Short answer. A partnership exists when two or more people bind themselves to contribute money, property, or industry to a common fund, intending to divide the profits among themselves. Article 1767 also allows two or more people to form a partnership for the exercise of a profession.
What the law says
By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.
Civil Code, Article 1767 — Contract of Partnership Defined. Read the full provision →
A contribution to a common fund
Article 1767 requires that the persons involved bind themselves to contribute money, property, or industry to a common fund. That contribution can take three different forms — money, property, or industry, meaning a person's work or effort — but some contribution to a fund shared between the parties has to exist. People who simply work near each other, or who deal with each other as separate businesses, are not partners under this article without that binding commitment to contribute to something held in common.
The intention to divide profits
The article also requires the intention of dividing the profits among themselves. This is what separates a partnership from other arrangements where people might pool resources for a shared purpose without meaning to split what comes out of it. Two people are not partners under Article 1767 merely because they cooperate on a venture — they have to intend, from the start, to share in the profits that venture generates.
Both elements have to be present together
Article 1767's definition combines the contribution and the profit-sharing intention into a single test: a contract of partnership exists where two or more persons commit to a common fund made up of money, property, or industry, with the shared intention of dividing the profits. Neither element alone is enough. A shared fund without any intention to divide profits, or an intention to share future gains without any actual contribution bound to a common fund, does not by itself satisfy what this article describes.
Professions are expressly included
Article 1767 closes with a second sentence extending the same basic idea to professional work: two or more persons may also form a partnership for the exercise of a profession. This confirms that the concept is not limited to commercial ventures selling goods — people practicing a profession together, on the same footing of common contribution and shared profit, fall within what the article recognizes as a partnership.
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 →
- Antonia Torres, et al. vs. Court of Appeals, et al, G.R. No. 134559, December 9, 1999 — read the decision on LawPhil →
- 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 →