PARTNERSHIP REVIEWER

I.

THE CONCEPT OF PARTNERSHIP

A. HISTORICAL BACKGROUND
B. THE NATURE OF PARTNERSHIPS
1. Definition
ARTICLE 1767: By the contract of partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise of a profession.
LITONJUA v LITONJUA: The partnership is void and legally nonexistent. The documentary evidence
presented by Aurelio, i.e. the letter from Eduardo and the Memorandum, did not prove partnership.
The 1973 letter from Eduardo on its face, contains typewritten entries, personal in tone, but is unsigned
and undated. As an unsigned document, there can be no quibbling that said letter does not meet the
public instrumentation requirements exacted under Article 1771 (how partnership is constituted) of the
Civil Code. Moreover, being unsigned and doubtless referring to a partnership involving more than
P3,000.00 in money or property, said letter cannot be presented for notarization, let alone registered with
the Securities and Exchange Commission (SEC), as called for under the Article 1772 (capitalization of a
partnership) of the Code. And inasmuch as the inventory requirement under the succeeding Article 1773
goes into the matter of validity when immovable property is contributed to the partnership, the next logical
point of inquiry turns on the nature of Aurelios contribution, if any, to the supposed partnership.
The Memorandum is also not a proof of the partnership for the same is not a public instrument and again,
no inventory was made of the immovable property and no inventory was attached to the Memorandum.
Article 1773 of the Civil Code requires that if immovable property is contributed to the partnership an
inventory shall be had and attached to the contract.

2. Elements
ARTICLE 1767: By the contract of partnership two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the profits among themselves.
Two or more persons may also form a partnership for the exercise of a profession.
EVANGELISTA v CIR: The essential elements of a partnership are two, namely: (a) an agreement to
contribute money,property or industry to a common fund; and (b) intent to divide the profits
among the contractingparties. The first element is undoubtedly present in the case at bar, for,
admittedly, petitioners have agreed to,and did, contribute money and property to a common fund. Upon
consideration of all the facts andcircumstances surrounding the case, we are fully satisfied that their
purpose was to engage in real estatetransactions for monetary gain and then divide the same among
themselves, because of the followingobservations, among others: (1) Said common fund was not
something they found already in existence; (2)They invested the same, not merely in one transaction, but
in a series of transactions; (3) The aforesaid lotswere not devoted to residential purposes, or to other

personal uses, of petitioners herein.Although, taken singly, they might not suffice to establish the intent
necessary to constitute a partnership, thecollective effect of these circumstances is such as to leave no
room for doubt on the existence of said intent inpetitioners herein.
AFISCO v CA: Unregistered Partnerships and associations are considered as corporations for tax
purposes Under the old internal revenue code, A tax is hereby imposed upon the taxable net income
received during each taxable year from all sources by every corporation organized in, or existing
under the laws of the Philippines, no matter how created or organized, xxx. Ineludibly, the Philippine
legislature included in the concept of corporations those entities that resembled them such as
unregistered partnerships and associations.
Insurance pool in the case at bar is deemed a partnership or association taxable as a corporation In the
case at bar, petitioners-insurance companies formed a Pool Agreement, or an association that would
handle all the insurance businesses covered under their quota-share reinsurance treaty and surplus
reinsurance treaty with Munich is considered a partnership or association which may be taxed as a
corporation.
Double Taxation is not Present in the Case at Bar Double taxation means taxing the same person twice
by the same jurisdiction for the same thing. In the instant case, the insurance pool is a taxable entity
distince from the individual corporate entities of the ceding companies. The tax on its income is obviously
different from the tax on the dividends received by the companies. There is no double taxation.
a. COMMON FUND
LIM TONG LIM v PHILIPPINE FISHING GEAR: It is apparent from the factual milieu that the three
decided to engage in a fishing business. Moreover, their Compromise Agreement had revealed their
intention to pay the loan with the proceeds of the sale and to divide equally among them the excess or
loss. The boats and equipment used for their business entails their common fund. The contribution to
such fund need not be cash or fixed assets; it could be an intangible like credit or industry. That the
parties agreed that any loss or profit from the sale and operation of the boats would be divided equally
among them also shows that they had indeed formed a partnership. The principle of corporation by
estoppel cannot apply in the case as Lim Tong Lim also benefited from the use of the nets in the boat,
which was an asset of the partnership. Under the law on estoppel, those acting in behalf of a corporation
and those benefited by it, knowing it to be without valid existence are held liable as general partners.
Hence, the question as to whether such was legally formed for unknown reasons is immaterial to the
case.
AFISCO V CA (see 1st page)
b. PROFITS
AFISCO v CA (see 1st page)
GATCHALIAN v CIR: According to the stipulation facts the plaintiffs organized a partnership of a civil
nature because each of them put up money to buy a sweepstakes ticket for the sole purpose of dividing
equally the prize which they may win, as they did in fact in the amount of P50,000. The partnership was
not only formed, but upon the organization thereof and the winning of the prize, Jose Gatchalian
personally appeared in the office of the Philippines Charity Sweepstakes, in his capacity as co-partner, as
such collection the prize, the office issued the check for P50,000 in favor of Jose Gatchalian and
company, and the said partner, in the same capacity, collected the said check. All these circumstances
repel the idea that the plaintiffs organized and formed a community of property only.
c.

CHARACTERISTICS
i.

Lawful Purpose and Common Benefit

ARTICLE 1770: A partnership must have a lawful object or purpose, and must be established for the
common benefit or interest of the partners.
When an unlawful partnership is dissolved by a judicial decree, the profits shall be confiscated in favor of
the State, without prejudice to the provisions of the Penal Code governing the confiscation of the
instruments and effects of a crime.
ARTICLE 1409 (1): The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order
or public policy;
OCTOBER 17, 1989 SEC OPINION TO MS C.A. REYES SANTOS:
Madame:
This has reference to your letter dated September 6, 1989 requesting the opinion of this
Commission on the proposed partnership between a certain Mr. Smith of Surrey, England
and a Filipino.
It appears that the partnership shall advertise in the local newspapers and magazines for
Filipino women interested in writing to and eventually meeting English gentlemen of their
choice. Although not explicitly stated, the partnership intends to establish the so-called
"mail-to-order brides" service recently advertised in newspapers.
Different civic organizations have already voiced their concern and objection to this
"business" since it merely turns the "brides" into domestic helpers, not to mention its
adverse effect to the image of Filipino women. While the purpose of the partnership may
seem innocuous, its modus operandi and actual objective may be deemed immoral.
Moreover, some quarters claim that similar businesses are operated to circumvent labor
laws on overseas recruitment.
Hence, this Commission is of the view that the registration of the proposed business should
be denied on the following grounds:
a)
If they shall form a partnership, it shall be a violation of Article 1770 of the
Civil Code which provides as follows:
"A partnership must have a lawful object or purpose and must be established for
common benefit or interest of the partners".
b)
If a corporation, Sec. 17 of the Corporation Code should be complied with which
includes the following provision as one of the grounds for disapproval of Articles of
Incorporation:
2.
"That the purpose or purposes of the corporation are patently unconstitutional,
illegal, immoral or contrary to government rules and regulations."
Incidentally, may we suggest that proper verification be made on whether Mr. Smith may
have already launched his proposed activities here in the Philippines considering that there
are information that certain entities are presently engaged in this activity.
ARBES v POLISTICO: No charitable institution is a necessary party in the present case of determination
of the rights of the parties. The action which may arise from said article, in the case of unlawful
partnership, is that for the recovery of the amounts paid by the member from those in charge of the

administration of said partnership, and it is not necessary for the said parties to base their action to the
existence of the partnership, but on the fact that of having contributed some money to the partnership
capital. And hence, the charitable institution of the domicile of the partnership, and in the default thereof,
those of the province are not necessary parties in this case. The article cited above permits no action for
the purpose of obtaining the earnings made by the unlawful partnership, during its existence as result of
the business in which it was engaged, because for the purpose, as Manresa remarks, the partner will
have to base his action upon the partnership contract, which is to annul and without legal existence by
reason of its unlawful object; and it is self evident that what does not exist cannot be a cause of action.
Hence, paragraph 2 of the same article provides that when the dissolution of the unlawful partnership is
decreed, the profits cannot inure to the benefit of the partners, but must be given to some charitable
institution. The profits are so applied, and not the contributions, because this would be an excessive and
unjust sanction for, as we have seen, there is no reason, in such a case, for depriving the partner of the
portion of the capital that he contributed, the circumstances of the two cases being entirely different. Art.
1807. Every partner must account to the partnership for any benefit, and hold as trustee for it any profits
derived by him without the consent of the other partners from any transaction connected with the
formation, conduct, or liquidation of the partnership or from any use by him of its property.
ii.
Separate Juridical Personality

When it exists

ONA v CIR: Unregistered partnership. The Tax Court found that instead of actually distributing the
estate of the deceased among themselves pursuant to the project of partition, the heirs allowed their
properties to remain under the management of Oa and let him use their shares as part of the common
fund for their ventures, even as they paid corresponding income taxes on their respective shares.
For tax purposes, the co-ownership of inherited properties is automatically converted into an unregistered
partnership the moment the said common properties and/or the incomes derived therefrom are used as a
common fund with intent to produce profits for the heirs in proportion to their respective shares in the
inheritance as determined in a project partition either duly executed in an extrajudicial settlement or
approved by the court in the corresponding testate or intestate proceeding. The reason is simple. From
the moment of such partition, the heirs are entitled already to their respective definite shares of the estate
and the incomes thereof, for each of them to manage and dispose of as exclusively his own without the
intervention of the other heirs, and, accordingly, he becomes liable individually for all taxes in connection
therewith. If after such partition, he allows his share to be held in common with his co-heirs under a single
management to be used with the intent of making profit thereby in proportion to his share, there can be no
doubt that, even if no document or instrument were executed, for the purpose, for tax purposes, at least,
an unregistered partnership is formed.
For purposes of the tax on corporations, our National Internal Revenue Code includes these
partnerships The term partnership includes a syndicate, group, pool, joint venture or other
unincorporated organization, through or by means of which any business, financial operation, or venture
is carried on (8 Mertens Law of Federal Income Taxation, p. 562 Note 63; emphasis ours.) with the
exception only of duly registered general co-partnerships within the purview of the term corporation. It
is, therefore, clear to our mind that petitioners herein constitute a partnership, insofar as said Code is
concerned, and are subject to the income tax for corporations.
d. RECEIPT OF PROFITS PRIMA FACIE EVIDENCE OF BEING A PARTNER
ARTICLE 1769 (4): In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by article 1825, persons who are not partners as to each other are not
partners as to third persons;

(2) Co-ownership or co-possession does not of itself establish a partnership, whether such-coowners or co-possessors do or do not share any profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or not the
persons sharing them have a joint or common right or interest in any property from which the
returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie evidence
that he is a partner in the business, but no such inference shall be drawn if such profits
were received in payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of the
business;
(e) As the consideration for the sale of a goodwill of a business or other property
by installments or otherwise.
HEIRS OF JOSE LIM v JULIET LIM: It is Elfledo Lim based on the evidence presented regardless of
Jimmy Yus testimony in court that Jose Lim was the partner. If Jose Lim was the partner, then the
partnership would have been dissolved upon his death (in fact, though the SC did not say so, I believe it
should have been dissolved upon Norbertos death in 1993). A partnership is dissolved upon the death of
the partner. Further, no evidence was presented as to the articles of partnership or contract of partnership
between Jose, Norberto and Jimmy. Unfortunately, there is none in this case, because the alleged
partnership was never formally organized. But at any rate, the Supreme Court noted that based on the
functions performed by Elfledo, he is the actual partner. The following circumstances tend to prove that
Elfledo was himself the partner of Jimmy and Norberto: 1.) Cresencia testified that Jose gave Elfledo
P50,000.00, as share in the partnership, on a date that coincided with the payment of the initial capital in
the partnership; 2.) Elfledo ran the affairs of the partnership, wielding absolute control, power and
authority, without any intervention or opposition whatsoever from any of petitioners herein; 3.) all of the
properties, particularly the nine trucks of the partnership, were registered in the name of Elfledo; 4.)
Jimmy testified that Elfledo did not receive wages or salaries from the partnership, indicating that what he
actually received were shares of the profits of the business; and 5.) none of the heirs of Jose, the alleged
partner, demanded periodic accounting from Elfledo during his lifetime. As repeatedly stressed in the case
of Heirs of Tan Eng Kee, a demand for periodic accounting is evidence of a partnership. Furthermore,
petitioners failed to adduce any evidence to show that the real and personal properties acquired and
registered in the names of Elfledo and Juliet formed part of the estate of Jose, having been derived from
Joses alleged partnership with Jimmy and Norberto. Elfledo was not just a hired help but one of the
partners in the trucking business, active and visible in the running of its affairs from day one until this
ceased operations upon his demise. The extent of his control, administration and management of the
partnership and its business, the fact that its properties were placed in his name, and that he was not paid
salary or other compensation by the partners, are indicative of the fact that Elfledo was a partner and a
controlling one at that. It is apparent that the other partners only contributed in the initial capital but had no
say thereafter on how the business was ran. Evidently it was through Elfredos efforts and hard work that
the partnership was able to acquire more trucks and otherwise prosper.

II.

FORMING THE PARTNERSHIP

A. FORMAL REQUIREMENTS

1. In General
ARTICLE 1771: A partnership may be constituted in any form, except where immovable property or real
rights are contributed thereto, in which case a public instrument shall be necessary.
LILIBETH SUNGA-CHAN v CHUA: The action for accounting filed by Chua three (3) years after Jacintos
death was well within the prescribed period. The Civil Code provides that an action to enforce an oral
contract prescribes in six (6) years while the right to demand an accounting for a partners interest as
against the person continuing the business accrues at the date of dissolution, in the absence of any
contrary agreement. Considering that the death of a partner results in the dissolution of the partnership, in
this case, it was after Jacintos death that Chua as the surviving partner had the right to an account of his
interest as against Lilibeth. It bears stressing that while Jacintos death dissolved the partnership,
the dissolution did not immediately terminate the partnership. The Civil Code expressly provides
that upon dissolution, the partnership continues and its legal personality is retained until the
complete winding up of its business, culminating in its termination.
2. When Notarized Agreement and Inventory Required
ARTICLE 1771: A partnership may be constituted in any form, except where immovable property or real
rights are contributed thereto, in which case a public instrument shall be necessary.
ARTICLE 1773: A contract of partnership is void, whenever immovable property is contributed thereto, if
an inventory of said property is not made, signed by the parties, and attached to the public
instrument.
3. Notarized and Recorded
ARTICLE 1772: Every contract of partnership having a capital of three thousand pesos or more, in
money or property, shall appear in a public instrument, which must be recorded in the Office of the
Securities and Exchange Commission.
Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.
ARTICLE 1768: The partnership has a juridical personality separate and distinct from that of each of the
partners, even in case of failure to comply with the requirements of article 1772, first paragraph.
B. CORPORATIONS AS PARTNERS
FEB. 29,1980 SEC OPINION TO ANTONIO LIBREA:

Dear Sir:
This has reference to your letter dated October 29, 1979 requesting information on
whether or not two or more medium-size corporations (contractors) may
enter into a partnership or joint venture/consortium for the purpose of
qualifying in terms of capitalization and equipment in large-scale projects
of the Ministry of Public Highways through competitive bidding.

This Commission hereby reiterates its previous opinions that the weight of authority
is to the effect that a corporation cannot ordinarily enter into a contract of
partnership with another corporation or individual, to wit:
"According to the prevailing view, a corporation has no implied power to become a
partner with an individual or another corporation. This limitation is based on public
policy, since in a partnership the corporation would be bound by the acts of persons
who are not duly appointed and authorized agents and officers, which would be
entirely inconsistent with the policy of the law that the corporation shall manage its
own affairs, separately and exclusively". (Am Jur par. 823)
"It is fairly well-settled that corporations cannot ordinarily enter into partnerships
with other corporations or individuals, for, in entering into a partnership the identity
of the corporation is lost or merged with that of another and the direction of the
affairs is placed in other hands than those permitted by the law of its creation. A
corporation can act only through its duly authorized agents and is not bound by the
acts of anyone else, while in a partnership each member binds the firm when acting
within the scope of the partnership." (6 Fletcher, Cyc Corps. Section 2520; Cf. SEC
Opinion dated Dec. 22, 1966, SEC Folio p. 279).
Exceptions to the application of this general rule may be allowed by this
Commission, provided that the following conditions are adequately met:
1.
The articles of incorporation of the corporations involved must expressly
authorize the corporation to enter into contracts of partnership with others in the
pursuit of its business;
2.
The agreement or articles of partnership must provide that all the partners
will manage the partnership; and
3.
The articles of partnership must stipulate that all the partners are and shall
be jointly and severally liable for all the obligations of the partnership.
This Commission will not therefore interpose any objection to the recording of the
said articles of partnership which must be accompanied by the proper SEC
verification slip regarding the proposed partnership name; the written undertaking
to change the partnership name in the event that another person, firm or entity has
acquired a prior right to the use of said name or is misleading or confusingly similar
to it; the Data Sheet of the registrant partnership and the recording fee of 1/10 of
1% of the partnership's capital but not less than P100.00 or more than P50,000.00.
Moreover, two or more corporations may enter into a joint venture/consortium if the
nature of the venture is in line with the business authorized by its charter through a
contract or voluntary agreement between the said parties. Please note that no
independent legal entity is borne out of it and the same need not be registered with
the Commission. However when the joint venture/consortium would result in the
formation of a corporation or partnership, the same has to be registered with the
Commission and the conditions and requirements above-mentioned should be
complied with.

SEPTEMBER 3, 1984 SEC OPINION TO ROMEO ORSOLINO:

DECEMBER 1, 1993 SEC OPINION TO VAL ANTONIO SUAREZ:
Sir : This refers to your letter of November 29, 1993 requesting confirmation on the opinion previously
issued by the Commission that a corporation can enter into a partnership under certain conditions. As
stated, your client, a Dutch corporation, intends to establish a branch in the Philippines. The Dutch
corporation, through its Philippine branch, will then form a general partnership with a Philippine
corporation. The partnership will be registered with the Commission and will engage in the development
of a power plant on a build, operate and transfer basis, pursuant to which the partnership will design,
construct, own and operate the power plant for 10 years. Hence, your request for confirmation that the
Dutch corporation, through its Philippine branch and the Philippine corporation may enter into a general
partnership for the purpose described above and register such partnership with the Commission.
As a general rule, a corporation cannot enter into a contract of partnership with an individual or another
corporation, and the reasons, quoting American Authorities are, as follows: "According to the prevailing
view a corporation has no implied power to become a partner with an individual or another corporation.
This limitation is based on public policy, since in a partnership the corporation would be bound by the acts
of the persons who are not its duly appointed and authorized agents and officers, which would be entirely
inconsistent with the policy of the law that the corporation shall manage its own affairs separately and
exclusively." (13 A. Jur. S 823 [1938]) "It is fairly well settled that corporations cannot ordinarily enter into
partnerships with other corporations or with individuals, for, in entering into a partnership the identity of
the corporation is lost or merged with that of another and the directions of the affairs is placed on other
hands than those provided by the law of its creation. A corporation can act only through its duly authorized
agents and is not bound by the acts of anyone else, while in partnership each member binds the firm
when acting
within the scope of the partnership." (6 Fletcher Cyclopedia Corporations, S 2520 [perm. ed. rev. repl.
1950]) However, the Commission, on several occasions allowed exceptions to the application of the
above rule, provided the following conditions are complied with: 1. The authority to enter into a
partnership relation is expressly conferred by the respective charters or articles of incorporation of the
constituent corporations, and the nature of the business venture to be undertaken by the partnership is in
line with the business authorized by the charter or articles of incorporation of the constituent corporations.
2. The agreement on the articles of partnership must provide that all the partners will manage the
partnership, and consequently, the articles of partnership must stipulate that all the partners are and shall
be jointly and severally liable for all the obligations of the partnership; "In a solidary or joint and several
obligations, the relationship between the active and passive subjects is so close that each of the former or
of the latter may demand the fulfillment of or must comply with the whole obligations." (Paras, Civil Code
of the Philippines Annotated, citing 8 Manresa 194) 3. The foreign corporation must obtain a license to
transact business in the country in accordance with the Corporation Code of the Philippines and the
Foreign Investments Act.
Thus, for as long as the foregoing conditions are met, the above-mentioned proposed articles of
partnership may be registered.
C. PARTNERSHIP TERM
ARTICLE 1784: A partnership begins from the moment of the execution of the contract, unless it is
otherwise stipulated.
D. PARTNERSHIP PURPOSE
DECEMBER 8, 2003 SEC OPINION TO MS ARLYN SOLITARIO:

Madam :This refers to your letter dated 24 November 2003 inquiring whether Goudie Associates Manila
Ltd. Co. And Group III Design Studio are allowed to engage in consulting services. A partnership relation
is a result of a contract between and among the parties. It has only such objects or purposes as are
expressly granted in its articles of partnership or in accordance with the existing statutes or such powers
as are necessary for the purpose of carrying out its express objects. There should be specification of the
partnership's intended purposes with sufficient clarity and elucidation in the articles of partnership to
define with more certainty the scope of the contract between the parties. Thus, in the determination of
what businesses may be carried on by the partnership, reference must be had to its articles, and unless
the power to carry on a particular business is either expressly or impliedly conferred thereby, it does not
exist. When the purposes are enumerated in the Articles of Partnership, it is to be construed as including
incidental purposes reasonably necessary to the proper exercise of the enumerated purposes and as
excluding all other non-enumerated purposes. Thus, if the objects or purposes are expressly enumerated
in detail, such specification by implication excludes all other objects and purposes, except such incidental
or as may be necessary to an exercise of the objects or business expressly given. Simply put, an
enumeration of partnership objects or purposes implies the exclusion of all other purposes except those
implied and essential for the attainment of the objects and purposes expressly conferred. This is in
conformity with the generally accepted principle of statutory construction: "Expressio Unius Est Exclusio
Alterius" which means, the express mention of one thing will, as a general rule, mean the exclusion of
others not expressly mentioned.
In Goudie Associates Manila Ltd. Co., its Articles of Partnership provides: "Article V: That the purpose for
which said partnership is formed are as follows.To carry on the business as interior designer, both as
principal or agent, either by contracting designs, services, labor, materials and any other business similar
or analogous to the foregoing, or any of them; To acquire lease or hire lands, buildings or any real
property, export, import equipments and machineries necessary for carrying out any of the purposes of
the partnership, either on its own or through a joint venture with other persons or entities;To hold,
purchase or be interested in the shares of capital stock, bonds or other evidence of debts issued or
created by any person, corporation or partnership;To borrow or use money for the use and benefit of the
partnership;To buy, sell, manufacture, export, import, let or hire and deal in and with all kinds of articles
and things which may be required for the purposes of any said business; To do any and all other things
necessary, suitable or incidental in furtherance of any or all of the purposes set forth herein."
Further, Sec. 1, Art. I, Articles of Partnership of Group 3 Design Studio provides: "The purpose of which
this Partnership is formed shall be the general practice of architecture and other allied services."Hence,
Goudie Associates Manila Ltd. Co. may engage in the business of consultancy services related and
pursuant to the business of interior design and other purposes mentioned in its Articles of Partnership.
Likewise, Group 3 Design Studio may also engage in the business of consultancy involving the general
practice of architecture and other allied services, as stated in its Articles of Partnership.
E. FIRM NAME
ARTICLE 1815: Every partnership shall operate under a firm name, which may or may not include the
name of one or more of the partners.
Those who, not being members of the partnership, include their names in the firm name, shall be subject
to the liability of a partner.
SEC MEMORANDUM CIRCULAR NO.5,,S. 2008, AS AMENDED: (pdf file)
OCTOBER 19, 1984 SEC OPINION TO RENATO SANTIAGO:
JULY 8, 1987 SEC OPINION TO MINISTRY OF TRADE AND INDUSTRY

ARTICLE 1846: The surname of a limited partner shall not appear in the partnership name unless:
(1) It is also the surname of a general partner, or
(2) Prior to the time when the limited partner became such, the business has been carried on
under a name in which his surname appeared.
A limited partner whose surname appears in a partnership name contrary to the provisions of the first
paragraph is liable as a general partner to partnership creditors who extend credit to the partnership
without actual knowledge that he is not a general partner.
APRIL 25, 1984 SEC OPINION TO MILTON CHRISTOPHER:
Gentlemen: In connection with the articles of partnership of the proposed Milton Cristopher Co. Ltd.,
please be informed that the same cannot be given due course in view of the prohibition of inclusion of
surname of a limited partner in the partnership name under Article 1846 of the Civil Code of the
Philippines, which provides, as follows:
"ARTICLE 1846. 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 is surname appeared.
A limited partner whose surname appears in a partnership name contrary to the provisions of the first
paragraph is liable as a general partner to partnership creditors who extend credit to the partnership
without actual knowledge that he is not a general partner."
Although the law prohibits only the use of "surname" we cannot allow the inclusion of the "first name" of
the limited partner in the instant case as its inclusion would have the same misleading effect that the
"limited" partner is a "general" partner since Milton Cristopher and Milton Cristopher Fitch are one and the
same person.
In view thereof, it is advised that the partnership name be changed. Pending compliance herewith action
on your papers will be held in abeyance.