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Article 1771. 4.

Purpose:
1. General rule -- no special form is required for the a) A condition for issuance of licenses
validity or existence of the partnership; may be to engage in business or trade
made orally or in writing regardless of the value of
contributions. b) For tax purposes (tax liabilities
cannot be evaded)
2. Exceptions --
c) Public can determine more
a) if real properties are contributed, public accurately their membership and
instrument is necessary. Otherwise, the capital before dealing with them
contract is void. To affect third persons,
the transfer of real property to the 5. The recording of articles of partnership
partnership must be duly registered in is not for the purpose of giving the
the Registry of Property of the province partnership juridical personality; the only
or city where the property is located. objective of the law is to make the
recorded instrument open to all and to
b) If covered by Statute of Frauds -- when an give notice thereof to interested parties.
agreement to enter in a partnership which The objective is achieved from the date the
is not to be performed within a year from partnership papers are presented to and left
the making thereof, such is unenforceable for record in the Commission.
unless in writing or at least evidence by
some note or memorandum subscribed by 6. When the certificate recording of the
the parties. instrument is issued on a date
subsequent to the date of presentation
3. Partnership implied: thereof, its effectivity retroacts as of the
later date.
a) Its existence may be implied from the acts
or conduct of the parties, as well as from
other declarations; such implied contract
shall be binding as a written and express Article 1773.
contract. 1. The failure to comply with the following
b) The intention as disclosed by the entire requirements shall render the partnership
transaction, and as gathered from the void insofar as the contracting parties are
facts and from the language employed concerned:
by the parties as well as their conduct, a) Contract must be in a public
should be ascertained. instrument
c) If the parties intend a general partnership, b) Inventory of the property
they are general partners although their contributed must be made, signed
purpose is to avoid the creation of such by the parties, and attached to the
relation. public instrument
2. Article 1773 is intended primarily to
Article 1772. protect third persons. With regard to them, a
de facto partnership or partnership by
1. Two requirements when partnership is with estoppel may exist.
capital of P3,000 or more:
3. Article 1773 does not apply in the case of
a) Contract must appear in a public immovable property which may be
instrument possessed or even owned by the
partnership but not contributed by any of
b) Must be recorded or registered with the the partners.
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2. Failure to comply does not prevent the
formation of partnership, or affect its liability
and that of the partners to third persons.
3. However, the partners have the right to compel
each other to execute a contract in a public
instrument. Note: this cannot be availed of if the
contract of partnership is void.