Business Partnership Agreement Sample Philippines

GENERAL PARTNERSHIP AGREEMENT

DOCUMENT CONTROL

• Effective Date: [Effective Date, e.g., October 1, 2023]
• Document Version: 3.4-PH
• Jurisdiction / Scope: Republic of the Philippines (Regulated by the Civil Code of the Philippines, Book IV, Title IX)

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OFFICIAL NOTICE & LEGAL DISCLAIMER

This document is a high-level model template drafted by corporate legal counsel for general informational and structural guidance within the Republic of the Philippines. It does not constitute formal legal advice. Partnership laws in the Philippines impose strict joint and several (solidary) liabilities on partners. Both parties must retain independent legal counsel and a Certified Public Accountant (CPA) to review asset contributions, tax implications under the National Internal Revenue Code (NIRC) as amended, and SEC/LGU registration mandates prior to execution.

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1. PARTIES & IDENTIFICATION

This General Partnership Agreement (the "Agreement") is entered into and made effective as of [Date], by and between the following parties:

1. [Full Legal Name of Partner 1], of legal age, [Civil Status], [Nationality], and with residential address at [Residential Address], hereinafter referred to as "Partner 1"; and
2. [Full Legal Name of Partner 2], of legal age, [Civil Status], [Nationality], and with residential address at [Residential Address], hereinafter referred to as "Partner 2".

(Partner 1 and Partner 2 may collectively be referred to as the "Partners" or individually as a "Partner".)

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2. RECITAL & OPERATIVE CLAUSES

SECTION 1: BUSINESS FORMATION & BASIC PROVISIONS

1. Formation: The Partners hereby form a general partnership (the "Partnership") pursuant to the provisions of Articles 1767 through 1867 of the Civil Code of the Philippines.
2. Name: The name of the Partnership shall be [Official Partnership Trade Name], operating under the registered business name [Registered DTI/SEC Business Name if applicable].
3. Principal Place of Business: The principal office of the Partnership shall be located at [Complete Philippine Business Address, e.g., Unit 102, Ayala Tower, Makati City].
4. Purpose: The purpose of the Partnership is to engage in [Specific Business Purpose, e.g., software development, import-export, general trading] and any other lawful business activities incidental thereto.
5. Term: The Partnership shall commence on [Start Date] and shall continue indefinitely until dissolved in accordance with the provisions of this Agreement or applicable Philippine law.

SECTION 2: CAPITAL CONTRIBUTIONS

1. Initial Capital: The capital of the Partnership shall be contributed in cash, property, or industry by the Partners in the following amounts and proportions:
   • Partner 1 Contribution: PHP [Amount, e.g., 500,000.00], consisting of [Cash / Description of Property / Industry].
   • Partner 2 Contribution: PHP [Amount, e.g., 500,000.00], consisting of [Cash / Description of Property / Industry].
2. Total Initial Capital: PHP [Total Capital Amount].
3. Timing of Contribution: All capital contributions shall be delivered in full to the Partnership’s designated bank account within [Number] days of the execution of this Agreement.
4. Additional Capital: If the Partnership requires additional capital, the Partners shall contribute such funds in proportion to their existing profit-sharing ratio. No Partner shall be forced to make additional capital contributions without their express written consent.

SECTION 3: PROFITS, LOSSES, AND DISTRIBUTIONS

1. Profit and Loss Sharing: All net profits and net losses of the Partnership shall be shared and borne by the Partners in the following percentages:
   • Partner 1: [Percentage, e.g., 50]%
   • Partner 2: [Percentage, e.g., 50]%
2. Distribution Schedule: Net profits, as determined by the Partnership’s accountant based on audited or reviewed financial statements, shall be distributed [Monthly / Quarterly / Annually], subject to the retention of reasonable reserves for working capital and tax liabilities.

SECTION 4: MANAGEMENT & DECISION MAKING

1. Management Rights: Both Partners shall have equal rights in the management and conduct of the Partnership business.
2. Major Decisions: The unanimous written consent of all Partners shall be required for the following acts:
   • Incurring debt, loans, or credit lines exceeding PHP [Threshold Amount].
   • Selling, leasing, mortgaging, or encumbering any major real property or core asset of the Partnership.
   • Admitting new partners or amending this Agreement.
   • Entering into mergers, joint ventures, or dissolving the Partnership.
3. Daily Operations: Routine operational decisions may be executed individually by [Designated Managing Partner Name, or "any Partner"].

SECTION 5: SALARIES, EXPENSES, AND DRAWINGS

1. Salaries: Partners shall [not be entitled to a regular salary / receive a monthly draw of PHP [Amount] as an operational expense].
2. Expense Reimbursement: Reasonable and necessary out-of-pocket expenses incurred by a Partner on behalf of the Partnership shall be fully reimbursed upon presentation of official Philippine Bureau of Internal Revenue (BIR) compliant Official Receipts (ORs) or Sales Invoices (SIs).

SECTION 6: BOOKS, RECORDS, AND TAXATION

1. Accounting Period: The fiscal year of the Partnership shall run from January 1 to December 31 of each calendar year.
2. Books of Accounts: Accurate books of accounts shall be maintained at the principal place of business. Every Partner shall have access to inspect and copy said books at any reasonable time during business hours.
3. Tax Compliance: The Partnership shall secure a Tax Identification Number (TIN) from the BIR, file all required quarterly and annual income tax returns, and comply with local government unit (LGU) permitting requirements.

SECTION 7: TRANSFER OF INTEREST & RESTRICTIONS

1. Prohibition on Transfer: No Partner may sell, assign, pledge, encumber, or otherwise transfer their partnership interest to any third party without the prior unanimous written consent of the other Partner.
2. Right of First Refusal: If a Partner wishes to sell their interest, they must first offer it in writing to the remaining Partner at the same price and terms proposed by a bona fide external buyer. The remaining Partner has [Number] days to accept or reject the offer.

SECTION 8: DISSOLUTION AND LIQUIDATION

1. Grounds for Dissolution: The Partnership shall be dissolved upon:
   • The expiration of the term specified herein (if applicable).
   • The unanimous written agreement of the Partners.
   • The death, civil interdiction, insanity, insolvency, bankruptcy, or withdrawal of any Partner, subject to the option of the surviving Partner(s) to continue the business under Philippine law.
2. Liquidation Process: Upon dissolution, a designated liquidator shall wind up the affairs of the Partnership, pay off all valid creditors in accordance with statutory preference, and distribute any remaining assets to the Partners in proportion to their capital and profit-sharing ratios.

SECTION 9: DISPUTE RESOLUTION

1. Negotiation and Mediation: In the event of any dispute arising out of or relating to this Agreement, the Partners shall first endeavor to settle the dispute through good-faith negotiation. If unresolved within [Number] days, the parties agree to submit the dispute to mediation under the rules of the Construction Industry Arbitration Commission (CIAC) or an accredited mediation center in [City, Philippines].
2. Venue: If mediation fails, any legal action or proceeding shall be brought exclusively before the proper courts of [City, Philippines], to the exclusion of all other venues.

SECTION 10: GOVERNING LAW

1. Philippine Law: This Agreement shall be governed by, construed, and enforced in accordance with the laws of the Republic of the Philippines.

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3. EXECUTION & SIGNATURES BLOCK

IN WITNESS WHEREOF, the Partners have hereunto set their hands this [Day] day of [Month, Year] at [City/Municipality, Philippines].

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[Full Legal Name of Partner 1]
Partner 1
Tax Identification No. (TIN): [TIN Number]

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[Full Legal Name of Partner 2]
Partner 2
Tax Identification No. (TIN): [TIN Number]

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ACKNOWLEDGMENT

(Notarial Block - Mandatory under Philippine Law for public instruments)

REPUBLIC OF THE PHILIPPINES)
CITY/MUNICIPALITY OF ___________) S.S.

BEFORE ME, a Notary Public for and in the City/Municipality of [City], personally appeared the following persons exhibiting their competent evidence of identity:

Known to me and to me known to be the same persons who executed the foregoing General Partnership Agreement, consisting of [Number] pages including this page where the Acknowledgment is written, and they acknowledged to me that the same is their free and voluntary act and deed.

WITNESS MY HAND AND SEAL this [Day] day of [Month, Year] at [City], Philippines.

Doc. No. ______;
Page No. ______;
Book No. __;
Series of 20.
NOTARY PUBLIC

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4. STEP-BY-STEP EXECUTION GUIDE (PHILIPPINES)

1. Review and Finalize Customizations: Fill in all bracketed fields ([...]) with accurate data. Ensure capital contributions and profit-sharing ratios accurately reflect the commercial intent.
2. Consult Professionals: Have a Philippine CPA review the tax structures (especially regarding capital gains tax or donor's tax implications on property contributions) and secure legal counsel to verify compliance with industry-specific foreign equity restrictions (Foreign Investment Act / Negative List).
3. Notarization: All Partners must appear physically before a Notary Public in the Philippines, presenting valid government-issued photo IDs, to execute the Acknowledgment block. Note: Under Philippine law, if the capital contribution of the partnership amounts to PHP 3,000.00 or more in cash or property, the public instrument must be recorded with the Securities and Exchange Commission (SEC) to affect third parties.
4. SEC Registration (If Applicable/Mandatory):
   • Prepare SEC Form F-101 (or relevant partnership forms), Articles of Partnership, and Treasurer's Affidavit.
   • Submit the notarized Agreement along with the SEC application to secure the official SEC Registration Number and Certificate of Partnership.
5. Local Government & Bureaucratic Filings:
   • Barangay Clearance: Secure clearance from the local Barangay where the principal office is located.
   • Mayor’s Permit / Business Permit: File at the local City/Municipal Hall.
   • BIR Registration: Register the Partnership at the Revenue District Office (RDO) having jurisdiction over the business address to obtain a new BIR Certificate of Registration (COR), books of accounts registration, and Authority to Print (ATP) receipts/invoices.
6. Enforceability: Keep certified true copies of the notarized/SEC-registered agreement in a secure corporate records book. Any future modifications must be made via a written addendum signed by all Partners and similarly notarized.