In the Philippines, the creation and regulation of partnerships are governed by the Civil Code of the Philippines (Republic Act No. 386), specifically under Title IX, Chapter 4. A limited partnership is a unique business structure that allows for a combination of management control and investment protection, provided specific statutory requirements are strictly met.

Definition and Nature

A Limited Partnership is one formed by two or more persons, having as members one or more general partners and one or more limited partners.

General Partners: They manage the business and are personally liable for partnership debts and obligations.
Limited Partners: They contribute capital but do not participate in management. Their liability is limited to the extent of their capital contribution.

1. Essential Requisites for Formation

Unlike a general partnership, which can often be created by mere agreement, a limited partnership is a statutory creation. Substantial compliance with the following requirements is mandatory under Article 1844 of the Civil Code:

A. Execution of the Certificate of Limited Partnership

The partners must sign and swear to a certificate which states:

The name of the partnership (which must include the word "Limited" or "Ltd.").
The character of the business.
The location of the principal place of business.
The name and place of residence of each member, designating who are general and who are limited partners.
The term for which the partnership is to exist.
The amount of cash and a description of and the agreed value of the other property contributed by each limited partner.
The additional contributions, if any, to be made by each limited partner and the times at which they shall be made.
The time, if agreed upon, when the contribution of each limited partner is to be returned.
The share of the profits or other compensation by way of income which each limited partner shall receive by reason of their contribution.
Any rights regarding the substitution of an assignee as a limited partner, the admission of additional partners, or priority rights among limited partners.

B. Filing with the Securities and Exchange Commission (SEC)

The sworn certificate must be filed for record in the Securities and Exchange Commission (SEC). In the Philippines, the SEC is the primary regulatory body that oversees the registration of partnerships.

Important: If the certificate is not filed, the partnership is generally treated as a general partnership with respect to third persons, meaning all partners could be held personally liable for the firm's debts.

2. Name Requirements

Under Philippine law, the surname of a limited partner shall not appear in the partnership name unless:

It is also the surname of a general partner; or
Prior to the time when the limited partner became such, the business had been carried on under a name in which that surname appeared.

A limited partner whose name appears in a partnership name contrary to these rules is liable as a general partner to partnership creditors who extend credit without actual knowledge that they are not a general partner.

3. Contribution of Limited Partners

A limited partner may contribute cash or other property, but not services. If a person contributes only services (an industrial partner), they must be classified as a general partner.

4. Rights and Limitations of Limited Partners

While general partners have the same rights and powers as in a general partnership, limited partners have specific statutory rights:

Access to Books: To inspect and copy the partnership books at reasonable hours.
Information: To demand true and full information of all things affecting the partnership.
Dissolution: To demand dissolution and winding up by decree of court.
Profit Sharing: To receive a share of the profits or other compensation by way of income, provided the partnership assets exceed the liabilities.

Prohibition on Management: A limited partner shall not become liable as a general partner unless, in addition to the exercise of their rights and powers as a limited partner, they take part in the control of the business.

5. Admission of Additional Partners

After the formation of a limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate with the SEC, signed by all members.

6. Summary of Registration Steps

Name Reservation: Verify and reserve the partnership name through the SEC’s online portal.
Preparation of Articles: Draft the Articles of Limited Partnership containing all requirements under Article 1844.
Notarization: The document must be acknowledged before a Notary Public.
Submission: Submit the notarized articles, along with a Tax Identification Number (TIN) for each partner and the required registration fees, to the SEC.
Issuance of Certificate: The SEC issues a Certificate of Recording, marking the legal commencement of the partnership's personality.