passing itself off as another partnership or corporation,
October 22, 2020  or its goods or services as those of such other company.
LEGEND:
A in red, bold, italics: Atty’s question
A in red, non-bold, italics: Atty’s discussion
S in blue italics non-bold: Student’s answer
TN: Maker’s notes and comments
Texts in black are taken from the textbooks and discussed during class
Texts in purple and bold are not discussed (PLEASE TAKE NOTE
OF THIS)
I. REQUIREMENT OF A FIRM NAME
ART. 1815. Every partnership shall operate under a firm name,
which may or may not include the name of one or more of the
partners.
Those who, not being members of the partnership, include their
names in the firm name, shall be subject to the liability of a partner.
IMPORTANCE OF A PARTNERSHIP NAME
A partnership name is important because it
represents goodwill and credibility. A firm name is
necessary to distinguish the partnership which has a
distinct and separate juridical personality from the
individuals composing the partnership and from other
partnerships and entities.
1.1 FIRM NAMES THAT MAY BE USED  ○ a limited partner who allows his name to
The partners enjoy the utmost freedom in the
selection of the partnership name. As a general rule,
they may adopt any firm name desired. The firm name
may be that of:
● An individual partner
● The surnames of all the partners
● The surname of one or more of the members
with the addition of “and Company”
● Individuals names wholly distinct from the
names of any of the members
● A name purely fanciful or fictitious
1.2 FIRM NAMES THAT MAY NOT BE USED  this is because the ultimate purpose of a partnership
1.2.1 USE OF MISLEADING NAMES   3rd parties. And that's precisely why, because of these
The partners cannot use a name that is identical
or deceptively confusingly similar to that of any existing
partnership or corporation or to any other name already
protected by law or is patently deceptive, confusing or
contrary to existing laws, as to mislead the public by
AGENCY, TRUST & PARTNERSHIP (MIDTERMS) | EH405 | ATTY. ESPEDIDO | 45
1.2.1 USE OF DECEASED PARTNER’S NAME  
The continued use of the name of a deceased
partner is permissible provided that the firm indicates in
all its communications that said partner is deceased.
● TAKE NOTE: this is different from cases where
a person continues the business of a partnership
after dissolution, who uses the name of the
dissolved partnership or the name of a
deceased partner as part thereof
○ This case is covered by art. 1840
1.3 LIABILITY FOR INCLUSION OF ONE’S NAME 
IN A FIRM NAME 
If a person’s name is in a partnership name, that
person shall be subject to the liability of a partner.
● They are considered as partner by estoppel
HOWEVER persons who, not being partners,
include their names in the firm name do not acquire the
rights of a partner.
● TAKE NOTE: Article 1815 does not cover the
case of:
be included in the firm name (Art.
1846.), or of
○ a person continuing the business of a
partnership after dissolution, who uses
the name of the dissolved partnership or
the name of a deceased partner as part
thereof. (Art. 1840, last par.)
A: Why should we talk about third persons insofar
as partnership is concerned?
S: Because partnerships enter into contracts and it
would affect third persons.
A: Exactly. We deal with 3rd persons. Partnerships
deal with 3rd persons by entering into contracts. And
is for profit. And the only way you could realize or
enjoy profit is by dealing, entering into business with
transactions, liabilities are incurred by the partnership
in favor of third persons.
A: And so first, the partnership should have a
name. What's the importance of a name?
S: The importance of a name is for them to have their
credibility. To establish themselves to be known and
have goodwill and credibility.
A: To be able to identify. A name is therefore important
to be able to identify the partnership, so that third
persons dealing with it will be able to locate the party
with whom they are dealing.
A: More importantly, in so far as the Securities and
Exchange Commission is concerned, why do you
think a name is important? This is important
insofar as courts are concerned. Why should this
be important?
S: If ever a partnership has liabilities or makes some
obligations, they will know who to sue.
A: Exactly. So they will know to whom summons
will be served, and eventually, who will be made
liable. That's why a partnership must carry a name
so that if your name were included in the
partnership name, even if you were not a partner,
would you be happy?
S: No, because I may be liable for any liabilities.
A: In other words, that's not a source of joy. Would
you agree if someone would want to put your
name in their partnership, would you agree?
S: If I don't receive any profits from it, I would not
accept it. I would tell them to remove my name from
the partnership because I might be liable for any
liabilities that they incur.
A: What if they pay you 10k? If naay kay maligis
and pabayrun kag 50k, igo ang 10k?
S: No, Atty.
A: In other words, you will never know the extent
of your liability. Pero if 10k a month? There might
be a way you might agree.
S:Yes, maybe I will check its operations. If it is more
risky, I would not accept it.
A: But you know how these people talk? They talk
very nicely. Do you think you can be convinced
and how will you protect yourself?
S: If ever the deal is too good to be true, I would
decline.
A: How will you protect yourself from the risk?
S: For me to be able to lessen the risk perhaps, or
minimize it, or even extinguish it, I could actually
bargain to have a stipulation that I would not be liable
for any liabilities with regard to that.
AGENCY, TRUST & PARTNERSHIP (MIDTERMS) | EH405 | ATTY. ESPEDIDO | 46
A: Okay. When it comes to liability, let them sign so
that you will have the 10k for free. Pangitaag pamaagi
dili ka madaot. Naa gihapon kwarta. That's how
important a name is, but then again, we said we
should be careful because if our name is included in
the partnership name even when you are not a
partner, there is a liability corresponding to that.
A: Could you use any name?
S: Yes. So long as it is not misleading, unlawful, not
confusingly similar, and using a deceased partners
name.
A: So that you have entered into a partnership
with Marc, and you decided to engage in our
favorite business, funeral parlor, and we call our
name Buhi Dayun Funeral Partner. Is there
anything wrong? Are you not confused? Do you
think you would use a name "Mahal Ko Funeral
Parlor"? (Love kita)
S: No.
A: The final name is Hapyud-hapyud Massage
Parlor? What do you think? To use partnership
name, what is important?
S: What is important with regard to partnership name
is that it must not be identical to other partnerships or
corporations, or misleading to the public.
A: This is important because you will have to register
your name in the SEC as well as the DTI. The name is
important so that you have to make sure that the
name you are proposing to use is not being used by
others because it may lead to confusion later for
purposes of determining liabilities, for example, if
there are several groups or parties using the same
names.
However, there are names that you cannot use,
especially names which have general application, for
example. You cannot say the United Nations
Partnership because the UN is an international
organization. You cannot also use Red Cross Inc.
because Red Cross is an organization, as well. We
should take note of these names.
A: There are some cases involved which may
cause confusion to the public. For example,
coming out with the product "Efficient Oil," do you
think it will confuse any existing Oil?
 S: The makers of another Oil will complain. There is
an oil called "Efficascent Oil." The makers of
"Efficascent Oil" will complain that you cannot use
"Efficient Oil" because it will confuse the public -- it is
very close. It sounds like the same thing. The other is
required to use another name.
A: Partnership acquire profits by dealing with third
parties, and eventually, there could be occasions
when these contractual relations will end up as
contractual liabilities to third persons. What is the
extent of the share of liabilities of partners?
S: When it comes to contractual liabilities, partners are
liable pro-rata and jointly.

A: Here are partners A, B and C. All of them

agreed to contribute P50,000 each. Partner A was
II. LIABILITIES OF PARTNERS able to complete his contribution of P50,000.
Partner B was also able to complete the
ART. 1816. All partners, including industrial ones, shall be liable pro contribution. But Partner C was only able to
rata with all their property and after all the partnership assets have contribute P10,000 out of the P50,000 that was
been exhausted, for the contracts which may be entered into in the agreed. Here is a third party (supplier), he
name and for the account of the partnership, under its signature and
by a person authorized to act for the partnership. However, any delivered supplies to the partnership. Instead of
partner may enter into a separate obligation to perform a paying the full amount, the partnership was given
partnership contract. credit of up to P30,000. Eventually the partnership
was unable to pay, which will now constitute a
All partners (including industrial partners) are liability in favor of third persons. The supplier
liable to creditors of the partnership for the obligations went to A and A said "You cannot make me liable
contracted in the name and for the partnership. Their because I contributed my P50,000." Do you think
liability to creditors is pro rata and subsidiary. the supplier can demand payment of the unpaid
● Pro-rata — For the purpose of this Article deliveries of P30,000. Are there still assets
remaining?
means equally or jointly; based on the number of
S: The supplier cannot go after Partner A because
partners, not on the amount of contributions to there are still assets remaining (amount receivable) in
the common fund, subject to adjustment among the partnership in the amount of P40,000 which C
the partners. failed to contribute.
● Subsidiary or secondary — Subsidiary only
because the partners become personally liable READ UNTIL 1827.
only after all the partnership assets have been
exhausted.
● Liability of an industrial partner — Even the
industrial partner, who ordinarily does not share
in the losses, would have to pay but he can
recover the amount he paid from the capitalist
partners unless there is an agreement to the
contrary.
○ TAKE NOTE: The exemption of the
industrial partner to pay losses relates
exclusively to the settlement of the
partnership affairs among the partners
themselves and has nothing to do with
the liabilities of the partners to third
persons.

LIABILITIES LOSSES

Obligations due and Result of operation on a

unpaid. given period.

Pertains to obligations to Pertains to the settlement

third parties of affairs among the
partners themselves.

AGENCY, TRUST & PARTNERSHIP (MIDTERMS) | EH405 | ATTY. ESPEDIDO | 47