Prepared by:

ATTY. MICHELLE G. BERNARDO, OP, LL.M.

ATTY. JESSA G. BERNARDO, OP
 Every partnership is required to operate under a firm
name. (Art. 1815, 1st par.)

 A partnership has the right to adopt any name it may

choose. It may or may not include the name of one or
more partners. (Art. 1815, 1st par.)

 In limited partnerships, the law requires that the word

“limited” be included in the name of the partnership.
(Art. 1844, (1)(a))
 By an Ordinary Partner:

 Nature and extent of right to represent: Every partner

is an agent of the partnership for the purpose of its
business
 Exception: Even if the act is for apparently carrying on
in the usual way the business of the partnership, such
act will not bind the partnership if the following
requisites will be present:

a. The partner so acting has in fact no authority to act

for the partnership in the particular matter; and

b. The person with whom he is dealing has knowledge

of the fact that he has no such authority.
 The articles of partnership or the special agreement
among the partners may restrict their authority as
agents of the firm.

 The act of a partner in contravention of a restriction on

authority shall still bind the partnership to persons
having no knowledge of the restriction

 the act of a partner in contravention of a restriction on

authority shall not bind the partnership to persons
having knowledge of the restrictions.
 Acts requiring concurrence of all partners:

1. Assigning of partnership property in trust for

creditors or on the assignee’s promise to pay the
debts of the partnership;
2. Disposition of the goodwill of the business;
3. Doing any other act which would make it impossible
to carry on the ordinary business of a partnership;
4. Confession of a judgment;
5. Entering into a compromise concerning a
partnership claim or liability;
6. Submitting a partnership claim or liability to
arbitration; or
7. Renouncing a partnership claim. (Art. 1818, 3rd par.)
 When title is in partnership name:

 Conveyance in partnership name: Any partner may convey

title to such property by a conveyance executed in the
partnership name

 But the partnership may recover such property unless:

1. The partner’s act binds the partnership; or

2. The property has been conveyed by the grantee or a

person claiming through such grantee to a holder for
value without knowledge that the partner, in making the
conveyance, has exceeded his authority.
 Conveyance in partner’s name: A conveyance executed
by a partner, in his own name, passes the equitable
interest of the partnership, provided that:

1. The partner’s act is for apparently carrying on in the

usual way the business of the partnership of which
he is a member; or

2. The third person with whom he has dealt with had

no knowledge of the fact that he has no such
authority. (Art. 1819, 2nd par.)
 But in the name of one or more but not all the partners
and record does not disclose right of partnership:

 The partners in whose name the title stands may

convey title to such property, but the partnership may
recover such property if the partner’s act is not for
apparently carrying on in the usual way the business of
the partnership.
 But the partnership may no longer recover the
property if –

a. The partner’s act is for apparently carrying on in the

usual way the business of the partnership of which
he is a member; or

b. The purchaser or his assignee is a holder for value,

without knowledge of the lack of authority. (Ibid.)
 But title is in the name of one or more or all the
partners, or in a third person in trust for the
partnership: A conveyance executed by a partner in the
partnership name, or in his own name, passes the
equitable interest of the partnership, provided that:

a. The partner’s act is for apparently carrying on in the

usual way the business of the partnership of which
he is a member; or

b. The third person with whom he has dealt with had

no knowledge of the fact that he has no such
authority. (Art. 1819, 4th par.)
 But title is in the name of all partners: A conveyance
executed by all the partners passes all their rights in
such property. (Art. 1819, 5th par.)
 Admission before dissolution: An admission or
representation made by any partner is binding upon
the partnership if:

a. It concerns partnership affairs, and

b. It is within the scope of his authority. (Art. 1820)
 Admission after dissolution: The same is binding upon
the partnership only if it is necessary for the winding
up of partnership affairs. (Art. 1834)
 Any notice to or knowledge of any partner of any matter
relating to partnership affairs operate as notice to or
knowledge of the partnership when:

a. The knowledge of the partner acting in the particular

matter is acquired while a partner or then present to his
mind; or

b. The knowledge is of any other partner (not the partner

acting in the particular matter) who reasonably could
and should have communicated it to the acting partner.
(Art. 1821)
 When not binding:

a. In case of fraud on the partnership committed by or

with the consent of the partner acting in the
particular matter

b. Where the knowledge is derived by a partner from

distinct transactions unconnected with partnership
affairs; or

c. Where the knowledge or notice has been received by

the partner before he became a partner, and his
partners are ignorant of this, and he is not the
partner acting in the particular matter.
 The partnership is liable to third persons for loss,
injury or penalty resulting from any wrongful act or
omission of any partner acting in the ordinary course
of the business of the partnership or with the authority
of his co-partners.
 The partnership is liable to make good the loss arising
from the act of conversion or misappropriation
committed by a partner in the following cases:

a. Where the partner who received and misapplied the

money or property of a third person acted within the
scope of his apparent authority; or

b. Where the money or property of a third person was

received by the partnership in the course of its
business and it was misapplied by any partner while
it was in the custody of the partnership. (Art. 1823)
 By Managing Partner:

 By person held out as partner

 When all the members of an existing partnership

consent to the representation of a person being a
partner (when in fact such person is not a partner), the
partnership is liable for the act of such ostensible
partner. The ostensible partner is also liable. (Art.
1825)
 When less than all the partners consent to such
representation, or where persons as between whom
there is in fact no partnership hold themselves out as
partner, they are liable as partners to a third person
who deal with them upon the faith of such
representation, the transaction being considered as
their joint act or obligation.
 Arising from contracts:

 Liability of partners for contractual obligations of

partnership: 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.
(Art. 1816)
 Liability of persons holding out, or consenting to be
held out, as partners: A person, not an actual partner,
by words or deed, either represents himself as a
partner or consents to another representing him to
anyone as a partner in an existing partnership or with
one or more persons not actual partners. (Art. 1825)
He thereby becomes partner by estoppel.
 Arising from delict or quasi-delict:

 Liability of partnership: The partnership is liable to

third persons for loss, injury or penalty resulting from
any wrongful act or omission of any partner acting in
the ordinary course of the business of the partnership
or with the authority of his co-partners. (Art. 1822)
 Arising from acts of conversion or misappropriation by a
partner:

 Liability of partnership: It is liable to make good the loss

arising from the act of conversion or misappropriation
committed by a partner:

a. Where a partner who received and misapplied the money

or property of a third person acted within the scope of his
apparent authority; or

b. Where the money or property of a third person was

received by the partnership in the course of its business
and it was misapplied by any partner while it was in the
custody of the partnership (Art. 1823)
 Liability of incoming partner for obligations arising
before admission: As to old obligations, or obligations
incurred prior to his admission to the partnership, an
incoming partner is liable as though he had been a
partner when such obligations were incurred. (Art.
1826) However, his liability is to be satisfied only out of
the partnership property, unless there is a stipulation
to the contrary. (Ibid.)
 The creditors of the partnership shall be preferred to
those of each partner as regards the partnership
property (Art. 1827)