CONFIDENTIAL

Decmber xx, xxxx

Mr. John Doe

123 Merchan Street
Lucena City, Quezon

Attention : John Doe

Executive Trustee of Doe Family Trust
---------------------------------------------------Re

: Establishing an investment vehicle

-----------------------------------------------

Sir:
We refer to your request for our opinion on your intention on establishing
an investment vehicle where several participants can come in and out
virtually at anytime without any added hassle and retaining almost absolute
control over everything. With the inclusion of the other entities you control
as potential participants aside from other interested parties.
What is an investment vehicle?
An investment vehicle is a product used by investors with the
intention of gaining positive returns. Investment vehicles can be low
risk, such as certificates of deposit (CDs) or bonds, or carry a greater
degree of risk such as with stocks, options and futures. Other types of
investment vehicles include annuities; collectibles, such as art or
coins; mutual funds; and exchange-traded funds (ETFs).
Regarding on your intention on establishing an investment vehicle aside
from a corporation, our legal opinion is for you to be engaged in a limited
partnership.
What is a limited partnership?
The Philippine Civil Code provides for a definition of a limited partnership
as follows:

Art. 1843. A limited partnership is one formed by two or more persons

under the provisions of the following article, having as members one
or more general partners and one or more limited partners. The
limited partners as such shall not be bound by the obligations of the
partnership.
As a general rule, the characteristics of a limited partner are as follows:
1. A limited partnership is formed by compliance with the statutory
requirements (Art. 1844);
2. One or more general partners control the business and are
personally liable to creditors (Art. 1848, 1850)
3. One or more limited partners contribute to the capital and share in
the profits but do not participate in the management of the business and are
not personally liable for the partnership obligations beyond the amount of
their capital contributions (1845, 1848, 1856);
4. The limited partners may ask for the return of their capital
contributions under the conditions prescribed by law (Art. 1844(b), 1857);
and
5. The partnership debts are paid out of common fund and the
individual properties of the general partners.
The general partners are treated by the law much like a partner in an
ordinary partnership. They are typically those who know how to manage the
business. The limited partners are usually those who put money for the
business. They are only investors. Thus, a limited partner has the same type
of liability as stockholder in a corporation.
The business reason
partnerships are:

and

purpose

of

statutes

authorizing

limited

1. To secure capital from others for ones business and still retain
control.
2. Share in profits of a business without risk of personal liability.
3. Associate as partners with those having business skill.
Based on the cited provisions, what we suggest is for you to form a limited
partnership, you being the general and limited partner at the same time. In
this kind of partnership, several participants can come in and out virtually
at anytime and you will also be retaining almost absolute control on
everything. According to Art. 1854 of the Civil Code of the Philippines:

Art. 1854. A person may be a general partner and a limited partner in

the same partnership at the same time, provided that this fact shall be
stated in the certificate provided for in Art. 1844.
A person who is a general partner, and also at the same time a limited
partner, shall have all the rights and powers and be subject to all the
restrictions of a general partner, except that, in respect to his
contribution, he shall have the rights against the other members
which he would have had if he were not also a general partner.
In the limited partnership that you would be establishing, you as the owner
of several entities will be the general partner and as the same time a limited
partner as a trustee of the Doe Family Trust.
As the trustee of a trust, the trustee is obliged to deal with the property for
the benefit of another. The person holding, in view of his equitable title, is
allowed to exercise certain powers belonging to the another of legal title.
(DPB vs. COA, 422 Scra 459)
Therefore, there will be no legal impediment in entering in a limited
partnership as the trustee of the Doe Family Trust.
Here are the following requirements on establishing a limited partnership:
Art. 1844. Two or more persons desiring to form a limited partnership
shall:
(1) Sign and swear to a certificate, which shall state (a) The name of the partnership, adding thereto the
word "Limited";
(b) The character of the business;
(c) The location of the principal place of business;
(d) The name and place of residence of each member, general
and limited partners being respectively designated;
(e) The term for which the partnership is to exist;
(f) The amount of cash and a description of and the agreed value
of the other property contributed by each limited partner;
(g) The additional contributions, if any, to be made by each
limited partner and the times at which or events on the
happening of which they shall be made;

(h) The time, if agreed upon, when the contribution of each

limited partner is to be returned;
(i) The share of the profits or the other compensation by way of
income which each limited partner shall receive by reason of his
contribution;
(j) The right, if given, of a limited partner to substitute an
assignee as contributor in his place, and the terms and
conditions of the substitution;
(k) The right, if given, of the partners to admit additional limited
partners;
(l) The right, if given, of one or more of the limited partners to
priority over other limited partners, as to contributions or as to
compensation by way of income, and the nature of such priority;
(m) The right, if given, of the remaining general partner or
partners to continue the business on the death, retirement, civil
interdiction, insanity or insolvency of a general partner; and
(n) The right, if given, of a limited partner to demand and
receive property other than cash in return for his contribution.
(2) File for record the certificate in the Office of the Securities
and Exchange Commission.
A limited partnership is formed if there has been substantial
compliance in good faith with the foregoing requirements.
The following requirements in registering a limited partnership provided in
the Securities and Exchange Commission are:
Basic Requirements
1. Name Verification Slip
2. Articles of Partnership (AP); and
3. Joint affidavit of two partners to change partnership name. (not
required if already stated in AP)
Additional requirements
1. Endorsement/clearance
applicable

from

other

government

2. For partnership with foreign national as partner

agencies,

if

a) FIA Form - 105

Note: For limited partnership, the word Limited or Ltd should form part
of the partnership name.
Please note the following:
1. All applications and supporting documents must be in four (4) copies
and in A4 size bond paper with a cover sheets.
2. Documents signed abroad must be authenticated by the Philippine
Embassy or Consulate in the country where signed.
3. Audited Financial Statements and Special Audit Reports must be
certified by an independent Certified Public Accountant (CPA), with
Statement of Representation filed with the SEC. Said statement must
indicate the CPA Cert. No., PRC/BOA No. and the PTR No. of the CPA
and SEC accreditation of External Auditor if applicable.
4. All applications must indicate the Tax Identification Number (TIN) of
the incorporators, directors/trustees, stockholders/members for
corporations, and partners for partnerships.
Procedure
1. Verify/reserve proposed name (on-line or at the Name Verification
Unit, 2nd floor, SEC Bldg.)
2. Draw up the Articles of Incorporation and ByLaws in accordance with
the Corporation Code. (Blank forms are also available at SECCU, 3rd
floor, SEC Bldg.)
3. If applicable, get endorsements from other government agencies. In
addition, the CRMD obtains clearances from other SEC departments
whenever these are deemed appropriate.
4. Deposit paid-up capital / contribution (for foundations only) in the
bank.
5. Present six (6) sets of the accomplished forms and documents for preprocessing at the CRMD. Only complete application documents are
accepted for processing. All documents executed outside the
Philippines must be authenticated by the appropriate Philippine
embassy or consulate in the area concerned.
6. Pay the filing fees to Cashiers counter. (located at G/F SEC Bldg.)
7. Claim the Certificate/License from the Releasing Unit, Records
Division upon presentation of the official receipt issued for payment of
filing fee.
REMINDER: Applicants must buy and register their Stock & Transfer Book
or Membership Book immediately after the issuance of the Certificate of
incorporation or within 30 days upon issuance thereof.

All registered corporations are required to submit a yearly General

Information Sheet (GIS) and Audited Financial Statement (AFS) in the
appropriate formats specified by the Commission.
How to Avail of the Service?
STEP
DURATIO
N
1
10 mins.

10-15
mins.

APPLICANT/CLIEN
T

SERVICE
PROVIDER

GUIDELINES

Verify
or
reserve If
proposed
proposed name
name
is
allowed
by
the
system,
the
reservation
and
confirmation
notice
is
printed and
given to the
applicant;
Present Articles of
Incorporation and ByLaws at Green Lane
Unit 2nd Floor, SEC
Bldg.

Check
the
document
presented. If
complete,
advise
the
registrant to
pay the filing
fee. If not,
advise
applicant to
comply with
requirements

FEES
P40.00
reservation
for 30 days;
P80.00
reservation
for 60 days;
120.00
reservation
for 90 days

Requirements
of the Civil
Code of the
Philippines
and
other
existing laws
M.C. No. 21 s.
of 2013 on
Omnibus
Guidelines
and
Procedures on
the
use
of
Corporate and
Partnership
names
M.C. No, 8 s.
of 2013 on
Filipinoforeign
ownership on

Filing fee:
1/5 of 1% of
the
Partnership
`s capital
but not less
than
P1,000.00
plus 1% of
the amount
as legal
research
fee

nationalized
and
partly
nationalized
activities
M.C. No. 3 s
of 2006 on
principal
office
and
SEC MC No. 6
s. of 2014 on
amendment of
the principal
office address
E.O. 98 dated
April 28, 1999
on
Tax
Identification
Number (TIN)
MC No. 1 s. of
2013
on
mandatory
TIN of foreign
investors
3
1 min

Pay filing fee at the

Cashier located at the
2nd Floor and file
application with the
Receiving
Unit,
CRMD located at the
2/F, SEC Bldg.

After receipt
of
the
application,
CPRD
staff
generates
the
Certificate of
Recording of
the Articles
of
Partnership
bearing
applicant`s
SEC
registration
no.
and

None

Unified
Registration
Report (URR)
4
5 mins.

Present
Official
Receipt to Releasing
Unit, CRMD, 2/F, SEC
Bldg. to get the
Certificate
of
Recording
of
the
Articles
of
Partnership

The
Asst.
Director
reviews the
application
and forward
it
for
approval
of
the
CRMD
Director.

None

Note : Duration of activity under normal circumstances

: Attached here is the list of the business activity which requires clearances
from other SEC departments and endorsements from other government agencies.
We hope that we have sufficiently advised you on the matter. Should you have
other questions or need further clariffications, please do not hesitate to wirte or
call us.
Very truly yours,
Cano and Associates
By:

____________________________

____________________________

____________________________