Sahlee

Gilmore

Karen

1. What are the effects of an unlawful partnership?

a. The contract is void ab initio and the partnership never existed in the eyes of the law
b. The profits shall be confiscated in favor of the government;
c. The instruments or tools and proceeds of the crime shall also be forfeited in favor of the
government; and
d. The contributions of the partners shall not be confiscated unless they fall under No. 3.

2. In what form may a partnership be constituted?

General Rule: A partnership contract may be express or implied.

Exceptions:

a. Where immovable property or real rights are contributed, a public instrument shall be
necessary; and
b. When partnership agreement is covered by Statute of Frauds, that is an agreement to
enter in a partnership at a future time which is not to be performed within a year,
agreement is unenforceable unless the same be in writing or at least evidenced by some
note or memorandum thereof subscribed by the parties (Art. 1403, Civil Code).

3. A and B, cousins, are planning to build a grocery store with a capital of P100,000. As a lawyer
friend of A, what will be your advice to A and B?

Under Article 1772 of the Civil Code, “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.”

As a lawyer, I will advise A and B to execute a partnership contract, prepare all other necessary
documents, then register the partnership on the Securities and Exchange Commission.

Bon

1. What is the consequence of not preparing an inventory of immovable property, as required by

Article 1773?

Answer: Without the inventory, the partnership is void, unless it involves no third party and
the partners claim the partnership agreement.
 2. How does Article 1775 impact associations and societies with secret internal articles?

Answer: Article 1775 renders them without juridical personality, subjecting them to co-
ownership provisions instead.

3. Define a limited partnership and briefly describe the liability of limited partners.

Answer: A limited partnership includes both general and limited partners. Limited partners are
not personally liable for partnership debts.

Jayson