P Limited Partner Partnership Contributed Liable Net L

In 2005, L, M, N, 0 and P formed a partnership. L, M and N were capitalist partners who contributed P500,000 each, while 0, a limited partner, contributed P1 ,000,000. P joined as an industrial partner, contributing only his services. The Articles of Partnership, registered with the Securities and Exchange Commission, designated L and 0 as managing partners; L was liable only to the extent of his capital contribution; and P was not liable for losses.

In 2006, the partnership earned a net profit of P800,000. In the same year, P engaged in a different business with the consent of all the partners.  However, in 2007, the partnership incurred a net loss of PSOO,OOO. In 2008, the partners dissolved the partnership. The proceeds of the sale of partnership assets were insufficient to settle its obligation. After liquidation, the partnership had an unpaid liability ofP300,000.

SUGGESTED ANSWER:

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. (Art. 1848 Civil Code)  In the absence of stipulation as to profits and losses, the share of each partner in the losses shall be in proportion to what he may have contributed (Art. 1797).