Short answer. Yes. Under Civil Code Article 1816, all partners — including those who contributed only their services — are personally liable for partnership contracts, but only after all partnership assets have been exhausted. The creditor must go after the partnership first; personal liability is secondary.
What the law says
All partners, including industrial ones, shall be liable pro rata with all their property and after all the partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account of the partnership, under its signature and by a person authorized to act for the partnership.
Civil Code, Article 1816 — Pro Rata Liability of Partners. Read the full provision →
The exhaustion requirement
Article 1816 creates a two-step process for creditors. A creditor who entered a contract with the partnership must first pursue the partnership's own assets — its cash, receivables, equipment, real property, whatever it owns — before turning to the individual partners. Only when those assets have been exhausted can the creditor move against the partners personally. This is not merely a practical sequence; it is a legal requirement. A creditor who tries to skip the partnership and go straight for a partner's personal bank account or property may be premature, and a partner in that position can raise the exhaustion requirement as a defence.
All partners are liable, including industrial partners
The article is explicit that all partners bear this liability — including industrial partners, meaning those who contribute their services or skills rather than capital. This surprises some people: an industrial partner may have contributed no money at all, yet stands personally liable for partnership debts once partnership assets run dry. The rationale is that all partners, regardless of contribution type, share in the enterprise and its benefits. All therefore share in the residual risk when the partnership cannot meet its obligations.
The liability is pro rata, not joint and several
When personal liability does attach, it is pro rata — divided among the partners in proportion to their respective stakes. This is distinct from joint and several liability, where any one partner could be made to pay the entire debt. Under Article 1816, a creditor cannot single out the wealthiest partner and demand full payment from that person alone. Each partner's exposure is limited to a proportionate share of the shortfall. The exact proportions depend on the terms of the partnership, which ordinarily reflect each partner's capital or agreed profit-sharing ratio.
The separate-obligation exception
Article 1816 preserves the right of any individual partner to take on a separate obligation to perform a partnership contract. If one partner personally guarantees a partnership obligation, that partner has stepped beyond the pro-rata, post-exhaustion framework and accepted direct personal exposure. A creditor who has such a guarantee does not need to exhaust partnership assets first before claiming against the guaranteeing partner — the partner has contracted around the protection the article would otherwise give. This matters in loan and credit transactions where lenders routinely require personal guarantees from individual partners.
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 →
- Michael C. Guy vs. Atty. Glenn C. Gacott, G.R. No. 206147, January 13, 2016 — read the decision on LawPhil →