Article 1848.

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. (what is control of the business?) answer is found below (Does the articles of incorporation need to be amended for the limited partner to become a general partner?) (the answer must be found on Chielos Report) (does this provision automatically apply? Who determines this application?) My answer: Yes, this provision automatically applies, my answer is based on this provision that:

Necessity of renouncing his interest The person must promptly rd renounce his interest before the partnership has become liable to 3 persons who cannot be blamed for considering him a general partner. Where no partnership creditors are prejudiced, it would seem that renunciation of his interest is not necessary. This provision was made for the protection of third party creditors of the partnership.

(Who determines that the limited partner takes part in the control of the business?) The creditors or the law. (what is controlling power in the firms transaction?) Answered below (Can a general partner be a limited partner if he ceases to control any part of the business or is there a need for amendment? What if the certificate states that any general partner can still become a limited partner if he renounces his control in the business?)- answer is under the general partner? I think.
(If it was shown that he no longer has any participation in the control of the partnership but after he cease control and before the amendment of the certificate, there is dissolution of the partnership without any fault in his part, can the general partner who has no control make use of the intention of the partners to make him only limited as a defense?) complicated problem. , with regards to the question above.

(Can the general partner with the consent of the partners make himself a limited partner and cease the control of the business?)- if yes, what about the 3rd party creditors? I think yes if before the

partnership has become liable to 3 persons who cannot be blamed for considering him a general partner (not sure though)
General Rule: Limited Partner cannot be considered as a general partner.

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Exceptions: He takes part in the control of the business Control: Active management of partnership business contemplated

Such control contemplates active participation in the management of the partnership business and does not comprehend the mere giving of advice to general partners. Bare grant of apparent control does not make him liable where he has not actually participated in the control of the partnership. Whether the limited partner has participated in the management is to be determined by whether he has exercised a controlling power in the firms transactions. The limited partner takes part in the management of the business and is liable generally for the firms obligations where: 1.) The business of the partnership is in fact carried on by a board of directors chosen by the limited partners; 2.) By the terms of the contract between the parties, an appointee of the limited partner becomes the directing manager of the firm; 3.) The limited partner purchases the entire property of the partnership, taking title in himself and then carries on the business in his own name and for his own exclusive benefit; or 4.) He makes or is a party to a contract with creditors of an insolvent firm with respect to the disposal of the firms assets in payment of the firms debts. (insolvency) The interference contemplated is with respect to an existing limited partnership. A limited partner is not subject to general liability for taking part in the management of the firm because he settles its affairs after dissolution.

Article 1849. After the formation of a lifted partnership, additional limited partners may be admitted upon filing an amendment to the original certificate in accordance with the requirements of article 1865.

Admission of additional limited partners in accordance with art. 1865 After a limited partnership has been formed, additional limited partners may be admitted, provided there is proper amendment to the certificate which must be signed and sworn to by all the partners, including the new limited partners, and filed with the SEC. (does the liability of the limited partner be affected if theres failure to comply with the requisites?) (can be answered maybe on the latter part on the discussion on limited partnership)

(what if before amendment could apply, there is dissolution of the partnership, what would be the effects if there is failure to amend)- third party creditors must be protected(who will be liable for the said failure to comply if the partnership itself dont do anything to amend but the limited partner are admitted?) who will be protected?) answer is found on the case below. (what is the period for the said amendment?) (answer maybe found on the latter part of the limited partnership) (What if after the amendment, the limited to general partner cease to take control of the partnership? Does it make him liable as a general or limited partner? (How long does the law permits the filing of the amendment?) (can reasonable time apply? Haha)

Article 1850. A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners. However, without the written consent or ratification of the specific act by all the limited partners, a general partner or all of the general partners have no authority to: General Rule: A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners Limitations of a General Partner with regards to the Limited partner

Exceptions: Must have Concurrence of the limited partners (obligation of the general partner) (why with the prohibition?- to have limited partner has also a say with regards to their contribution) (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 partnership 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 so to do 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.

Rights, powers, and liabilities of a general partner The essential feature of a limited partnership is the union of 2 classes of members limited and general partners. The law expressly requires there to be at least one general partner with unlimited liability. Right of control/unlimited personal liability A general partner in a limited partnership is vested with the entire control of the firms business and has all the rights and powers and is subject to all the liabilities and restrictions of a partner in a partnership without limited partners, i.e., in a general partnership. It is in consideration of his unlimited personal liability for the obligation of the partnership that he is granted the general authority to manage the firms business. Acts of administration/acts of strict dominion General Rule: He may bind the partnership by any act of administration Exceptions: He has no power to do the specific acts enumerated in 1850 As a rule, he may bind the partnership by any act of administration, but he has no power to do the specific acts enumerated in Article 1850 (even if agreed to by all the general partners) without the written consent or at least ratification of all the limited partners. The said acts are acts of strict dominion or ownership and are, therefore, beyond the scope of the authority of a general partner. The general partner who violates the requirement imposed by Article 1850 is liable for damages to the limited partners. Other limitations The general partners, of course, have no power to bind the limited partners beyond the latters investment. Neither do they have the power to act for the firm beyond the purpose and scope of the partnership, and they have no authority to change the nature of the business w/o the consent of the limited partners.

Article 1851. A limited partner shall have the same rights as a general partner to: (1) Have the partnership books kept at the principal place of business of the partnership, and at a reasonable hour to inspect and copy any of them; (2) Have on demand true and full information of all things affecting the partnership, and a formal account of partnership affairs whenever circumstances render it just and reasonable; and (3) Have dissolution and winding up by decree of court. A limited partner shall have the right to receive a share of the profits or other compensation by way of income, and to the return of his contribution as provided in articles 1856 and 1857.

Rights, in general, of a limited partner The limited partner is viewed as a partner only to a certain extent. His powers, actual or implied, are much more limited than those of a general partner. As between the members of the firm, the limited partner, in order to protect his interest in the firm, has the same right to compel the partners to account as a general partner has. Wrongdoing or improper acts on the part of general partners may not give a limited partner greater rights than the law and what his contract grants him.

Art. 1852. Without prejudice to the provisions of article 1848, a person who has contributed to the capital of the business conducted by a person or partnership erroneously believing that he has become a limited partner in a limited partnership,

is not, by reason of his exercise of the rights of a limited partner, a general partner with the person or in the partnership carrying on the business, or bound by the obligations of such person or partnership; provided that on ascertaining the mistake he promptly renounces his interest in the profits of the business or other compensation by way of income. HE IS EXEMPT EVENTHOUGH HE IS IN BAD FAITH AS LONG AS HE FUNCTIONS AS A LIMITED PARTNER OR HE DOES NOT TAKE CONTROL OF THE BUSINESS This provision was made for the benefit of a limited partner and to encourage them to engage in partnership transactions. Encourage the partnership for the benefit of the economy as a whole. Status of partner where there is failure to create limited partnership A limited partnership is formed when there is substantial compliance in good faith with the requirements of the law. If not complied with, rd the limited partner will have the liability of a general partner as to 3 persons.

Article 1852 provides for an exemption. Status of person erroneously believing himself to be a limited partner Conditions for exemption from liability as general partner: 1.) On ascertaining the mistake, he promptly renounces his interest in the profits of the business or other compensation by way of income; 2.) His surname does not appear in the partnership name; and 3.) He does not participate in the management of the business. (when does this begins? From the start of his involvement in the partnership (the moment he contributes) or from the moment he does not want to manage? (is this a way for the limited partner to be exempted? Because he can simply renounce his management of the business to be exempted from liability) the answer is found below:

What if theres no profit and the partnership are in debt? Necessity of renouncing his interest The person must promptly rd renounce his interest before the partnership has become liable to 3 persons who cannot be blamed for considering him a general partner. Where no partnership creditors are prejudiced, it would seem that renunciation of his interest is not necessary. Who will contend that the limited partner renounce his interest from the partnership? Is it the third person? Obligation to pay back profits and compensation already received There are two opinions as to whether the limited partner should also return profits and compensation already received. Some say yes, some say no. Both views have merit. a) It would seem that the requirement of renunciation refers only to profits or compensation not yet paid over for a person can hardly be dais to have an interest in profits or compensation he has already received, and this is fortified by the general usage of the word renounce which does not commonly have the meaning of return. Hence, there is no obligation to return or pay back profits or compensation already received. b) However, the opposite view also has merit. The intention behind the provision should be given more importance than the actual words used. The most of the statute could have intended was to put partnership creditors in the position they would have occupied had there been no limited partner at the time the obligations were contracted.