Short answer. Yes, in most cases. Philippine law allows a partnership to be formed in any form — oral, written, or by conduct — unless the partners are contributing immovable property or real rights, in which case a public instrument is required. A missing written contract does not automatically make a partnership invalid.
What the law says
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.
Civil Code, Article 1771 — Form of a Partnership. Read the full provision →
The general rule: no special form required
Article 1771 of the Civil Code states clearly: 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. For most partnerships — those involving only money, movable property, or personal skill and effort — no written contract, notarized deed, or SEC registration is required for the partnership to be valid as between the partners. The arrangement may be proven by the partners' conduct, oral agreements, or any available evidence of their mutual intent.
When a written instrument is required
The exception is significant: when immovable property or real rights are being contributed to the partnership, a public instrument — meaning a notarized deed — is necessary. This is because immovable property transactions generally require a higher level of formality under Philippine law, and the partnership's claim to the contributed property must be legally established and enforceable against third parties. If a partner contributed land to the partnership without executing the required public instrument, the contribution may not be enforceable against the partner or third parties in the way the partners expected.
Validity between partners, and against third parties
Even a validly formed informal partnership may face practical difficulties. Without a written agreement, disputes over each partner's share, management rights, duties, and the rules for dissolution must be resolved by reference to the default Civil Code provisions — which may not match what the partners informally agreed. A partnership that is not registered with the Securities and Exchange Commission may also have difficulty opening bank accounts, entering certain contracts, or asserting claims in formal legal proceedings. Informality is legally permissible but practically limiting.
What to do going forward
If your partnership is operating without a written contract and none of the contributed assets are immovable property, the partnership is valid. But you should consider formalizing the arrangement. A written partnership agreement — even a simple one — clarifies what each partner owns, how profits are divided, who has authority to bind the firm, and what happens when someone leaves or dies. Operating on a handshake works until something goes wrong. A clear agreement reduces the chance of dispute and provides a reference point if disagreements arise.
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.
- 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 →