Limited partnership is composed of one or more general partners and one or more limited partners. Limited partner is not bound to be a liable on partnership obligations
Article 1843: Characteristics of Limited Partnership
Compliance with statutory requirements
One or more general partnercontrol business and personallyliable to creditors
One or more limited partners contribute capital and share in profits. Donot participate in management and not personally liable to partnerhip obligations beyond their capital contribution.
May ask for return on their capital contribution
Partnershipliability paid out to common fund and individual properties of general partner.
Article 1843
General rule: All partners including industrial partner are liable pro rata with all their property for partnership debt.
Exception: Limited partner liability is limited to the amount of money they put in partnership
Article 1843: Reason and purpose of statutes authorizing formation of limited partnership
Secure capital from one business and still retain control ( 3 class of contracts)
Ordinary loan in interest
Loan lender + interest + share in profits
Loan lender + share in profits + control over the business
Share in profits of business without risk of personal liability
Associate as partners with those having business skills
Article1843: Difference general and limited partner
Liability: personally liable/ extend only to capitalcontributionManner mngmt: equalright / no share
Contribution: money, property or industry / contribute cash or property
Interest: may not assign & assignee to be partner need consent on partner / freely assignable
Engage other business: prohibit/ not prohibit (mere contributor)
Retirements, death, insanity or insolvency: dissolve/ no effect
Article 1843: Difference between general and Limited Partnership
Form: constituted in any form/ compliance requirements
Members: General partner only/ general & limited partner
Firm name: Operate under firm name/ followed by limited
Dissolution & Winding up: governed diff rules/ carried on by general partnership
Article 1844
Creation of limited Partnership is a formal proceeding and not merely voluntary agreement
Requirement of statue must be follow so public notice may be given to all who desire essential features of partnership
Failure to this lead for partnership automatic to be categorized as general partnership.
Article 1844: Two essential requirements on formation of limited partnership
Certificate of articles of limitedpartnership states the matter enumerated in articles, SIGNED and SWORN
Certificate file record in the office of Securities and Exchange Commisions
Article 1844
Purpose of filing is to give actual or constructivemotive to potential creditors or person dealing with partnerhip of LIMITED LIABILITY of LIMITED PARTNERS. (protection from 3rdperson)
To be prevent presumptions on general partnership
To obtain privilege of limited partnership liability, one must conform to the requirements of articles 1844
Failure to extend when it expired and register it again on SEC lead to presumptions that it is General partnership
Article 1845: Contribution of a limitedpartner may be cash or other property but not services
Limited partner are only allowed to contribute money or property and not services otherwise considered to be general or industrial partner lead to exception from personal liability
General while limited partner at the same partnerhip and at the same time as long as stated in certificate.
Article 1845
Law is not satisfied by limited partner contribution in promissory notes, checks, bond, contribution partly in cash, property and notes.
Exception: if the check contributed limited partner has actual money then give general partner absolute and final control of the amount.
Article 1845
Contribution of limited partner must be made before the formation of the partnership
Exception: Additional capital contribution after formation
Article 1846
Surname of limited partner shall not appear on firm name except:
Same surname to general partner
Prior to admissions business had been carried on under name which his surname appeared
Article 1846
Effect if surname of limited partner appears in partnerhip name:
He will be liable as a general partner to creditor who extend credit without knowledge that he is not a partner
Article 1847: False statement in certificate
Requisite:
He knew statement is false at the time he signed it or subsequent
have sufficient time but fail to cancel, amend or file petition to cancel or amend it.
Person seek to enforce liability relied on false statement in transaction
Person suffered loss due to reliance on it.
Article 1847 (false statement in certificate)
Nature of liability
It is merely statutorypenalty and does not make a limited partner to be generalpartner.
Article 1848
Limited partner become liable as a general partner for the firm obligations if he become involved in the management of firm business
Example: BOD is chosen by limited partner
Exception:
Bare grant to apprant control & he didn't participate
Purpose is to settle it's affairs after dissolution
He make suggestions or express opinion as to advisability of certain transaction
Article 1849: admissions of new limited partner Law required:
proper amendment to certificate must be SIGNED & SWORN by all partner include new limited partner
Filled in SEC
Article 1850: Right, Power and Liabilities of General Partner
Right to control/unlimitedPersonalliability
he is vested entire control of the firm business and has all right and powers, subject to liabilities and restrictions of partner in partnerhip without limited partners
He may bind the partnership by any act of administration.
Article 1850: Rights, powers and liabilities of generalpartner
Exception: He has no power to do specific acts on ff:
Do not act in contravention of the certificate
Do not act make it impossible to carryordinary business of partnership
Confession judgement against partnership
Posses partnership property or assigninterest other than partnerhip purpose
Admit person as a general partner
Admit person as a limited partner unless given right to do so
Continuebusiness with partnerhip property on the death, retirement, insanity, civil interdiction or insolvency of generalpartner.
Article 1851: Specific Right of Limited Partner
Require partnership books be kept at principal place of partnership
Inspect & copy at reasonable hour on partnership book
Demand true and full information of all things affecting partnerhip
Demand formal account of partnership affairs
Ask for dissolution and winding up by decree of court
Receive share of profits or other compensation
Receive return of his contribution.
Article 1852: Status of person erroneously believing himself to be limited partner.
Exemption from liability liability as a general partner
A person contributed a capital erroneously believing that he is a limitedpartner but into certificate he is generalpartner or notdesignated as a limited partner.
Requisites:
Promptly renounces his interest to general partner
Surname does not appear to partnerhipname
Does not participate partnership management
Article 1852
Necessity for renouncing interest if before partnership become liable to 3rd person who cannot be blame in believing he is a general partner
Exception: Without prejudice 3rd person renounciation of interest is not necessary
Article 1853: One person, both general partner and limited partner
All rights, powers restrictions of a general partner however he is liable with his seperate property to 3rd person
Limited partner as to the right in respect to his contribution as other partner concerned
Article 1854:
Limiter partner are not prohibited to
Grant loan to partnerhip
Transact other business with it
Receive pro rata share of partnerhip assets with general creditor if he is not general partner.
Article 1854: Limited Partner are prohibit to:
Receive or holding as collateral security any partnerhip property
Receive payment, conveyance or release from liability prejudice 3rd perso.
An agreement as to this must be stated to the in the certificate. In absence all limited partner stand upon equal footing
Return to the ff:
capital contribution
Compensation by way of income
Any other matter
Article 1856: Compensation of limited partner by way of income
Excess of partnerhip assets over partnerhip liabilities
Limited had right to receive share of profits or compensation by way of income stipulated for in certificate
In excess of partnerhip assets after partnerhip liabilities is settled.
3rd party creditor priority over limited partnership right.
Article 1856
Preferential right of partnerhip creditors
Limited partner up to contribution & arising from business transaction by them with partnerhip
General partner whether for contribution or not
Article 1857
Requisite for return of contribution of limited partner
All partnerhip Liabilities settled or asset of partnership are sufficient to pay liabilities
Consent of all member obtained except when it is rightfully demanded
Certificate is cancelled or amended as to withdrawal or reduction of contribution
Article 1857
Right to receive return of contribution of Limited partner
Upon dissolution
Upon arrival of agreedtime
After expiration of (6) sixmonths notice in writing given by him to other partner
Article 1857
General Rule: Limited partner entitled to receive return of contribution in a cash form only
Exception:
Stipulations contrary to certificate
All partner consent return other than in form of cash
Article 1857: Limited partner demand for dissolution
By judicialdecree
When his demand to return contribution is denied
When the liability is not yet settled or asset of partnership is insufficient to settle liabilities
By partner
Ask other partner first to have dissolution, In refusal seek through judicial decree
Article 1858: Liability of Limited Partner
Liability to partnerhip
Difference between actual contribution and stated in certificate
unpaid contribution agreed make in futuretime.
Article 1858: Liability as Trustee of Limited Partner
Specificproperty stated in certificate contributed by him but not
Specificproperty wrongfully returned to him
Money / Otherproperty wrongfully paid or conveyed to him as contribution
Article 1858: Requisite for waiver of compromise liability
Consent on all partner
Does not prejudice partnerhip creditor who extend credit or arose before cancellation or amendment of certificate
Article 1858: Liability for return contribution lawfully received
Limited partner liable to partnerhip for the return of contribution lawfully received by him to pay creditorsextendcredit or claim arose before such return
Article 1859
Effect of changing relation in Limited partner
Substitution of person as limited partner
Withdrawal, death, insolvency, civil interdiction of limited partner
Addition to new limited partner
Article 1859: Rights of assignee of limited partner
Entitled to receive share of profits or other compensation which assignor is entitled
May require allrights of limited partner if become substituted limited partner.