Short answer. Yes. Under Article 1772, failure to record the partnership contract with the Securities and Exchange Commission does not affect the liability of the partnership and its members to third persons. Registration is required for larger partnerships, but skipping it does not let the partners escape their obligations to the people they deal with.
What the law says
Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons.
Civil Code, Article 1772 — Registration of a P3,000+ Partnership. Read the full provision →
Registration is required, but not for liability
Article 1772 requires that 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. That is a real duty. But the article immediately adds that failure to comply with the requirements of the preceding paragraph shall not affect the liability of the partnership and the members thereof to third persons. So the registration rule governs formalities and record-keeping; it does not decide whether outsiders can hold the partnership answerable. A partnership that never registered is still a partnership, and it still owes what it owes to the people it transacted with.
Why non-registration does not help the partners
The law refuses to let partners benefit from their own failure to follow a formality. If skipping SEC registration wiped out the firm's obligations, partners could evade creditors simply by never registering — an obviously unfair result. Third persons who supplied goods, lent money, or rendered services to the business dealt with it in good faith and are entitled to be paid. Article 1772 protects them by making clear that the partnership's and the partners' liability to outsiders stands whether or not the paperwork was filed. The registration requirement exists for transparency and record purposes, not as a shield the partners can hide behind.
The partnership still exists between the partners too
Non-registration does not, by itself, make the partnership void or non-existent even among the partners. A partnership may be created by the agreement of the parties, and the failure to embody it in a registered public instrument does not defeat its existence for most purposes. The partners remain bound by their arrangement, and the firm can generally still be recognised in dealings with third persons. Registration and the public instrument carry weight for certain purposes and for good order, but their absence is treated as a defect in form rather than a reason to pretend the partnership never came into being.
What partners should still do
None of this makes registration optional in a practical sense. Reducing the partnership to a public instrument and recording it with the SEC gives the firm a clear legal footing, aids in dealing with banks and government offices, and avoids disputes about the terms of the arrangement. The point of Article 1772 is narrower: it prevents partners from using their own non-compliance to dodge people who relied on the business. So if your partnership is unregistered, expect to remain liable to your creditors and other outsiders — and consider completing the registration to put the venture on proper footing going forward.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Aniceto G. Saludo, Jr. vs. Philippine National Bank, G.R. No. 193138, August 20, 2018 — read the decision on LawPhil →
- Lilibeth Sunga-Chan, et al. vs. Lamberto T. Chua, G.R. No. 143340, August 15, 2001 — read the decision on LawPhil →
- Marjori Tocao and William T. Belo vs. Court of Appeals and Nenita A. Anay, G.R. No. 127405, October 4, 2000 — read the decision on LawPhil →