4. Resultados y discusiones
4.8 Hospitales públicos
4.8.4 Conclusiones del apartado
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. [Article 1843]
CHARACTERISTICS
(1) A limited partnership is formed by compliance with the statutory requirements [Article 1844]. (2) The business is controlled or managed by one or
more general partners, who are personally liable to creditors [Articles 1848 and 1850].
(3) One or more limited partners contribute to the capital and share in the profits but do not manage the business and are not personally liable for partnership obligations beyond their capital contributions [Articles 1845, 1848 and
1856].
(4) Obligations or debts are paid out of the partnership assets and the individual property of the general partners.
(5) The limited partners may have their contributions back subject to conditions prescribed by law [Articles 1844 and 1957].
ADVANTAGESOFLIMITEDPARTNERSHIP
(1) For general partners, to secure capital from others while retaining control and supervision for the business;
(2) For limited partners, to have a share in the profits without risk of personal liability.
GENERALANDLIMITEDPARTNER
DISTINGUISHED
General Partner Limited Partner
Extent of liability
Personally, but subsidiarily, liable for obligations of the partnership
Only to the extent of his capital contributions
Right to participate in management
Unless otherwise agreed upon, all general partners have an equal right to manage the partnership
No right to participate in management
Nature of contribution
Cash, property or industry Cash or property only, not industry
Property party in proceedings by or against partnership
Proper party Not proper party, unless: (1) He is also a general partner; or
(2) Where the object of the proceedings is to enforce his right against or liability to the partnership
Name in firm name
Name may appear in the
firm name Name must not appear in the firm name
Prohibition to engage in other business
Prohibited (qualified) Not prohibited
Effect of retirement, death, insanity or insolvency
Dissolves partnership Does not dissolve; rights transferred to executor or administrator for selling his estate
General Partner Limited Partner Not assignable Assignable
GENERALANDLIMITEDPARTNERSHIP
DISTINGUISHED
General Partnership Limited Partnership
Creation
May be constituted in any
form, with exceptions Partners must: (1) Sign and swear to a certificate in compliance with Article 1844; and (2) File the certificate for record in the SEC
Composition
Only general partners One or more general, and one or more limited partners
Firm name
Must contain the word "Company" (SEC Memo Circ No. 14-00), except for professional partnerships May or may not include the name of one or more of the partners
Must include the word "Limited" (SEC Memo Circ No. 14-00)
Must not include name of limited partners, 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.
Rules governing dissolution and winding up Articles 1828-1842 Articles 1860-1863
FORMATIONOFLIMITEDPARTNERSHIP
Two or more persons desiring to form a limited partnership shall:
(1) Sign and swear to a certificate stating the items in Article 1844; and
(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 requirements.
A partnership cannot become a limited partner. A general partnership may be changed into a limited one. A partner in the former general partnership may become a limited partner in the limited partnership formed [De Leon (2010)].
PURPOSE OF FILING
The purpose of the requirement of filing the certificate is to give actual or constructive notice to potential creditors or persons dealing with the partnership to acquaint them with its essential features, including the limited liability of limited partners.
NO SUBSTANTIAL COMPLIANCE
When there is failure to substantially comply with the requirements:
(1) In relation to third persons, the partnership is general, unless they recognized that the firm as a limited partnership;
(2) As between the partners, the partnership remains limited, since they are bound by their agreement [De Leon (2010)].
FIRM NAME
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 had been carried on under a name in which his surname appeared. A limited partner whose surname appears in a partnership name contrary to this prohibition is liable as a general partner to partnership creditors who extend credit without actual knowledge that he is not a general partner.
FALSE STATEMENT IN THE CERTIFICATE
If the certificate contains a false statement, one who suffers loss by reliance thereon may hold liable any party to the certificate who knew the statement to be false:
(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.
Requisites:
(1) The partner knew the statement to be false at the time he signed the certificate, or subsequently, but having sufficient time to cancel or amend it,
or file a petition for its cancellation or amendment, and he failed to do so;
(2) The person seeking to enforce liability has relied upon the false statement in transacting business with the partnership; and
(3) The person suffered loss as a result of reliance upon such false statement.
ADMISSION OF ADDITIONAL LIMITED PARTNERS
After the formation of a limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate. GENERAL AND LIMITED PARTNER AT THE SAME TIME A person may be a general 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. [Article 1853]
MANAGEMENTOFLIMITEDPARTNERSHIP
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 [Article 1848]. MANAGEMENT BY GENERAL PARTNERS
Only the general partners have the right to manage the partnership. The limited partners are not so entitled.
LIABILITY OF LIMITED PARTNER FOR PARTICIPATING IN CONTROL
A limited partner is liable as a general partner (i.e., subsidiarily liable) for the obligations of the partnership if he takes part in the control of the business. The control contemplated is active participation in the management of the business. It does not contemplate mere giving of advice to general partners which may be followed or not. The abstinence of the limited partner from participation in the transaction of the business of the firm is essential to his exemption from personal liability. [De Leon (2010)].
POWERS OF GENERAL PARTNER
General rule: A general partner shall have the rights
and powers and be subject to all restrictions and liabilities of a partner in a partnership without limited partners.
Thus, a general partner is vested with the entire control of the business. It is in consideration of his unlimited personal liability for the obligation of the partnership that he is granted the general authority to manage.
Qualification: Written consent or ratification of the
specific act by all the limited partners is necessary to authorize the general partners to:
(1) Do any act in contravention of the certificate; (2) Do any act which would make it impossible to
carry on the ordinary business of the partnership; (3) Confess a judgment against the partnership; (4) Possess partnership property, or assign their
rights in specific property, for other than a partnership purpose;
(5) Admit a person as a general partner;
(6) Admit a person as a limited partner, unless the right to do so is given in the certificate;
(7) Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right so to do is given in the certificate. [Article 1851]
The acts enumerated are acts of strict dominion. OBLIGATIONSOFALIMITEDPARTNER OBLIGATIONS RELATED TO CONTRIBUTION
The contributions of a limited partner may be cash or property, but not services [Article 1845].
A limited partner is liable for partnership obligations when he contributes services instead of only money or property to the partnership [De Leon (2010)]. A limited partner is liable to the partnership:
(1) For the difference between his actual contribution and that stated in the certificate as having been made;
(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. [1st
par., Article 1858]
He 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. [2nd par., Article 1858]
The liabilities under Article 1858 can be waived or compromised only by the consent of all members.
Such waiver or compromise, however, shall not affect the right to enforce said liabilities of a creditor: (1) Who extended credit, or
(2) Whose claim arose, after the filing or before a cancellation or amendment of the certificate, to enforce such liabilities.
Even after a limited partner has rightfully received the return in whole or in part of his capital contribution, he is still liable to the partnership for any sum, not in excess of such return with interest, necessary to discharge its liabilities to all creditors: (1) Who extended credit, or
(2) Whose claims arose, before such return. [Article
1858]
A person who has contributed capital to a partnership, erroneously believing that he has become a limited partner, but his name appears in the certificate as a general partner or he is not designated as a limited partner, is not personally liable as a general partner by reason of his exercise of the rights of a limited partner, provided:
(1) On ascertaining the mistake, he promptly renounces his interest in the profits of the business or other compensation by way of income [Article 1852];
(2) He does not participate in the management of the business [Article 1848]; and
(3) His surname does not appear in the partnership name [Article 1846].
LIABILITY TO PARTNERSHIP CREDITORS
General rule: A limited partner is not liable as a
general partner. His liability is limited to the extent of his contributions.
Exceptions: The limited partner is liable as a general
partner when:
(1) His surname appears in the partnership name, with certain exceptions.
(2) He takes part in the control of the business. LIABILITY TO SEPARATE CREDITORS
On due application to a court of competent jurisdiction by any separate creditor of a limited partner, the court may:
(1) Charge his interest with payment of the unsatisfied amount of such claim;
(2) Appoint a receiver; and
(3) Make all other orders, directions and inquiries which the circumstances of the case may require. The interest so charged may be redeemed with the separate property of any general partner, but may not be redeemed with partnership property. [Article
1862]
Note: In a general partnership, the interest may be
redeemed with partnership property with the consent of all the partners whose interests are not charged [Article 1814].
RIGHTSOFALIMITEDPARTNER RIGHTS OF LIMITED PARTNER, IN GENERAL
A limited partner shall have the same rights as a general partner to:
(1) Require that the partnership books be kept at the principal place of business of the partnership; (2) To inspect and copy any of them at a reasonable
hour;
(3) To demand true and full information of all things affecting the partnership;
(4) To demand a formal account of partnership affairs whenever circumstances render it just and reasonable; and
(5) To ask for dissolution and winding up by decree of court;
(6) To receive a share of the profits or other compensation by way of income; and
(7) To receive the return of his contribution provided the partnership assets are in excess of all its liabilities.
RIGHT TO TRANSACT BUSINESS WITH PARTNERSHIP A limited partner may:
(1) Loan money to the partnership;
(2) Transact other business with the partnership; and (3) Receive a pro rata share of the partnership assets with general creditors if he is not also a general
partner.
Limitations: A limited partner, with respect to his
transactions with the partnership, cannot:
(1) Receive or hold as collateral security any partnership property; or
(2) Receive any payment, conveyance, or release from liability if it will prejudice the right of third persons.
Violation of the prohibition is considered a fraud on the creditors of the partnership. [Article 1854] RIGHT TO SHARE IN PROFITS
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.
This right is subject to the condition that partnership assets will still be in excess of partnership liabilities after such payment.
Ratio: Otherwise, he will receive a share to the
In determining the partnership liabilities, the liabilities to the limited partners (for their contributions) and to general partners (whether for contributions or not) are not included.
RIGHT TO RETURN OF CONTRIBUTION
A limited partner may have his contributions withdrawn or reduced when:
(1) All the 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;
(2) The consent of all members is had, unless the return may be demanded as a matter of right; and
(3) The certificate is cancelled or so amended as to set forth the withdrawal or reduction.
The return of his contributions may be demanded, as a matter of right (even when not all the other partners consent), the return of his contribution when (1) and (2) above are complied with:
(1) On the dissolution of the partnership;
(2) Upon the arrival of the date specified in the certificate for the return; or
(3) After the expiration of a 6-month notice in writing given by him to the other partners, if no time is
fixed in the certificate for:
(a) the return of the contribution; or (b) the dissolution of the partnership.
General rule: A limited partner, irrespective of the
nature of his contribution has only the right to demand and receive cash in return for his contribution.
Exceptions: He may receive his contribution in a form
other than cash when:
(1) There is a statement in the certificate to the contrary; or
(2) All the members of the partnership consent. PREFERENCE OF LIMITED PARTNERS
General rule: The limited partners stand on equal
footing as to their:
(1) Compensation by way of income; (2) Return of contribution; or (3) Any other matter.
Exception: By an agreement of all the partners
(general and limited) in the certificate, priority or preference may be given to some limited partners over others with respect to the matters enumerated. [Article 1855]
RIGHT TO ASSIGN INTEREST
The interest of a limited partner is assignable. The assignee may become:
(1) A substituted limited partner; or (2) A mere assignee.
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. He has all the rights and powers, and is subject to all the restrictions and liabilities of his assignor, except those liabilities which:
(1) The assignee was ignorant of; and
(2) Cannot be ascertained from the certificate. An assignee is only entitled to receive the share of the profits or other compensation by way of income, or the return of contribution, to which the assignor would otherwise be entitled. He has no right:
(1) To require any information or account of the partnership transactions;
(2) To inspect the partnership books.
An assignee has the right to become a substituted limited partner if:
(1) All the partners consent thereto;
(2) The assignor, being empowered to do so by the certificate, gives him that right.
An assignee becomes a substituted limited partner when the certificate is appropriately amended. [Article 1859]
RIGHT TO ASK FOR DISSOLUTION
A limited partner may have the partnership dissolved and its affairs wound up:
(1) When his demand for the return of his contribution is denied although he has a right to such return;
(2) When he has such right, but his contribution is not paid because the partnership property is insufficient to pay its liabilities. [Article 1857] CAUSESOFDISSOLUTIONOFLIMITED PARTNERSHIP
A limited partnership is dissolved in much the same way and causes as an ordinary partnership [De Leon
(2010)].
General rule: The retirement, death, insolvency,
insanity or civil interdiction of a general partner dissolves the partnership.
Exception: It is not so dissolved when the business is
continued by the remaining general partners: (1) Under a right to do so stated in the certificate; or (2) With the consent of all members. [Article 1860]
On the death of a limited partner, his executor or administrator shall have:
(1) All the rights of a limited partner for the purpose of settling his estate; and
(2) The power to constitute an assignee as a substituted limited partner, if the deceased was so empowered in the certificate.
The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner. [Article
1861]
SETTLEMENTOFACCOUNTS
ORDER OF PAYMENT
In settling accounts after dissolution, the liabilities of the partnership shall be entitled to payment in the following order:
(1) Those to creditors, including limited partners
except those on account of their contributions, in
the order of priority as provided by law;
(2) Those to limited partners in respect to their share of the profits and other compensation by way of income in 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.
Note: In settling accounts of a general partnership,
those owing to partners in respect to capital enjoy preference over those in respect to profits.
SHARE IN THE PARTNERSHIP ASSETS
The share of limited partners in respect to their claims for capital, profits, or for compensation by way of income, is in proportion of their contribution,
unless:
(1) There is a statement in the certificate as to their share in the profits; or
(2) There is a subsequent agreement fixing their share. [Article 1863]
AMENDMENTORCANCELLATIONOF
CERTIFICATE
WHEN CERTIFICATE IS CANCELLED
The certificate shall be cancelled when: (1) The partnership is dissolved; or (2) All limited partners cease to be such. WHEN CERTIFICATE IS AMENDED
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;