Short answer. No, not by itself. Article 1769 of the Civil Code says the sharing of gross returns does not of itself establish a partnership, whether or not the parties have a joint or common interest in the property the returns come from. Splitting combined gross sales alone does not make two businesses partners.
What the law says
The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived
Civil Code, Article 1769 — Rules to Determine Existence of a Partnership. Read the full provision →
What the law says
The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business
Civil Code, Article 1769 — Rules to Determine Existence of a Partnership. Read the full provision →
Gross returns are named specifically, and excluded
Article 1769 states this rule as one of several factors for determining whether a partnership exists. The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property from which the returns are derived. Splitting combined gross sales fits this description directly, and the article says that fact alone is not enough.
Why gross returns are treated differently from profits
Article 1769 draws a real distinction between gross returns and profits. It separately provides that the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business. Profits are what remain after expenses and costs are accounted for, which more plausibly reflects a shared stake in how the business actually performs than raw, gross sales figures do.
Why the property or interest connection does not change this
The gross-returns rule applies whether or not the parties have a joint or common right or interest in the property the returns come from. Even if the two businesses share some connection to the underlying property or venture, that additional fact does not convert gross-returns sharing into partnership evidence on its own — Article 1769 excludes it regardless of that additional connection.
What this means for your two businesses
An agreement to split combined gross sales, standing alone, is not something Article 1769 treats as establishing a partnership between the two businesses. Whether a partnership actually exists would depend on other facts about the relationship — how profits are shared, how control and management are exercised — rather than on the gross-returns split by itself, which this article expressly rules out as sufficient proof on its own.
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.
- Pedro D. Dusol and Maricel M. Dusol vs. Emmarck A. Laso, as owner of, G.R. No. 200555, January 20, 2021 — read the decision on LawPhil →
- Federico Jarantilla, Jr. vs. Antonieta Jarantilla, et al, G.R. No. 154486, December 1, 2010 — read the decision on LawPhil →
- Heirs of Jose Lim, represented by Elenito Lim vs. Juliet Villa Lim, G.R. No. 172690, March 3, 2010 — read the decision on LawPhil →
- Heirs of Tan Eng Kee vs. Court of Appeals, G.R. No. 126881, October 3, 2000 — read the decision on LawPhil →