After reading “What is a Limited Partnership?”, read also “What is the Double Indemnity Doctrine?”
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A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one or more limited partners.
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The limited partners as such shall not be bound by the obligations of the partnership.
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A limited partnership is not formed if there is no substantial compliance with the requirements under the law.
To have a better grasp on what a limited partnership is, it is imperative to provide for a definition of partnership in general. Partnership is a contract whereby two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. (Art. 1767, New Civil Code of the Philippines.)
The law says:
What is a limited partnership?
Article 1843 of the New Civil Code provides that:
“Article 1843. A limited partnership is one formed by two or more persons under the provisions of the following article, having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership.”
How are limited partnerships formed?
Article 1844 of the New Civil Code provides for a procedure regarding the formation of a limited partnership. To wit:
“Article 1844. Two or more persons desiring to form a limited partnership shall:
(1) Sign and swear to a certificate, which shall state –
(a) The name of the partnership, adding thereto the word “Limited”;
(b) The character of the business;
(c) The location of the principal place of business;
(d) The name and place of residence of each member, general and limited partners being respectively designated;
(e) The term for which the partnership is to exist;
( f ) The amount of cash and a description of and the agreed value of the other property contributed by each limited partner;
(g) The additional contributions, if any, to be made by each limited partner and the times at which or events on the happening of which they shall be made;
(h) The time, if agreed upon, when the contribution of each limited partner is to be returned;
(i) The share of the profits or the other compensation by way of income which each limited partner shall receive by reason of his contribution;
(j) The right, if given, of a limited partner to substitute an assignee as contributor in his place, and the terms and conditions of the substitution;
(k) The right, if given, of the partners to admit additional limited partners;
(l) The right, if given, of one or more of the limited partners to priority over other limited partners, as to contributions or as to compensation by way of income, and the nature of such priority;
(m) The right, if given, of the remaining general partner or partners to continue the business on the death, retirement, civil interdiction, insanity or insolvency of a general partner; and
(n) The right, if given, of a limited partner to demand and receive property other than cash in return for his contribution.
(2) File for record the certificate in the Office of the Securities and Exchange Commission.
A limited partnership is formed if there has been substantial compliance in good faith with the foregoing requirements.”
Jurisprudence says:
The surname of a limited partner shall not appear in the partnership name (Article 1846, New Civil Code), unless it is also the surname of a general partner, or prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared.
In the case of Commissioner of Internal Revenue v. Juan Isasi (G.R. No. L-9186, 29 April 1957), the Supreme Court held that to establish a limited partnership there must be at least one general partner and the name of at least one of the general partners must appear in the firm name.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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