An Articles of Partnership — also called a partnership agreement — is the contract by which 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. In the Philippines the partnership is governed by the Civil Code provisions on partnership (Articles 1767 to 1842), and it acquires a juridical personality separate from the partners from the moment the contract is executed.
What Is a General Partnership Agreement?
It is the founding document of a partnership. It records who the partners are, what each contributes, how profits and losses are shared, how the business is managed, and how the partnership may be dissolved. Under Article 1767, the essence of a partnership is the contribution to a common fund and the intent to divide the profits — so the agreement must clearly state each partner's contribution and profit share.
A partner may contribute money, property, or industry (skill or services). A partner who contributes money or property is a capitalist partner; one who contributes only services is an industrial partner. The distinction matters for liability and for the right to engage in other business, as discussed below.
When Do You Need One?
You need an Articles of Partnership whenever two or more people go into business together and intend to share the profits. Common situations include:
- Co-owners starting a business — friends, family, or colleagues pooling capital to open a trading, food, services, or professional firm.
- Bringing in a working partner — where one party contributes capital and another contributes management or technical skill (a capitalist-industrial arrangement).
- Formalizing an existing venture — converting an informal joint undertaking into a registered partnership with the SEC for banking, permits, and tax purposes.
- Professional partnerships — where licensed professionals practice together under a common firm name.
Where the partners want to limit some investors' liability to the amount they put in, the proper instrument is a limited partnership agreement instead.
Key Provisions of an Articles of Partnership
A complete Articles of Partnership should address all of the following:
- Firm name — the name under which the partnership will operate.
- Nature and purpose of business — the activities the partnership is formed to undertake.
- Principal place of business — the partnership's main office.
- Term — fixed-term, at-will, or until dissolved.
- Capital contributions — what each partner contributes (cash, property, or industry) and the total capital.
- Profit and loss sharing — each partner's share, and the rule that an industrial partner is not liable for losses (Art. 1797).
- Management — whether all partners manage or a managing partner is designated.
- Rights, powers, and duties — agency, good faith, and the limits on competing business (Arts. 1789, 1808).
- Books, dissolution, dispute resolution, governing law, and SEC registration — and the acknowledgment before a notary public.
Free Sample — General Partnership Agreement
Below is a complete sample of an Articles of Partnership for a three-partner general partnership engaged in trading, with a capitalist partner contributing cash, a capitalist partner contributing property, and an industrial partner contributing services. Use Legalia Ultra to generate a notary-ready version with your own details, and to toggle optional articles such as bank accounts, salaries and drawings, admission of new partners, dispute resolution, and the notarial block.
ABC Trading Company
KNOW ALL MEN BY THESE PRESENTS:These Articles of Partnership are made and entered into this January 15, 2026, at Makati City, Philippines, by and among:
Juan Dela Cruz, Filipino, of legal age, married, with address at 45 Mabini Street, Barangay Poblacion, Makati City; Maria Santos, Filipino, of legal age, single, with address at 78 Rizal Street, Barangay San Antonio, Quezon City; and Pedro Reyes, Filipino, of legal age, married, with address at 12 Bonifacio Avenue, Barangay Kapitolyo, Pasig City;
(hereinafter collectively referred to as the "Partners").
NOW, THEREFORE, for and in consideration of the foregoing premises and the mutual covenants set forth herein, the Partners hereby agree to form a general partnership under the following terms and conditions:
1. NAME
The partnership shall be conducted under the firm name "ABC Trading Company".
2. NATURE AND PURPOSE OF BUSINESS
The purpose for which the partnership is formed is to engage in the following business: the buying and selling of construction materials and hardware supplies at wholesale and retail, and to do all things necessary, incidental, or related thereto as may be permitted by law.
3. PRINCIPAL PLACE OF BUSINESS
The principal place of business of the partnership shall be at 123 Ayala Avenue, Barangay Bel-Air, Makati City, and it may establish such other offices or places of business as the partners may from time to time agree upon.
4. TERM
The partnership shall commence upon the execution of these Articles and shall continue for a term of 10 year(s) therefrom, unless sooner dissolved in accordance with this Agreement or by operation of law.
5. CAPITAL CONTRIBUTIONS
The capital of the partnership shall consist of the contributions of the partners, which they have contributed or bound themselves to contribute, as follows:
(a) Juan Dela Cruz shall contribute the sum of Five Hundred Thousand Pesos (₱500,000.00) in cash;
(b) Maria Santos shall contribute property consisting of a delivery truck, Toyota Hi-Ace, with Plate No. ABC 1234, with an agreed value of Three Hundred Thousand Pesos (₱300,000.00);
(c) Pedro Reyes shall contribute industry and services to the partnership, particularly management and technical expertise;
The total capital contribution of the partnership is One Million Pesos (₱1,000,000.00).
6. PROFIT AND LOSS SHARING
The net profits and net losses of the partnership shall be divided among and borne by the partners in the following proportions:
(a) Juan Dela Cruz — 40%;
(b) Maria Santos — 35%;
(c) Pedro Reyes — 25%;
It is expressly stipulated that an industrial partner shall not be liable for the losses of the partnership; and should the losses of the industrial partner not be stipulated, the same shall be borne by the capitalist partners in proportion to their capital contributions, in accordance with Article 1797 of the Civil Code. Each capitalist partner shall bear the losses of the partnership in the same proportion in which the profits are shared, except as otherwise provided herein or by law.
7. MANAGEMENT
The management and conduct of the partnership business shall be vested in all the partners, each of whom shall have an equal voice in the management and may act for and bind the partnership in the ordinary course of its business. Acts of strict ownership, or acts beyond the ordinary course of business, shall require the consent of all the partners.
8. RIGHTS, POWERS, AND DUTIES OF THE PARTNERS
Every partner shall act as an agent of the partnership for the purpose of its business and shall observe the diligence of a good father of a family and the utmost good faith in all partnership affairs. A capitalist partner shall not, without the consent of the other partners, engage for his or her own account in any operation of the same kind of business in which the partnership is engaged, in accordance with Article 1808 of the Civil Code. An industrial partner shall not engage in business for himself or herself unless the partnership expressly permits him or her to do so; otherwise, the capitalist partners may exclude him or her from the firm or avail themselves of the benefits which he or she may have obtained, with a right to damages in either case, in accordance with Article 1789 of the Civil Code.
9. BOOKS OF ACCOUNT AND FISCAL YEAR
The partnership shall keep true and complete books of account at its principal place of business, which shall at all reasonable times be open to the inspection of every partner. The fiscal year of the partnership shall end on the thirty-first (31st) day of December of each year, unless otherwise agreed by the partners.
10. ADMISSION OF NEW PARTNERS
No person shall be admitted as a partner without the unanimous written consent of all the existing partners. Any new partner so admitted shall be bound by the terms of these Articles, as the same may be amended, and shall be liable for the obligations of the partnership only as provided by law.
11. WITHDRAWAL, RETIREMENT, OR DEATH OF A PARTNER
The retirement, withdrawal, incapacity, insolvency, or death of any partner shall not necessarily dissolve the partnership where the remaining partners elect to continue its business. In such event, the remaining partners shall have the right to continue the partnership under the same firm name, and the interest of the outgoing partner or his or her estate shall be ascertained and paid in accordance with the books of the partnership and applicable law.
12. DISSOLUTION AND WINDING UP
The partnership shall be dissolved and its affairs wound up upon the expiration of its term, by the unanimous agreement of the partners, or upon the occurrence of any cause provided under Articles 1828 and the following articles of the Civil Code. Upon dissolution, the assets of the partnership shall be applied in the following order: (a) to pay the debts and liabilities of the partnership owing to creditors other than partners; (b) to pay the partners for advances made and for their respective shares of the profits; (c) to return the capital contributions of the partners; and (d) to distribute any remainder among the partners in the proportions in which profits are shared.
13. DISPUTE RESOLUTION
Any dispute or controversy arising out of or in connection with this Agreement shall first be settled amicably by the partners through good-faith negotiation. Failing such settlement, the dispute shall be resolved by arbitration in accordance with the Alternative Dispute Resolution Act of 2004 (Republic Act No. 9285), and the award rendered therein shall be final and binding upon the partners.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the Republic of the Philippines, particularly the provisions of the Civil Code of the Philippines on partnership (Articles 1767 to 1842).
15. REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION
The partners undertake to register this partnership and these Articles with the Securities and Exchange Commission, it being understood that a partnership having a capital of Three Thousand Pesos (₱3,000.00) or more, in money or property, is required to be registered with the Securities and Exchange Commission, in accordance with Article 1772 of the Civil Code.
16. MISCELLANEOUS
This Agreement constitutes the entire agreement among the partners with respect to the partnership and supersedes all prior agreements and understandings, whether oral or written. Any amendment hereto shall be valid only if made in writing and signed by all the partners. Should any provision of this Agreement be declared invalid or unenforceable, the remaining provisions shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands this January 15, 2026 at Makati City, Philippines.
BEFORE ME, a Notary Public for and in the above jurisdiction, personally appeared:
| Name | Competent Evidence of Identity |
|---|---|
| JUAN DELA CRUZ | Philippine Passport No. P1234567A |
| MARIA SANTOS | Philippine Passport No. P2345678B |
| PEDRO REYES | Philippine Passport No. P3456789C |
known to me and to me known to be the same persons who executed the foregoing instrument and acknowledged to me that the same is their free and voluntary act and deed, and the free and voluntary act and deed of the partnership herein constituted.
WITNESS MY HAND AND SEAL on the date and at the place first above written.
Generate Your General Partnership Agreement — Ultra Plan Required
This document is available on the Legalia Ultra plan. Subscribe to unlock all document types, AI drafting, and priority support.
Subscribe to Ultra — Generate NowHow to Draft a Partnership Agreement
- Agree on the business and the firm name. Settle what the partnership will do and the name it will operate under, and check the name's availability with the SEC.
- Fix each partner's contribution. State precisely what each partner contributes — a peso amount for cash, a description and agreed value for property, or the specific skill for an industrial partner — and the total capital.
- Set the profit and loss shares. Decide each partner's share. If a share is left unstated, the law presumes it is proportional to the contribution; an industrial partner shares in profits but is not liable for losses.
- Choose how the partnership is managed. Decide whether all partners manage jointly or a managing partner is designated, and what acts require unanimous consent.
- Add the operative clauses. Cover books of account, admission of partners, withdrawal and death, dissolution, dispute resolution, and governing law. Toggle optional articles to fit your venture.
- Notarize and register. Sign before a notary public, and — where capital is ₱3,000 or more, or real property is contributed — record the articles with the SEC. Where real property is contributed, attach a signed inventory (Art. 1773).
Capitalist vs. Industrial Partner
The Civil Code treats the two kinds of partner differently, and the difference is worth understanding before you sign:
- Liability for losses. A capitalist partner shares in the losses, generally in the same proportion as the profits. An industrial partner is not liable for losses (Art. 1797) — though this protects only their internal share; third-party creditors may still reach all partners.
- Engaging in other business. A capitalist partner may not, without consent, engage in the same line of business as the partnership (Art. 1808). An industrial partner may not engage in any business for themselves unless the partnership permits it (Art. 1789), because the partnership is entitled to all of their industry.
- Profit share. An industrial partner receives the share stipulated; if none is stipulated, they receive a just and equitable share before the capitalist partners divide the remainder according to their capital.
If you need to cap an investor's liability at the amount they contribute, consider a limited partnership instead.