PHILIPPINE COLLEGE OF BUSINESS AND ACCOUNTANCY
LAW ON PARTNERSHIP AND CORPORATION
PARTNERSHIP LAW
Instructor: Noelen Monarca Carreon, CPA
1. Concepts of Partnership
 Two or more persons bind themselves together to contribute money, property or industry to a
common fund, with the intention of dividing profits among themselves.
 The practice of profession
2. Characteristic elements of partnership
 Consensual, Nominate, Bilateral, Onerous, Commutative, Principal, Preparatory
3. Essential features
3.1 There must be a valid contract
3.2 Legal capacity of the parties to enter into the contract
 Unemancipated minors, insane or demented persons, deaf-mutes who do not know how to write,
persons who are suffering from civil interdiction, incompetents who are under civil interdiction
3.3 Mutual contribution of money, property, or industry
3.4 Object must be lawful
3.5 Primary purpose: Obtain profits and divide the same among the parties
4. Effect of failure to comply with statutory requirements
5. Rules to determine existence of partnership
 In general, to establish the existence of partnership, all of its essential
characteristics must be shown as being present.
 In case of doubt, Article 1769 will prevail:
 Persons who are not partners as to each other are not partners as to third persons
 Co-ownership does not establish a partnership
 The sharing of profits is not a conclusive evidence of partnership
features or
6. Objects or purpose of partnership must be lawful
 Consequences of a partnership formed for an unlawful purpose:
 Contract is void ab initio
 Profits shall be confiscated in favor of the government
 The instruments or tools and proceeds of the crime shall also be forfeited in favor of the
government
 The contributions of the partners shall not be confiscated unless they fall to the statement
above.
7. Form of partnership contract
 It may be constituted in any form, except where immovable property or real rights are
contributed thereto. A public instrument is necessary.
8. Purpose of registration
 It is a condition for the issuance of license to engage business or trade. By this, tax liabilities
can’t be evaded and public can also determine more accurately their membership and capital
before dealing with them.
9. Partnership with contribution of immovable property
 Inventory of said contributed property is not made, signed by the parties and attached to
PUBLIC INSTRUMENT.
 If required document was not complied with, the contract is VOID.
10. Acquisition or Conveyance of property by partnership
 Immovable property may be acquired in partnership name
 Conveyance
 Prima facie ownership of real property
 Ownership and registration: a) partnership, b) one or more but not all partners, c) one or
more or all partners, or in a third person in trust for the partnership, d) all the partners
11. Secret partnership without juridical personality
12. Classification of partnership
 As to object: Universal or Particular
 As to liability: General or Limited
 As to duration: Partnership at will or Partnership with a fixed term
 As to legality of its existence: De Jure and De Facto
 As to representation to others: Ordinary/ Real or Ostensible/Partnership by estoppel
 As to publicity: Secret or Open/Notorious
 As to purpose: Commercial or Professional
13. Kinds of Partners
Under the Civil Code:
 Capitalist Partner
 General Partner
 Managing Partner
 Partner by estoppel
 Surviving Partner
Industrial Partner
Limited Partner
Liquidating Partner
Continuing Partner
Subpartner
Other Classifications:
 Ostensible Partner Secret Partner
 Dormant Partner Original Partner
Retiring Partner
Silent Partner
Incoming Partner
14. Universal partnership of all Present Property
 The following will become the common property of all the partners:
1. Property which belonged to each of them at the time of the constitution of the partnership
2. Profits which they may acquire from the property contributed
* Property subsequently acquired by (1) inheritance, (2) legacy, or
(3) Donation cannot be included by stipulation except the fruits thereof
* Profits from other sources not from the properties contributed will only become the property
of the common fund if there is a stipulation.
15. Universal partnership of Profits
 Ownership of present and future property retained to the partners.
 Only profits or income and the usufruct or use of the property will transfer to the partnership
16. Presumption in favor of Universal Partnership of Profits
 It imposes less obligations on the partners.
17. Limitations to form Universal Partnership
 The following donations will be void:
1. Those made between persons who were guilty of the same criminal of
the same criminal offense.
2. Those made between persons who were guilty of adultery or
concubinage at the time
of donation.
3. Those made to public officer or his wife, descendants and ascendants
by reason of his office.
18. Particular partnership
 Its object is a determinate thing, their use or fruits, or specific undertaking or exercise of
profession or vocation
19. Obligations of the partners among themselves
1. Relations among the partners themselves
2. Relations of the partners with the partnership
3. Relations of the partnership with third persons with whom it contracts
4. Relations of the partners with such third persons
20. Continuation of partnership with a fixed term
 No need for liquidation or settlement
 The rights and duties of partners are still the same
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
Partnership for a fixed term is extinguished and partnership at will is created.
21. Every partner is a debtor of the partnership for whatever he may have promised to contribute
thereto. It includes warranty for eviction and fruits thereof from the time they should have been
delivered without the need of any demand.
22. Effects of failure to contribute property promised.
 Liability as debtor to partnership
 Remedy of other partners
23. Appraisal of goods contributed
1. Stipulation prescribed in the contract of partnership.
2. In the absence of stipulation, by experts chosen by the partners and according to current prices.
3. After the goods have been contributed, the partnership bears the risk or gets the benefit of
subsequent changes in value.
24. Appraisal of immovable property contributed
1. The appraisal is made in the inventory of said property.
25. A partner who has undertaken to contribute the sum of money and fails to do so becomes a
debtor for:
1. Interest and Damages from the time he should have complied with his obligation.
2. Reimbursement of any amount he may have taken from the partnership coffers and converted to
his own use
26. Prohibition against engaging in business
 Industrial partner: Prohibition is absolute
 Capitalist partner: Prohibition extends only to any operation which the partnership is engaged
unless there is a stipulation.
27. An industrial partner cannot engage in business for himself, unless the partnership permits him
to do so. Consequences if he may do so:
 The capitalist partners may exclude him from the firm; or
 The capitalist partners may avail themselves of the benefits which he may have obtained
28. Partners to contribute equal shares to the capital of the partnership unless there is a stipulation
29. In case of imminent loss, any partner who refuses to contribute an additional share to the
capital to save the venture shall be obliged to sell his interest to the other person. Exception is given
to IDUSTRIAL PARTNER.
30. Obligation of managing partner who collects debt (wherein third party is indebted separately
to managing partner and the partnership):
 If received in the account of partnership - the whole sum shall be applied to the debt owing to
the partnership.
 If received in the account of the partner - shall be applied to the credits in proportion to their
amounts.
* Requisites for application of rule:
1. There exist at least two (2) debts
2. Both debts are demandable
3. The partner who collects is authorized to manage and actually manages the partnership
31. Obligation of partner for damages to partnership:

He is responsible to the partnership for damages suffered through his fault
 He cannot compensate the partnership with profits and benefits which he may have earned for
the partnership bu his industry.
 However, the courts may equitably lessen this responsibility if through the partners
extra-ordinary efforts in other activities of the partnership, unusual profits have been realized.
32. Risk of loss of things contributed
1. Specific and determinate things which are not fungible where only the use is contributed.
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2.
3.
4.
5.
Specific and determinate things the ownership of which is transferred to the partnership.
Fungible things even if they are contributed only for the use of the partnership.
Things contributed to be sold
Things brought and appraised in the inventory
33. Rules for distribution of profits and losses
1. Distribution of profits
a) According to stipulation
b) If there’s no agreement: 1st : Distribute just and equitable share to Industrial Partner; 2nd :
The share of each capitalist partner shall be in proportion to his capital contribution.
2. Distribution of losses
a) According to stipulation
b) In accordance to profit-sharing ratio; Industrial partner is exempted
c) In proportion to their capital contribution; Industrial partner is exempted
34. Designation of share in profits and losses to be vested to third persons
 Can be impugned within three (3) months from the time he had
knowledge of it.
35. A stipulation which excludes one or more partners from any share in the profits or losses is
VOID.
36. A stipulation which excludes an industrial partner from any share in the profits or losses is
VALID.
37. A stipulation providing unequal shares in profits or losses with equal contribution is VALID.
However, if the unequality is so GROSS, the stipulation is VOID.
38. MANAGING PARTNER
1. Appointed in the Articles of Incorporation
a) May execute all acts of administration despite the opposition of his other partners, unless he
acts in bad faith
b) The power is irrevocable without just or lawful cause
c) The vote of the partners with controlling interest shall be necessary for such revocation of
power.
2. Power granted after the partnership has been constituted
a) It may be revoked any time
39. Compensation for services rendered
 Generally, No partner is entitled to compensation for his services to the partnership without the
consent of all partners
 Share in the profits is partner’s compensation.
40. Powers of two or more managing partners whose respective duties are unspecified
 Each one may separately execute all acts of administration.
 Decision of the MAJORITY OF THE MANAGING PARTNERS shall prevail -- if one or more
of the managing partners oppose to the act of the other.
 Decision by the vote of the partners owning CONTROLLING INTEREST -- in case of tie in
reference to the second statement.
41. Powers of two or more managing partners in case there’s a stipulation that NONE of the
managing partners shall act WITHOUT the consent of the others
 The concurrence of all shall be necessary for the validity of the acts.
42. Rules when manner of management has not agreed upon.
1. All partners are considered managers
2. Unanimous consent required for any important alteration in immovable property of partnership
43. Contract of sub-partnership
 The partnership formed between a partner and a third person for division of the profits coming
to him from the partnership enterprise
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

It can be done WITHOUT the consent of other partners
No admission of Subpartner/associate
44. Duty to keep partnership books
 The duty to keep true ans correct books showing the firm’s accounts, such books being at all
times open to inspection of all members of the firm, primarily rests on the managing or active
partner or the particular partner given record-keeping duties.
 A partner is a co-owner of the partnership properties which include the Books of Partnership
45. Duty to render information
 Partners shall render on demand true and full information of all things affecting the partnership
to any partner or legal representative of any deceased partner or of any partner under legal
disability.
46. Every partner must account to the partnership for any benefit, and hold as trustees for it any
profits derived by him without the consent of the other partners from any transactions connected
with the formation, conduct, or liquidation of the partnership or from any use by him of its
property.
47. Property rights of a partner
1. His rights in specific partnership property
2. His interest in the partnership
3. His right to participate in the management
48. Nature of partner’s right in specific partnership property
1. Equal right of possession of the property for partnership purposes
2. A certain partner cannot assign his right to the specific partnership property but all partners can
assign the right in the same property.
3. Specific partnership property cannot be subject to attachment or execution
Except on claims against the partnership.
49. Nature off partner’s interest in the partnership
1. Share of the profits and surplus
2. On the dissolution, the value of his share usually cannot be accurately dete
-rmined until liquidation of the business has taken place and the partnership accounts have been
settled.
50. Remedies of separate judgement creditor of a partner
 The separate creditor of a partner cannot attach or levy upon specific partnership property for
the satisfaction of his credit.
 He can secure a judgement on his credit and then apply to the court for a charging order
subjecting the interest of the debtor-partner in the partnership with the payment of the
unsatisfied amount of such judgement with interest thereon.
51. Obligations of the partners with regard to third persons
52. A partnership must have a firm name under which it will operate.
 The firm name may be that of an individual partner, the surnames of all partners, or the surname
of one or the surnames of more of the members, with the the addition of “and Company”. Or, it
may consist of individual names wholly distinct from the names of any of the members.
53. All partners, including industrial ones, shall be liable pro-rata
54. Stipulation against liability
 VALID and ENFORCEABLE as among partners only
 VOID as to third persons
55. Liability of partnership for acts of partners
1. Acts for apparently carrying on in the usual way the business of the partnership.
a) The partner so acting has, in fact, no authority
b) The third person doesn’t know that the acting partner has no authority
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2. Acts of strict dominion or ownership
 The partnership is not liable
3. Acts in contravention of a restriction on authority
 The partnership is not liable to third persons having actual or presumptive knowledge of the
restrictions (whether or not the acts are for carrying in the usual course of business of the
partnership).
56. An admission or representation made by any partner concerning partnership affairs within the
scope of his authority is evidence to the partnership.
57. Notice to or knowledge of any partner relating to the partnership affairs operates as a notice to
or knowledge of the partnership except in case of fraud.
58. Three cases of knowledge of a partner
 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 mind
 Knowledge of any other partner who reasonably could and should have communicated it to the
acting partner
59. Liability arising from partner’s wrongful act or omission, or breach of trust
 Solidary liability
1. Where one partner acting within the scope of his apparent authority receives money or property of
a third person and misapplies it.
2. Where the partnership in the course of its business receives money or property of a third person
and the money or property of a third person and the money or property so received is misapplied by
any partner while it is in the custody of the partnership.
3. Where, by any wrongful act or omission of any partner acting in the ordinary course of business
of the partnership or with the authority of his co-partners, loss or injury is caused to any person, not
being a partner in the partnership, or any penalty is incurred.
60. Partner by estoppel, Partnership by estoppel
61. A person admitted as partner into an existing partnership is liable for all the obligations of the
partnership arising before his admission, except that this liability shall be satisfied only out of
partnership property, unless there is a stipulation to the contrary
62. Preference of partnership creditors in partnership property
 With respect to the partnership assets, the partnership creditors are entitled to priority of
payment.
63. PARTNERSHIP’S DISSOLUTION AND WINDING UP
64. Causes of dissolution
1. Without violation of the agreement of the partners
a) By the termination of the definite term or particular undertaking specified in the agreement.
b) By the express will:
i. Of any partner who must act in good faith, when no definite term or particular
undertaking is specified.
ii. Of all partners who have not assigned their interests or suffered them to be charged for
their separate debts, either before or after the termination of any specified term or
undertaking.
iii. By the expulsion of any partner from the business bona fide in accordance with such a
power conferred by the agreement between the partners.
2. In contravention of the agreement between the partners, by the express will of any partner
at any time.
3. When any event makes it unlawful for the business of the partnership to be carries on or for
the members to carry it on in the partnership.
4. In the following cases of loss:
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a)
b)
Loss before or after the delivery: Partner contributed only its use or enjoyment (usufruct
only)
Loss before delivery of specific things: Partner had promised to contribute to the
partnership.
5. By the death of any of the partner
6. By the insolvency of any partner or of the partnership.
7. By the civil interdiction of any partner.
8. By decree of court in the following cases:
a) On the application by or for a partner to dissolve the partnership whenever:
i. A partner has been declared insane in any judicial proceeding or is shown to be of
unsound mind.
ii. A partner becomes in any way incapable of performing his part of the partnership
contract.
iii. A partner has been guilty of such conduct as tend to affects prejudicially the carrying
on of the business
iv. A partner willfully or persistently commits a breach of the partnership agreement , or
otherwise so conducts himself in matters relating to the partnership business that it is
not reasonably practicable to carry on the business in partnership with him.
v. The business of the partnership can only be carried at a loss.
vi. Other circumstances render a dissolution equitable.
b) On the application of the purchaser of a partner’s interest
i. After the termination of the specific term or particular undertaking
ii. At any time when the partnership was a partnership at will when the interest was
assigned or the charging order was issued.
65. Effect of dissolution on authority of the partner
Dissolution terminates all authority of any partner to act for the partnership, except with respect to the
following:
1. Acts to wind up partnership affairs
2. Acts to complete transactions begun before dissolution.
66. WHEN AUTHORITY OF A PARTNER TO ENTER INTO NEW TRANSACTIONS IS
TERMINATED AMONG THE PARTNERS
1. If the cause of dissolution is not by the act, insolvency, or death of a partner, eg. Expiration of the
term for which the partnership was constituted or by decree of the court. (Notice or knowledge of the
acting partner of the cause of the dissolution.
2. If the cause of dissolution is the act of a partner and the partner who entered into the new
transaction had knowledge of the dissolution.
3. If the cause of dissolution is the insolvency or death of a partner and the partner who entered into
the new transaction had notice or knowledge of such insolvency or death.
67. WHEN AUTHORITY OF A PARTNER TO ENTER INTO NEW TRANSACTION IS NOT
TERMINATED AMONG THE PARTNERS
1. If the cause of dissolution is the act of a partner and the acting partner had no knowledge of the
dissolution.
2. If the cause of dissolution is the insolvency or death of a partner and the acting partner had no
notice or knowledge of such insolvency or death.
68. WHEN THE ACT OF A PARTNER AFTER DISSOLUTION BINDS THE PARTNERSHIP
1. When the act is necessary for winding up of partnership affairs.
2. When the act is necessary to complete transaction begun before
dissolution.
3. In case of a new transaction or business in the following cases:
a) If the other party to the transaction had extended credit to the partnership before dissolution.
b) If the other party to the transaction had not so extended credit before dissolution but had
nevertheless known of the partnership before dissolution, and the fact of dissolution had not
been advertised in a newspaper of general circulation in the place at which the business is
regularly carried on.
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4. When although the partner has no authority to wind up partnership affairs, the other party to
the transaction is”
a) One who had extended credit to the partnership before dissolution (previous creditor) and he had
no notice or knowledge of partner’s lack of authority.
b) One who had not so extended credit before dissolution (new creditor) and having no notice or
knowledge of the partner’s lack of authority, the fact of want of authority has not been
advertised in a newspaper of general circulation in the place at which the business is conducted
69. WHEN THE ACT OF A PARTNER AFTER DISSOLUTION DOES NOT BIND THE
PARTNERSHIP
1. Where the partnership is dissolved because it is unlawful to carry on the business, unless the act is
appropriate for winding up partnership affairs.
2. Where the acting partner is insolvent.
3. Where the partner had no authority to wind up partnership affairs, except with innocent third
persons.
4. Where a partner’s authority is already terminated among the partners and the third person had
actual or constructive knowledge, as the case may be, of the dissolution of the firm.
70. RULES ON EXISTING LIABILITY OF PARTNER UPON DISSOLUTION
1. The dissolution does not of itself discharge the partner’s liability.
2. A partner is discharged from any existing liability upon dissolution by the agreement of the following:
a) The partner himself
b) The partnership creditor
c) The person continuing the business
3. The individual property of a deceased partner shall be liable for obligations of the partnership while he
was a partner, but subject to the prior payment of his separate debts.
71. WHO MAY WIND UP PARTNERSHIP AFFAIRS?
1. Extra-judicially
a) By the partner or partners designated by the agreement.
b) If none was designated:
i. By the partner or partners who have not wrongfully dissolved the partnership
ii. If all the partners are dead, the legal representative of the last surviving partner who was
not insolvent.
2. Judicially
a) Under the direction and control of the court, upon proper cause shown by any partner, his legal
representative or assignee.
b) The appointee of the court should be a surviving partner, not the legal representative of the
deceased partner who was not insolvent except when he was the last surviving partner.
72. APPLICATION OF PARTNERSHIP PROPERTY AND OTHER RIGHTS OF PARTNERS
ON DISSOLUTION
1. Dissolution without contravention of the partnership agreement
Each partner shall have the following rights:
a. To have the partnership property applied to discharge the liabilities of the partnership.
b. To have the surplus, if any, applied to pay in cash the net amount owing the respective partners.
2. Dissolution in the contravention of the partnership agreement
a) Rights of partner who has not caused dissolution wrongfully
i. To have the partnership property applied to discharge the liabilities of the partnership.
ii. To have the surplus, if any, applied to pay in cash the net amount owing to the respective
partners.
iii. To be indemnified for damages from the partner who has caused the wrongful dissolution
of the partnership.
iv. To continue the business of the partnership in the same name, either by themselves or
jointly with others, and for that purpose possess partnership property provided that:
1. They pay the partner who has caused the wrongful dissolution of the partnership the
value of his interest in the partnership less damages.
2. They secure its payment by a bond approved by the court.
b) Rights of partner who has caused the dissolution wrongfully
i. If the business is not continued
1. To have the partnership property applied to discharge the liabilities of the partnership.
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2.
ii.
Too receive the share in the surplus, less damages suffered by the other partners by
reason of his having caused the wrongful dissolution of the partnership.
If the business is continued
1. To have the value of his interest in the partnership less damages paid to him in cash or
have its payment secured bu a bond approved by the court. In ascertaining the value of
such partner’s interest, the value of the goodwill shall not be included.
2. To be released from all existing liabilities of the partnership.
73. RECISSION OF PARTNERSHIP CONTRACT
1. Grounds for rescission
a) Fraud
b) Misrepresentation to enter into the partnership contract
2. Rights of partners who was induced by fraud or misrepresentation
a) Right of lien on, or retention of, the surplus of the partnership property, after the satisfaction of
partnership liabilities for any sum of money paid by him to the partnership by way of capital or
advances.
b) Right of subrogation in place of the partnership creditors for any payment made by him for
partnership liabilities.
c) Right of indemnification from the person guilty of fraud or misrepresentation against all debts of
the partnership.
74. LIQUIDATION OF DISSOLVED PARTNERSHIP
75. Liquidation or winding
This involves the sale of the assets of the partnership, the payment of its liabilities, and the
distribution of the remaining cash or other property to the partners.
76. Order of payment of partnership liabilities
1. Creditors other than partners
2. Partners other than for capital and profits
3. Partners in respect of capital
4. Partners in respect of profits
77. Assets of the partnership
1. Partnership property
2. The contributions of the partners necessary for the payment of such liabilities.
i. The contributions shall be in accordance with the rules on the division of profits and losses.
ii. The individual property of a deceased partner shall be liable for such contributions.
3. The following may enforce payment of the contributions
iii. An assignee for the benefit of the creditors.
iv. Any person appointed by the court.
v. Any partner or his legal representative to the extent of the amount which he paid in excess
of his share of the liability.
78. Priority in the payment of liabilities if the partnership property and the individual property of
the partners are in possession of the court for distribution
Subject to the rights of lien or secured creditors, the priority in payment of the liabilities shall be as
follows:
a. Partnership creditors for partnership property
b. Separate creditors for individual property
79. Priority claims against separate property of a debtor who is insolvent whose insolvent or
whose estate is insolvent
b) Those owing to the separate creditors
c) Those owing to partnership creditors
d) Those owing to partners by way of contribution
80. When liabilities of dissolved partnership are also liabilities of the person or partnership
continuing the business
1. When a new partner is admitted into an existing partnership.
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2. When a partner retires and assigns his rights in partnership property to two or more partners, or to one
or more of the partners and one or more third persons.
3. When all but one partner retire and assign their rights in partnership property to the remaining partner,
who continues the business without liquidation of partnership affairs, either alone or with others.
4. When any partner retires or dies and the business of the dissolved partnership is continued, with the
consent of the retired partner or the representative of the deceased partner, but without any assignment of
his right in specific partnership property.
5. When all the partners or their representative assign their rights in partnership property to one or more
third persons who promise to pay the debts and who continue the dissolved partnership.
6. When any partner wrongfully causes the dissolution of the partnership and the remaining partners
continue the business without liquidation of partnership affairs.
7. When a partner is expelled and the remaining partners continue the business either alone or with others
without liquidation of the partnership affairs.
81. Rights of partner who retires or the legal representative of a deceased partner if a business is
continued without the settlement of accounts
1. To have the value of the interest of the retiring or deceased partner ascertained of the date of
dissolution.
2. To receive as ordinary creditor an amount equal to value of his interest in the dissolved partnership
with interest, or at his option, in lieu of the of the interest on such value, the profits attributable to the use
of his right in the property of the dissolved partnership.
82. Rights to Accounting
Any partner or the legal representative of a deceased partner has a right to an accounting of his interest
against the following:
1. Winding up partners
2. The surviving partners
3. The person or partnership continuing the business
83. 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.
84. 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.
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(2) File for record the certificate in the Office of the Securities and Exchange Commission.
85. The contributions of a limited partner may be cash or property, but not services.
86. The surname of a limited partner shall not appear in the partnership name unless:
(1) It is also the surname of a general partner, or
(2) Prior to the time when the limited partner became such, the business has been carried on under a name
in which his surname appeared.
87. A limited partner shall not become liable as a general partner unless, in addition to the exercise
of his rights and powers as a limited partner, he takes part in the control of the business.
88. After the formation of a lifted partnership, additional limited partners may be admitted upon
filing an amendment to the original certificate.
A general partner shall have all the rights and powers and be subject to all the restrictions and
liabilities of a partner in a partnership without limited partners.
89. A limited partner shall have the same rights as a general partner to:
(1) Have the partnership books kept at the principal place of business of the partnership, and at a
reasonable hour to inspect and copy any of them;
(2) Have on demand true and full information of all things affecting the partnership, and a formal account
of partnership affairs whenever circumstances render it just and reasonable; and
(3) Have dissolution and winding up by decree of court.
90. A person may be a general partner and a limited partner in the same partnership at the same
time, provided that this fact shall be stated in the certificate.
A person who is a general, and also at the same time a limited partner, shall have all the rights and powers
and be subject to all the restrictions of a general partner; except that, in respect to his contribution, he
shall have the rights against the other members which he would have had if he were not also a general
partner.
91. A limited partner also may loan money to and transact other business with the partnership,
and, unless he is also a general partner, receive on account of resulting claims against the
partnership, with general creditors, a pro rata share of the assets. No limited partner shall in
respect to any such claim:
(1) Receive or hold as collateral security and partnership property, or
(2) Receive from a general partner or the partnership any payment, conveyance, or release from liability if
at the time the assets of the partnership are not sufficient to discharge partnership liabilities to persons not
claiming as general or limited partners.
92. Where there are several limited partners the members may agree that one or more of the
limited partners shall have a priority over other limited partners as to the return of their
contributions, as to their compensation by way of income, or as to any other matter. If such an
agreement is made it shall be stated in the certificate, and in the absence of such a statement all the
limited partners shall stand upon equal footing.
93. A limited partner may receive from the partnership the share of the profits or the compensation
by way of income stipulated for in the certificate; provided that after such payment is made,
whether from property of the partnership or that of a general partner, the partnership assets are in
excess of all liabilities of the partnership except liabilities to limited partners on account of their
contributions and to general partners.
94. A limited partner may have the partnership dissolved and its affairs wound up when:
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(1) He rightfully but unsuccessfully demands the return of his contribution, or
(2) The other liabilities of the partnership have not been paid, or the partnership property is insufficient
for their payment as required by the first paragraph, No. 1, and the limited partner would otherwise be
entitled to the return of his contribution.
95. A limited partner is liable to the partnership:
(1) For the difference between his contribution as actually made and that stated in the certificate as having
been made; and
(2) For any unpaid contribution which he agreed in the certificate 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) Specific property stated in the certificate as contributed by him, but which was not contributed or
which has been wrongfully returned, and
(2) Money or other property wrongfully paid or conveyed to him on account of his contribution.
96. A limited partner’s interest is assignable.
97. 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.
98. The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner.
99. In setting accounts after dissolution the liabilities of the partnership shall be entitled to payment
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;
(6) Those to general partners in respect to capital.
100. 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 under Article 1860;
(6) There is a change in the character of the business of the partnership;
(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 a 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.
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