Short answer. Yes. A person who is not a partner but who allows his name to appear in the firm name is subject to the liability of a partner. The Civil Code attaches partner-level liability to anyone who, though not a member of the partnership, includes their name in the firm name.
What the law says
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.
Civil Code, Article 1815 — Firm Name. Read the full provision →
Putting your name on the firm carries a price
A partnership operates under a firm name, and that name may or may not include the name of one or more of the partners. The catch is in the second sentence of Article 1815: those who, not being members of the partnership, include their names in the firm name, shall be subject to the liability of a partner. In other words, if you are not actually a partner but you let your name form part of the firm's name, the law can hold you answerable as though you were one. Lending your name to the business is treated as taking on a partner's exposure to those who deal with it.
The reason is protection of outsiders
The rule exists to protect people who transact with the partnership in good faith. Someone deciding whether to extend credit or do business often relies on the names in the firm; a well-known or trusted name in the title can be the reason they feel safe dealing with the firm at all. If a person allowed their name to be used to create that impression, it would be unfair to let them escape responsibility by pointing out that they were never really a partner. The article prevents that by making the name-lender liable to the same extent as a genuine partner, so the outsider's reliance is not betrayed.
What this liability is, and is not
Being subject to the liability of a partner means creditors of the firm can look to you as they could to a partner for the partnership's obligations, a significant exposure, since a partner can be reached for the firm's debts. What the article does this to is your liability; it does not, by itself, hand you a partner's rights, such as a share in the profits or a voice in management. So a name-lender can end up carrying the downside of partnership without the upside. The provision is aimed squarely at the appearance the name creates and the reliance it invites, not at rewarding the person who allowed it.
What this means in practice
The practical warning is simple: do not let your name be attached to a firm you are not truly part of unless you accept that you may be treated as a partner for its debts. If your name is already in a firm name and you are not a partner, that is a situation to address deliberately rather than ignore. For someone dealing with a partnership, the names in the title can matter to who you can pursue. Because the exposure here can be substantial, anyone lending or discovering their name in a firm name should have their position reviewed by a lawyer.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- David Yu Kimteng, et al. vs. Atty. Walter T. Young, et al, G.R. No. 210554, August 5, 2015 — read the decision on LawPhil →