Short answer. Generally, no. Article 1818 provides that an act of a partner which is not apparently for carrying on the business in the usual way does not bind the partnership unless authorized by the other partners. Because the act fell outside the ordinary course, the partnership is bound only if it actually approved it.
What the law says
An act of a partner which is not apparently for the carrying on of business of the partnership in the usual way does not bind the partnership unless authorized by the other partners.
Civil Code, Article 1818 — Partner as Agent of the Partnership. Read the full provision →
Why ordinary acts bind the partnership, but this one may not
Article 1818 begins by making every partner an agent of the partnership, so that an act for apparently carrying on in the usual way the business of the partnership generally binds it, even without the other partners' express approval. That rule exists because outsiders dealing with the partnership need to be able to rely on a partner's apparent authority over ordinary business dealings. But the article draws a clear line at that word 'usual': the moment an act is not apparently within the ordinary course of the partnership's business, the default rule protecting outsiders no longer applies in the same way.
The rule for out-of-the-ordinary acts
The article states directly that an act of a partner which is not apparently for the carrying on of business of the partnership in the usual way does not bind the partnership unless authorized by the other partners. So if what this partner did was clearly outside the ordinary way your partnership conducts its affairs, the partnership is not automatically bound by it. The partnership becomes bound only if the other partners actually authorized the act, whether beforehand or through a later ratification, rather than merely because the acting partner claimed to be representing the partnership.
Certain extraordinary acts need everyone's consent
The same article goes further for a specific list of especially significant acts, including assigning partnership property in trust for creditors, disposing of the business's goodwill, confessing a judgment, compromising a partnership claim, submitting a claim to arbitration, or renouncing a partnership claim. For these, the law says one or more but less than all the partners have no authority to act unless the other partners authorized it or have abandoned the business. If what this partner did falls into one of these categories, the bar for binding the partnership is even higher than the general unusual-act rule.
What to check next
Whether the partnership ends up bound turns on two separate questions: whether the act genuinely fell outside the usual course of your partnership's business, and, if so, whether the other partners in fact authorized or later ratified it. It is also worth checking whether the third party dealing with this partner knew the act exceeded his authority or knew of any restriction on it, since the article separately provides that no act contravening a known restriction on authority binds the partnership as to persons aware of that restriction.
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.
- Villamor & Victolero Construction Company, et al. vs. Sogo Realty and Development Corporation/Sogo Realty, G.R. No. 218771 / G.R. No. 220689, June 3, 2019 — read the decision on LawPhil →