- Statute
- Philippine Civil Code
- Article
- Art. 1769
- Topic
- General Provisions
- Status
- In force
- Book
- BOOK IV Obligations and Contracts
- Title
- TITLE IX PARTNERSHIP
- Chapter
- CHAPTER 1 General Provisions
- Year
- 1949
- Cited by
- Multiple Supreme Court decisions
The provision
In determining whether a partnership exists, these rules shall apply: (1) Except as provided by article 1825, persons who are not partners as to each other are not partners as to third persons; (2) Co-ownership or co-possession does not of itself establish a partnership, whether such-co-owners or co-possessors do or do not share any profits made by the use of the property; (3) 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; (4) 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, but no such inference shall be drawn if such profits were received in payment: (a) As a debt by installments or otherwise; (b) As wages of an employee or rent to a landlord; (c) As an annuity to a widow or representative of a deceased partner; (d) As interest on a loan, though the amount of payment vary with the profits of the business; (e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise. (n)
Intellegal Wiki · In plain terms
This lists the tests for deciding whether a partnership exists. People who have not agreed to be partners are generally not partners toward each other or third parties; merely co-owning property or splitting gross returns does not create one. Sharing in a business's profits is strong (prima facie) evidence of partnership—unless the share was actually payment of a debt, wages, rent, an annuity, loan interest, or the price for buying goodwill or property.
An editorially maintained plain-language explanation of this provision — not legal advice.
Intellegal Wiki · How the courts apply it
In Heirs of Jose Lim v. Juliet Villa Lim, the Supreme Court held: Whether a person is a partner is determined by conduct under Article 1769 — control of the business, properties registered in his name, profit-sharing instead of wages, and the absence of any demand for accounting mark the real partner.
One leading Supreme Court case applying this provision.
Cases applying this article
- Heirs of Tan Eng Kee v. Court of Appeals G.R. No. 126881
- Heirs of Jose Lim v. Juliet Villa Lim G.R. No. 172690
- Philex Mining Corporation v. Commissioner of Internal Revenue G.R. No. 148187