Art.

1770
Art. 1770. A partnership must have a lawful
object or purpose, and must be established
for the common benefit or interest of the
partners.
When an unlawful partnership is dissolved by
a judicial decree, the profits shall be
confiscated in favor of the State, without
prejudice to the provisions of the Penal Code
governing the confiscation of the instruments
and effects of a crime
Illegal Purpose is separable
Where a partnership is sought to be
performed for several purposes, and only one
of the purposes is illegal, the partnership will
be sustained if the illegal object can be clearly
separated from the legal object of the
partnership.
Example of Unlawful
Partnership
Partnership formed to create illegal
monopolies or combinations in restrain of
trade.
Partnership for illegal gambling purpose
Partnership to furnish apartment houses for
prostitution or white slavery.
Profits obtained if Ph is
unlawful
No share in the profits
Confiscated in favor of the state

Common benefit
Must be established for the common benefit
of all the partners

Any stipulation which excludes one or more
partners from any share in the profits or
losses is void.
Art. 1771
A partnership may be constituted in any
form, except where immovable property or
real rights are contributed thereto, in which
case a public instrument shall be necessary.
Form of partnership contract
A. If contribution is money or personal
property
Contract may be oral or written, express or
implied
If capital is less than P3,000 in money or
property may be constituted orally or in
writing
B. If immovable property or real rights are
contributed

Contract must appear in a public instrument,
together with inventory of the immovables or
real rights contributed, signed by the parties,
and attached to the public instrument,
otherwise the contract is void. (Art. 1773)
Coverage of the Statute of
Frauds
1. Promise to answer for the debt, default or
miscarriage of another must be in writing.
2. If the agreement to form a partnership shall be
performed after one year, the same must be in
writing.
3. Contracts for the sale of real property or any
interest therein for leasing of partnership
property for more than one year must be in
writing.
4. Sale of property at a price not less than P500
must be in writing, unless there is delivery or
payment.
Art 1772
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
SEC.

Failure to comply with the requirements of
the preceding par. shall not affect the liability
of the partnership and the members thereof
to third persons.
Directory provision, not
mandatory
Legal effects
1. There is a valid partnership, separate and
distinct from the partners.
2. The partnership and the partners are still
liable.
3. The partners may compel each other to put
it in a public instrument (Art. 1357)
Effect of non-registration
For validity, a contract of partnership, whether
written or oral is valid.

Registration is only necessary as a condition for
the issuance of license to engage in business or
trade, so that tax liabilities of big partnership
cannot be evaded, and the public can also
determine more accurately the partnership
members and their capital contribution on the
partnership capital before dealing with them.
Art. 1773
A contract of partnership is void, whenever
immovable property is contributed thereto if
an inventory of said property is not made,
signed by the parties, and attached to the
public instrument.
Requirements if immovable
property is contributed
1. public instrument must be constituted
2. Inventory of real or immovable property,
signed by the parties
3. Inventory must be attached to the public
instrument.
Effect of failure to comply
1. No juridical personality
2. The parties cannot compel each other to
observe the required form
3. The parties may request the return of their
capital contribution
Art. 1774
Any immovable property or an interest
therein may be acquired in the partnership
name. Title so acquired can be conveyed only
in the partnership name.
Acquisition of immovable
property
Being a juridical person, it can acquire and
possess property of all kinds, as well as incur
obligations and bring civil or criminal actions,
in conformity with the laws and regulations of
their organization.
Conveyance of property
Only in the name of the partnership
Art. 1775
Associations and societies, whose articles are
kept secret among the members, and
wherein any one of the members may
contract in his own name with third persons,
shall have no juridical personality, and shall
be governed by the provisions relating to co-
ownership.
Where rules on co-ownership
governs
Lack of legal personality as members can
enter into a contract in their individual
capacity.
Third persons with whom the partnership
wishes to deal are entitled to know the
articles of partnership.
Art. 1776
As to its object, a partnership is either
universal or particular.

As regards the liability of the partners, a
partnership may be general or limited.