ATP2022-7057-Project Reviewer- Group 1

UNIVERSITYOFSANJOSE-RECOLETOSSCHOOLOFLAW

LIMITEDPARTNERSHIP
PROJECTREVIEWER
ART.1843-1867
SUBMITTEDTO:
ATTY.CHRISTIANFERNANDEZ
GROUP1
ALEJANDRE,APRILMAE
ALENTON,JOECARLO
ALFAJARDO,SHYRAMAE
ALFEREZ,CRISLLOYD
ALONZO,JOSEMARIAEMMANUEL
BALITE,ADONAIJIREHDIONNE

BESABELLA,MARYROSEANNEATP7057
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 BESABELLA,MARYROSEANNEATP7057
TABLE OF CONTENTS

Article 1843 - Limited Partnership Defined 2

Article 1844 - Requisites in the Formation of Limited Partnership 3
Article 1845 - What the Limited Partner Can Contribute 4
Article 1846 - Non- Inclusion of Name of the Limited Partner 4
Article 1847 - Liability for a False Statement in the Certificate of Limited Partnership 4
Article 1848 - Effect of Limited Partner’s Taking Part in the Control of
the Business 5
Article 1849 - Admission of Additional Limited Partners 6
Article 1850 - Rights of a General Partners 6
Article 1851 - Rights of a Limited Partner 6
Article 1852 - Contributor Who Erroneously Believes He Has Become
a Limited Partner 7
Article 1853 - General – Limited Partner 7
Article 1854 - Right of a Limited Partner to Lend Money
and Transact Other Business with the Firm 8
Article 1855 - Preference to Some Limited Partners as to the
Return of Their Contribution 9
Article 1856 - Profit or Compensation of Limited Partners 9
Article 1857 - Return of Contributions 10
Article 1858 - Liabilities of a Limited Partner 11
Article 1859 - Assignment of Partnership’s Interest 12
Article 1860 - Dissolution of the Limited Partnership 12
Article 1861 - Effect of the Death of a Limited partner 13
Article 1862 - Indebted Limited Partner 13
Article 1863 - Order of Payment on Dissolution. 14
Article 1864 - Cancellation of Certificates When the Partnership is Dissolved 14
Article 1865 - The Writing to Amend a Certificate 15
Article 1866 - Limited Partner As Mere Contributor 16
Article 1867 - Limited Partnership Formed Under the Law Prior

to the Effectivity of New Civil Code 16

Article 1843 - Limited Partnership Defined

Q1: Give at least three distinctions between general partnership and limited partnership.
ANSWER:
The following distinctions are as follows:
1. A general partner is personally liable for partnership obligations, while a limited partner’s liability

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 1. A general partner is personally liable for partnership obligations, while a limited partner’s liability
extends only to his capital contribution
2. A general partner may contribute money, property, or industry to the partnership while a limited
partner can only contribute cash or property to the partnership but not services.
3. A general partner is prohibited from engaging in a business which is of the same kind of business
in which the partnership is engaged, if he is a capitalist partner, or in any business for himself if he is
an industrial partner, while there is no such prohibition in the case of a limited partner who is
considered as a mere contributor to the partnership. (Art. 1843, NCC)
Q2: Xtian and Liam opened a structured cabling company XYZ. They were hired by company A to set
up a 200 seat call center office in Iloilo City. They need a big amount of funds for this certain project.
They asked Duchene to fund this project and he accepted the offer. A certificate was issued
complying with the requirements required by law. As there were so many issues with the
construction, the funds invested by Duchene was not enough, so Xtian and Liam acquired a loan
from 456 Lending. Now for failure to pay out the loan, 456 Lending filed a small claims case against
the partners Xtian, Liam and Duchene. Duchene argues that he cannot be personally liable for the
debt of the partnership. Is his contention correct?
ANSWER:
Duchene cannot be personally liable beyond his capital contribution.
Under Art.1843, it states that limited partners shall not be bound by the obligations of the partnership.
In the case at bar, Duchene as a limited partner contribute to the capital but did not participate in the
management of the business. Thus, he cannot be personally liable for the partnership obligations
beyond the amount of his capital contributions.
Q3: Cecile and Marie agreed to invest in a nail salon business in Cebu City. They agreed to a 50-50
sharing on the needed capital. After a year into the business, they decided to expand to Dumaguete
City. However their funds were not enough to cover the necessary capital, so they ask Jenny if she is
interested to invest. Jenny accepted their offer and invested P500,000. Seeing that the business was
booming in Dumaguete City, Jenny decided to withdraw from the business and ask for the return of
the money she invested. What kind of partnership did Cecile, Marie and Jenny form when they
opened the Dumaguete Branch? Explain

ANSWER:
It is a limited partnership. Under Art. 1843 states that a limited partnership is one formed by two or more
persons, having as members one or more general partners and one or more limited partners.
In the case at bar, Cecile and Marie are general partners who control the business while Jenny as a limited
partner contribute to the capital and share in the profits but do not participate in the management of the
business

Article 1844 - Requisites in the Formation of Limited Partnership

Q4: In the above situation, Can Jenny ask for the return of the money she invested?
ANSWER:
Yes Jenny can ask for the return of her capital contribution. Limited partners may ask for the return of their
capital contributions under the conditions prescribed by law. (Art. 1844, NCC)
Q5: Xtian and Liam opened a structured cabling company XYZ. They were hired by company A to set
up a 200 seat call center office in Iloilo City. They need a big amount of funds for this certain project.
They asked Duchene to fund this project and he accepted the offer. A certificate was issued
complying with the requirements required by law. As there were so many issues with the
construction, the funds invested by Duchene was not enough, so Xtian and Liam acquired a loan
from 456 Lending. Now for failure to pay out the loan, 456 Lending filed a small claims case against
the partners Xtian, Liam and Duchene. They failed to file the certificate for record in the SEC. Will
Duchene still be liable to 456 Lending?
ANSWER:
Yes Duchene will be liable like a general partner.
Under Article 1844, the prime requisite to the formation of a limited partnership is the execution of the
prescribed certificate and the filing of the certificate under SEC for the purpose of giving notice to
potential creditors to inform them of the limited liability of a limited partner. However, strict compliance with
the legal requirements is not necessary. It is sufficient that there is substantial compliance in good faith. If
there is no substantial compliance, the partnership becomes a general partnership as far as third
persons are concerned.
In the case at bar, since the partnership failed to file the certificate for record in the SEC, Duchene as a
limited partner will be liable as a general partner.

Q6: Can a limited partnership be constituted orally?

ANSWER:
No, a limited partnership cannot be constituted orally.
There are two essential requirements for the formation of a limited partnership:

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 There are two essential requirements for the formation of a limited partnership:
(1) The certificate or articles of the limited partnership which states the matters enumerated in the
article, must be signed and sworn to; and
(2) Such certificate must be filed for record in the Office of the Securities and Exchange Commission. (
Art. 1844, NCC)

Article 1845 - What the Limited Partner Can Contribute

Q7: Sassy, as a general partner, contributed money to the business, Mercy, as a limited partner,
contributed her property to be used as the location of the business, Remy, as a limited partner
offered that she will manage the business. Can Remy be considered a limited partner?
ANSWER:
No. Remy cannot be considered as a limited partner.
Under Art. 1845 a limited partner can only contribute cash or property, not services.
Since Remy is not a capital contributor, she can only be an industrial partner.
Q8: Can a partner be a general partner and a limited partner in the same partnership at the same
time?
ANSWER:
Yes, provided that the facts must be stated in the certificate required under Article 1844. But a limited partner
cannot be an industrial partner without being a general partner in view of Article 1845 which requires
that a limited partner must be a capital contributor.

Article 1846 - Non- Inclusion of Name of the Limited Partner

Q9: What can a limited partner contribute?

ANSWER:
The contributions of a limited partner may be cash or other property, but not services (Therefore, an
industrial partner cannot be a limited partner) (Art. 1846, NCC)
Q10: An industrial partner cannot be a limited partner. But can an industrial partner be a
general partner?
ANSWER:
Yes. Article 1846 speaks only of a limited partner.

Article 1847 - Liability for a False Statement in the Certificate of Limited Partnership

Q11: When does any partner to the certificate containing a false statement is liable?
ANSWER:
The Article 1847 of New Civil Code provides that any partner to the certificate containing a false statement
is liable provided the following requisites are present:
(1) At the time he signed the certificate, or
(2) Subsequently, but within a sufficient time before the statement was relied upon to
enable him to cancel or amend the certificate, or to file a petition for its cancellation or
amendment as provided in article 1865.

Q12: Can a limited partner raise the defense that he is merely a limited partner to escape personal
liability to innocent third persons in case the other general partners are insolvent.
ANSWER:
No, a limited partner appeared as a general partner in the certificate. If Article 1847 is applicable, he
cannot raise the defense that he is merely a limited partner to escape personal liability.
Guilty partner shall be liable as a general partner. The liability is merely a statutory penalty and does not
make the limited partner a general partner for all purposes even as to third persons.

Article 1848 - Effect of Limited Partner’s Taking Part in the Control of the Business

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 Article 1848 - Effect of Limited Partner’s Taking Part in the Control of the Business

Q13: When does the limited partner become liable as a general partner?
ANSWER:
The limited partner becomes liable as a general partnerIf he takes part in the control of the business. (Art.
1848, NCC)

Q14: Enumerate acts which do not constitute taking part in the course of business.
ANSWER:
The acts which do not constitute taking part in the course of business are as follows:
1. Mere dealing with customer
2. Mere consultation on one occasion with the general partners ( Art. 1848, NCC)
Q15: Enumerate acts which do constitute taking part in the course of business.
ANSWER:
The acts which do constitute taking part in the course of business are as follows:
1. Selection of who will be the managing partners
2. Supervision over a superintendent of the business of the firm

Q16: Does a limited partner have control in business?

ANSWER:
No, a limited partner is excluded from any active voice in the control of the affairs of the firm. (1848,
NCC)

Q17: Can limited partners perform acts of administration?

ANSWER:
Limited partners may not perform any act of administration with respect to the interests of the partnership,
not even in the capacity of agents of the managing partners. (Art. 1848, NCC)

Article 1849 - Admission of Additional Limited Partners

Q18: Say additional limited partners are taken in without proper amendment of certificate with
the SEC, will the failure to properly amend the certificate result in the dissolution of the limited
partnership?
ANSWER:
No. Failure to properly amend the certificate with the SEC does not result in the dissolution of the
limited partnership. (Art. 1849, NCC)

Article 1850 - Rights of a General Partners

Q19: What are the acts of ownership which require consent or ratification by all of the limited
partners?
ANSWER:
Under Article 1850 of the New Civil Code, the following are the acts of ownership which requires consent
and ratification by all of the limited partners:
(1) Act of disregarding the agreement of the partners written in the certificate
(2) Act which makes the business not function
(3) Act unfavorable to the partnership
(4) Using and giving the rights to use partnership property outside the partnership’s
course of business
(5) Act of adding a new general partner
(6) Act of adding a new limited partner, unless there is an agreement
(7) Continue the partnership even there are events which results to dissolution of the
Partnership
Q20: True or False. The general partner in a limited partners can do only acts of administration and
not acts of ownership
ANSWER:
True (Article 1850, NCC)
Q21: If a general partner in a limited partnership goes abroad, his capacity to bind the firm is
governed by what law?
ANSWER:
If a general partner in a limited partnership goes abroad his capacity to bind the firm is governed by the

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 If a general partner in a limited partnership goes abroad his capacity to bind the firm is governed by the
law of the place where the limited partnership was formed. (Art. 1850, NCC)

Article 1851 - Rights of a Limited Partner

Q22: What are the rights common to the general and limited partners?

ANSWER:
According to Ar. 1851 of the New Civil Code, the rights common to the general and limited partners are as
follows:
1) Have access to the partnership books at any reasonable hours located and kept at their principal place
(2) Have the rights to seek and know everything that affects the partnership, and may demand formal
account of partnership affairs given that the circumstances are just and reasonable
(3) Have, by decree of court, the right to dissolve and wind up the partnership
(4) Have the right to receive a share of profits or other compensation by way of income
(5) Have the right to receive return of his contribution in excess of assets to liabilities

Article 1852 - Contributor Who Erroneously Believes He Has Become a Limited Partner

Q23: Is a contributor who erroneously believes that he has become a limited partner in a limited
partnership be held liable as a general partner?
ANSWER:
No, a contributor who erroneously believe that he has become a limited partner in a limited partnership
cannot be held liable as a general partner given and provided that; on discovering the mistake, he accept to
not receive his interest in the profits of the business or other compensation by way of income and he does
not, in any way, take part in the control of the business. (Article 1852, NCC)

Article 1853 - General – Limited Partner

Q24: Deanna, Jema, and Kim formed a partnership. Here, Jema expressed to Deanna and Kim that
she wanted to become a general and a limited partner at the same time. However, when their
partnership was registered and eventually was issued with a Certificate of Registration by the
Securities and Exchange Commission, it was not mentioned in the certificate of partnership that
Jema would act as a general and a limited partner. Can Jema still be validly a general and a limited
partner?
ANSWER:
No, Article 1853 of the Civil Code states that If upon forming the partnership, a person made himself clear to
become a general and a limited partner at the same time, he may then do so as long as it is mentioned in
the certificate of partnership. In this case, when the Certificate of Partnership was issued, the designation of
Jema to become a general and a limited partner was not expressly stated in the certificate of partnership.
Since, Jema was not validly designated as a general and a limited partner, she cannot validly be called as
such.
Q25: True or False. A partner can be designated as general and limited partner at the same time for
as long as it is mentioned in the certificate of partnership.
ANSWER:
True. (Art. 1853, NCC)
Q26: True or False. If a partner acts as both general and limited partner, his rights and liabilities are
those of a limited partner.
ANSWER:
False (Article 1853, NCC provides that his rights and liabilities are those of a general partner)
Q27: True or False. The contribution of the partner who is designated as both a general and a limited
partner is those of a limited partner in so far as the other partners are concerned.
ANSWER:
True (Art. 1853, NCC)

Article 1854 - Right of a Limited Partner to Lend Money and Transact Other Business with the
Firm

Q28: Kyu, Ka and Pa form a partnership named KyuKa partnership wherein Pa is a limited partner,
while both Kyu and Ka as general partners. The partnership kickstarted as one of most valuable
partnerships due to the investment of Pa. After its long reign in the business world and due to the
partnership having its biggest loss due to the Asian Financial Crisis, their assets are not enough to
pay all their creditors. Kyu, as gratitude to Pa, returned the money invested by Pa and released him
from liability. Ka contended that, as partners, they should all overcome the liabilities. Is Ka correct?
ANSWER:
Yes, Ka is Correct.

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 Yes, Ka is Correct.
Paragraph 2 of Article 1854 provides that no limited partner shall 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.
In this case, he cannot claim or receive from any general partners any payment which would release him
from liabilities as the partnership’s assets are not sufficient to pay its creditors. The law presumes that there
is fraud between the transaction of Kyu and Pa.
Therefore, Ka is correct.
Q29: Pa, Sar and Ta formed a partnership called PaSar partnership, both Pa and Sar are general
partners while Ta is a limited partner. The partnership has limited connections and there are no
banks that can guarantee them loans, meanwhile their counsel, the partners asked if, Ta as the
wealthiest among them, can loan money to the partnership knowing he is a partner. Can Ta validly
give loan to the partnership?
ANSWER:
Yes, Ta can validly enter into a loan agreement with the partnership.
Article 1854 of the New Civil Code provides that 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.
In this case, Ta as a limited partner who is not also a general partner, may validly enter a loan agreement
with the partnership. As a limited partner, their obligations will be from that of their contribution.
Therefore, Ta can validly enter into a loan agreement with the partnership.

Article 1855 - Preference to Some Limited Partners as to the Return of Their Contribution

Q30: Abo, Che, Kek, and Ek formed a partnership where Abo and Che are general partners while Kek
and Ek are limited partners. Kek contributed the land and building where their office is situated while
Ek contributed the delivery truck of their business. Kek wanted to be the first to be paid their income
as he believes that his contribution is significant to the partnership, this was voted down which Abo
and Che both agreed. This was contested by Ek, that as partners they shall have equal footing in the
business income.
Is Ek correct even if there is a majority vote by the partners?
ANSWER:
Yes, Ek is correct.
Article 1855 of the New Civil Code provides that 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.
In this case, although limited partners may agree to prioritize one of them as to the business income, this
must be stated in the certificate. This was not done by the partners, thus by the provision of the New Civil
Code they must stand upon equal footing.
Therefore, Ek is correct.
Q31: Can there be a preferential right over several limited partners?
ANSWER:
Yes, Article 1855 of the New Civil code provides Limited partners may have preferential rights other limited
partners if agreed and included in the certificate. These are:
1. Return of their contribution
2. Their compensation by income; or
3. As to any other matter.

In absence of a stipulation in the certificate, even if there is an agreement, they shall stand in equal footing.

Article 1856 - Profit or Compensation of Limited Partners

Q32: What are the rights of limited partners to his compensation?

ANSWER:

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 Article 1856 of the New Civil Code provides for the compensation of limited partner by way income of the
following:
1. Excess of partnership asset over partnership’s liabilities.;
2. Preferential rights over the creditors on the transaction made aside for their contribution

Q33: Song, Jong and Ki formed a partnership where Ki is a limited partner. Because of the pandemic,
the partnership incurred more loss than their assets combined. Sensing that the partnership would
go bankrupt. Ki approached you and asked if he could ask for his contribution.
Can Ki ask for his contribution?

ANSWER:
No, Ki cannot ask for his contribution.
Article 1856 provides that 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.
In this case, the liabilities of partnership exceed that of the asset of the partnership and therefore even if in
the certificate Ki is preferred, he cannot claim his contribution.
Therefore, Ki cannot ask for his contribution.

Article 1857 - Return of Contributions

Q34: What are the requisites prior to the return of contribution of a limited partner?
ANSWER:
Article 1857 provides that a limited partner shall not receive from a general partner or out of partnership
property any part of his contribution until:
1. All liabilities of the partnership have been paid
2. The consent of all members, general and limited partners, has been obtained except when the
return may be rightfully demanded; and
3. The certificate is cancelled or so amended as to set forth the withdrawal or reduction of the
contribution of a limited partner.
Q35: U, S and Jr formed a partnership wherein Jr is a limited partner. Jr now wants to withdraw his
contribution to the partnership in the amount of one million. The total asset of the partnership is P1.5
while its liabilities is in the amount of 2 million which includes, 1 million for the contribution of Jr,
and 1 million both loans payable to U and S. May Jr demand return of his contribution.
ANSWER:
Yes, Jr can claim his contribution.
Article 1857 of the New Civil Code provides that A limited partner shall not receive from a general partner or
out of partnership property any part of his contributions until:
All liabilities of the partnership, except liabilities to general partners and to limited partners on account of
their contributions, have been paid or there remains property of the partnership sufficient to pay them.
In this case, the total asset exceeds the total liabilities of the partnership. The liabilities of 1 million which is a
loan granted by the general partners is not counted in the computation. Thus there is only one million
liabilities to consider.
Therefore, Jr can claim his contribution.

Article 1858 - Liabilities of a Limited Partner

Q36: John and Arne are limited partners in the ARJOMA partnership. In the certificate of partnership,
it appears that John contributed P10,000.00. Actually, he contributed only P8,000.00. In the certificate
too, Arne promised to give an additional contribution of P4,000.00 at a specified date. Discuss the
liability of John and Arne for unpaid contribution.
ANSWER:
John should pay the difference of P2,000.00 and Arne, the amount of P4,000.00 on the date specified or
now, if the date has arrived.
Under Article 1858 of the Civil Code, the limited partner is liable not only for the difference between the
amount of his actual contributions and that stated in the certificate as having been made but also for any
unpaid contribution he agreed to make at a future time.
In this case, it is clear that John only contributed P8,000.00 but in the certificate of partnership, it appears
that he contributed P10,000.00.
Thus, he should pay the difference of P2,000.00. With regard to Arne, he must pay P4,000.00, the amount
he promised to give as an additional contribution at a specified date.

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 he promised to give as an additional contribution at a specified date.

Q37: What are the liabilities of a limited partner to the partnership?

ANSWER:
As limited partners are not principals in the transaction of a partnership, their liability, as a rule, is to the
partnership not to the creditors of the partnership. The general partners cannot, however, waive any liability
of the limited partners to the prejudice of such creditors. (Art. 1858, NCC)

Q38: In the preceding problem, suppose that after the liabilities of John and Arne were waived or
compromised with the consent of all the partners, Jose extended credit to the partnership. Later on,
the certificate was amended to set forth the necessary change. May Jose enforce the liabilities of
John and Arne?
ANSWER:
Yes, If the remaining assets are insufficient, X can still enforce the liabilities of John and Arne.
Under Article 1858 of the Civil Code, in order for the liabilities of a limited partner to be waived or
compromised it is necessary that the waiver or compromise is made with the consent of all the partners; and
the waiver or compromise does not prejudice partnership creditors who extended credit or whose claim
arose before the cancellation or amendment of the certificate.
In this case, the credit was extended after the filing but before the amendment of the certificate.

Q39: What are the requisites in order for the liabilities of a limited partner to be waived or
compromised?
Under the third paragraph of Article 1858 of the Civil Code, the following requisites must be present:
1. The waiver or compromise is made with the consent of all the partners; and
2. The waiver or compromise does not prejudice partnership creditors who extended credit or whose
claim arose before the cancellation or amendment of the certificate.

Article 1859 - Assignment of Partnership’s Interest

Q40: What is a substituted limited partner?

ANSWER:
A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has
assigned his interest in a partnership. (Art. 1859, NCC)
Q41: What are the requisites in order for an assignee to become a substituted limited partner?
ANSWER:
Article 1859 of the New Civil Code that the following are the requisites in order that the assignee may
become a substituted limited partner:
1. All the members must consent to the assignee becoming a substituted limited partner or the limited
partner, being empowered by the certificate, must give the assignee the right to become a limited
partner;
2. The certificate must be amended in accordance with Article 1865; and
3. The certificate as amended must be registered in the Securities and Exchange Commission

Q42: What is the effect of change in relation to limited partners?

ANSWER:
Under Article 1859 of the Civil Code, the substitution of a person as a limited partner in place of an existing
limited partner or the withdrawal, death, insolvency, insanity, or civil interdiction of a limited partner, or the
addition of new limited partners does not necessarily dissolve the partnership.

Article 1860 - Dissolution of the Limited Partnership

Q43: What is the effect of retirement, death, insolvency, insanity, or civil interdiction of a general
partner?
ANSWER:
Article 1860 of the New Civil Code provides that the retirement or withdrawal, death, insolvency, insanity, or
civil interdiction of a general partner dissolves the partnership; while any such causes affecting a limited
partner does not result in its dissolution unless there is only one limited partner. If the business is continued
by the remaining partners under the rights given in the certificate or with the consent of all the members, the
limited partnership is not dissolved but the certificate must be amended to reflect the change in order that the
limited partners may avail of the protection granted by law.

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 Article 1861 - Effect of the Death of a Limited Partner

Q44: What happens to the interest of a limited partner upon his death?
ANSWER:
His executor or administrator shall have all the rights of a limited partner for the purpose of setting his estate,
and such power as the deceased had to constitute his assignee a substituted limited partner.
The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner. (Art. 1861,
NCC)
Q45: Does the death of a limited partner dissolve the partnership?
NO, the death of the limited partner does not dissolve the partnership.
Under Art. 1861 of the NCC, On the death of a limited partner his executor or administrator shall have all the
rights of a limited partner for the purpose of setting his estate, and such power as the deceased had to
constitute his assignee a substituted limited partner.
The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner.
The death of a limited partner will not automatically dissolve the partnership since the estate of the said
Limited partner will be substituted as the limited partner in accordance with Article 1861.

Article 1862 - Indebted Limited Partner

Q46: What may the court do when a creditor claims a credit that was owed to him by a deceased
limited partner?
ANSWER:
On due application to a court of competent jurisdiction by any creditor of a limited partner, the court may
charge the interest of the indebted limited partner with payment of the unsatisfied amount of such claim, and
may appoint a receiver, and make all other orders, directions and inquiries which the circumstances of the
case may require.
The interest may be redeemed with the separate property of any general partner, but may not be redeemed
with partnership property.
The remedies conferred by the first paragraph shall not be deemed exclusive of others which may exist.
(Art. 1862, NCC)
NOTE: Nothing in this Chapter shall be held to deprive a limited partner of his statutory exemption.

Article 1863 - Order of Payment on Dissolution.

Q47: What is the order of preference in settling accounts after the winding up or dissolution of a
limited partnership?
ANSWER:
Herewith, is the order of preference.
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.

Subject to any statement in the certificate or to subsequent agreement, limited partners share in the
partnership assets in respect to their claims for capital, and in respect to their claims for profits or for
compensation by way of income on their contribution respectively, in proportion to the respective amounts of
such claims. (Art. 1863, NCC)

Article 1864 - Cancellation of Certificates When the Partnership is Dissolved

Q48: Multiple Choice. Instances where certificate shall be cancelled not merely amended:
A. When the partnership is dissolved other than by reason of the expiration of the term of the

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 A. When the partnership is dissolved other than by reason of the expiration of the term of the
partnership or when all limited partners cease to be such
B. When one of the partners just want to
C. Both a and b
D. None of the above

ANSWER:
Letter A. When the partnership is dissolved other than by reason of the expiration of the term of the
partnership or when all limited partners cease to be such.
The certificate shall be cancelled when the partnership is dissolved or all limited partners cease to be such.
(Art. 1864, NCC)
Q49: Multiple Choice. When an additional limited partner is admitted, should the certificate be:
A. Amended
B. Cancelled

ANSWER:
Letter A, Amended.
The law provides that a certificate shall be amended when:
(3) An additional limited partner is admitted; ( Article 1864, NCC)

Q50: Multiple Choice. When a person is admitted as general partner, should the certificate be
A. Amended
B. Cancelled

ANSWER:
Letter A, Amended.
A certificate shall be amended when:
(4) A person is admitted as a general partner;( Art. 1864, NCC)
Q51: Multiple Choice. When there is a false or erroneous statement in the certificate, should it be:
A. Amended
B. Cancelled

ANSWER:
Letter A, Amended
A certificate shall be amended when:
(7) There is a false or erroneous statement in the certificate;( Art. 1864, NCC)
Q52: When a general partner dies or becomes insolvent or becomes insane or is sentenced to a civil
interdiction, should the certificate be:
A. Amended
B. Cancelled

ANSWER:
LetterA, Amended.
A certificate shall be amended when:
(5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and the
business is continued under article 1860;(Art. 1864. NCC)

Article 1865 - The Writing to Amend a Certificate

Q53: Multiple Choice. Requirements to amend a certificate:

A. Must be in writing and in public document
B. Must be in writing, signed and sworn to by all the members and the assigning limited
partner in case of substitution or addition of a limited or a general partner, and the certificate
as amended must be filed for record in the SEC
C. Verbal agreement is enough
D. One signature of a partner is enough

ANSWER:
Letter B. Must be in writing, signed and sworn to by all the members and the assigning limited partner in
case of substitution or addition of a limited or a general partner, and the certificate as amended must be filed
for record in the SEC
The writing to amend a certificate shall: (2) Be signed and sworn to by all members, and an amendment
substituting a limited partner or adding a limited or general partner shall be signed also by the member to be
substituted or added, and when a limited partner is to be substituted, the amendment shall also be signed by
the assigning limited partner. ( Art. 1865, NCC)

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 the assigning limited partner. ( Art. 1865, NCC)

Article 1866 - Limited Partner As Mere Contributor

Q54: True or False. Without a fiduciary relationship, a limited partner can engage in a business for
himself even in competition with the partnership.
ANSWER:
True. ( Art. 1789, 1808, 1866, NCC)
Q55: What is a limited partner as a mere contributor?
ANSWER:
As a general rule, a limited partner is a mere contributor, meaning, he is practically a stranger. This is
because he has no participation in management and control and is only liable to the partnership, not to
3rd persons and if he is filed against as a general partner, he can file a counterclaim for wrongful
inclusion. (Art. 1866, NCC)
Q56: What is the exception of the rule regarding limited partnerships as mere contributors?
ANSWER:
The exceptions are as follows in relation to Art. 1866 of the New Civil Code:
1. To enforce his right against the partnership
2. If he refuses to restore his contribution when the partnership assets are not sufficient to pay
creditors.

Article 1867 - Limited Partnership Formed Under the Law Prior to the Effectivity of New Civil Code

Q57: What happens to a limited partnership existing before the Civil Code?
The partnership must first comply with the following requirements before they can become a limited
partnership under the Civil Code: (1) State the amount of contribution and the time it was contributed (2)
After paying off all liabilities, the total assets of the partnership must be greater than the
contribution of all limited partners, otherwise, it will continue to be governed by the Code of Commerce.
(Art. 1867)

ALEJANDRE | ALENTON | ALFAJARDO | ALFEREZ | ALONZO | BALITE | BESABELLA

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