Law on Partnership Reviewer | Article 1771 to 1775

Law on Partnership Reviewer | Article 1771 to 1775

   October 17, 2018       FJ

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       I.            LAW ON PARTNERSHIP REVIEWER | ARTICLE 1771-1775 (NCC)

a.      FORM OF PARTNERSHIP

¾    GR: no special form is required for the validity or existence of the contract of partnership.

- may be made orally or in writing regardless of the value of the contributions.

- Its existence may be implied from the acts or conduct of the parties, as well as from other declarations, and such implied contract would be as binding as a written and express contract.

- A partnership may even be created without any definite intention; the intention of the parties being inferred from their conduct and dealings with each other.

ETR:

- where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary. (1771)

- An agreement to enter in a partnership at a future time, which “by its terms is not to be performed within a year from the making thereof” is covered by the Statute of Frauds.

- having a capital of P3,000 or more, in money or property, shall appear in a public instrument, which must be recorded in the Office of the SEC.

b.      WHEN A PARTNERSHIP SHOULD BE IN WRITING

¾    Art. 1771 - where immovable property or real rights are contributed thereto, in which case a public instrument shall be necessary.

REASON: To affect 3^rd persons, the transfer of real property to the partnership must be duly registered in the Registry of Property of the province or city where the property contributed is located.

¾    Art. 1403 (2[a]) - When partnership agreement covered by Statute of Frauds.

An agreement to enter in a partnership at a future time, which “by its terms is not to be performed within a year from the making thereof” is covered by the Statute of Frauds.

¾    Art. 1772 - 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:

= NOT prevent the formation of the partnership (1768)

= NOT affect its liability and that of the partners to third persons.

= But any of the partners is granted the right by the law to compel each other to execute the contract in a public instrument.

- Registration is necessary as “a condition for the issuance of licenses to engage in business or trade.