Section 2 It means that the claims of partnership creditors must be satisfied

first before the separate creditors of the partners can be paid out
Article 1814
of the interest charged.
Without prejudice to the preferred rights of partnership
 In providing for the charging order above described, Article 1814
creditors under article 1827, on due application to a competent
seems to have made this an exclusive remedy so that a writ of
court by any judgment creditor of a partner, the court which
execution will not be proper.
entered the judgment, or any other court, may charge the
 The court may resort to other courses of action provided in Article
interest of the debtor partner with payment of the unsatisfied
1814 (i.e., appointment of receiver, sale of the interest, etc.)
amount of such judgment debt with interest thereon; and may
Redemption or purchase of interest charged
then or later appoint a receiver of his share of the profits , and
1. Before foreclosure
of any other money due or to fall due to him in respect of the
- The interest charged may be redeemed at any time before
partnership, and make all other orders, directions, accounts and
foreclosure.
inquiries which the debtor partner might have made, or which
- Who can redeem the interest charged? By any one or more
circumstances of the case may require.
of the partners whose interest are not charged or sold.
2. After foreclosure
The interest charged may be redeemed at any time before
- It may still be purchased without thereby causing a
foreclosure, or in case of a sale being directed by the court,
dissolution:
may be purchased without thereby causing a dissolution:
a. With separate property of the partners
(1) With separate property, by any one or more of the partners;
b. With partnership property with the consent of all the
or
partners whose interest are not charged or sold.
(2) With partnership property, by any one or more of the
Does the redeeming or purchasing partner acquire the interest of the
partners with the consent of all the partners whose interests
debtor-partner?
are not so charged or sold. Nothing in this Title shall be held
In case of redemption, the price ordinarily would be the amount of
to deprive a partner of his right, if any, under the exemption
the creditor’s claim against the debtor-partner, and the payment
laws, as regards his interest in the partnership. (n)
would be in the nature of advance to the latter. No absolute
ownership acquired since it appears that he holds it in trust for him.
Charging order- it refers to the remedy of the judgement creditor of a In case of purchase, the price would have to be based on the value of
debtor partner to charge the interest of the latter in the partnership by the interest purchased. It would seem that the non-debtor partner
means of court order for the purpose of satisfying the amount of the will acquire the interest of the debtor-partner in the second
judgement. situation but not in the first
Note: The specific partnership property cannot be attached the
partner’s creditors because it is reserved for the partnership creditors
and it is not owned by the partners.
Section 3- OBLIGATIONS OF THE PARTNERS WITH ARTICLE 1816
REGARDS TO THIRD PERSON All partners, including industrial ones, shall be liable pro rata with
all their property and after all the partnership assets have been
 Article 1815.Every partnership shall operate under a firm exhausted, for the contracts which may be entered into in the name
name, which may or may not include the name of one or more and for the account of the partnership, under its signature and by a
of the partners. person authorized to act for the partnership.
 Those who, not being members of the partnership, include However, any partner may enter into a separate obligation to
their names in the firm name, shall be subject to the liability of perform a partnership contract
a partner. Liability for contractual obligations of the partnership
Importance of having a firm name 1. Partnership Liability
A firm name is necessary to distinguish the partnership which has a - Partners are principal to the partners and agents for them
distinct and separate juridical personality from the individuals and the partnership.
composing the partnership and from other partnership and entities. - They are liable to third person who have dealt with one of
Right of partners to choose firm name them in the same way that a principal is liable to third
The partnership enjoys the utmost freedom in the selection of the person who dealt with an agent.
partnership name. Exception, the partnership cannot use identical or GR:
deceptively confusingly similar to that of an existing partnership or a partner has the right to make all partners liable for contracts
corporation or names protected by law or is patently deceptive or he makes for the partnership in the name and for the account of
contrary to laws. the partnership
Rationale: Since there is a reliance for the public, such name will XP: only if the partner was authorized, i.e., he had actual (or
cause the public to be mislead by passing itself off as another apparent) authority.
partnership, overriding on the goodwill of such partnership or corpo. The authority can be expressly granted in the partnership
agreement or by the other partners subsequently. A partner has
Use of name of deceased partners- implied authority to bind the partnership in transactions that are
 a partnership cannot continue to use in its firm name, the names of for the purpose of “carrying on in the usual way the business of
deceased partners for such use “will run counter to Article 1815. the partnership.’
 It is clearly tacit in the above provision that names in a firm name 2. Individual Liability
of a partnership must either be those of living partners and, in the - — A partner, however, may assume a separate undertaking
case of non-partners, should be living persons who can be in his name with a third party to perform a partnership
subjected to liability. contract or make himself solidarily liable on a partnership
Liability for inclusion of name in firm name contract
Persons who, not being partners, include their names in the firm name Distinction between a liability and a loss
do not acquire the rights of a partner 1. The inability of a partnership to pay debt to a third party at a
particular time does not necessarily mean that the partnership
business as a whole, has been operated at a loss.
 2. The exemption of the industrial partner to pay losses relates Note: In the absence of an agreement to the contrary, all partners have
exclusively to the settlement of the partnership affairs among equal rights in the management and conduct of the partnership
the partners themselves and has nothing to do with the business.
liabilities of the partners to third persons. An industrial partner There is a general presumption that each individual partner is an agent
is not exempted from liability to third persons for the debts of of the fi rm and that he has authority to bind the firm in carrying on the
the partnership. partnership transactions. The presumption is sufficient to permit third
ARTICLE 1817. Any stipulation against the liability laid down persons to hold the fi rm liable on transactions entered into by any one
in the preceding article shall be void except as among partners. of the members of the firm acting apparently in its behalf and within
- A stipulation among the partners contrary to the pro rata the scope of his authority
and subsidiary liability expressly imposed by Article 1816 Liability of partnership for acts of partners
is void and of no effect insofar as it affects the rights of 1. Acts for apparently carrying on in the usual way the business of
third persons. It is valid and enforceable only as among the partnership (par. 1.). — Every partner is an agent and may
the partners execute such acts with binding effect on the partnership even if
ARTICLE 1818. he has in fact no authority unless the third person has
GR: Every partner is an agent of the partnership for the purpose of its knowledge of such lack of authority
business. The act of every partner including the execution in the 2. Acts of strict dominion or ownership (pars. 2 and 3.). — For
partnership name of any instrument, for apparently carrying on the acts which are not apparently for carrying on in the usual way
usual way the business of the partnership binds the partners. the business of the partnership, the partnership is not bound,
XP: unless authorized by all the other partners or unless they have
- NO AUTHORITY TO ACT abandoned the business.
- THIRD PERSON HAS KNOWLEDGE OF THIS FACT 3. Acts in contravention of a restriction on authority (par. 4.). —
Cases that a partner can act alone without the authority of others. The partnership is not liable to third persons having actual or
(unless they have abandoned the business and when authorized by presumptive knowledge of the restrictions, whether or not the
the other partners.) acts are for apparently carrying on in the usual way the
(1) Assign the partnership property in trust for creditors or on the business of the partnership.
assignee’s promise to pay the debts of the partnership; Article 1819
(2) Dispose of the goodwill of the business; Conveyance of real property belonging to the partnership
(3) Do any other act which would make it impossible to carry on the 1. The presumption is that, property purchased with partnership
ordinary business of a partnership; funds belongs to the partnership unless a contrary intent is
(4) Confess a judgment; shown
(5) Enter into a compromise concerning a partnership claim or 2. Legal effects of conveyance. — Article 1819 gives the legal
liability; effects of the conveyance of real property belonging to the
(6) Submit a partnership claim or liability to arbitration; partnership depending in whose name it is registered and in
(7) Renounce a claim of the partnership Art. 1819 whose name it is conveyed.
Under the article, the real property may be registered or owned
in the name of:
 (a) The partnership (pars. 1, 2.); (5) When a deed is executed on behalf of a firm by one partner,
(b) One or more but not all the partners (par. 3.); the other partner will also be bound if there is subsequent
(c) One or more or all the partners, or in a third person in trust adoption of the act.
for the partnership (par. 4.); or (6) A ratification may be inferred from the presence of the
(d) All the partners. (par. 5.) other partners at the execution and delivery, or from their
Equitable interest or title is one not duly recognized by law but acting under it or knowingly taking the benefits arising
in equity alone; it is a right or interest in property which is therefrom. (40 Am. Jur. 251-256.
imperfect and unenforceable at law but which, under well
recognized equitable principles, should be and is convertible
into a legal right or title. Conveyed Title is in Executed Effects
Authorization or ratification of conveyance. Any Partnership Partnership Title passes to the
A conveyance of partnership realty by one partner may be partner buyer but the
authorized by his co-partners, or when made without authority, One or One or One or partnership may
may be ratified by them. more more more recover.
Such authority or ratification must affirmatively appear, for the partners partners partners XP:
authority of one partner to make and acknowledge a deed for 1. In the usual
way of
the partnership will not be presumed.
business
XP except when
(1) After the lapse of many years from the time of execution the buyer has
of a conveyance by a partner purporting to act for the knowledge of
partnership, authority or ratification will be presumed. partners lack
(2) It has sometimes been said that the authority to execute a of authority
deed in behalf of a firm should be conferred in writing and not 2. Real property
by parol (see Art. 1874.), although the decisions on the point was
are not wholly uniform, partners having been held bound transferred to a
because of previous parol authority. innocent buyer
(3) It has also been held that one partner, in the presence of his Any Partnership Partner Passes the equitable
co-partners, may, by parol authority, execute a deed for them Partner interest of the
which will amount to an execution of the deed of all the One or Partner/ Partner partnership provided
more Partnership the conveyance was in
partners.
the way of business
(4) The authority may also be implied from the nature of the
All All All Passes all the rights in
partnership business, and where a firm is engaged in the partners partners partners such property. No
business Art. 1819 185 of buying and selling real estate, a right of redemption.
contract of sale executed by one of the partners in the firm
name is valid. Equitable Interest:
 An interest held by virtue of an equitable title or claimed on ART. 1823. The partnership is bound to make good the loss:
equitable grounds. (1) Where one partner acting within the scope of his apparent
Title: legal document of a person’s ownership rights in authority receives money or property of a third person and
property. misapplies it; and
(2) Where the partnership in the course of its business receives money
ART. 1820. An admission or representation made by any or property of a third person and the money or property so received
partner concerning partnership affairs within the scope of his is misapplied by any partner while it is in the custody of the
authority in accordance with this Title is evidence against the partnership.
partnership. Bound to make good the loss" means that someone is legally obligated
GR: a person is not bound by the act, admission, statement, or or required to compensate or reimburse for any losses or damages
agreement of another of which he has no knowledge or to incurred. In other words, they are responsible for covering the cost
which he has not given his consent of any harm or damage that has occurred, typically as a result of
XP: except by virtue of a particular relation between them. their actions or responsibilities.
ART. 1824. All partners are liable solidarily with the partnership for
An admission by any partner is evidenced against partnership everything chargeable to the partnership under articles 1822 and
if; 1823.
1. the admission must concern the partnership affairs Liability arising from the partner’s wrongful act or omission or
2. the admission must be within the scope of his authority breach of trust
Admission- a statement in which someone admits that something is 1. Solidary liability- because he is acting within the scope of the
true or that he or she has done something wrong. firm’s business or with the authority of his co-partners. Even
ARTICLE 1821. though they did not participate in the act there is a mutual
GR: notice to any partner is a notice to the partnership. agency that binds the partners this is however no prejudice to
Instances where knowledge of a partner is considered knowledge their right to recover from the guilty partner.
to the partnership: 2. Different from liability under Article 1816. — This liability of
1. Knowledge of the partnership acting in the particular matter the partners under the above articles is different from their
acquired while a partner liability for contractual obligations as defined in Article
2. Knowledge of the partner acting in the particular matter then 1816. Here, it is solidary, while in Article 1816, it is joint and
present to his mind subsidiary. Furthermore, while the liability in Article 1816
3. Knowledge of any partner who reasonably could and should refers to partnership obligations, this article covers the liability
have communicated it to the acting partner. of the partnership arising from the wrongful acts or omissions
ART. 1822. Where, by any wrongful act or omission of any partner of any partner. The act or omission is called “quasi-delict’’ or
acting in the ordinary course of the business of the partnership or “tort’’ when it does not constitute a crime or felony punishable
with the authority of his co-partners, loss or injury is caused to any by law.
person, not being a partner in the partnership, or any penalty is  Reason for imposition of wider liability. — The reason for
incurred, the partnership is liable therefor to the same extent as the law’s imposition of wider liability on the partnership
the partner so acting or omitting to act with respect to torts and breach of trust is based on public
 policy. The rule of respondeat superior (also called the rule such person, whether the representation has or has not been
of vicarious liability) applies to the law of partnership in made or communicated to such person so giving credit by or
the same manner as other rules governing the agency with the knowledge of the apparent partner making the
relationship. representation or consenting to its being made:
 The obligation is solidary because the law protects him (1) When a partnership liability results, he is liable as though
who, in good faith, relied upon the authority of a he were an actual member of the partnership;
partner, whether such authority is real or apparent. (2) When no partnership liability results, he is liable pro rata
This is the reason why under Article 1824 all partners, with the other persons, if any, so consenting to the contract or
whether innocent or guilty, as well as the legal entity which representation as to incur liability, otherwise separately. When
is the partnership, are solidarily liable. a person has been thus represented to be a partner in an existing
3. Criminal liability for criminal acts. — A non-acting partner in a partnership, or with one or more persons not actual partners, he
partnership engaged in a lawful business is not criminally liable is an agent of the per sons consenting to such representation
for the criminal acts of another partner but he is criminally to bind to the same extent and in the same manner as though
liable if the partnership is involved in an unlawful enterprise he were a partner in fact, with respect to persons who rely upon
with his knowledge or consent. the representation. When all the members of the existing
- Partnership liability under Article 1822 does not extend to partnership consent to the representation, a partnership act or
criminal liability, such as embezzlement, where the obligation results; but in all other cases it is the joint act or
wrongdoing is regarded as individual in character. So, it obligation of the person acting and the persons consenting to
has been held that one member of a law partnership is not the representation.
subject to disbarment or discipline for the misconduct of his Partner by estoppel- A person who represent himself or
partner where he had no knowledge of the misconduct, nor consents to another or others representing him to any one as a
consented to it nor participated in it partner either in an existing partnership or in one that is
Misapplication of money or property of a third person fictitious.
The partnership is liable for any losses suffered by a third held liable to third persons as if he were a partner, when by
person whose money or property is misappropriated by a words or by conduct he: (a) Directly represents himself to
partner who received it within the scope of his authority or anyone as a partner in an existing partnership or in a non-
by any other partner after it was received by the partnership in existing partnership (with one or more persons not actual
the ordinary course of business while in its custody. partners); or (b) Indirectly represents himself by consenting to
ART. 1825. When a person, by words spoken or written or by another representing him as a partner in an existing partnership
conduct, represents himself, or consents to another representing or in a non-existing partnership
him to anyone, as a partner in an existing partnership or with partnership by estoppel- Arises if all the partners consented
one or more persons not actual partners, he is liable to any such to the misrepresentation of a third person who is not a real
persons to whom such representation has been made, who has, partner. This creates a partnership obligation. This means the
on the faith of such representation given credit to the actual or person who falsely represented themselves becomes an agent
apparent partnership, and if he has made such representation or of the partnership, and any actions or obligations they take on
consented to its being made in a public manner he is liable to behalf of the partnership are legally binding for all involved.
elements to establish liability as a partner on ground of - Those who were already partners at the time when the
estoppel obligations were incurred are liable with their separate
The basic elements in connection with establishment of property. (Art. 1816.) For all the obligations accruing
liability as a partner if based on the doctrine of estoppel must subsequent to the admission of the new partner, all the
encompass: partners are liable with their separate properties
(1) Proof by plaintiff that he was individually aware of the ART. 1827. The creditors of the partnership shall be preferred
defendant’s representations as to his being a partner or that to those of each partner as regards the partnership property.
such representations were made by others and not denied or Without prejudice to this right, the private creditors of each
refuted by the defendant; partner may ask the attachment and public sale of the share of
(2) Reliance on such representations by the plaintiff; and the latter in the partnership assets. (n)
(3) Lack of any denial or refutation of the statements by Preference of partnership creditors in partnership property
the defendant; such denial need not precede plaintiff’s acting based upon the theory that the partnership, treated as a legal
thereon if the denial was forthcoming promptly upon hearing of entity distinct and separate from the members composing it
the representations, and if, by prudence and diligence the (Art. 1768.), should apply its property to the payment of its
plaintiff might have learned of the truth or untruth of the debts in preference to the claim of any partner or his creditors
representations
ART. 1826. A person admitted as a partner into an existing The rule applies only in the event of the disposition of
partnership is liable for all the obligations of the partnership partnership property among its creditors to pay partnership
arising before his admission as though he had been a partner debts. The partners may deal with partnership property in the
when such obligations were incurred, except that this liability usual course of business as they see fit
shall be satisfied only out of partnership property, unless there Remedy of private creditors of a partner
is a stipulation to the contrary. - Without prejudice to the right to preference of partnership
Liability of incoming partner for partnership obligations creditors, the creditors of each partner may ask for the
1. Limited to his share in partnership property for his existing attachment and public sale of the share of the latter in the
obligations- he is liable for all obligations existing at the partnership assets.
time of his admission as though he was already a partner
when such obligations were incurred. For such obligations,
his liability is limited to his share in the partnership
property, unless there is a stipulation to the contrary. It has
been said that the credit of a new member of a partnership
does not enter into the consideration of the creditors of the
old partnership, and it would be manifestly unjust to hold
the new partner liable unless he, by an express or implied
agreement, assumed the debts of the old firm.
2. Extends to his separate property for subsequent obligations