Art. 1837(1) Two Aspects of Causes of DissolutionDissolution may be caused:(a) although the partnership contract is NOT VIOLATED (Example: death, or arrival of term) (The rights of partners are governed by the FIRST PARAGRAPH of this article.)(b) Because the partnership contract is VIOLATEDExample: Deliberate withdrawal of a partner although the period of the firm has not yet expired, thus causing damage to the firm.(NOTE: The rights of the partners here are governedBUT the SECOND PARAGRAPH of this article.)(2) Better Rights for Innocent PartnersNote that innocent partners have better rights than guilty partners, and that the latter are required to indemnify for the damages caused.(3) Right of Innocent Partners to ContinueNote also that the innocent partners may continue the business (but this time, there is really a NEW partnership). They can even use the same firm name if they wish to; moreover, they can ask new members to join, BUT always, the rights granted to the guilty partners are safeguarded by:(a) a BOND approved by the court;(b) a PAYMENT of his interest at the time of dissolution MINUS damages. (Moreover, the guilty partner who is excluded will be indemnified against all PRESENT or FUTURE partnership liabilities. This is because he is no longer a partner.)(4) Right to Get CashIn case of non-continuance of the business, the interest of the partner should, if he desires, be given in CASH. (Firm assets may be sold for this purpose.)[NOTE: “The right given to each partner, where no agreement to the contrary has been made to have his share of the surplus paid to him in CASH makes certain an existing (under the old law) uncertainty. At present (under the old law) it is not certain whether a partner may or may not insist on a physical partition of the property remaining after third persons have been paid.(5) No Share in Goodwill for Guilty PartnerA guilty partner, in ascertaining the value of his interest is NOT entitled to a proportionate share of the value of the GOODWILL. (This is a necessary consequence of his bad faith.)[NOTE: The deprivation of his share in the goodwill is not unconstitutional, and cannot be considered as unlawful taking of property without due process of law.(6) Partner Wrongfully ExcludedWhen a partner is excluded wrongfully, he should be considered as the innocent partner, and the others as the guilty partners. It is now said that other partners “must account not only for what is due to him at the date of the dissolution but also for damages or for his share of the profits realized from the appropriation of the partnership business and good will. (Of course), it is otherwise if the excluded partner had substantially broken the partnership agreement.” Indeed, he has a pecuniary interest in every existing contract that was incomplete and in the trade name of the co-partnership and assets at the time he was wrongfully expelled.(7) Division of LossesAlthough such things as “depreciation, obsolescence, or diminished market value of capital assets” are not strictly speaking to be considered losses because they merely constitute a decrease in capital assets (and not the result of business transactions), still they should, in fairness be considered as losses, and the rules on losses must apply, provided that their real market values at the time of liquidation are the values considered.

Art. 1838.(1) Rescission or annulment of Partnership Contract

(a) Although the law here uses the term “rescind,” the proper technical term that should have been used is “annulled,” in view of the “fraud or misrepresentation.”(b) The “fraud or misrepresentation” here vitiates the consent whereby the contract of partnership had been entered into, hence, it is really “dolo causante.”(2) Three RightsThe Article speaks of 3 rights (without prejudice to his other rights under other legal provisions):(a) right of LIEN or RETENTION(b) right of SUBROGATION(c) right of INDEMNIFICATION

Art. 1839.(1) Rules for Settling Accounts(a) Commissioner’s Comment on No. (1) subdivision (b) “the contributions of the partners necessary for the payment of all liabilities . . .”:“The adoption of this clause will end the present (under the old law) confusion as to whether the contribution of the partners toward the losses of the partnership are partnership assets or not. The Commissioners believe that the opinion that such contributions are assets is supported by the better reasoning.”(b) Art. 1839 speaks of the methods of settling the accounts of the partnership, that is to say — its LIQUIDATION.[NOTE: Before liquidation is made, no action for accounting of a partner’s share in the profit or for a return of his capital assets can properly be made, since it is essential to first pay-off the creditors. Thus, a partner who has retired must first ask for the liquidation before he can recover his proportionate share of the partnership assets.[NOTE: The managing partner of a firm is not a debtor of the other partners for the capital embarked by them in the business; thus, he can only be made liable for the capital, when upon liquidation of the business, there are found to be assets in his hands applicable to the capital account.(c) Art. 1839 can apply only if there is a contrary agreement.Of course, such agreement cannot prejudice innocent third parties.(2) The Assets of the Partnership(a) The partnership property (including goodwill).(b) The contributions of the partners, which are made to pay off the partnership liabilities.(3) Order of Payment of Firm’s Liabilities(a) First give to creditors (who are strangers), otherwise they may be prejudiced.(b) Then give to partners who are also creditors (they should be placed in a subordinate position to outside creditors for otherwise they may prefer their own interests).[NOTE: Example of credits owing to partners which are neither capital nor profits, are those for reimbursement of business expenses.(c) Then give to the partners their capital.(NOTE: Capital should be given ahead of profi t for it is only the surplus profi t over capital that should be considered as the gain or the profi t of the fi rm.)[NOTE: An industrial partner, who has not contributed money or property at all is, in the absence of stipulation, not entitled to participate in the capital. He shares in the profi ts, however.(d) Lastly, the profi ts must be distributed.[NOTE: If, during the liquidation of a fi rm, the profi ts for a certain period of time cannot be exactly determined because no evidence or insuffi cient evidence thereof is available, the court should determine the profi t for the period by fi nding the average profi ts during the period BEFORE and AFTER the period of time in question.(4) New Contributions

If the partnership assets are insufficient, the other partners must contribute more money or property. Who can enforce these contributions?ANS.:(a) In general, any assignee for the benefi t of the creditor; or any person appointed by the court (like a receiver). (Reason: Said enforced contributions may be considered as partnership assets, and should therefore be available to the creditors).(b) Any partner or his legal representative (to the extent of the amount which he has paid in excess of the share of the liability).(5) ProblemA, B, and C are partners. A died. Is A’s estate still liable for the contributions needed to pay off the partnership obligations?ANS.: Yes. (Generally, as long as the said obligations had been incurred prior to his death.)(6) Preference With Respect to the AssetsSuppose both the partnership property and the individual properties of the partners are in the possession of the court for distribution, who should be preferred?ANS.: It depends:(a) Regarding partnership property, partnership creditors have preference.(b) Regarding individual properties of the partners, the individual creditors are preferred.(7) Rule if Partner is InsolventIf a partner is insolvent, how will his individual properties be distributed?ANS.:(a) First, give to the individual or separate creditors.(b) Then, to the partnership creditors.(c) Then, those owing to the other partners by way of contribution.(NOTE: Insolvency here of the partner or his estate does not necessarily mean no more money or property; it is enough that the assets are less than the liabilities.)[NOTE: A person who alleges himself to be a partner of a deceased individual has the right to intervene in the settlement of the decedent’s estate, particularly in the approval of the executor’s or administrator’s account for after all it may be that he (the alleged partner) was indeed a partner to whom the deceased partner owed something. Administrators and executors, instead of opposing the intervention of interested parties, should welcome the participation of the same for their own protection. Of course, mere intruders should not be allowed.

Art. 1840.(1) Right of Old Creditors to be Creditors of the NewFirmReason for the law (in making creditors of the dissolved firm also creditors of the persons or partnership continuing the business): So that said creditors will not lose their preferential rights as creditors to the partnership property.(2) ExampleA and B are partners. Later, C was admitted as member or partner and the firm’s business was continued. The creditors of the old firm continue to be creditors of the new partnership but the liability of C shall be satisfied out of partnership property only. Exception: if there is a stipulation to the contrary.

Art. 1841.Retirement or Death of a Partner(a) This Article speaks of the rights of retiring partners or of the estate of a deceased partner when the business is continued without any statement of accounts.(b) As a general rule when a partner retires from the fi rm, he is entitled to the payment of what may be due him after a liquidation. But no liquidation is needed when

there already is a settlement as to what the retiring partner shall receive.

Art. 1842.(1) When Right to Account Accrues(a) See Arts. 1807 and 1809 which also deal with the duty to account. Under the present Article (1842), the right to demand the account accrues at the date of dissolution in the absence of any contrary agreement.(b) Note that the legal representative of a partner is also, under Art. 1842, entitled to the accounting.(2) Possible DefendantsThe action can be against:(a) the winding up partners;(b) the surviving partners;(c) the person or partnership continuing the business.

Art. 1843.Reason for and History of Limited Partnerships“The business reason for the adoption of acts making provisions for limited or special partners is that men in business often desire to secure capital from others. There are at least three classes of contracts which can be made with those from whom the capital is secured: One, the ordinary loan on interest; another, the loan where the lender, in lieu of interest, takes a share in the profi ts of the business; third, those cases in which the person advancing the capital secures, besides a share in the profi ts, some measure of control over the business.“At first, in the absence of statutes, the courts, both in this country and in England, assumed that one who is interested in a business is bound by its obligations, carrying the application of his principle so far that a contract where the only evidence of interest was a share in the profits made one who supposed himself a lender, and who was probably unknown to the creditors at the time they extended their credits, is unlimitedly liable as a partner for the obligations of those actually conducting the business.“Later decisions have much modifi ed the earlier case. The lender who takes a share in the profi ts, except possibly in one or two of our jurisdiction, does not by reason of that fact, run a risk of being held as a partner. If, however, his contract falls within the third class mentioned, and he has any measure of control over the business, he at once runs serious risk of being liable for the debts of the business as a partner; the risk increasing as he increase the amount of his control.“The fi rst Limited Partnership Act was adopted by NewYork in 1822; the other commercial states, during the ensuing 30 years, following her example. Most of the statutes follow the language of the New York statute with little material alteration. Those statutes were adopted, and to a considerable degree interpreted by the courts, during that period when it was generally held that any interest in a business should make the person holding the interest liable for its obligations.As a result the courts usually assume in the interpretation of those statutes two principles as fundamental.“First: That a limited (or as he is also called, a “special”) partner is a partner in all respects like any other partner, except that to obtain the privilege of a limitation on his liability, he has conformed to the statutory requirements in respect to fi ling a certifi cate and refraining from participation in the conduct of the business.“Second: The limited partner, on any failure to follow the requirement in regard to the certifi cate or any participation in the conduct of his business, loses his privilege of limited liability and becomes, as far as those dealing with the business are concerned, in all respects a partner.“The courts in thus interpreting the statutes, although they made an American partnership with limited members something very diffi cult from the French

Societe in Commandite from which the idea of the original statutes was derived, unquestionably carried out the intent of those responsible for their adoption. This is shown by the very wording of the statutes themselves. For instance, all the statutes require that all partners, limited and general, shall sign the certifi cate, and nearly all state that: ‘If any false statement be made in such certifi cate all the persons interested in such partnership shall be liable for all the engagements thereof as general partners.’“The practical result of the spirit shown in the language and in the interpretation of existing statutes, coupled with thefact that a man may now lend money to a partnership and take a share in the profi ts in lieu of interest running serious danger of becoming bound for partnership obligations, has, to a very great extent, derived the existing statutory provisions for limited partners of any practical usefulness. Indeed, apparently their use is largely confi ned to associations in which those who conduct the business have not more than one limited partner.“One of the causes forcing business into the corporate form, in spite of the fact that the corporate form is ill-suited to money business conditions, is the failure of the existing limited partnership acts to meet the desire of the owners of a business to secure necessary capital under the existing partnership form of business association.“The draft herewith submitted proceeds on the following assumptions:“First: No public policy requires a person who contributes the capital of a business, acquires an interest in the profi ts, and some degree of control over the conduct of business, provided creditors have no reason to believe at the times their credits were extended that such person was so bound.“Second: That persons in business should be able, while remaining themselves liable without limit for the obligations contracted in its conduct, to associate with themselves, others who contribute to the capital and acquire rights of ownership, provided that such contributors do not compete with creditors for the assets of the partnership.“The attempt to carry out these ideas has led to the incorporation into the draft submitted of certain features, not found in, or differing from, existing limited partnership acts.“First: In the draft the person who contributes the capital, though in accordance with custom called a limited partner, is not in any sense a partner. He is, however, a member of the association. (See Sec. 1).“Second: As limited partners are not partners securing a certificate, the association is formed when substantial compliance in good faith is had with the requirements of a certificate. (Sec. 2[2]). This provision eliminates the difficulties which arise from the recognition of de facto associations, made necessary by the assumption that the association is not formed unless a strict compliance with the requirements of the act is had.“Third: The limited partner not being in any sense a principal in the business, failure to comply with the requirements of the act in respect to the certifi cate, while it may result in the non-formation of the association, does not make him a partner or liable as such. The exact nature of his liability in such cases is set forth in Sec. 11.“Fourth: The limited partner, while not as such in any sense a partner, may become a partner as any person not a member of the association may become a partner, and, becoming a partner, may nevertheless restrain his rights as limited partner this last provision enabling the entire capital embraced in the business to be divided between the limited partners, all the general partners being also limited partners.(Sec. 12).

“Fifth: The limited partner is not debarred from loaning money or transacting other business with the partnership as any other non-member; provided he does not, in respect to such transactions, accept from the partnership collateral security, or receive from any partner or the partner of the partnership any payment, conveyance, release from liability, if at the time the assets of the partnership are not suffi cient to discharge its obligation to persons not general or limited partners. (Sec. 13).“Sixth: The substitution of a person as limited partner in place of an existing limited partner, or the withdrawal of a limited partner, or the addition of new limited partners, does not necessarily dissolve the association (Secs. 16[2b]); no limited partner, however, can withdraw his contributionuntil all liabilities to creditors are paid. (Sec. 16[1a]).“Seventh: As limited partners are not principals in transactions of the partnership, their liability, except, for known false statements in the certifi cate (Sec. 6), is to the partnership, not to the creditors of the partnership. (Sec. 17). The general partners cannot, however, waive any liability of the limited partners to the prejudice of such creditors.”

Art. 1844.(1) Requisites in the Formation of a Limited PartnershipTwo important things are needed:(a) The signing under oath of the required certifi cate (with all the enumerated items), and(b) The fi ling for record of the certifi cate in the Offi ce of the Securities and Exchange Commission.(2) Non-Fulfi llment of the RequisitesIf the proposed limited partnership has not conformed substantially with the requirements of this article, as when the name of not one of the general partners appear in the fi rm name, it is not considered a limited partnership but a general partnership. This is because a firm transacting business as a partnership is presumed to be a general partnership.(3) Effect if Only Aggregate Contribution Is StatedThe law says that the contribution of each limited partner must be stated. Therefore if the aggregate sum given by two or more limited partners is given, the law has not been complied with.(4) Effect of Omitting the Term “Limited” in the FirmNameThe law requires the firm name to have the word “Limited.” If this provision is violated, the name cannot be considered the firm name of a limited partnership.

Art. 1845.(1) What the Limited Partner Can ContributeNote that a limited partner is not allowed to contribute industry or services alone.(2) Industrial Partner Can JoinAn industrial partner can become a general partner in a limited partnership, for the article speaks only of a “limited partner.”

Art. 1846.Non-Inclusion of Name of the Limited PartnerNote that a limited partner violating this article is liable as a general partner to innocent third parties, without however the rights of a general partner.

Art. 1847.Liability for a False StatementThis speaks of liability for a false statement. The person who suffers loss can sue for damages.

Art. 1848.Effect of Taking Part in the Control of the Business(a) The following acts do not constitute taking “part in the control of the business”:

1) mere dealing with a customer.2) mere consultation on one occasion with the general partners.(b) The following have been held to constitute taking “part in the control of the business”:1) selection of who will be the managing partners.2) supervision over a superintendent of the business of the firm. (c) Participation in the control of the business makes the limited partner liable as a general partner without however getting the latter’s rights

Art. 1849.(1) When Additional Limited Partners May Be AdmittedNote that even after a limited partnership has already been formed, the fi rm may still admit new limited partners, provided there is a proper amendment to the certifi cate.(2) Effect of Failure to AmendIf additional limited partners are taken in, without proper amendment of certifi cate with the SEC, this does not necessarily mean the dissolution of the limited partnership.

Art. 1850.(1) Acts of Strict DominionNote that as a rule, in the instances enumerated, the general partners (even if already unanimous among themselves) must still get the written CONSENT or RATIFICATION of ALL the limited partners.Reason: In a sense the acts are acts of strict dominion or ownership, and are not generally essential for the routine or ordinary conduct of the firm’s business.(2) Confl icts Rule Governing Capacity of the Limited PartnerIf 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. 1851.Rights of a Limited Partner(a) A limited partner necessarily has lesser rights than a general partner. These rights are enumerated in the Article.(b) Note however that among other things he also has the right to have dissolution and winding up by decree of the court.(c) He cannot however bind the fi rm by a contract

Art. 1852.(1) Contributor Who Erroneously Believes He Has Become a Limited PartnerExample:A, B, C, D, and E agreed to form a limited partnership, with the fi rst two as general partners and the rest as limited partners, but as recorded in the Securities and ExchangeCommission and in the certifi cate, A and B were really named general partners, but only C and D were included as limited (special) partners. E, who had contributed money, was LEFTOUT. If E erroneously believes that he has become a limited partner (erroneously, for clearly, he is not) and thereupon exercises the rights of a limited partner, he should not generally be considered as liable as a general partner (general because the public cannot be blamed for not considering him a limited partner).(2) When He Becomes Liable As a General PartnerIn the example given, however, he can still be liable asa general partner:(a) unless on ascertaining the mistake, he promptly renounces his interest in the profi ts of the business, or other compensation by way of income; or

(b) unless, even if no such renouncing is made, partnership creditors are NOT prejudiced.(3) Limited Partner Who Participates in the Control CannotTake Advantage of the ArticleThe person referred to under Art. 1848 cannot take advantage, naturally, of Art. 1852.

Art. 1853.(1) General — Limited PartnerNote that a person may be a general and a limited partner at the same time, provided same is stated in the certifi cate.(2) RightsGenerally, his rights are those of a general partner (hence, third parties can go against his individual properties).EXCEPTION: Regarding his contribution (like the right to have it returned on the proper occasions) he would be considered a limited partner, with the rights of a limited partner, insofar as the other partners are concerned.

Art. 1854.Right of a Limited Partner to Lend Money and TransactOther Business With the Firm(a) Note that 3rd parties are always given preferential rights insofar as the fi rm’s assets are concerned.(b) Note also that while the limited partner, in the case of a claim referred to in the article, is prohibited to “receive or hold as COLLATERAL SECURITY any partnership property,” still he if not prohibited to purchase partnership assets which are used to satisfy partnership obligations towards third parties.

Art. 1855.(1) Preference to Some Limited Partners(a) Note that preference can be given to some limited partners over the other limited partners.(b) However, the preference must be “stated in the certificate.”(2) Nature of the PreferenceThis preference may involve:(a) the return of contributions;(b) compensation;(c) other matters.

Art. 1856.Profi t or Compensation of Limited Partners(a) Whereas Art. 1856 speaks of “profi t or compensation by way of income,” Art. 1857 deals generally with the return of the contributions.(b) Note that for Art. 1856 to apply, partnership assets must be in excess of partnership liabilities to 3rd persons, not liabilities to partners.

Art. 1857.(1) When Contributions of Limited Partners Can Be Returned(a) The 1st paragraph deals with the CONDITIONS that must exist before contributions (or part thereof) by a limited partner can be returned to him.(b) The second paragraph deals with the TIME when such contributions can be returned, provided that the conditions are complied with.(c) Note that as a rule, even if a limited partner has contributed property, he has the right to demand and receiveCASH in return.(d) If paragraph one is violated, previous creditors can sue, but they must allege and prove the non-existence of the CONDITIONS. Among these in the same category as previous creditor is the assignee in insolvency of a bankrupt limited partnership.(2) Liability of a Limited Partner Who Has Withdrawn

Suppose a limited partner withdraws rightfully his contribution (all conditions being fulfi lled, particularly the complete solvency of the fi rm as of the time of withdrawal) and the certifi cate is amended properly, would he still be liable to previous creditors if later on the fi rm becomes insolvent?ANS.: Yes, if by chance, the very next day the partnership assets are all destroyed by an earthquake, etc., it is unfair for him to keep the cash, and leave the creditors with nothing. His contribution (even if already returned to him) is to be treated as a trust fund for the discharge of liabilities.Moreover, the sum should include the interest presumably earned.[NOTE: Future creditors cannot make use of the principle enunciated in the above-cited case in view of the recorded amended certifi cate, except of course if the money had been wrongfully returned to the limited partner.

Art. 1858.(1) Liabilities of a Limited Partner(a) This is a new provision of the new Civil Code.Source: Sec. 17, Uniform Limited Partnership Act.(b) A and B are limited partners of a partnership. In the certificate, it was stated that A contributed P1.8 million when as a matter of fact he had given only P1.5 million. In the certificate too is a promise made by B to pay P200,000 additional contribution on Dec. 1, 2004.Should A and B make good the P300,000 and P200,000 respectively?ANS.: Yes, A should pay now; B on Dec. 1, 2004.(c) May the liabilities in the preceding problem be waived or compromised?ANS.: Yes, but two conditions must be followed:(a) All the other partners must agree.(b) Innocent third party creditors must not be prejudiced.They are innocent when their claim for extension of credit was before the cancellation or amendment of the certifi cate.(2) Problem Involving Liability to CreditorsA, a limited partner, received the return of his contribution on the date stated in the certifi cate. It was discovered that the remaining assets were insuffi cient to pay two creditors,X and Y. X’s claim arose before the return; Y’s claim arose after the return. Should A be compelled to give back what he had received?ANS.: I distinguish:(a) X’s claim should be satisfi ed out of what has been returned to A.Reason: X’s claim arose before the return. If there is a balance, it should be returned to A. If there is a defi cit, A is not liable for this because he is only a limited partner.(b) Y’s claim does not have to be satisfi ed from what has been returned to A as contribution.Reason: His claim arose after the return. Y’s claim should be directed against the general partners.

Art. 1859.(1) Assignment of a Limited Partner’s Interest(a) This is a new provision of the new Civil Code.Source: Sec. 19, Uniform Limited Partnership Act.(b) May the interest of a limited partner be assigned?ANS.: Yes. (Par. 1, Art. 1859).(c) Does the assignee of the interest of the limited partner become necessarily a substitute partner?ANS.: No.1) In some cases, he becomes one.2) In others, he remains a mere assignee.2) Some Problems(a) A, a limited partner, assigned his interest to B. In the certificate, A was expressly given the right to give the assignee the right to become a substituted limited partner.

Is B now a substituted limited partner?ANS.: Not yet. He has to wait until the certificate is appropriately amended. (b) A, a limited partner, assigned his right to X. In the certificate, A was not given the right to give his assignee the right to become a substituted limited partner. How can X acquire said right to become a substituted limited partner?ANS.: Only if all the members of the partnership so consent. If they do consent, X acquires the right to become a substituted limited partner, BUT is not yet one, until after the certificate is appropriately amended.(c) Suppose in problem (b) X was not given the right to become a substituted limited partner by the partners, what will be his status and his rights?ANS.: He will be a mere assignee. He has NO RIGHT.1) to require any information or account of the partnership transactions;2) to inspect the partnership books. BUT, he has the right to receive the share of the profits or other compensation by way of income, or the return of his contribution to which his assignor would otherwise be entitled.(3) Substituted Limited PartnerHe is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership.(4) Some Problems(a) Is a substituted limited partner responsible for the liabilities of his assignor?ANS.: Yes, except those liabilities of which he was ignorant at the time he became a limited partner and which could not be ascertained from the certificate. (b) A, a limited partner, assigned his interest to X, who subsequently became a substituted limited partner. IsA completely relieved of all his liabilities to the partner to the partnership?ANS.: No. A is still liable under Art. 1847 to a person who relies on a false statement in the certificate, and under Art. 1858 to creditors who extended credit or whose claims rose before the assignment.

Art. 1860.Some Causes for the Dissolution of a Limited Partnership(a) This is a new provision of the new Civil Code.Source: Sec. 20, Uniform Limited Partnership Act.Keyword: DRICI (death, retirement, insolvency, civil interdiction, insanity of a GENERAL partner)(b) Example:A, B, C, D, and E were partners, A and B beinggeneral partners, and the rest, limited partners. A dies.Is the partnership dissolved?ANS.: Yes, unless it is continued by the remaining general partners.Query: When may the remaining general partners continue the business?ANS.:1) If the right to do so is stated in the certificate; or2) If all the members consent.BUT, at any event, there should be an amendment of the certificate.[NOTE: The instances set forth in Art. 1860 (retirement, etc.) do not apply in the case of the limited partner, for in such a case, the fi rm is not dissolved.

Art. 1861.(1) Death of a Limited Partner(a) This is a new provision of the new Civil Code.Source: Sec. 21, Uniform Limited PartnershipAct.(b) A, a limited partner, while still alive contracted certain liabilities as such. Is his estate liable for them?ANS.: Yes. (2nd par., Art. 1861, Civil Code).(2) Problem

A, a limited partner, was given the right to constitute his assignee as a substituted limited partner. On his death, may his administrator do the same?ANS.: Yes. Furthermore, said administrator shall have all the rights of a limited partner for the purpose of settling the estate of the deceased.

Art. 1862.(1) Charging the Interest of a Limited PartnerThis is a new provision of the new Civil Code.Source: Sec. 22, Uniform Limited Partnership Act.(2) ExampleA is a limited partner who is indebted to X. X applies to the court to charge the interest of A in the partnership. May the interest charged be redeemed by partnership property?ANS.: No. The law says that the interest may be redeemed with the separate property of any general partner, but cannot be redeemed with partnership property.

Art. 1863.Payment of Liabilities of the Limited Partnership(a) This is a new provision of the new Civil Code.Source: Sec. 23, Uniform Limited Partnership Act.(b) Notice that profi ts are given priority over capital.

Art. 1864.(1) When Certifi cate Is Cancelled or AmendedThis is a new provision of the new Civil Code.Source: Sec. 24, Uniform Limited Partnership Act.(2) CancellationWhen the partnership is dissolved, or when all the limited partners cease to be limited partners, the certifi cate shall be cancelled, not merely amended. This is obvious for if there be no more limited partners, the limited partnership cannot exist as such. The writing to cancel a certifi cate shall be signed by all members. (Art. 1865, 2nd par.).

Art. 1865.(1) Requisites for Amending or Cancelling the Certifi cateThis is a new provision of the new Civil Code.Source: Sec. 25, Uniform Limited Partnership Act.(2) Problems(a) X, a limited partner, assigned his interest to Y, who thereby acquired the right to be a substituted limited partner. Aside from the others, should X and Y sign the amendment?ANS.: Yes.(b) In the preceding problem, suppose X refuses to sign the amendment, may Y petition the court to order the court to order the amendment?ANS.: Yes.

Art. 1866.When Contributors (Other Than General Partners)Should Be Made Parties to ProceedingsThe Article is self-explanatory.

Art. 1867.Transitional Provisions on Limited Partnerships(a) This is a new provision of the new Civil Code.Source: Sec. 30, Uniform Limited PartnershipAct.(b) On June 1, 1946, a limited partnership was formed. May it become a limited partnership under the new Civil Code?ANS.: Yes, by following the conditions in Art.1867.(c) Suppose the limited partnership in question (b) does not want to become one under the new Civil Code, what laws will govern said partnership?ANS.: The old law.