 5). Note: In the absence of any statement in the certificate as to the share
of the profits which each partner shall receive by reason of his
Article 1861. On the death of a limited partner, his executor or contribution, limited partners share in the partnership assets in respect
administrator shall: to their claims for capital and profits in proportion to the respective
amounts of such claims. (takes place only where the partnership
1. has all the rights of a limited partner for the purpose of assets are insufficient to pay such claims.
settling his estate;
2. has the right to constitute the deceased’s assignee as Article 1864. The certificate shall be cancelled when:
substituted limited partner (only if the deceased partner was
empowered to do so in the certificate. 1. the partnership is dissolved other than by reason of the
expiration of the term of the partnership;
The estate of the deceased limited partner shall be liable for 2. all limited partners cease to be such.
all his liabilities contracted while he was a limited partner (1861,
par 2). A certificate shall be amended when:

Article 1862. Rights of Creditors of Limited Partners 1. change in the name of partnership
2. change in the amount or character of the contribution of any
1. The creditor may apply to the proper court for an order limited partner
charging the limited partner’s interest in the partnership for 3. a person is substituted as a limited partner
the payment of any unsatisfied amount of his claim. 4. an additional limited partner is admitted
2. The court may appoint a receiver, and make all other 5. a person is admitted as a general partner
orders, directions and inquiries which the circumstances of 6. a general partner D,R,I,I,CI and the business is continued
the case may require. (Art. 1860)
7. change in the character of the business
GN: Redemption of the interest of the debtor limited partner may be 8. false or erroneous statement in the certificate
done by any general partner with his separate property, not with 9. change in the time stated in the certificate for dissolution of
partnership property. return of contribution
10. a time is fixed for dissolution or return of contribution
XPN: Interest may be redeemed with partnership property with the
when no time is specified in the certificate
consent of all partners whose interest are not so charged (Art.1814,
11. members desire to make a change in any other statement in
par 2, No. 1).
the certificate in order that it shall accurately represent the
Note: The limited partner’s right under exemption laws is also agreement among them.
preserved under this article since his interest in the partnership is
Article 1865. Requirements to amend a certificate:
actually his property.
1. must be in writing
Article 1863. In settling accounts after dissolution, the liabilities
2. signed and sworn to by all members including the new
of the partnership shall be entitled to payment in the following
members, and the assigning limited partner in case of
order:
substitution or addition of a limited or general partner
1. To creditors and limited partners (not for contribution), in 3. must be filed for record in the SEC.
the order of priority as provided for by law(Arts. 1854,
Requirements to cancel a certificate:
1856, 1857 [1]);
2. To limited partners for their share of profits and other 1. must be in writing
compensation by way of income on their contributions; 2. signed by all members
3. must be filed with the Office of SEC. 5. The nature of the limited partner’s interest in the firm
amounts to a share in the partnership assets after its
When a person who must execute the writing refuses to do so, the liabilities have been deducted and a balance struck. An
petitioner who has a right to have the writing be executed may intangible personal property.
petition to the court.
Article 1867. A limited partnership formed under the law prior to
The court shall: the effectivity of this Code, may become a limited partnership
under this Chapter by:
1. order the SEC where the certificate is recorded, to record the
cancellation or amendment of the certificate. 1. Complying with Article 1844 and
2. The certificate sets forth:
When the certificate is to be amended, the court shall: a. The amount of the original contribution of each
limited partner
1. issue a certified copy of its decree setting forth the
b. The time when the contribution was made
amendment and shall cause it to be filed for record in SEC.
c. That the property of the partnership exceeds the
amount sufficient to discharge its liabilities to
After the certificate is duly amended in accordance with this
creditors by an amount greater than the sum of the
article, the amended certificate shall thereafter be for all
contributions of its limited partners.
purposes the certificate of the partnership under Article 1844.

Note: The approval of the Commission of the amendment or (the net assets [assets – liabilities to third persons] is greater than the
cancellation is not required. sum of the liabilities to limited partners on account of their
contributions)
Article 1866. GN: A limited a partner is a mere contributor and is
therefore not a proper party to proceedings by or against a Until compliance with this Code, the limited partnership shall be
partnership. governed by the provisions of the old law. (Articles 145-150, Code
of Commerce)
Reason: Since limited partners are not principals in the partnership
transactions, their liability is to the partnership, not to the creditors of
the partnership, hence they have no right of action against third
persons against whom the partnership has any enforceable claim.

XPN:

1. where the object is to enforce a limited partner’s right


against the partnership
2. where the object is to enforce his liability to the ;
partnership.

Note: A limited partner is practically a stranger in the limited


partnership whose liability is limited to his interest in the firm,
without any right and power to participate in the management and
control of the business.

Note: The relationship among a limited partner and the other partners
and the partnership is not one of trust and confidence.

Nature of Limited Partner’s Interest:

1. The limited partner’s contribution to the firm is not a loan


and he is not a creditor of the firm because of his
contribution thereto.
2. A limited partner’s contribution is not a mere investment
3. A limited partner is, in a sense, an owner, which in interest
in the capital of the firm and its business as such, but he
has no property right in the firm’s assets but may be a
co-owner of partnership property as a tenant in the
partnership and his ownership may be defined as a tenancy
in partnership.
4. A limited partner’s interest is in personal property and it
is immaterial whether the firm’s assets consist of realty or
intangible personalty.